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NATIONAL MINIMUM WAGE EFFECTIVE 1 JANUARY 2019

In Article Archive, Article Archive - Home, Article Archive - Teazer, Labour News, Labour News Teazer by Jan Truter26 Comments

The long awaited national minimum wage (NMW) has been signed into law. The effective date is 1 January 2019. What exactly does this mean for employers and employees?

R20 per hour
The new minimum wage of R20 per hour applies across all sectors, with a few exceptions.

Temporary exceptions
The exceptions include domestic workers, farm/forestry workers and workers employed in Expanded Public Works Programmes. These exceptions will only be temporary. It is envisaged that there will be a gradual adjustment of certain wages to come in line with the NMW. As a first step these minimum wages will be as follows:
- Domestic workers: R15 per hour
- Farm/forestry workers: R18 per hour
- Workers employed on Expanded Public Works: R11 per hour

Schedule 1 of the National Minimum Wage Act of 2018 states that these minima will be effective “from a date fixed by the President by Proclamation in the Gazette.” Although this suggests a future date than is not yet known, some commentators have assumed that it should also be 1 January 2019. While we disagree with the latter interpretation, we nevertheless recommend that our readers adhere to the stipulated minima as from 1 January 2019.

Immediate adjustments within certain sectors
Employers in some sectors will have to increase their minimum wages to R20 per hour with effect from 1 January 2019 – these include the Hospitality Sector (where the current minimum for employers with less than 10 employees is R17.34 per hour) and the Wholesale and Retail Sector (where the minimum wage for several categories workers is below R20 per hour, the lowest currently being R16.20).

Minimum monthly wage
For employees who work 45 hours per week, the minimum monthly wage will be just short of R3900. If the contract of employment makes provision for less than 45 hours per week, the monthly rate can be less than this amount. Employers are not permitted to unilaterally reduce hours of work or change other conditions of employment in response to the implementation of the NMW.

Are benefits included?
Employers are restricted in the way that they structure the remuneration package. The NMW excludes allowances that are paid to enable employees to work (such as transport and equipment), or payment in kind (such as board or accommodation), as well as bonuses, tips or food. So, for example, one cannot argue that you pay an employee less than R20 per hour because you contribute to their uniform or provide them with meals.

Reducing hours of work
Employers are not be permitted to unilaterally change working hours due to the implementation of the NMW. Any reduction of hours of work will have to be negotiated.

Exemption
There is provision for employers to apply for exemption of up to a 10% reduction by means of an electronic system. The National Minimum Wage Exemption System is publicly accessible online at https://nmw.labour.gov.za. Alternatively employers may approach their nearest branch of the Department of Labour.

Other changes
The other important changes to labour legislation, i.e. those relating to parental, adoption and surrogacy leave, as well as improvements to unemployment benefits, have been signed into law, but the implementation dates are not known. We shall deal with these as soon as the implementation dates are announced.

Jan Truter for www.labourwise.co.za

Comments

  1. I read somewhere that companies that are struggling financially would not have to comply. Is this true

    1. Author

      As mentioned in the article, employers may apply for exemption of up to a 10% reduction by means of an electronic system. The National Minimum Wage Exemption System is publicly accessible online at https://nmw.labour.gov.za. Alternatively employers may approach their nearest branch of the Department of Labour.

  2. I see my comment has already been answered.
    What is the new rate from 01 July 2019 please

  3. Hi There,

    Will the minimum wage also be applicable to someone who earns basic plus commission

    1. Author

      Yes. Basic plus commission must be at least as much as the minimum wage.

  4. Mr Truter

    Can you advise me on what the basic Monthly Salary of a Guest House Manager should be please in the Western Cape.

    1. Author

      R20 per hour is an absolute minimum. It therefore applies irrespective of the level of the post.

  5. Hi Jan,

    I would just like to confirm that if all staff now receive the minimum wage of R20/hour as of January 2019 we as an employee are not obliged to give them the annual increase in July and this is now up to the discretion of the company.

    1. Author

      That is correct, unless your business falls under a sectoral determination or bargaining council agreement that prescribes a minimum wage that is more than R20/hr.

  6. Jan,
    what happens with employees that earned more than the R20.00 per hour in the hospitality industry who dit not get an increas in Jan 2019. I could not find anything re the sectoral dertermination which was always effective 1 July of each year what % increase should we give

    1. Author

      There has been no further increase in the hospitality sector from 1 July 2019. Employees who were already earning in the minimum wage of R20/hr that was implemented in January 2019, are not automatically entitled to an annual increase. It remains is a matter of employer prerogative (where there is no trade union representing employees) or negotiation (where there is a union).

  7. Good Morning Jan

    Please confirm if company contributions to provident funds are included in the basic minimum wage of R20.

    1. Author

      The wording of the NMWA in this regard is unfortunate. While it does not specifically refer to company contributions to benefit funds, it excludes “any paymnent in kind including board or accommodation”. It would therefore seem that the company’s contribution to a provident fund would be excluded unless it could somehow be argued that it is not a “payment in kind”.

  8. What would be the minimum and average wage for a reception clerk in a dental practise.
    No experience of the industry.

    1. Author

      The minimum would be R20 per hour, but the ‘going rate’ would be determined by what other dental and medical practices in your area pay.

    1. Author

      It would be R20 per hour, unless you fall under a Bargaining Council that prescribes a higher minimum

  9. do we have any idea what is going to happen to the CPI increases for farm workers above the R18, 00/hour minimum wage.

    1. Author

      We don’t know yet, but shall inform our subscribers as soon as the information is available to us.

  10. How is a general worker classified related to the new National Minimum Wage Legislation and what is the minimum wage for general workers set at.

    1. Author

      Every worker worker earns at least the minimum wage, subject to certain exceptions. The minimum wage for domestic and farm/ forestry workers is less, and the minimum wages for some categories of workers are more where this stiplulated by a sectoral determination or bargaining council agreement.

  11. What will be the new increased rate for cashiers counter hands in wholesale and retail with the NMW

    1. Author

      The new rates for the Wholesale and Retail Sector have not yet been published. However, the absolute minimum rate for all workers in W&R throughout South Africa is now R20 per hour, with effect from 1 January 2019.

  12. Are domestic workers excluded because of the sectoral determination or is the NMW applicable to them as well

    1. Author

      Domestic workers are excluded from the NMW for now. Their minimum wages will gradually be increased to “catch up” to the NMW.

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