THE Department of Labour intends to open a fraud case with the South Africa Police Service against an employer who misrepresented the company to obtain exemption from paying the National Minimum Wage (NMW). The department wishes to inform the public that it is in the process of imposing punitive measures. It is initiating a process towards withdrawing the granted exemption as per Section 5 of the NMW Regulations. Section 15 of the NMW Act makes a provision for an employer who cannot afford to pay the NMW to apply for an exemption. The Labour Minister, Mildred Oliphant, has published regulations in this regard relating to the form and manner in which exemptions must be made.

Applications for exemptions from paying the NMW are submitted through a NMW online system accessible from the department’s website. The office of the Director-General, Thobile Lamati, received an email on January 19 from an employee at Fleeceytex Knitting Company. The employee wanted to confirm the authenticity of an exemption notice displayed at the workplace. The employee said that the exemption notice displayed showed a rate of R16 per hour effective from January 17, which the employees were subsequently paid on January 18.

Upon investigation, the department found out that the employer indeed applied for an exemption from paying the legislated R20 per hour on January 17 and was granted an exemption based on the fact that he could not afford due to insufficient profitability and assets. However, the rate the exemption was granted for was R18 per hour and not the R16 hour displayed by the employer, which the department has a copy of as furnished by the complainant.

Section 5 of the NMW Regulations provides that an exemption notice may be withdrawn if:
• The employer has provided false or incorrect information that has led to the granting in its application for an exemption;
• The employer is not complying with the exemption notice;
• The employer’s financial position has improved to the extent that the employer is able to pay the NMW;
• There are other justifiable grounds for withdrawing the exemption notice.

Section 5 (3) further provides that before making a decision to withdraw an exemption notice, the delegated authority must be satisfied that in addition to the grounds mentioned above, that the employer has been consulted. The Chief Director of Labour Relations scheduled a meeting with the employer on January 22 at the workplace to try to ascertain his version of what had happened in the case. The employer confirmed that he applied and was granted an exemption at a rate of R18 per hour. Also, he confirmed that an exemption notice showing a rate of R16 per hour was erroneously displayed at the workplace and used to calculate employee’s wages that they were subsequently paid on January 18. Further, he said that they were investigating the case and would send the report as soon as the investigation was finalised. The employer said that they had since rectified the misrepresentation and that the correct exemption notice was now displayed at the workplace.

Considering the facts presented by the complainant and the employer, we have come to the conclusion that it is a case of fraud. The Department of Labour is planning to name and shame employers who engage in fraudulent activities.
Issued by the Department of Labour.

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