Section 23 of the Constitution of the Republic of South Africa guarantees all South Africans the right to fair labour practice. Some of the rights are incorporated in the Basic Conditions of Employment Act (BCEA). The BCEA makes provision for the Minister of Labour to set a salary threshold from time to time. People who earn below this threshold (which is currently R205 433.30 per annum and equates to R17 119.44 monthly cost to company) are completely protected by minimum conditions of employment in the BCEA. Those who earn above this threshold do not enjoy all the protection that the BCEA has to offer.
At the end of January 2019, the United National Transport Union (UNTU) released a statement which stated that it had received word from the Minister of Labour that she was reviewing the BCEA threshold. The question has to be asked as to what effect this proposed change would have on ordinary South Africans.
What effect does the current BCEA threshold have?
Employees who earn above the current threshold – as stated above – are not entitled to the protection of the BCEA in terms of:
- A limit to the number of hours that a person is allowed to work,
- Overtime pay as well as Sunday and public holiday pay,
- Compressed working weeks, and
- Rest periods.
The BCEA imposes limitations on – for example – how many hours a person can work in a day and week. If a person earns – for example – R206 000 per year – he or she will not be able to enjoy the rights under this section of the Act.
Some of the protections afforded to people who earn below the threshold relate to overtime pay. A person earning below the threshold may not work more than three hours’ overtime per day or ten hours’ overtime per week. For each hour of overtime worked, the employer must pay the employee one-and-a-half times the employee’s usual hourly rate. For work on Sundays, employees who earn below the BCEA threshold, and do not normally work on Sundays, are entitled to be paid double what they normally earn. These rights do not extend to people who earn above the threshold.
Possible effect of an increase in the threshold
Should the threshold be revised upwards, this means that more employees will be entitled to such benefits as overtime pay. Unfortunately, this may place strain on many employers as they will be obliged to pay an increased percentage of their staff complement overtime whereas previously they were not required to do so.
We believe that there could be a correlation between the level of the threshold and employment. The current threshold of R17119.44 per month is set to protect the vulnerable employees with the further conditions of service. Thus, careful consideration needs to be given to the manner in which the BCEA adjustment is implemented as, if this is done too hastily and without the requisite thought, it may indeed lead to unemployment. This means that a new figure for the BCEA threshold needs to be thoroughly researched.
The National Minimum Wage Commission and the BCEA Threshold
The National Minimum Wage Commission was established in terms of the National Minimum Wage (NMW) Act that was signed into law at the end of 2018.
Among others, purpose of this Commission is to review the NMW, on an annual basis, and to recommend adjustments to this figure. In addition, the Committee members are tasked with investigating and reporting annually – to the Minister of Labour – regarding the impact of the NMW on:
- The South African economy,
- Collective Bargaining,
- How the NMW has helped to reduce income differentials.
This information needs to be made available to the public.
What is important to note is that the NMW Commission has taken over a number of obligations of the Employment Conditions Commission (ECC). For example, it was previously the duty of the ECC to advise the Minister of Labour about matters relating to basic conditions of employment. This includes the BCEA threshold. This now falls within the scope of the NMW Commission. Thus, the Minister of Labour may not make any decisions regarding readjusting these levels until the NMW Commission has made their recommendations.
The South African Economy is tenuous, to say the least. As such, every effort should be made to ensure that South Africans remain employed and keep the economic wheels turning. It can be seen – through the implementation of the NMW – that government had this requirement at the top of mind. The same care and consideration needs to be given to a possible BCEA threshold increase.
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Jonathan Goldberg sits on the National Minimum Wage Commission. Contact him to get his advice on minimum wage matters in your organisations.