National minimum wage law explained
TWO pieces of legislation are relevant to the new minimum wage law that came into effect from January 1: namely the National Minimum Wage Act (2018) and the Regulations to the National Minimum Wage Act (2018).
It has been estimated that more than six million employees will benefit from this legislation.
The minimum wage legislation coincides with a raft of amendments to many other labour laws including the introduction of paternity and adoptive parent leave.
The purpose of the National Minimum Wage Act is “to advance economic development and social justice by”, among other things, “improving the wages of lowest paid workers”, “protecting workers from unreasonably low wages” and “preserving the value of the national minimum wage”.
The Act “applies to all workers and their employers, except members of the South African National Defence Force, the National Intelligence Agency and the South African Secret Service”.
Volunteers are excluded from the Act and need not, of course, be paid any wage.
The applicable national minimum wage is R20 per hour, except for farm workers who have a minimum wage of R18 per hour and domestic workers whose minimum wage is R15 per hour. Workers employed on an expanded public works programme are entitled to a minimum wage of R11 per hour.
The minimum wages for farm and domestic workers will be reviewed and amended by January 1, 2021, while the general minimum wage is to be reviewed annually.
Importantly, an employer will be committing an unfair labour practice if they “unilaterally alter wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage”.
In calculating wages when applying the National Minimum Wage Act, “the calculation of a wage for the purposes of (the Act) is the amount payable in money for ordinary hours of work”.
However, payment of the minimum wage excludes any payment for employee transport, equipment, tools, food or accommodation. It also excludes all gratuities including tips and bonuses.
Regulations to the National Minimum Wage Act (2018), on the other hand, primarily address all matters relating to employer applications to be exempted from paying the prescribed minimum wages.
To begin with, the regulations stipulate that “an exemption may only be granted if the delegated authority (the director-general of Labour) is satisfied that (a) the employer cannot afford to pay the minimum wage and (b) every representative trade union representing one or more of the affected workers has been meaningfully consulted or, if there is no such trade union, the affected workers have been meaningfully consulted”.
If an employer is granted an exemption to pay the national minimum wage, it will be for a maximum period of 12 months, and may not be less than 95% of the applicable minimum wage.
Exemptions can be withdrawn if it is established that the employer “has provided false or incorrect information that has led to the granting” of the exemption or “the employer is not complying with the exemption notice”.
So-called audit triggers have been identified in the regulations that include “discrepancies in depreciation”, “out of proportion net losses”, “discrepancies in reported revenue and reported total expenditure” and “discrepancies in total liabilities”.
Our firm has received numerous enquiries from employers who are contemplating widespread retrenchments in response to the impact of the implementation of the new minimum wage.
You do not need to look far to find highly charged sentiments on this legislation, both in favour of and against its implementation.
Organised labour has already expressed its concern that the exemption process will enable many employers in the manufacturing and construction industries, for example, to successfully apply for exemption from payment of the minimum wage, given the parlous state of the economy.
Time will tell if that proves to be true. There is little doubt that the director- general of Labour will be inundated with exemption applications from employers.
The Commission for Conciliation, Mediation and Arbitration anticipates that disputes relating to the payment of minimum wages will increase its caseload by about 15%.
We think this is a conservative estimate, with a 20% case load increase being more likely.
Tony Healy is a labour law expert at labour law consultancy Tony Healy & Associates. www.tonyhealy.co.za. Call 0861 115 375 or email [email protected]