23 October 2011

Increase in the Earnings Threshold in the Basic Conditions of Employment Act

The Minister of Labour periodically adjusts the Earnings Threshold for employees, as he is empowered to do in terms of section 6(3) of the Basic Conditions of Employment Act 5 of 1997 (the BCEA). From 1 July 2011, the Earnings Threshold has been adjusted to R172 000, 00 per year. But what does this mean to airlines?

With many airlines operating as 24/7/365 operations, the limiting effect of the BCEA on the scheduling of employees cannot be overstated. Maximum duty hours, minimum rest periods, maximum overtime and payment for work on public holidays and Sundays are some aspects that are strictly regulated by the BCEA that limit an employer's ability to productively schedule employees for shifts. However, the Earnings Threshold presents a small window of opportunity for airlines (and other employers) desiring more flexibility in scheduling shift-working staff.

Employees earning above the Earnings Threshold are not covered by certain sections of Chapter II of the BCEA. Notably, the limitations on maximum working hours, minimum rest, overtime, pay for work on Sundays and night work allowances do not statutorily apply to those earning in excess of the Earnings Threshold. This means that an airline can schedule staff outside the restrictive parameters of these sections of the BCEA without incurring the wrath of the Department of Labour or Labour Court. Employees earning above the Earnings Threshold may not rely on the BCEA to enforce a right that accrues only to those employees earning below the Earnings Threshold. That means that check-in staff or flight attendants earning above the Earnings Threshold are not automatically entitled to payment for overtime, do not have to receive an allowance for performing night work, can work on Sundays, and so forth.

Of course, if the employees are contractually entitled to certain favourable provisions, they can enforce their contractual right to, for instance, a night allowance independently from the BCEA. Where an airline entered into a collective agreement with a trade union granting a right to payment for overtime, to use another example, the employees may enforce their right to payment for overtime by relying on the contractual right contained in the collective agreement, even though they may earn above the Earnings Threshold and cannot rely on the BCEA for a right to payment for overtime in terms of section 10 of the BCEA.

What lessons are there to be learnt by airlines seeking to capitalise on the flexibility offered by the Earnings Threshold?

  • Conduct an audit to ascertain which categories of staff earn above the Earnings Threshold, as per the BCEA.
  • Once you have established the level of earnings and know who earns above and below the Earnings Threshold, consider the feasibility of creating a two-tiered system in which staff earning below the Earnings Threshold are subjected to a different scheduling and attendance management regime than those earning above it. In other words, can the airline manage its operations, in practice, if a section of its shift workers were subject to the restrictive scheduling constraints of the BCEA while that portion of the staff earning above the threshold are managed outside the BCEA restrictions.
  • Conduct an audit of contractual rights of employees, with due regard for the provisions of collective agreements and employment contracts. It is crucial to understand whether employees may rely on a contractual (as opposed to a statutory) right to enforce something like payment for overtime. Care should be taken in future negotiations to ensure that additional employee rights are not inadvertently created in collective agreements or employment contracts where this could limit the flexibility offered by the Earnings Threshold.
  • Consider the additional flexibility that can be extracted from the BCEA for those staff earning below the Earnings Threshold.

The employer and employee (or, in certain instances, the trade union) may agree to certain relaxations on some basic conditions contained in the BCEA. For instance, a meal interval may be reduced from 60 minutes to 30 minutes if there is written agreement to do so. There are a number of similar provisions in the BCEA that present further flexibility to an airline that is willing to extract same through negotiation.

Don King famously said "You don't get what you deserve, you get what you negotiate." This adage is equally applicable to airlines seeking to maximise their operational flexibility. Airlines should consider the benefit of managing their staff, especially shift workers, earning above the Earnings Threshold differently from those earning below it. While the practical difficulties (dual administration for one group of employees, to name one) may make it unattractive for some airlines to implement such a differentiated system, it may achieve significant cost-saving for another.

Johan Botes

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