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When will the new parental and associated leave provisions come into effect? What is the future of the Employment Tax Incentive (ETI) given the National Minimum Wage Act?

Welcome to this edition of the Labour Law Newsflash.

At Our Annual Employment Conference, which is taking place on 13 March 2019, a panel of esteemed legal minds, thought leaders and futurists will be further debating the matters in this edition as well as a host of related topics. To be part of this conversation, and gather must-know insights for your HR and LR department, register now.

What is the norm?

No longer is an employee, who works from 8 to 5, the norm in the workplaces. Many, whose work allows for it, have opted to pursue different working options such as freelancing, working part-time or telecommuting.

The rise of the Gig Economy – which is so-called as their members work from ‘gig’ to ‘gig’ as opposed remaining in the full-time employ of one employer – has not just been seen in the United States. According to the Millennial Survey Report, which was conducted by Deloitte in 2018 and surveyed millennials over 36 countries, the majority of the respondents stated that they are already part of this economy or do part-time work.

Given the fact that increasing numbers of people are choosing the gig lifestyle over full-time employment, the question has to be asked as to whether or not labour legislation in South Africa affords this new category of workers the employment protection required. The other question that is asked is whether they need any protection at all.

Only employees are protected under SA labour law

Up to this point, SA labour law has not afforded any protection to workers who are not employees of an organisation. In fact, these laws specifically exclude an ‘independent contractor’ or freelancer. This is even though other countries’ labour laws, such as those in the  United Kingdom, have begun to recognise gig workers.

At the end of last year, President Ramaphosa signed a number of pieces of labour legislation into law. What is significant to note about these laws is that the new National Minimum Wage Act (NMWA) is extended to protect employees in addition to workers. This is specifically made a wider definition and maybe a sign of things to come. This means that even though someone may not be in an employment relationship with an employer, that person is still afforded the protection of the NMWA.

A few things to iron out

One of the most talked-about provisions of the LLAA is the allocation of parental leave. We have it that the commencement date for this provision will be 1 March 2019. However, as can be seen with the postponement of the implementation date of the NMW last year, this date may be further delayed and 1 April is more likely.

The amendments to the Unemployment Insurance Fund (UIF) Act, allowing employees to claim from the UIF during their parental leave, still need to be implemented. So if the parental leave implementation goes ahead on 1 April, and the UIF Act amendments have not been implemented, these employees will not be able to make any claim from the fund. We expect both to be initiated at the same time.

Moving on to the Employment Tax Incentive (ETI)

The table below sets out the current dispensation in respect of the ETI. Currently, the greatest tax relief for employers arises when youth who are employed earn between R2000 and R3500 per month. However, since 1 January 2019, the NMW is set at R3500 per month which means that only those youth earning R3500 pm would generate the R1000 per month ETI rebate. If not amended, this could detract from the many drives to bring about youth employment. Hence as was communicated in the Budget Review, the table below will be revisited and it is likely that the R1000 ETI earnings thresholds will be extended beyond the R3500 per month monthly remuneration level and then taper off. We will have to wait until we have clarity on this as well as whether or not employers would be able to backdate the claims.

Our information is that for the first time since 2013 the maximum ETI benefit of R1000 per month will be at a monthly earning threshold of R4500 and not R4000 and that the maximum threshold for a benefit will be R6500 per month and not R6000. This is likely to maintain the current youth employment momentum.

We look forward to discussing these and other topics with you at our Annual Employment Conference on 13 March 2019. Click here for the brochure and detailed programme of the event.

Kind regards
Johnny and Grant

Jonathan Goldberg and Grant Wilkinson

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