Come the 1st of May 2018, businesses will see the much anticipated National Minimum Wage Bill (“NMWB”) enacted into legislation. On the back of the promulgation of the NMWB, we will also see amendments to existing labour legislation to assist in the enactment of the NMWB (for example the Basic Conditions of Employment Act).
So what can we expect come 1 May 2018? As you will see below there is far more to the national minimum wage than the much publicised (and debated) R20 per hour.
The purpose of the NMWB is to advance social economic development and social justice by improving the wages of the lowest paid employees, by protecting employees from unreasonably low wages, by preserving the value of the national minimum wage and by promoting collective bargaining and supporting economic policy.
As stated above, the point of departure in achieving this purpose is the introduction of a minimum rate of pay of R20.00 per hour. This national minimum will be applicable to all employees, except for:
- Farm workers, whose minimum rate will be R18.00 per hour
- Domestic workers, whose minimum rate will be R15.00 per hour
- Expanded Public Works Programme employees, whose minimum rate will be R11.00 per hour
- Workers engaged in learnerships will be entitled to an allowance of between R301.01 to R1,755.84 per week, dependent on their NQF level.
and will take precedence over any existing collective agreement or contract of employment which is less favourable.
In calculating the minimum rate of pay, the following amounts are excluded:
- any payment made to enable an employee to work including transport
- equipment, food or accommodation allowances
- any payment in kind, which includes board or accommodation
- gratuities including bonuses, tips or gifts and any other prescribed category of payment.
Whilst laying the foundation of the national minimum wage, the NMWB has made provision for those Employers not in a position to pay same to apply for exemptions to the Minister of Labour.
Despite this provision being catered for in the NMWB, there are no guidelines in place, as yet, setting out how the exemptions process works – for example: criteria to be used; form of the application; time frames for submission / consideration; justifications/supporting evidence required etc.
Albeit that there are no Regulations outlining the exemption process, Employers are encouraged to take proactive steps before the 1st of May 2018. The fact remains that when the NMWB comes into effect Employers will be obliged to implement same. Those Employers who are not in a position to implement NMWB should be seen to have acted in good faith and taken positive steps to address the issue before implementation.
The NMWB has also established a National Minimum Wage Commission (“the Commission”), whose functions will include:-
- reviewing the national minimum wage and recommending adjustments
- investigating the impact of the national minimum wage on the economy, collective bargaining and the reduction in income differentials; and reporting its findings to the Minister
- investigate differentials and recommend benchmarks for proportionate income differentials
- set medium term targets for the national minimum wage within 3 years
- advise the Minister on measures to reduce income differentials or any other matter on which the Minister requires the Commission’s advice
The Commission’s mandate is vast and only time will tell how they will execute their functions in this unchartered territory whilst facing criticism from key stakeholders in industry.
As mentioned above, in addition to the introduction of the NMWB we will also see amendments being effected to existing labour legislation.
The most significant of these amendments in the context of the NMWB is the proposed amendments to the Basic Conditions of Employment Act (“BCEA”), including:
- Empowering labour inspectors to monitor and enforce the application of the NMWB (including: referring disputes to CCMA, compliance orders and obtaining undertakings)
- Repealing provisions dealing with the creation of sectoral determinations
- Extending the jurisdiction of the CCMA for enforcement procedures relating to underpayments (note: only employees earning below the threshold of R205,433.30 can refer a dispute relating to underpayment of minimum wages)
- Employers who fail to pay an employee the national minimum wage will be obliged to pay interest on any late payment calculated and for a fine equal to twice the value of the underpayment or twice the employee’s monthly wage, whichever is greater.
The NMWB seeks to advance economic development and social justice by improving the wages of the lowest paid workers.
We will only understand the full impact of the NMWB once it has been enacted and the necessary regulations and other legislative amendments have been effected (i.e. how the exemptions process will unfold, the capacity of the CCMA in dealing with additional work load, how the Commission will execute their functions).
Employers are advised to ensure that their employees’ remuneration is brought in line with from the 1st of May 2018 in order to avoid being held liable for any potential fines or the payment of interest on any late payments to their employees in regard to their non-compliance.
If you require any assistance in matters dealing with the national minimum wage, please contact our offices.
Download a copy of the National Minimum Wage Bill
Author’s Note: at the time of publication of this article, the Minister of Labour announced that the Bill would not be taking effect on the 1st of May 2018. Employers are still urged to take heed of the Bill and start preparing accordingly.
Note: This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. BLC Attorneys will accept no responsibility for any actions taken or not taken on the basis of this publication.