Minister announces increase in annual earnings threshold

© Anke-van-Wyk – za.fotolia.com

Gavin Stansfield, director in the Employment Practice at Cliffe Dekker Hofmeyr in Cape Town, explains that earnings threshold is significant as employees who earn in excess of the threshold (now R17,119.41 gross per month) are excluded from the protection offered by the BCEA in terms of sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3). These sections govern respectively:

• limiting ordinary hours of work to 45 hours per week (s9);
  
• to payment for any overtime worked in excess of 45 hours (s10);
  
• limitations on a compressed working week (s11);
  
• provisions which allow for the averaging of a work week (s12);
  
• the mandatory provision of a meal interval of not less than 30 minutes for employees who work for longer than 5 hours (s14);
  
• provisions which allow for certain mandatory minimum daily and weekly rest periods (s15);
  
• an employee's entitlement to increased pay for work on Sundays (s16);
  
• the payment of a mandatory allowance for employees who engage in night work (s17(2)); and
  
• increased pay for employees who work on public holidays (s18(3)).

"Employees who earn in excess of the threshold are not entitled to the minimum protections contained in these sections of the BCEA," Stansfield says.

"Earnings 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 for the purpose of calculating remuneration in terms of the threshold," he notes.

Effect of increase

"The increase in the threshold has the effect of increasing the number of employees who may be entitled to the above-mentioned minimum rights.

"In other words," Stansfield explains, "an employee who until the increase was earning for example R195,000.00 would not have been entitled to the payment of overtime. With effect from 1 July 2014, such an employee now becomes entitled to insist on the payment of overtime, to cite but one example.

"The increase in the threshold, accordingly, affects positively that category of employees who currently earn between R193,000 and R205,433.30 as they now become entitled to the above-mentioned basic rights. Employers should be aware of the increase in order to assess the impact it may have on employees in this band."