South Africa’s New Earnings Threshold: What You Need to Know

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South Africa’s New Earnings Threshold- What You Need to Know

As of March 1, 2023, South Africa’s new earnings threshold comes into effect, which will have a significant impact on the country’s labor laws. Here’s what you need to know.

Increased Annual Earnings Threshold

The new earnings threshold set by the Minister of Employment and Labor is R241,110.59 a year, or approximately R20,092 a month. Employees earning in excess of this threshold will lose certain automatic protections under the Basic Conditions of Employment Act (BCEA).

What Protections Will Be Lost?

According to legal experts from Cliffe Dekker Hofmeyr (CDH), the BCEA provisions that regulate the following will no longer apply to employees earning in excess of the threshold:

  • Ordinary hours of work;
  • Overtime;
  • Compressed working weeks;
  • Averaging of hours of work;
  • Meal intervals;
  • Daily and weekly rest periods;
  • Sunday pay;
  • Pay for night work; and
  • Pay for work on public holidays.

Impact on Employees and Employers

Employers and employees should be aware of the impact of this change, as it could have a significant influence on salary expectations, particularly in cases where employees regularly work overtime, night shifts, or weekends.

Impact on Other Labor Laws

Aside from the BCEA provisions, the new earnings threshold will also affect other areas of labor law, including:

  • Labor Relations Act (LRA): employees earning in excess of the earnings threshold are not subject to provisions around labor brokers and being deemed employees for purposes of the LRA.
  • Employment Equity Act (EEA): an employee earning in excess of the earnings threshold who has a dispute under Chapter II of the EEA relating to unfair discrimination is not permitted to refer the dispute to the CCMA for arbitration unless the dispute relates to alleged unfair discrimination on the grounds of sexual harassment, or the parties all agree to arbitration.
  • Fixed-Term Employees: employees earning in excess of the earnings threshold fall outside the scope of provisions relating to fixed-term employees who are deemed to be employed indefinitely after three months (in the absence of justifiable reasons for fixing the term of the contract).

Protecting Vulnerable Employees

The sections covered in these acts are intended to protect vulnerable employees and regulate, amongst other things, hours of work, overtime, work over weekends, lunch breaks, and even where labor disputes need to be handled.

Full Protection for Employees Under the Threshold

Employees earning under this threshold enjoy the full protection of the BCEA, and can, for example, demand overtime pay at a rate of 1.5 times, or legally refuse to work more than 45 hours a week.

Determining Earnings

For purposes of determining whether an employee earns in excess of the earnings threshold, “earnings” means an employee’s regular annual remuneration before the deduction of income tax, pension fund contributions, and medical aid contributions, and similar payments, excluding similar contributions made by the employer in respect of the employee. Subsistence and transport allowances received, achievement awards, and payments for overtime worked do not fall within the scope of remuneration.

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