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The new National Minimum Wage Bill – What employers need to know

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The new National Minimum Wage Bill – What employers need to know

6th July 2018

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Nelson Mandela said: “Let there be work, bread, water and salt for all.” Twenty-four years after South Africa became a democracy, we are still grappling as to how we can create  employment and livelihoods for all our citizens.

On 29 May 2018, Parliament passed a National Minimum Wage Bill (hereafter referred to as “The Bill”) that aims to tackle wage inequality. The minimum wage is set at R3500 per month which  amounts to R20 per hour. Legislature introduced The Bill as a strategy to boost our struggling economy because it is said to reduce inequality amongst workers by encouraging workers to spend more.

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However, many people are not as optimistic about this new minimum wage, claiming that it will increase unemployment because Employers would simply not be able to afford to pay their Employees R3500 a month.

The Minister of Labour, Mildred Oliphant, explained that the Bill could address “perennial wage inequality and poverty in South Africa”.

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Many Trade Unions expressed their concerns that the policies contained in The Bill are aimed at preventing prolonged and violent strikes, would effectively dilute worker’s rights. They further indicated that the proposed minimum wage is not a living wage and thus inadequate.

COSATU’s Parliamentary Coordinator, Matthew Parks, welcomed Parliament’s decision by indicating that: “The minimum wage of R20 per hour will see the wages of 6.4 million South Africans rise. This is equal to 47% of workers and will directly benefit half the nation”.

How will this Bill affect Employers once it becomes Law? What must Employers know to prepare for this?

National Minimum Wage Regulations published in the Government Gazette

The Minister of Labour, Mildred Oliphant, published the Regulations on The Bill on 30 May 2018.

The Regulations make provision for Employers to apply for exemption from paying the minimum wage of R3500 per month or R20 per hour. The Application must be lodged on the National Minimum Wage Exemption System.

An Application for Exemption will only be granted if the Delegated Authority is satisfied that:

  • “The Employer cannot afford to pay the minimum wage and
  •  if every representative of a Trade Union representing one or more of the affected workers has been meaningfully consulted, or if no such Trade Union exists, the affected workers have been meaningfully consulted with”.

The Delegated Authority may grant exemption from paying the minimum wage:

  • “only from the date of the Application for the exemption and specifying the period for which it is granted, which may not be more than 12 months;
  • specifying the wage that the Employer is required to pay workers, which may not be less than the thresholds referred to in subsection 7 and
  • on any conditions that advances the purposes of the Act”.

Furthermore, the exemption would only be granted if an Employer can confirm compliance with the Unemployment Insurance Fund, Compensation Fund and any applicable Bargaining Council Agreement.

Schedule 1 of The Bill determines the criteria that the Delegated Authority will take into consideration when determining the Application for Exemption.

The wage thresholds to which no exemption may be granted are 90% of the national wage in terms of Farm Workers and Domestic Workers.

What would the legal effect of Exemption Notice be?

The Employer must display the Notice in the workplace and will thus be exempted from paying 100% of the minimum wage for a period of 12 months from the date of the exemption notice.

This will give Employers a grace period to enable them to prepare to comply 100% with the set minimum wage.

Employers should take note that the Exemption Notice can be withdrawn by the Delegated Authority in instances where it is found that the Employer falsified information, or the financial position of the Employer enables him/her to pay the minimum wage or the Employer does not comply with the Exemption Notice.

Conclusion

Once the Bill is approved by the National Council of Provinces and the National Assembly then published in the Government Gazette, it will become applicable to all Employers.

Employers should apply for exemption if they cannot afford to pay the minimum wage. Employers must further take note that the said exemption is only valid for 12 months and should the Employer still not be in a financial position to pay the minimum wage before the 12-month period lapses, it is advisable that the Employer applies once again for exemption. Since the application for exemption can become quite technical it is advisable that Employers seek legal assistance in this regard.

Contact SchoemanLaw Inc today for expert advice on all Employment-related matters.

Written by Helena Roodt, Attorney, Schoeman Law

 

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