New earnings threshold and National Minimum Wage – Effective 1 March 2023
New earnings threshold
Labour and Employment Minister Thulas Nxesi (Nxesi) has announced a new annual earnings threshold under the Basic Conditions of Employment Act, which will have implications for South African employees.
In a gazette published on Monday (20 February 2023), Nxesi announced that annual earnings threshold will amount to R241,110.59 per annum. This represents an increase of R17,030.11 per annum from the previous amount of R224,080.48 per annum, effective 1 March 2023.
This amounts to an increase in the monthly threshold earnings to R20 092.55 per month from the previous amount of R18 673.37.
The new annual earnings threshold referred to in the gazette is defined as an employee’s regular annual remuneration before the deduction of income tax, pension, medical aid and similar payments, but excluding similar payments/contributions made by the employer in respect of the employee. This is subject to the provision that subsistence and transport allowances received, achievement awards and payment for overtime worked are not regarded as remuneration for the purpose of the notice.
Employees earning more than the earnings threshold are excluded from the provisions which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work and pay for work on public holidays of the Basic Conditions of Employment Act.
The Labour Relations Act (LRA) also extends protection to employees employed in terms of fixed term or part time contracts of employment and employees provided to clients by labour brokers, who earn below the earnings threshold.
With reference to the Employment Equity Act (EEA), an employee earning in excess of the earnings threshold, who has a dispute under Chapter II of the EEA relating to unfair discrimination, is not permitted to refer the dispute to the CCMA for arbitration (unless the dispute relates to alleged unfair discrimination on the grounds of sexual harassment, or the parties all agree to arbitration) and is obliged to refer the dispute to the Labour Court for adjudication.
National Minimum Wage
The Department of Employment and Labour has also published the new National Minimum Wage for South Africa.
The minimum wage of R23,19 per hour will increase to R25,42 per hour (an increase of approximately 9,6%), with effect 1 March 2023. The new minimum also outlines the minimum wage for workers in certain sectors.
Farm workers will earn a minimum in line with the rate, as will domestic workers. However, workers employed in expanded public works programmes will be entitled to a lower rate at R13.97 per hour.
The National Minimum Wage excludes allowances that are paid to enable employees to work (such as transport and equipment), or payment in kind (such as board or accommodation), as well as bonuses, tips, or food. As such, one cannot argue that you pay an employee less than the minimum wage because you contribute to their uniform or provide them with meals.
The National Minimum Wage is the floor level below which no employee should be paid. The national minimum wage applies to all workers i.e., any person who works for another person and who receives or is entitled to receive any payment for that work.
