In the wake of the recent budget speech, South Africa’s Minister of Employment and Labour has announced a significant change that will affect employers across the nation. Starting from 1 April 2024, a new annual earnings threshold will come into effect, impacting how certain labour laws apply to employees. This development holds implications for both employers and employees, warranting a closer examination of its effects.

What Constitutes Earnings?

“Earnings” refer to the regular annual remuneration received by employees before deductions. This includes income tax, pension, and medical contributions, among others. However, it excludes similar payments made by the employer on behalf of the employee. Additionally, earnings do not encompass subsistence and transport allowances, achievement awards, or payments for overtime worked.

Impact on Basic Conditions of Employment Act (BCEA)

The BCEA imposes specific regulations that apply to employees earning below the annual earnings threshold. These regulations encompass various aspects of employment, including ordinary working hours (“Section 9”), overtime pay (“Section 10”), compressed working weeks (“Section 11”), meal intervals (“Section 14”), rest periods (“Section 15”), and pay for work on Sundays and public holidays (“Section 16”) and (“Section 18 (3)”). With the new threshold in place, employees falling within the designated earnings bracket will benefit from these protective measures.

Furthermore, employees earning below the threshold can seek resolution for disputes related to non-payment or underpayment in terms of the BCEA, the National Minimum Wage Act, No. 9 of 2018, a contract of employment, a sectoral determination or a collective agreement through the Commission for Conciliation, Mediation and Arbitration (CCMA). Conversely, those earning above the threshold must pursue claims through designated courts, such as the Labour Court or the High Court or, subject to their jurisdiction, the Magistrates’ Court or the small claims court.

Impact on the Labour Relations Act (LRA)

In terms of section 198B of the LRA, employees earning below the threshold may gain additional rights, particularly concerning fixed-term contracts. In cases where an employer cannot justify the fixed term of a contract, such employees may be considered permanent. This provision aims to prevent the exploitation of workers through successive fixed-term contracts as such contracts must have a justifiable reason for fixing the term of the contract.

Moreover, the threshold has implications for temporary employment services (The term “labour broker” has historically referred to). Regarding section 198A(3)(b) which states employees falling below the threshold may be deemed as permanent employees of the client after a certain duration of service, altering the dynamics of temporary employment arrangements.

Impact on Employment Equity Act (EEA)

In terms of section 10(2) of the EEA grants specific arbitration rights to employees earning below the annual earnings threshold in cases of unfair discrimination (“Examples include discrimination based on race, gender, pregnancy, marital status, familial obligations, ethnic or social background, sexual orientation, age, and similar factors”). Disputes unresolved through conciliation at the CCMA can automatically proceed to arbitration for these employees, ensuring expedited resolution of discrimination claims. On the contrary, employees earning above the annual earnings threshold do not possess an inherent entitlement.

Conclusion

The increase in the annual earnings threshold carries substantial implications for both employers and employees in South Africa. Employers need to understand their obligations under the BCEA, LRA, and EEA to ensure compliance and fair treatment of employees. For further clarification or assistance in navigating these changes, feel free to reach out to us. We’re here to help you understand and adapt to these regulatory shifts effectively.