Introduction
The National Minimum Wage Act 9 of 2018, hereafter referred to as “the Act”, came into effect on the 1st of January 2019. The Act recognises the levels of inequality in terms of pay disparities in South Africa and it seeks to fulfil the constitutional right to fair labour practices. It would not be inaccurate to refer to the Act as controversial, as it has received some resistance from the private sector, especially from small employers. Be that as it may, the Act is here to stay however; it is important to note that the applicability of the Act is limited. Furthermore, Employers are required to know and understand the consequences for failing to comply with the Act and in the event of non-compliance, to know what recourse is available.
The National Minimum Wage Act in General
Currently, the amount determined as being the national minimum wage that an Employee is entitled to, is R20 per hour. It is important to note however, that when determining the earnings of an employee, it will be dependent on the number of [ordinary] hours that an Employee has worked during the month. In terms of the Basic Conditions of Employment Act 75 of 1997 (The BCEA), an employee’s average hours of work should not exceed 45 hours per week. Therefore, if an Employee has worked fewer hours in comparison to the prescribed 45 hours per week or has worked an agreed maximum number of hours in terms of a sectoral determination or an employment contract, then their remuneration will accordingly be calculated according to the number of actual hours worked during the week / month. It is important for Employers to note that an Employee’s remuneration, excludes any payments which enable an Employee to perform his/her job such as a tool allowance or an accommodation allowance; any payments in kind, unless this is specified in a sectoral determination; gratuities such as tips or bonuses and any other prescribed category of payment.
The Act clearly states that no Employee, who is legally entitled to the national minimum wage rate, can be paid less than the prescribed minimum wage and any Employer who unilaterally alters an Employee’s hours work, wages or conditions of employment as a result of thereof, would be deemed as having committed an unfair labour practice.
Applicability and/or Exclusions of the Act
Although the Act does apply to most sectors in South Africa, it does exclude Employees who work in certain sectors. Section 3 of the Act provides that the minimum wage does not apply to the South African National Defense Force, the National Intelligence Agency, the South African Secret Service and to volunteers.
As per Schedule 1 of the Act, it further provides for categories of Employees who are not entitled to the national minimum wage of R20 per hour, which ipso facto excludes some Employers from having to comply with the Act. Item 2 of Schedule 1 states that farm workers, domestic workers and Employees who are employed on an expanded public works programme, are not entitled to the national minimum wage. Schedule 1 further provides that Employees who have concluded a learnership agreement, are entitled to an allowance which may or may not exceed the minimum wage per week.
Enforcement and Exemptions
The Act provides for the Establishment of the National Minimum Wage Commission, hereafter referred to as “The Commission”. The Commission performs the following functions:
– To review the national minimum wage amount and to recommend any adjustments;
– To investigate and report the impact of the national minimum wage on the economy, collective bargaining and the reduction of income differentials;
– To investigate income differentials;
– To set targets for the national minimum wage within three years;
– To advise the Minister of Labour on how to reduce income differentials, sectoral determinations and any matters concerning basic conditions of employment; and
– To perform any function as may be required of the Commission, in terms of employment law.
The Commission therefore can be seen as a mechanism to ensure that the wage threshold keeps abreast with inflation and does not negatively impact the employment figures.
Despite the clear requirements of the Act, there are numerous Employers who refuse to be compliant in which case, an Employee can refer an Unfair Labour Practice dispute to the CCMA. The Department of Labour, after an inspection has been made, may issue a compliance order against an Employer for non-compliance with the national minimum wage where in turn, an Employer may refer a dispute to the CCMA in terms of Section 69(5) of the BCEA as amended, should an Employer wish to object to the compliance order.
In the instance however, where an Employer is unable to be compliant in that the Employer cannot afford or sustain the national minimum wage rate, an application can be made by an Employer or by an Employer’s Organisation representing the Employer, for an exemption. The minimum wage exemption application process is also offered online by the Department of Labour, via its online portal (https://nmw.labour.gov.za/).
Section 15(2) of the Act states that a minimum wage exemption granted, must specify the exemption period which cannot be longer than one year; it must specify the wage that the Employer is required to pay, and it may contain any other relevant condition to the exemption.
Conclusion
Inasmuch as the introduction of the National Minimum Wage Act has caused some concern amongst Employers in South Africa, the scope of the national minimum wage does not apply to all sectors. Compliance with the Act in general is mandatory, therefore it is in the interests of an Employer “To Be Compliant” in order to avoid a potential referral to the CCMA; however, Employers themselves have the option of referring a dispute to the CCMA should they wish to object to a compliance order and Employers also have the avenue of making an application to the Department of Labour, in order to seek an exemption, should they face issues pertaining non-compliance with the national minimum wage.
By Linden Bowes (LLB-UKZN)
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