How the minimum wage will affect you and your business

wage-law-south-africa

Whether you run a business and employ staff or even use the services of a domestic worker or gardener, you need to adhere to the provisions of the National Minimum Wage Act (NMWA) which came into effect on 1 January 2019. Every worker is entitled to payment of a wage not less than the national minimum wage and employers will be obligated to pay workers this wage, which cannot be waived and overrides contrary provision in a contract, collective agreement, sectoral determination or law.

The minimum wage act applies to 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.  The only exceptions are members of the South African National Defence Force, the National Intelligence Agency, the South African Secret Service and volunteers who perform work for another without remuneration. There is also a provision in the Act that allows certain companies to opt out of paying the minimum wage for a period of not longer than one year if they are able to prove they cannot afford it.

The national minimum wage is pegged at R20 for each ordinary hour worked, with the following exceptions:

  • Domestic workers, gardeners, those employed by a household as a driver of a motor vehicle, a person who takes care of children, the aged, the sick, the frail or the disabled and domestic workers employed or supplied by employment services are entitled to a minimum wage of R15 per hour.
  • Farm workers or any other worker employed mainly or wholly in connection with farming or forestry activities and includes domestic workers employed in a home on a farm, security guards on a farm or other agricultural premises is entitled to a minimum wage of R18 per hour.
  • Workers employed on expanded public works programme are entitled to a minimum wage of R11 per hour.
  • Workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act 97 of 1998 are entitled to the allowances contained in Schedule 2 of the NMWA.

The calculation of the minimum wage is worked out on the hours of work permitted in terms of section 9 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) and is currently 45 hours per week or for the number of hours that the worker works on any day. Any deductions made from the remuneration of a worker must be in accordance with section 34 of the BCEA and does not exceed one quarter of a worker’s remuneration. The minimum wage excludes;

  • Any payment made to enable a worker to work including any transport, equipment, tool, food or accommodation allowance, unless specified otherwise in a sectoral determination;
  • Any payment in kind including board or accommodation, unless specified otherwise in a sectoral determination;
  • Gratuities including bonuses, tips or gifts; and
  • Any other prescribed category of payment.

Visit www.labour.gov.za for full details of the Act.

Werksmans Attorneys

by Jacques van Wyk, Director and labour law specialist at Werksmans Attorneys

Latest posts by Werksmans Attorneys (see all)