How the new National Minimum Wage Bill affect employers.
The National Minimum Wage Bill (hereafter referred to as the Bill) was published in the Government Gazette on the 17th of November 2017 and is set to help reduce the inequality that still exists in the South African labour market.
Some believe that there are major gaps in the Bill. The Bill, for instance, has a new definition of the word “worker”. It appears from the definition that it excludes independent contractors and could possibly also exclude casual workers.
Who is a worker?
The word “worker” now reads “employee” as defined in section 1 of the Basic Conditions of Employment Act”. The Basic Conditions of Employment Act (“BCEA”) states that the definition of an employee “includes a worker as defined in the NMW Act”.
This is creating a bizarre circular definition of a worker.
Even though the Bill was put into place to advance economic development and social justice, the Bill also seems to open the door for wage reduction in a number of sectors where wages were set by sectoral determinations. There are also a number of key factors missing from this Bill, some of which include a guarantee that it will increase with the rate of inflation.
The national minimum wage proposed is R20 for each ordinary hour worked and will constitute a term of the employee’s contract except to the extent that the employee’s contract or a collective agreement provides for a wage that is more favourable to the employee.
The only exceptions to the R20 minimum wage applies to farm workers who are entitled to R18 an hour, domestic workers who are entitled to R15 an hour and Expanded Public Works Programme workers, who are entitled to R11 an hour.
Employers are encouraged to bring their employees’ wages in line with the national minimum wage to avoid being held liable for the payment of penalties or interest for not complying.
Furthermore, sectoral determinations were specifically put in place to set wages and special conditions of employment for unorganised sectors, including – but not limited to – retail, farms, domestic work, hospitality and security. A number of these as set by the sectoral determination are higher than the R20 per hour as set out in the National Minimum Wage Bill.
The question however remains what the effect on workers is. Does this mean that all the special conditions of employment in these sectoral determinations also fall away and where does it leave employees with existing employment contracts?
The National Minimum Wage Bill is said to take precedence over any contract of employment, collective agreements or law unless the current employment contract has more favourable terms.
The said Bill will come into effect on 1 May 2018.
Employers that are unsure how they will be impacted by the National Minimum Wage Bill and proposed amendments to the Basic Conditions of Employment Act and Labour Relations Act should consider enlisting the services of a legal adviser to gain a deeper understanding of what they need to put into place to accommodate a different regulatory landscape.
For more information contact BVSA Legal Services at joannes@bvsa.ltd
Disclaimer: The material contained in this document is provided for general information purposes only and does not constitute legal advice. We accept no responsibility for any loss or damage which may arise from reliance on information contained in this article.
