BY Lauren Salt AND Jessie Moore
New South African national minimum wage and earnings threshold
On 8 February 2021, two significant developments took place in the employment law arena. These will have far-reaching implications for employers and employees alike.
New earnings threshold
First, the so-called “earnings threshold” has been increased for the first time since July 2014.
Previously the earnings threshold was ZAR205 433.30. As from 1 March 2021, the new earnings threshold will be ZAR211 596.30 per year (approximately ZAR17 633.00 per month). “Earnings” includes the employee’s regular annual remuneration before deductions, but excludes benefits such as subsistence and transport allowances, achievement awards and payments for overtime worked. Employees who earn more than the earnings threshold per annum are excluded from the protection of sections 9, 10, 11, 12 , 14, 15, 16, 17(2) and 18(3) of the Basic Conditions of Employment Act, 1997.
The increase in the threshold will mean that from 1 March 2021, some employees who earn more than ZAR205 433.30 but less than ZAR211 596 per year may be entitled to additional protections that they were not previously enjoyed, such as payment for overtime, compulsory breaks and rest periods, night work allowances and the like.
Increases in the national minimum wage
The Minister of Employment and Labour has also published increases in the National Minimum Wage and various sectoral determinations. These increases are also effective from 1 March 2021.
The national minimum wage will change from ZAR20.76 per hour to ZAR21.69 for each ordinary hour that an employee works. This is an increase of approximately 4.9%. All sectors will be subject to the new national minimum wage, save for a few exceptions, including:
- farm workers, who are entitled to ZAR21.69 per hour;
- domestic workers, who are entitled to ZAR19.09 per hour; and
- workers employed on an expanded public workers programme, who are entitled to ZAR11.93 per hour.
Workers who have concluded learnership agreements are also entitled to certain allowances as outlined in a Schedule in the Government Gazette. Sectoral determinations have also been made for the contract cleaning sector and the wholesale and retail sector. Employers in these sectors will be required to increase their minimum wages too.
Employers may apply for exemption online or at their nearest branch of the Department of Employment and Labour.
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