New earnings threshold in South Africa: what it means for employee protections

The statutory earnings threshold (Threshold) will increase to ZAR 261,748.45, representing a ZAR 7,376.78 increase from the current Threshold.

The Threshold, a determination in terms of section 6(3) of the Basic Conditions of Employment Act (BCEA), affects the applicability of certain provisions of the BCEA, Labour Relations Act (LRA), and Employment Equity Act (EEA). Employees earning above the Threshold are not entitled to certain protections afforded to those earning below it. The purpose of the Threshold is to ensure greater protection for more vulnerable employees earning below a specified income.

Sections of the BCEA regulating ordinary hours of work, overtime, meal intervals, daily and weekly rest periods, Sunday pay, night work pay, and public holiday pay apply only to employees earning below the Threshold.

Employees earning above the Threshold are not subject to the deeming provisions that apply to atypical employment arrangements, including those regulated under the temporary employment services (labour brokers) and fixed-term employment provisions in the LRA.

Employees earning above the Threshold are precluded from referring unfair discrimination disputes under the EEA to the Commission for Conciliation, Mediation, and Arbitration (CCMA) unless the dispute relates to sexual harassment, or all parties agree to arbitration. Such disputes must instead be referred directly to the Labour Court for adjudication.

The determination outlines the definition of 'earnings' for the purpose of calculating whether an employee falls above or below the Threshold. 'Earnings' refers to an employee’s gross annual remuneration before deductions, including tax, UIF, medical aid, and pension contributions. Notably, 'earnings' in this context differs from the definition of 'remuneration' under the Ministerial Determination on the Calculation of Employee's Remuneration in terms of section 35(5) of the BCEA.

The increase in the Threshold is a noteworthy development, as it may expand the number of employees entitled to stricter protections under labour legislation, such as overtime pay. As a result, employers may face financial implications, as they may now be required to comply with additional BCEA protections for employees who now fall below the new Threshold.

Employers should take heed of the new Threshold, as understanding which employees fall below it is essential to minimising the risk of non-compliance with the BCEA. It is prudent for employers to review remuneration structures to account for the new Threshold and its associated costs. Employers who utilise atypical employment arrangements should also review these arrangements to ensure ongoing compliance with the BCEA and to avoid the consequences of the deeming provisions under the LRA.

*Collier and Abraham are partners and Jacobs is an associate at Webber Wentzel.

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