Labour Law Blog

23

The Introduction of the Minimum Wage, What Does It Mean For You?

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1 January 2019 marked a new era for the South African labour market, with the introduction of the long-awaited and ground-breaking National Minimum Wage Act (NMWA). The NMWA introduced a national minimum wage below which no worker should be paid.

The NMWA applies to all workers and their employers except members of the National Defence Force, the National Intelligence Agency and the South African Secret Service. The term ‘worker’ means any person who works for another and who receives, or is entitled to receive, any payment for that work whether in money or in kind. Volunteer workers are also excluded from the ambit of the NMWA because they do not receive pay and/or are not entitled to pay.
This means that-

  • every worker, except those specifically excluded, is entitled to at least the minimum wage;
  • employers may not pay wages that are below the minimum wage;
  • the national minimum wage cannot be varied by contract, collective agreement or law; and
  • the national minimum wage automatically constitutes a term of the worker’s contract except to the extent that the contract provides for a more favourable wage or the employer has been exempted.

The national minimum wage, which is currently prescribed at R20 per hour, came into effect on 1 January 2019, from which date Employers, unless otherwise exempted, are required to pay workers R20 for each ordinary hour worked, with the following exceptions:

  • farm workers are entitled to a minimum wage of R18 per hour;
  • domestic workers are entitled to a minimum wage of R15 per hour;
  • workers employed on an expanded public works programme are entitled to R11 per hour;
  • workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act will be entitled to the allowances contained in Schedule 2 of the NMW Act.

It is intended that the hourly wage for the farm, forestry and domestic workers will be brought up to 100% of the national minimum wage level within two years of from 1 January 2019, subject to research findings of the National Minimum Wage Commission on this timeframe.

The national minimum wage is calculated with reference to the amount payable for the ordinary hours of work. This means that a worker is entitled to receive at least the minimum wage for the number of ordinary hours that the worker works in a day. Notwithstanding this, a worker must be paid for a minimum of four hours per day even if he/she works less than four hours on a given day.

The national minimum wage does not include the payment of allowances (such as transport, tools, food or accommodation allowances), payments in kind (board or lodging), tips, bonuses, and gifts, therefore, if such payments are applicable to the worker, the payment of same will be made over and above the national minimum wage. While the Minister of Labour is empowered to exclude, by way of regulations, any other forms of payment from the national minimum, no further exclusions have been made to date.

The payment of the national minimum wage is mandatory and cannot be excluded, even by agreement between the parties. The only time the employer would be allowed not to pay the national minimum wage is where the employer has been duly exempted from payment of the national minimum wage, through an exemption certificate issued by the National Minimum Wage Commission, which exemption is only valid for a period of 12 months, unless renewed accordingly.

In the premise, non-payment of the national minimum wage, where there is no valid exemption, constitutes non-compliance with the NMWA and can be enforced through the department of labour, the CCMA and/or the Labour Court.

Non-compliance with the provisions of the National minimum wage may lead to the employer being ordered to pay the employee twice the value of the underpayment, or twice the employee’s monthly wage, whichever amount is greater.

The successful implementation of the NMWA is dependent on compliance, effective monitoring and swift enforcement. Employers, the Department of Labour and the CCMA will be key in ensuring the success of the NMWA.

The first port of implementation of the NMWA are the employers, who are duty bound, effective 1 January 2019, to align the wages of employees currently earning below the set minimum wage, with the legislated rates, alternatively, and assuming they comply with the requirements, apply for exemption with the National Minimum Wage Commission.

Notwithstanding the inherent duty of the Employer to comply, the BCEA mandates the Department of Labour to monitor and ensure compliance with the provisions of the NMWA and to initiate enforcement proceeding on behalf of the affected employee(s).

The BCEA read together with the NMWA then extends the Department of Labour and the CCMA’s jurisdiction to deal with the enforcement of the national minimum wage.

Thus, where there has been non-compliance with the national minimum wage, a worker and/or a trade union [where a worker is a member of a registered trade union], may approach the Department of Labour assistance. 

epartment of Labour Inspectors will then attempt to obtain a written undertaking from the employer to pay the NMW or issue a compliance order to order the employer to do so. Both the compliance orders and written undertakings may, if not timeously complied with, be referred to the CCMA by the Department of Labour, for the CCMA to make the written undertaking or compliance order an arbitration award, which can be enforced through in terms of section 143 of the LRA.

Alternatively, the worker may also refer the dispute relating to non-compliance with the national minimum wage directly to the CCMA for a con-arb hearing, wherein the CCMA will first attempt to conciliation the dispute between the parties, failing such conciliation, the CCMA will immediately, on the same day of the Conciliation, move to arbitrate the dispute. The CCMA will then issue an award within 14 days from the date on which the dispute was arbitrated.

Should the employer fail to comply with the award [whether resulting from an arbitration process or a referral of non-compliance with a written undertaking or compliance order to the CCMA], then the employee or the Department of Labour, may apply to the CCMA, for certification of the award in terms of section 143 of the LRA, which will enable the employee or the department of labour to enforce the award, through the sheriff’s, where the award relates to payment of any monies and/or through contempt proceedings instituted in the labour court, where the award directs the alignment of the employee’s salary with the prescribed legislative rate.
The CCMA will provide financial assistance to employees who have to enforce their awards through sheriffs by giving security for and/or payment of applicable enforcement / or sheriff fees.

It is important to note that in respect of disputes relating to monies owing, the employee may elect to refer the dispute to the CCMA or Department of Labour as contemplated herein above, or refer same to the Labour Court for determination. However, the same dispute cannot be instituted in more than one forum.

In addition to the above, the CCMA may also hear unfair labour practice disputes where an employer unilaterally altered the hours of work or other conditions of employment in connection with the implementation of the NMW. This is intended to apply retrospectively, with the effective date pending approval by parliament. Such a dispute may be referred to the CCMA in terms of either section 191(1)(b)(ii) or section 64(4) of the LRA, however,  Section 64(4) applies to collective disputes only. An unfair labour practice dispute must be referred to the CCMA within 90-days of the act or omission.

As indicated above, the successful implementations of the National Minimum Wage Act (NMWA) is dependent on compliance, which is a shared responsibility between employers, the department of labour and the CCMA. otwithstanding this, it is important to note that while employers and the Department of Labour are responsible for the proactive implementation of the national minimum wage, the CCMA’s role therein is a reactive and triggered by non-compliance.

Note: the CCMA will be hosting its second annual labour law conference on the 14th and 15th of March 2019, under the theme “Implications and Application of Employment Law Amendments and the National Minimum Wage Act”. The conference will discuss in more detail, the implications, application, and operationalisation of the national minimum wage. For more information about the conference please email: registrations@ccma.org.za

Authors:
Ms Laurie Warwick: Senior Commissioner - Training and Development
Ms Rebecca Moeketsi: General Manager: Legal Services

Date: February 2019

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