On 20 February 2023, the Department of Employment and Labour released the new Basic Conditions of Employment Act, 1997 (BCEA) earnings threshold. The earnings threshold has been increased from ZAR224,080.48 per annum (which amounts to ZAR18,673.37 per month) to ZAR241,110.59 per annum (which amounts to ZAR20,093.00 per month) with effect from 1 March 2023.

Employees earning above this threshold are excluded from various sections of the BCEA, namely sections 9 (Ordinary hours of work); 10 (Overtime); 11 (Compressed working week); 12 (Averaging of hours of work); 13 (Determination of hours of work by Minister); 14 (Meal intervals); 15 (Daily and weekly rest period); 16 (Pay for work on Sundays); 17 (Night work – 17(2) that deals with transport and night shift allowances); and 18 (Public holidays – 18(3) that deals with payment for work on a public holiday that falls on a day on which the employee would ordinarily not have worked).

Employees earning less than the threshold amount enjoy full protection and rights under the abovementioned sections of the BCEA.

This increase in the threshold may have important implications for employers. For example, employees earning above the threshold are not eligible for overtime pay. If an employee was not receiving overtime pay because that employee earned just above the threshold, that employee may now need to receive additional remuneration in respect of overtime worked from 1 March 2023 if such employee earns less than the new threshold.

Furthermore, the BCEA threshold amount is linked to the deeming provisions in the Labour Relations Act, 1995. In this regard, a fixed term employee who earns below the prescribed annual earnings threshold and is engaged for longer than 3 months is deemed to be a permanent employee unless there is a justifiable reason for fixing the term. Similarly, labour broker employees who earn below the threshold and are engaged to work for a client for longer than 3 months are deemed to be employees of the client for purposes of the Labour Relations Act, 1995. Therefore, employers should also consider whether the increase in the threshold amount will result in the deeming provisions in the Labour Relations Act, 1995 applying to certain of their employees.

In addition to the increase to the BCEA earnings threshold, the Department has also released the new National Minimum Wage (NMW) , which will increase from ZAR23,19 per hour to ZAR25,42 per hour for all employees across all sectors, except workers employed on Expanded Public Works who are entitled to ZAR13,97 per hour and workers on learnership agreements.

Notably, employers in the Wholesale and Retail Sector and Contract Cleaning Sector will have to increase their minimum rates to align with the new National Minimum Wage.

The NMW amount does not include allowances that are paid to enable employees to work (such as transport and equipment), or payment in kind (such as board or accommodation), as well as bonuses, tips or food.

Contributor:

Faryn Nana - Associate