Effective 1 March 2022: New Earnings Threshold and National Minimum Wage

Posted in Employment and Labour Law

Employers and employees need to keep an eye on the annual increases in both the National Minimum Wage and the Earnings Threshold, summarised below for your convenience. Both are effective from 1 March 2022.

The National Minimum Wage increase

The National Minimum Wage (NMW) for each ordinary hour worked has been increased by 6.9% from R21,69 to R23.19.

To quote from Minister of Employment and Labour Thulas Nxesi’s announcement –

“As in previous years, the adjustment provides exceptions for several worker groups, including:

Farmworkers are entitled to a minimum wage of R23.19 per hour.
Domestic workers are entitled to a minimum wage of R23.19 per hour.
Workers employed on an expanded public works programme are entitled to a minimum wage of R12.75 per hour.
Workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act, 1998 (Act No 97 of 1998), are entitled to allowances contained in schedule 2.

It is illegal and unfair labour practice for an employer to unilaterally change working hours or other employment conditions in order to implement the NMW. The NMW is the amount payable for ordinary hours of work and excludes payment of allowances (such as transportation, tools, food, or lodging), payments in kind (board or lodging), tips, bonuses, and gifts.”

Domestic workers

For the first time domestic workers have been brought into line with the NMW via a 21.5% increase from 2021’s R19.09 per hour. Assuming a work month of 21 days x 8 hours per day, R23.19 per hour equates to R3,895.92 per month. The Living Wage calculator will help you check whether or not you are actually paying your domestic worker enough to cover a household’s “minimal need”.

The Earnings Threshold Increase

The annual earnings threshold above which employees lose some of the protections of the Basic Conditions of Employment Act has been increased from R211,596.30 p.a. to R224,080.48 p.a.

“Earnings” (for this purpose only) means “the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee: Provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration”.

To quote again from the Minister’s announcement: “These sections protect vulnerable employees by regulating, among other things, working hours, overtime,… compressed schedules, working time, average hours of work, meals interval, daily and weekly rest periods, pay for work on Sundays, night work, and work on public holidays.”

The threshold also impacts on some of the protections provided in the Labour Relations Act –

Employees earning less than the threshold, if contracted to a client for more than three months through a temporary employment service (“labour broker”) are deemed to be employed by the client unless they are actually performing a temporary service.
Fixed-term employees earning below the threshold are deemed to be employed indefinitely after three months unless the employer has a justifiable reason for fixing the term of the contract.

Turning to the Employment Equity Act, employees earning over the threshold can only refer unfair discrimination disputes (other than disputes based on sexual harassment) to the Commission for Conciliation, Mediation and Arbitration (CCMA) with the consent of all parties. Otherwise they must go to the Labour Court for arbitration.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.