Minimum Wage Threshold

On 1 March 2023, the Minister of Labour, Minister TW Nxesi, declared that the earnings threshold for the Basic Conditions of Employment Act, 1997 (BCEA) would be increased from R224 080.48 per annum (approximately R18 673.37 per month) to R241 110.59 per annum (around R20 092.55 per month). As per the BCEA, “earnings” refers to the regular yearly pay before deductions, such as income tax, pension, medical aid, and similar payments (excluding payments made by the employer in respect of the employee). Subsistence and transport allowances, achievement awards, and payments for overtime worked are not considered “earnings” for the purpose of the earnings threshold.

The national minimum wage has also risen from R23.19 per hour to R25.42 per ordinary hour worked. Employers paying below the threshold must adhere to certain provisions of the BCEA, including sections 9 through 18(3). It is critical for employers to know which of their employees are below, and which are above the earnings threshold. Those identified as earning below the threshold are entitled to greater protection under labour legislation, such as overtime pay and pay for work on Sundays and public holidays.

If employees who earn below the threshold are denied the protections, or are being paid below the national minimum wage, they can seek assistance from the CCMA (under section 73A of the BCEA). Employers must note that non-compliance with the BCEA may attract a substantial fine.

A significant inclusion in the act that has garnered much attention is the amendment in which the act now also states that employees who earn above the threshold, however, do not qualify for assistance from the CCMA and must refer disputes to the Labour Court for arbitration. 

It is important to note that employees earning below the threshold who are employed on a fixed-term contract or those placed in temporary employment services are protected under the Labour Relations Act (LRA)In addition, employees earning below the threshold who are employed for more than three months may be considered permanent employees if the reason for the fixed-term contract cannot reasonably be justified. These conditions are detailed in Sections 198A(3)(b) and 198B of the LRA.

The two significant, and possibly most impactful, amendments to the act are those which pertain to non-assistance by the CCMA for employees earning above the threshold, and to employees earning below the threshold and are employed under a contract exceeding three months. These inclusions could see a notable shift in the recruitment and employment landscape.

Employers are encouraged to closely monitor any changes that may be made to the earnings threshold and the national minimum wage. Changes are typically published each year in the month of February. The expanded public works programme, and workers involved through learnership agreements, are not subject to the national minimum wage rise. Their minimum wage and allowance(s) have, however, increased. So too have contract cleaning, wholesale, and retail sector workers’ minimum wage increased, but at different rates.

The Basic Conditions of Employment Act 75 of 1997 (BCEA) can be accessed using Sabinet’s services. Visit http://bit.ly/3ZNyPei for more information on our subscription options.

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