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2022 minimum wage in South Africa and how to apply for exemption

2022 minimum wage in South Africa and how to apply for exemption

In a gazette published on Monday evening (7 February), the minister of Finance said that the national minimum wage is now R23.19 for each ordinary hour worked. This change has taken effect from 1 March 2022.

This represents an increase of 6.9% from the minimum wage set in 2021(an increase of R12, 484.18 from the previous amount of R211, 596.30, which has been in effect since 1 March 2021). Unlike in previous years, no specific worker groups have been provided exceptions, with the minimum wages for domestic workers and farmworkers now also set at R23.19 for each ordinary hour worked as part of a planned equalisation push. This represents a 21.5% increase for domestic workers.

The adjustments follow recent proposals published by the National Minimum Wage (NMW) Commission which recommend that domestic worker salaries be increased to 100% of the National Minimum Wage. Under the Act, the minimum wage for domestic workers was initially set at 75% of the National Minimum Wage in 2020. The Commission proposed increasing it to 88% of the national minimum wage in 2021 and 100% in 2022.

Workers employed as part of the expanded public works programme are entitled to R12.75 per hour. The National Minimum Wage Act was first proclaimed in 2018, setting a historic precedent in the protection of low-earning (vulnerable) workers in South Africa and providing a platform for reducing inequality and huge disparities in income in the national labour market.

The national minimum wage was first implemented on 1 January 2019 at a level of R20 per hour. On 1 March 2021, the minimum wage base rate was adjusted to R21.69 per hour. In terms of the law, it is an unfair labour practice for an employer to unilaterally alter hours of work or other conditions of employment in implementing the national minimum wage.

The national minimum wage is the amount payable for the ordinary hours of work and does not include payment of allowances (such as transport, tools, food or accommodation) payments in kind (board or lodging), tips, bonuses and gifts.

What penalties will an employer incur for failure to comply with the Act?

  • An employer may be issued with a fine if an employee is paid less than the prescribed minimum wage.
  • This fine may be either one of the following (whichever is the higher amount):
    • Twice the value of the amount the employee is paid below the prescribed minimum wage. For example, an employer paid the employee R5 less than the prescribed minimum wage. This means that the fine will be twice that amount, which is R10.
    • Twice the employee’s monthly wage. For example, if an employee earns R900 per month, the fine can be R1 800.

In terms of Section 15(1) of the National Minimum Wage Act –

An employer may, in the prescribed form or manner, apply for an exemption from paying the national minimum wage.

In terms of the Regulations to the National Minimum Wage Act, the following guidelines for the exemption process have been provided:

  • Section 1 – Definitions

Delegated authority – means the Director-General: Labour or an employee in the public service whom the Minister has given power to grant exemptions in terms of section 15(3) of the Act read with section 85 of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997);

National Minimum Wage Exemption System – means the online exemption process contemplated in Regulation 6.

  • Section 2 – Application for exemption from paying National Minimum Wage

The Exemption Application must be lodged on the National Minimum Wage Exemption System in the form required by that System.

An exemption may only be granted if the delegated authority is satisfied that:

  • the employer cannot afford to pay the minimum wage; and
    • every representative trade union representing one or more of the affected workers has been meaningfully consulted or, if there is no such trade union, the affected workers have been meaningfully consulted.

The determination of whether an employer can afford to pay the minimum wage must be in accordance with the decision process in Schedule 1 of the Regulations.

In consulting with the representative trade union or the affected workers, the employer must provide the bargaining council, union or, if there is no such union, the affected workers with a copy of the application to be lodged in terms of sub-regulation (2) downloaded from the National Minimum Wage System for that purpose.

Consideration of the Exemption Application

The delegated authority may grant exemption from paying the national minimum wage:

  • only from the date of the application for the exemption and specifying the period for which it is granted, which may not be more than 12 months;
    • specifying the wage that the employer is required to pay workers, which may not be less than the thresholds referred to in sub-regulation (7); and
    • on the condition that advances the purposes of the National Minimum Wage Act.

An exemption would only be considered if the employer confirmed compliance with applicable statutory payments and obligations, including but not limited to the Unemployment Insurance Fund, the Compensation Fund and any applicable Bargaining Council Main Collective Agreement.

Any refusal of an exemption must be by notice published on the National minimum Wage Exemption System together with reasons for refusal.

  • Section 4 – Display of the Exemption

An employer in respect of whom an exemption has been granted must:

  • display a copy of the exemption notice conspicuously in the workplace where it can be read by the employees to whom the exemption applies;
    • give a copy of the exemption notice to the representative trade union representing one or more of those workers, every worker who requested a copy; and the bargaining council.

What payroll professionals need to know:

  • If an employer receives an exemption from minimum wage, it may not exceed a period of one year.
  • Payroll professionals should ensure that their clients and employers are aware of the Minimum Wage Act and that employees are being paid accordingly.

The Way Forward

The Department of Labour’s spokesperson has stated that the Department is intent on naming and shaming employers who are engaging in fraudulent activities by paying below the minimum wage. Claiming that your business has exemption to the minimum wage when it doesn’t is fraud.

It is well advised and for employers to educate employees to be in the know of the latest changes as it helps with compliance with laws and legislature that govern the employment relationship. For more information, necessary advice and enquiries on how to appropriately implement the new changes with regards to minimum wage and other Labour Relations matters kindly visit our underneath website. https://sisolprojects.co.za/labour-relation-support/

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