The National Minimum Wage Act
The South African President, Cyril Ramaphosa, has signed into law the National Minimum Wage Act (“the Act”) on 23 November 2018, which will come into effect on a date still to be determined by the President. The Act will see the minimum hourly rate for workers set at R20.00 (“NMW”), equivalent to R3 500.00 per month, depending on the number of hours worked.
The Act comes four years after the National Economic Development and Labour Council first began deliberations on the protection of low-paid workers, fair and effective competition in the labour market, and the challenges of labour instability.
The Act has important consequences for employees and employers alike, across all sectors.
To whom does the Act apply?
The 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. It applies to all workers and their employers, except to members of the South African National Defence Force, the National Intelligence Agency, the South African Secret Service and volunteers who perform work for another person without remuneration.
Obligation to Comply
The minimum wage cannot be circumvented by agreement between employers and employees. It will constitute a term of the employment contract unless the contract of employment, collective agreement or law is more favourable.
In implementing the national minimum wage, the employer cannot unilaterally alter the hours of work or other conditions of employment without it constituting a potential unfair labour practice.
The Act establishes a National Minimum Wage Commission (“Commission”) which is tasked with reviewing the national minimum wage annually and submitting a report to the Minister of Labour indicating the recommended changes to the national minimum wage.
The Commission further provides a procedure for employers to apply for an exemption in cases where they are unable to pay the minimum wage due to business constraints. However, employers are forewarned that the exemption is only valid for 12 months.
There are temporary exceptions to the Act for the first year of its operation. These exceptions are:
- farm/forestry workers: R18 per hour (90% of the NMW);
- domestic workers: R15 per hour (75% of the NMW); and
- workers in the expanded public works programme: R11 per hour (55% of the NMW).
Employers should be mindful of the impending changes to the country’s national minimum wage and cautioned against any attempts to shortcut the legal effects of the Act.
Please do not hesitate to contact our offices should you require further information relating to the implications of this Act.
Written by Jordan Dias and Pierre can der Merwe