An upward adjustment to the earnings threshold in 2024

22 Mar 2024

Employers and employees must take note that the Minister of Employment and Labour has announced an upward adjustment to the earnings threshold in terms of section 6(3) of the Basic Conditions of Employment Act, 75 of 1997 (“BCEA”).

The earnings threshold shall increase to R254 371.67 per annum with effect from 1 April 2024. This is an increase of 5,5% from R241 110.59 per annum.

‘Earnings’ means the regular annual remuneration of an employee before deductions in respect of income tax, pension, medical aid, and similar payments made by the employer in respect of the employee. Subsistence and transport allowances received, and payments for overtime worked, among others, are not regarded as remuneration for the purpose of the earnings threshold.

The earnings threshold impacts upon the application of various provisions of the BCEA, Labour Relations Act, 66 of 1995 (“LRA”) and the Employment Equity Act, 55 of 1998 (“EEA”). For example:

• employees who earn above the threshold are excluded from the following provisions of the BCEA regulating: ordinary hours of work; overtime; compressed working week; averaging of hours of work; meal intervals; daily and weekly rest period; pay for work on Sundays; night work; and public holidays
• under the LRA, there are additional protections afforded to employees who earn below the threshold, relating to where those employees (i) are engaged in temporary employment services, (ii) are employed on fixed-term contracts and (iii) are employed on a part-time basis
• under the EEA, where an employee alleges unfair discrimination and earns above the threshold, ordinarily they are not permitted to refer the dispute for arbitration to the Commission for Conciliation, Mediation and Arbitration (“CCMA”). Instead, such employee must refer the dispute for adjudication before the Labour Court. Employees who earn above the threshold can still refer the matter for arbitration at the CCMA if the parties to the dispute agree to do so. Where employees earn below the threshold, they may refer an unfair discrimination dispute for arbitration at the CCMA

The increase to the earnings threshold follows the recent increase to the national minimum wages prescribed by the National Minimum Wage Act, 9 of 2018 (“NMWA”) that took effect from 1 March 2024. For information purposes, the national minimum wage has been raised from R25.42 to R27.58 for each ordinary hour worked. The minimum wages for the following categories of employees have also been increased:

• domestic workers and farmworkers from R25.42 to R27.58;
• workers employed on an expanded public works programme, from R13.97 to R15.16;
• workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act, 97 of 1998 are entitled to allowances contained in schedule 2 of the NMWA

Article sourced from Eversheds Sutherland.

See also:

• Understanding permanent vs fixed term employment contracts
• Balancing leave applications and working overtime
• National Minimum Wage under the spotlight
• “Objection to con/arb!”, “Overruled!”

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)