UNDERSTANDING THE NEW NATIONAL MINIMUM WAGE ACT

The much-anticipated new National Minimum Wage Act came into effect on 1^st January 2019. The Minister of Labour also released the National Minimum Wage Regulations, 2018 (“Regulations”) which also came into operation on 1 January 2019.

What does this mean for employers?

Employers need to now standardise the amount they pay to employees to be in line with the National Minimum Wage (“NMW”) which is R20 an hour. This rate does not apply to domestic or farm workers. Farm workers will receive a minimum of R18 an hour, domestic workers R15 and expanded public works programme employees only R11 an hour. A failure to abide by the NMW could result in fines being imposed on the employer.

Employers should take special note that it is now also illegal to include “payments in kind” when calculating employees’ minimum wage. These include contributions employers may make to their employees’ transport, food, accommodation or gratuities. These have to be calculated over and above the NMW.

Of particular interest is a provision [Section 4 (6)] in the National Minimum Wage Act which will operate retrospectively from 1 May 2017. The provision in question prevents the possibility of waiving the payment of the minimum wage and provides for the NMW to take precedence over any other existing provision in law or contractual agreement.

This means that any employee (certain exceptions apply) who has been receiving remuneration of less than R20 per hour, may claim the difference between what they were being paid and the NMW, from 1 May 2017. In the event that an employer disputes this claim, in terms of the amendments to the Basic Conditions of Employment Act, the CCMA has the jurisdiction to determine the dispute.

Employers who cannot afford the prescribed minimum wage can apply to be exempted from paying the minimum wage. The exemption process is specifically created for employers who can show that they cannot afford to pay the NMW to workers and the Regulations provide information on the criteria to be met and process to be followed by any employer wanting to be exempted from the NMW.

The following criteria will need to be satisfied by an employer in order to be exempt: the employer cannot afford to pay the NMW; and the representative trade union(s) of the workers have been meaningfully consulted or, if there are no trade union(s), the affected workers have been meaningfully consulted.

To assess affordability; elements of profitability, liquidity and solvency are taken into account.

The extent of the practical implications of the National Minimum Wage Act will become apparent over time as issues arise and the solutions to such issues will be determined with the help of our courts and other dispute resolution tribunals such as the CCMA and Bargaining Councils.

Compiled By: Aruna Khan (nee Chetty) (Senior Associate) (Labour Department) (Pietermaritzburg Office)

E-mail: arunac@tmj.co.za

Tel: 033 341 9100