After months of speculation over a compulsory minimum wage, the National Minimum Wage Bill was published on 17 November 2017 in the Government Gazette. Despite a long and complex parliamentary process, Government anticipated that the Bill will become an Act of Parliament by May 2018.
What is the purpose of the proposed Act?
The Act intends to rectify the unequal and huge disparities in income in the labour market. It is a mechanism to prescribe and to enforce a national minimum wage.
What does the minimum wage entail?
As from 1 May 2018, all employers will have to pay their employees at least a minimum wage of R20.00 for each ordinary hour worked. There are, however, a few specific exclusions or variations:
- Farm workers (inclusive of workers involved in forestry activities) @ R18.00 per hour.
- Domestic workers @ R15.00 per hour.
- Workers employed on an expanded public works programme @ R11.00 per hour.
- Workers on Learnership agreements in terms of the Skills Development Act will be entitled to prescribed allowances which will vary from R301.01 to R 1755.84 per week depending on the level and credits obtained.
How is the minimum wage calculated?
This entails the amount which the employee is paid in money for ordinary hours worked. It excludes the following:
- Any payment made to enable the employee to work including transport, equipment, tools, food, or accommodation.
- Any payment in kind including board or accommodation.
- Gratuities, including bonuses, tips, or gifts.
- Any other prescribed category of payment like pension and medical aid contributions.
To whom will this apply?
The minimum hourly wage will apply to all employees and their employers except member of the South African Defense Force, the National Intelligence Agency and the South African Secret Service.
If the Bill, in its current form, becomes law it will not only affect businesses for whom there do not exist prescribed minimum wages but also those who have but is not in compliance with the proposed Act.
How will it affect existing agreements?
Section 4(4) determines that the national minimum wage will take precedence over any contrary provision in any contract, collective agreement (Bargaining Council Main Agreements) or law (Sectorial Determinations). The result hereof is that unless the Act itself prescribes or allows a different wage, collective agreements or sectorial determinations will have to prescribe the same minimum wage and employers will have to adapt their contracts of employment with their employees.
Employers who, due to the nature of their businesses fall under the jurisdiction of a Bargaining Council or a Sectorial Determination, will also be affected. Although many wages being prescribed by agreements exceed the prescribed minimum wage, there are still many “lower level employees in those industries and sectors who earn less than the proposed minimum wage of R 20.00 per hour. The negotiators involved will have to adapt these wages when they negotiate new agreements.
A quick oversight of various agreements and sectorial determinations which prescribes minimum wages showed that only 7 out of the 36 industries and sectors prescribe the proposed minimum wage.
The following table lists the most prominent industries and sectors with an indication of the lowest wage in that particular industry. From this it can be concluded where there are shortcomings and what the impact of adaptions will be:
|Bargaining Council(BC)/Sectorial Determination(SD)||Lowest wage per hour|
|Building Industry – Bloemfontein (BC)||R20.38|
|Building Industry – Cape of Good Hope (BC)||R17.40|
|Building Industry – Kimberley (BC)||R10.26|
|Building Industry – North and West Boland (BC)||R13.79|
|Canvas Goods Industry – Witwatersrand & Pretoria (BC)||R12.07|
|Restaurant and Catering Industry – Johannesburg & Pretoria (BC)||R14.78|
|Textile Manufacturing industry (BC)||R 26.86|
|Clothing Industry (BRC||R578.20 per week = R12.84/hour|
|Electrical Industry (BC)||R18.07|
|Fishing Industry (BC)||R160.13 per day = R 17.79/hour|
|Furniture Industry (BC)||R569-73 per week = R12.66/hour|
|Hairdressing and Cosmetology Industry (BC)||R1 110.61 = R9.49/hour|
|Leather Industry (footwear) (BC)||R811.54 per week = R 18.03/hour|
|Leather Industry (general) (BC)||R654.80 per week =R 14.55/hour|
|Tannery Industry (BC)||R24.81|
|Meat Industry (butcheries) (BC)||R3280.69 per month = R16.83/hour|
|Metal Engineering Industry (MEIBC) (BC)||R25.27|
|Motor Industry (MIBCO) (BC)||R14.61|
|Road Freight Industry (BC)||R1078.35 per week = R 23.96/hour|
|Road Passenger – long distance Industry (BC)||R31.16|
|Wood and Paper Industry (BC)||R6 047.00 per month = R 31.03/hour|
|Contract Cleaning Sector (SD)||R18.90|
|Domestic Worker Sector (SD)||R11.31|
|Farm Worker Sector (SD)||R15.39|
|Hospitality Sector (SD)||R16.36|
|Learnerships (SD)||R120 per week|
|Private Security Sector (SD)||R2778 per month = R14.25/hour|
|Wholesale and Retail Sector (SD)||R 15.95|
Employers in all industries and sectors will have to prepare themselves for wage increases as a result of the Act.
May I reduce the work hours of my employees in order to avoid paying higher wages?
No. Section 4(6) prohibits an employer to reduce the work hours of its employees unilaterally in order to pay them less. This will constitute an unfair labour practice which could cost the employer dearly.
How will the Act be enforced?
Employees or Trade Unions may refer disputes to the Commission for Conciliation, Mediation and Arbitration (CCMA). A Commissioner may make an award compelling the employer to comply with the Act.
What can employees do to take action?
Employees may lodge complaints to the Department of Labour. Section 68 of the Basic Conditions of Employment Act (BCEA) is being amended to the effect that if an employer fails to comply with the Act and an inspector issues a written undertaking to comply with the Act to which he fails to comply, the inspector may apply to the CCMA to make the undertaking an award which will have the effect of an order of court.
Can I be fined if I do not comply with the Act?
Yes. Not complying with the Act is an offence. If you are convicted, a fine of twice the underpayment or twice the employee’s monthly wage (whichever is the greater) can be imposed. You will also have to pay the employee the underpayment with interest.
What can I do if I can’t afford to pay the prescribed minimum wage?
Chapter 4 of the Act makes provision for Exemptions. An employer who in all circumstances is not able to pay the prescribed minimum wages, may apply in the prescribed manner for an exemption from paying the wages.