There is still some uncertainty pertaining to the new National Minimum Wage Act, 9 of 2018 (“the Act”) with regards to the application thereof and in determining the minimum wage which a worker is entitled to receive.
The Act came into effect on January 1, 2019 and it is South Africa’s first legislation that was enacted focusing on regulating the minimum wage of workers. The purpose of the Act is “to improve the wages of lower paid workers, to protect workers from unreasonably low wages, to promote collective bargaining and to support economic policy”.
The Act applies to all workers, except for members of the South African National Defence Force, the National Intelligence Agency and the South African Secret Service.
Volunteer workers are also excluded from the Act. Volunteer workers are defined as “a person who performs work for another person and who does not receive or is not entitled to receive any remuneration for his or her services”.
The Act provides that the national minimum wage is R20 for each ordinary hour worked and this translates to an amount of R3 440 per month based on a 40-hour week, or in the case of a 45-hour week the worker is entitled to a minimum of R3 870 per month.
There are however certain exceptions in this regard for example, farm workers are entitled to a minimum wage of R18 per hour, domestic workers are entitled to a minimum wage of R15 per hour and workers employed on an expanded public works programme are entitled to a minimum wage of R11 per hour.
In terms of section 4(6) of the Act it is clear that the Act takes precedence over any contrary provision in any contract of employment, collective agreement, sectoral determination (meaning a determination by the Minister in respect of a certain sector of industry or service) or any other law.
This is based on the fact that every worker is entitled to receive payment of a wage in an amount which is not less than the national minimum wage as mentioned in the Act. Consequently, the minimum wage may not be waived by any agreement, law or sectoral determination.
Employers are prohibited from unilaterally reducing employees working hours or altering any other conditions of employment in response to the implementation of the Act, as such changes will constitute an unfair labour practice which could lead to serious financial consequences for the employer.
The minimum wage that a worker is entitled to, is calculated by looking at the number of ordinary hours worked. However, it should be noted that benefits such as payment for transport, equipment, tools, food or accommodation allowances are excluded from the calculation of the minimum wage.
Additionally, any payment in kind, including board, accommodation or gratuities, including bonuses, tips or gifts is also excluded from the calculation.
Thus, employers may not argue that the reason for the payment of wages less than the minimum wage is due to the fact that a worker receives one or more of the above-mentioned benefits.
Notwithstanding the above, in terms of section 15 of the Act, an employer or an employers’ organisation registered in terms of section 96 of the Labour Relations Act or any other law acting on behalf of a member may, in the prescribed form and manner, apply for an exemption from paying the national minimum wage.
Application for an exemption can be done online at https://nmw.labour.gov.za or by visiting your nearest branch of the Department of Labour. Where an exemption has been granted, such exemption must provide details as to the period for which the exemption is granted (which may not exceed one year), the wage that the employer is required to pay to his or her workers and any other relevant condition.
Employers who are not exempted in terms of the Act must comply with the Act.
An employer’s failure to comply with the Act could be sanctioned with a fine. In terms of section 76A(1) of the Basic Conditions of Employment Act, 75 of 1997 (“BCEA”), a fine will be the greater of an amount equivalent to double the value of the underpayment or double the employee’s monthly wage. More severe fines may be imposed for further non-compliance in terms of section 76A(2) of the BCEA.
The fines includes an amount equivalent to three times the value of the underpayment or three times the employee’s monthly wage, whichever is the greatest. In the event of a fine being imposed against an employer for non-compliance, such a fine could be retrospective from the date on which an employer failed to comply with the Act.
Article compiled by Carel Roberts from Malherbe Rigg and Ranwell Attorneys. Contact them on 011 918 4116.
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