New minimum wage and the earnings threshold

The Minister of Employment and Labour increased the earnings threshold and the national minimum wage, effective from 1 March 2023, as follows:

The Earnings Threshold increased to R241,110.59 per annum (ZAR20,093 per month).  

The earnings threshold is defined as an employee’s regular annual remuneration before the deduction of income tax, pension, medical aid, and similar payments, but excluding similar payments/contributions made by the employer in respect of the employee.  Subsistence and transport allowances received, achievement awards and payment for overtime worked are not regarded as remuneration for the purpose of the notice.

Employees earning more than the earnings threshold are excluded from the provisions which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work, and pay for work on public holidays of the Basic Conditions of Employment Act, 1997 (“BCEA”).

Those employees currently earning between ZAR18 673 per month and ZAR20 093 per month will, from 1 March 2023, now join the category of “vulnerable” workers who are entitled to additional rights and protections, including the right to increased rates of pay, in terms of the BCEA.

National Minimum Wage increased to R25,42 per hour or R4,956 per month.

All employees earning below the threshold are subject to the provisions of the BCEA dealing with hours of work, overtime, compressed working week, averaging of hours, meal intervals, daily and weekly rest periods, pay for work on Sundays, night work and work on public holidays.

The increased earnings threshold also affects any temporary employment services (“TES”) employees, i.e., labour broking employees, who are earning between ZAR18 673 per month and ZAR20 093 per month. They will, from 1 March 2023, be deemed the employees of the client of the TES, if they satisfy the requirements of section 198A of the LRA. If employees are not performing temporary work and are placed with the client of the temporary employment service for a period of three months or more, they may be considered permanent employees of the client and not of the TES. If this is the case, employers will also be jointly and severally liable for any non-compliance by the TES with the provisions of the BCEA, and the deemed employees will be able to institute action against their deemed employer for any non-compliance by the TES.

Any fixed-term contract employees who are earning between ZAR18 673 per month and ZAR20 093 per month will from 1 March 2023 be deemed to be permanent employees of the employer if they satisfy the requirements of section 198B of the LRA. Employees who earn below the threshold may be deemed permanent employees if they are employed for 3 months or more without a justifiable reason for fixing the term of the contract. Again, there is a positive obligation on the employer to equalise the treatment of these employees with permanent comparators.

Employers must review and audit their contracts of employment and policies to ensure that these are aligned with the new amounts legislated. They should also conduct audits of their workforce and suppliers of labour to ensure compliance with the BCEA.