As of the 8th of February 2021, it has been Gazetted by the Minister of Employment and Labour (Mr. Thembelani Waltermade Nxesi), that the new earnings threshold is an amount of R 211 596.30 will take effect from the 1st of March 2021. This is a 3% increase from the previous R205 433.30 as was published on 1 July 2014.
The Earnings Threshold, in terms of the Basic Conditions of Employment Act, 1997 determines whether or not certain Basic Conditions of Employment apply to the Employee, with certain such protections being relaxed for more senior Employees in the Workplace.
In terms of the Act,
“Earnings” means the regular annual remuneration before deductions i.e. income tax, pension, medical aid and similar payments, but excluding similar payments (contributions) made by the employer in respect of the employee, provided that subsistence and transport allowances received, as well as achievement awards and payments for overtime worked shall not be regarded as remuneration.
This means that employees earning more than R 211 596.30 per year (Approximately R 17 633.00 per month) do not automatically have the protections afforded in terms of sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3) of the Basic Condition of Employment Act, 1997. For the most part, these sections all relate to Regulation of Working Time and the payment for work outside of normal working hours.
Reasons contributing to the exemption of these sections of the Basic Conditions of Employment Act include delineating the jurisdiction of the CCMA in order to focus their efforts on vulnerable employees who cannot easily afford the remedies offered by the Labour Court (Failures to pay monies owed in terms being one of those disputes). Another factor is the fact that lower paid Employees generally lack the bargaining power to negotiate these terms or fail to account for them when entering into employment relationships.
While the Basic Conditions of Employment Act, 1997, offers these protections as statutory minimum conditions of employment, nothing in the Act precludes the Parties from negotiating more beneficial conditions than those minimums. Similarly, Exempted Employees are expected to negotiate these conditions or, failing to do so, may find themselves in a situation where they waive entitlements to these benefits (Unless contained in the Contract of Employment).
One of the more important aspects of the exemptions is the fact that exempted Employees have no limit on the maximum hours which an Employee may be expected to work. While working hours will be subject to an agreement between the Employer and the Employee, such Employees may well find themselves working significantly longer hours. Employers do, however, have a responsibility to ensure that working hours remain reasonable, taking into account the health and safety of the employees.
In short, the prior listed sections of the Basic Conditions of Employment Act, 1997 fully protects an Employee earning below the threshold, whereas an Employee earning above the thresholds should negotiate his/her specific conditions of employment.
While it is not permitted to have an employee earning below the threshold work more than 10 hours overtime a week, or 15 hours in a week where a Collective Agreement exists, no such limit exists for Employees earning above the Threshold.
Employees who earn above the threshold do not have an automatic right to be paid for overtime worked, meaning that the new earnings threshold will also affect Employers whose Employees were previously exempted from the provisions pertaining to the payment of overtime, who may now be entitled to be paid at least one-and-a-half times their ordinary rate for any hours of overtime worked.
Summary of sections which apply to Employees earning below the Threshold and which may not necessarily apply to Employees earning above the Threshold:
Section 9 – Ordinary hours of work: An Employer may not require an Employee earning below the threshold to work more than 45 hours in any week (9 hours in any day if the employee works for 5 days or less in a week or 8 hours in any day if the employee works for more than 5 days a week).
Section 10 – Overtime: An Employer may not force an Employee earning below the threshold to work overtime except when there is an agreement and the Employer must pay the Employee at a rate of at least one-and-a-half times the Employee’s wage for such overtime worked.
Section 11 – Compressed working week: An Employer may permit an employee earning below the threshold to work up to 12 hours a day, inclusive of meal intervals and without paying overtime only when an agreement in writing is present.
Section 12 – Averaging of hours of work: Employees hours of work may be averaged over a period of up to 4 months. An Employer may still not require an employee earning below the threshold to work more than an average of 45 ordinary hours of work in a week over the agreed period or an average of 5 hours of overtime in any week over the agreed period.
Section 13 – Determination of hours of work by Minister: Despite the whole chapter in the BCEA, the Minister of Employment and Labour may prescribe maximum permitted hours of work including overtime in any category of employment.
Section 14 – Meal intervals: Employees earning below the threshold are entitled to a meal interval (lunch) of 1 hour when the employee has continuously worked for 5 hours and should the Employee be required to work during any period of such a meal interval, the Employee is entitled to payment for the whole hour. An agreement may reduce the meal interval to no less than 30 minutes.
Section 15 – Daily and weekly rest period: An employee earning below the threshold is entitled to a daily rest period of at least 12 consecutive hours and a weekly rest period of at least 36 consecutive hours.
Section 16 – Pay for work on Sundays: Should an Employee earning below the threshold work on a Sunday, that Employee is entitled to be paid at double that Employee’s normal wage for each hour that the Employee has worked, unless the employee normally works on a Sunday of which the employer must pay the employee at one and a half times his/ her normal wage for each hour worked on the Sunday.
Section 17 – Night work: An Employee who earns below the threshold is entitled to an allowance should that Employee be expected to work between the hours of 18h00 and 06h00. The Employer is also required to ensure that transportation is available between the Employee’s residence and the workplace before and after the required shift during those hours.
Section 18 – Public holidays: Employees earning below the threshold are entitled to their ordinary daily wage plus an amount earned by the employee for work on a public holiday which falls on a day on which the Employee would ordinarily have worked.
When negotiating the above-mentioned sections with Employees earning above the threshold, all Employers are urged to ensure that there is an agreement drawn up between the Parties which regulate working hours, overtime and remuneration and that such an agreement is legally binding and valid.
To ensure compliance with the legal issues, you are advised to consult a specialist who can outline the exact nature of what is- and is not allowed in terms of legislation.
The above summary does not necessarily refer to every workplace nor does it apply to every employer, it is still the responsibility of the Employer to ensure its’ compliance at all times with the relevant legislation, however should you have questions or concerns, you are, as always, invited to contact us for assistance.
Eben van Deventer 082 412 2845 firstname.lastname@example.org
AJ van Niekerk 079 890 4411 email@example.com
Elri de Bruin 082 753 5695 firstname.lastname@example.org
Riané Smith 071 687 1485 email@example.com
Conrad Luus 072 624 3410 firstname.lastname@example.org