18 February 2020 by Employment Alert

Increased wages: a step forward

The National Minimum Wage Act, No. 9 of 2018 (NMWA) which came into force on 1 January 2019 was enacted within the context of advancing economic development and social justice by reducing wage inequality and protecting the lowest paid workers from exploitation by employers who pay unconscionably low wages, amongst other things. It is within this context that the amendments made in terms of the NMWA and the Basic Conditions of Employment Amendment Act, No. 75 of 1997 (BCEA) have helped contribute to the progression of the employment law legislative framework in South Africa.

On the 17 February 2020 the Minister of Employment and Labour amended the national minimum wages as contained in Schedule 1 and Schedule 2 of the NMWA, and also increased the wages and the remuneration and associated benefits based on sectoral determinations as allowed by the BCEA, specifically in the contract cleaning sector and wholesale and retail sector.

The amendment to Schedule 1 of the NMWA saw the national minimum wage increase from R20.00 to R20.76 for each ordinary hour worked, to the exceptions of R18.00 to R18.68 for farm workers;  R15.00 to R15.57 for domestic workers and R11.00 to R11.42 for workers employed pursuant to an expanded public works programme. The amendments contained in Schedule 2 are applicable to workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act, No. 97 of 1998.

Contract cleaning employees in Metropolitan Councils and Local Councils (Area A) will now earn no less than R22.84 per hour while those in all areas in KwaZulu-Natal (Area B) will earn R23.04 per hour, and those in the rest of the Republic of South Africa (Area C) earning no less than R20.83 per hour. In this regard, the rates contained in clause 3 (1) as reflected in Government Gazette No. 42182 of 23 January 2019 were replaced with the aforementioned rates. The amendments to table 1 and 2 as illustrated in Government Gazette No. 42766 of 14 October 2019, dealing with Area A and B in the wholesale and retail sector, also saw a slight increase in minimum wages.

The above amendments will indeed impact the remuneration structures of companies. In terms of section 4 (6) of the NMWA, payment of a national minimum wage cannot be waived as the national minimum wage takes precedence over any contrary provision in a contract, collective agreement or sectoral determination or law. In the event that the hourly rates contained in a sectoral determination are not more favorable than those contained in the NMWA, the NMWA will prevail. This is provided for by section 5 (3), subject to section 5 (2) of the NMWA. Employers therefore may not rely on the abovementioned sectoral determinations to justify paying employees' rates lower than those prescribed by the NMWA.

The need to address wage inequality, especially within the context of South Africa, is imperative. Whilst the amendments don’t solve all the problems that stem from unreasonably low wages, they certainly help foster an environment that is ripe for equality across sectors that generally see workers being paid unreasonably low wages.

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