April 21, 2020

Can an employer avoid paying the new national minimum wage?

The National Minimum Wage Act, 2008 (“NMWA”) came into effect on 01 January 2019, and, apart from the employees, will have its biggest impact on small companies (where profitability is already threatened) and those which rely heavily on a large workforce.  

The Basics

The NMWA provides that the minimum wage will be determined regularly by the Minister of Labour (“Minister”). The Minister has set the minimum wage at R20.00 per hour (the “Minimum Wage”). Based on this Minimum Wage and the Basic Conditions of Employment Act, 1997, full-time employees must now be paid no less than (R20.00 per hour) and not less than (R900.00) for a (45 hour week). Part-time employees must also be paid no less than R20.00 per hour, and, must be paid for no less than 4 hours per day (or at least R80.00 per day).

The Exceptions  

The Minimum Wage applies to all workers in South Africa, except for employees of the National Defence Force, the National Intelligence Agency, the South African Secret Service, and volunteers. There are also exceptions for three other groups of employees who have their own minimum wage standards, farm workers (R18.00 per hour), domestic workers (R15.00 per hour) and people employed on the expanded public works programs of government (R11.00 per hour).

Can employees agree to earn less than the Minimum Wage?

The NMWA specifically states that the Minimum Wage cannot be waived through a contract or collective agreement. If one signs a contract that says that you are willing to receive less than the Minimum Wage, that contact does not change an employer’s obligation to pay the Minimum Wage.

Can an employer be granted an exemption for paying the Minimum Wage?

Employers can apply for exemptions for specific periods (not exceeding 12 months). It is not entirely clear on what basis such exemptions will be granted as the Minister has not yet published regulations clarifying when an exemption may be granted.

What happens if employers fail to comply with the NMWA?

Failure to comply with the NMWA will result in the imposition of fines. The fine for a first-time offence is either double the value of the underpayment or double the employee’s monthly wage, whichever is greater. For any further offence, the employer may be fined three times the value of the underpayment or the employee’s minimum wage, again whichever is greater. The Department of Labour will also publish the names of employers who have had compliance orders made against them.

Nelson Xaba

Candidate Attorney

Litigation and Labour Department

(031) 536 7517

073 092 8325