As you may have noted in recent media reports, the President of South Africa, Cyril Ramaphosa, signed the new national minimum wage statute into law effective from 1 January 2019.
Apart from the national minimum wage of R20 per hour introduced for all employees of all industries (*excluding farm workers and domestic workers), the National Minimum Wage Act (NMWA) also triggered other amendments to inter alia the Basic Conditions of Employment Act (BCEA) and the Labour Relations Act (LRA), the most significant being the introduction of parental and adoption leave.
Below find a quick snapshot of the National Minimum Wage Act and other amendments for your own edification.
What does the National Minimum Wage Act entail for employers?
- The national minimum wage was introduced based on a per hour tariff (R20 per hour) and not in respect of a monthly minimum amount. The hours calculated exclude any lunch breaks and, on average, the national minimum wage amounts to a monthly minimum salary of R3,200 – R3,500. Employers will be legally obliged to pay at least the national minimum wage to their employees.
- Employers must note that only the minimum wage component of legislation was amended. Other provisions with reference to deductions, overtime, leave, working hours, housing, etc. as applicable to the specific industry shall still apply. Also, if an industry’s set minimum wage is higher than the national minimum wage, employers must pay the higher wage.
- The farming/forestry and domestic worker sectors have been given an exemption and only need to pay 90% and 75% respectively of the national minimum wage. This amounts to R18.00 per hour for the farming/forestry sector and R15.00 per hour for the domestic worker sector.
- Another amendment effected by the enactment of the NMWA is that employees who work fewer than four hours per day must at least receive remuneration equal to four hours’ pay.
The national minimum wage exemption process
- The National Minimum Wage Act (NMWA) and regulations also make provision for business owners who feel that they cannot afford to pay the new national minimum wage, to apply for exemption. To qualify for national minimum wage exemption, a business must be able to demonstrate that it had not made a profit for the past two financial years or that its profit was less than 6% of the value of the assets of the business.
- Although the introduction of the national minimum wage was criticised from a business perspective, the lenient and broad criteria that are set to qualify for exemption will enable a large percentage of businesses, especially small and medium-size enterprises, to be exempted from paying the national minimum wage.
Introduction of parental and adoption leave
The aggregate effect of the introduction of parental and adoption leave from a basic condition of employment perspective is that –
- three days’ paid leave per year provided for in the past under Family Responsibility Leave for a parent on the birth of a child falls away and is replaced with 10 days’ unpaid leave under parental leave and adoption leave respectively;
- the three days’ Family Responsibility Leave per year is now only available when a child is sick or on the death of certain closely related family members;
- in the event of the birth of a child, an employee as parent would be entitled to either maternity leave or parental leave (not both), and in the event of adoption of a child, to parental leave or adoption leave (not both), with all categories of leave (maternity, parental and adoption) being unpaid.
It is important to note that an employee as parent is entitled to the new parental leave and adoption leave irrespective of the marital status of such an employee/parent or the same-sex or different sex (heterosexual) affiliation of such an employee/parent.
Businesses will have to ensure that their employment policies and procedures are sound in line with the amendments to the Basic Conditions of Employment Act and National Minimum Wage Act. Employers who fail to comply with the relevant legislation risk being caught up in unnecessary legal action and disputes as some employees and unions might see this as an opportunity to exploit the situation.
