For most of us, the 1st of January 2019 followed a routine night of year-end festivities and marked the beginning of our newfound optimism for the year ahead. However, the 1st of January 2019 was no ordinary date. It marked the date which saw significant developments in the South African labour law landscape, as it ushered in both the National Minimum Wage Act 9 of 2018 (hereinafter referred to as “the Act”) and the Basic Conditions of Employment Amendment Act 7 of 2018 (hereinafter referred to as “the BCEA”).
This article will explore the implications of the Act and the effect it may have from both the employer and employee’s perspective.
The concept of a national minimum wage has been flirted with by the Department of Labour from as far back as 1935, though due to reasons relating to employers’ organisational rights and other amendments relating to the 1925 Wage Act, nothing came of it. By 1977, the South African Congress of Trade Unions (SACTU) called for a minimum wage of R50 per week. This was after the Durban strikes of 1973 and the Soweto uprisings of 1976. Again, nothing came of it. It soon developed that within certain sectors of the workforce in South Africa, workers were afforded a minimum wage through sectoral determinations and collective agreements. They only affected those workers within the specific sectors, however.
In circumstances where a worker was not working in a sector where the minimum wage was regulated by collective agreement or sectoral determination, an employer would be entitled to negotiate any wage with a worker, and the worker, out of desperation for employment, would in most instances accept exploitative offers.
It is within this historical context that the enactment of the Act is a ground-breaking achievement for the labour law legislative environment in South Africa.
With the enactment of the Act, the national minimum wage currently stands at R20.00 for each ordinary hour worked with, inter alia, the following exceptions:
- Farm and forestry workers are entitled to a minimum wage of R18.00 per ordinary hour worked;
- Domestic workers are entitled to a minimum wage of R15.00 per ordinary hour worked; and
- Workers employed pursuant to an expanded public works programme are entitled to a minimum wage of R11 per ordinary hour worked.
Notwithstanding the above, the Domestic Workers Sectoral Determination 7, applicable to the domestic workers’ sector, sets out the hourly rate applicable to domestic workers dependent upon the geographic area within which they work, and whether they work on a full time or part-time basis. A domestic worker working 27 ordinary hours or less a week (a part-time worker) is entitled to a minimum rate of R16.03 per hour, while a domestic worker working from 27 ordinary hours up to 45 ordinary hours a week is entitled to a minimum rate of R13.69 per hour. The aforesaid minimum rate for part-time workers is for the period ending 30 November 2019. Currently, part-time workers will not be subjected to the national minimum wage of R15 per hour, but the higher R16.03 per hour until 30 November 2019.
According to the general minimum wage of R20 per hour, the general monthly minimum wage is R3 500.00, in respect of a 40 hour week, and R3 900.00, in respect of a 45 hour week. The calculation of the above-mentioned minimum wage amounts exclude any allowances made available to the worker in respect of food, transport or accommodation, etc. An employer cannot, therefore, set-off the value of allowances afforded to workers against the minimum prescribed wage.
National Minimum Wage Commission
The Act establishes a national minimum wage commission tasked with the annual review of the national minimum wage and is empowered to recommend adjustments each year if deemed necessary. There is every likelihood that the national minimum wage amount will increase, considering that the purpose of the Act is to advance economic development and protect workers from unreasonably low wages.
The ever-increasing cost of day-to-day living expenses of an average South African will undoubtedly necessitate an increased minimum wage in the near future. The first review of the national minimum wage will take place in January of 2021 and annually thereafter.
Exemption to National Minimum Wage:
The Act does make provision for the scenario where an employer, or an employers’ organisation on behalf of its members, wishes to apply for exemption from having to pay the national minimum wage. Essentially, the exemption serves to ease demands on employers who can prove they cannot afford to pay the national minimum wage. There is, however, stringent criteria that must be complied with by the employer prior to being granted an exemption.
Most importantly, employers should not be disillusioned into believing an exemption will mean a substantial reduction from the current national minimum wage. The most that an employer can expect to obtain through the exemption process is a 10 (ten) per cent decrease in the national minimum wage. Whether it’s worth the time and effort in applying for the exemption remains to be seen.
Enforcement of National Minimum Wage
The BCEA establishes that those workers who earn below the national minimum wage threshold may refer any non-compliance with the provisions of the Act to the CCMA.
An employer will be fined for not paying the national minimum wage. The fine for a first-time offence may either be double the underpayment or double the monthly wage due to the worker, whichever is the greater. Should it not be the first offence, the fine imposed may be three times the underpayment or three times the monthly wage, again, whichever is the greater.
Labour Inspectors from the Department of Labour may in certain instances obtain written undertakings from employers to pay the minimum wage. Furthermore, Labour Inspectors may issue compliance orders for non-compliance with the Act.
Most importantly, both compliance orders and written undertakings may be made an arbitration award by the CCMA. Should the arbitration award not be complied with, the award may be certified as an order of court by the CCMA and enforced in a manner similar to that of obtaining a civil judgment against a debtor. This will, in effect, empower the appropriate sheriff to execute against property owned by the employer, to the value provided in the enforcement award, thereby ensuring compliance with the national minimum wage.
A further method which may be used for the enforcement of the Act in the future is a compliance system called “Impimpi Alive”, which will enable workers to send an anonymous SMS to the Department of Labour, triggering a labour inspector to be sent out to the employer’s business premises within 48 Hours to investigate the complaint. The labour inspector may determine the appropriate sanction, in accordance with the Act, for non-compliance with the national minimum wage.
In the event that it is deemed appropriate, the names of the guilty employers may be published on the Department of Labour website. The publication of deplorable employers, through a “naming and shaming” initiative, will undoubtedly cause reputational damage to those employers and may even result in financial losses as a result of a possible divestment.
Should you require a more comprehensive understanding of the implications of the National Minimum Wage Act, we would be happy to assist.
Zaahir Teladia