The National Minimum Wage Bill, 2017 and the proposed amendments to the Basic Conditions of Employment Act, 2017
29 Nov 2017
On Friday, 17 November 2017 the Department of Labour published the National Minimum Wage Bill, 2017 (“the NMW Bill”) and the Basic Conditions of Employment Amendment Bill (“the BCEA Bill”) for public comment, pertinent aspects of both are discussed below.
The National Minimum Wage Bill, 2017
The purpose of the NMW Bill is to advance social economic development and social justice by improving the wages of the lowest paid employees, by protecting employees from unreasonably low wages, by preserving the value of the national minimum wage and by promoting collective bargaining and supporting economic policy.
In order to achieve the aforementioned goals, the NMW Bill seeks to provide for a national minimum wage and establish a National Minimum Wage Commission (“the Commission”) which is intended to implement the provisions of the National Minimum Wage Act, 2017 (“the Act”).
The NMW Bill, in its current form, specifies a national minimum wage of R20,00 for each ordinary hour worked. The NMW Bill further specifies that farm workers, domestic workers and workers employed on an expanded public works programme should be paid a minimum wage of R18,00, R15,00 and R11,00 per hour, respectively. Workers who have concluded learnership agreements will also be entitled to allowances, depending on their qualifications, ranging from R301,01 to R1 755,84 per week.
The NMW Bill further prescribes that the payment of a national minimum wage takes precedence over any contrary provision in any contract, collective agreement or law, except a law amending the Act. The national minimum wage must also constitute a term of the employee’s contract except to the extent that the contract, collective agreement or law provides for a wage that is more favourable to the employee.
Furthermore, the national minimum wage is calculated as being the aforementioned amounts excluding any payment made to enable an employee to work including transport, equipment, food or accommodation allowance, any payment in kind, which includes board or accommodation, gratuities including bonuses, tips or gifts and any other prescribed category of payment.
If an employee is paid on a basis other than the number of hours worked, the employee may not be paid less than the minimum wage for the ordinary hours of work. Furthermore it would constitute an unfair labour practice where employers unilaterally alter hours of work or other conditions of employment when the national minimum wage is implemented.
However, the NMW Bill empowers the Minister, on application by an employer, to grant exemptions for payment of the national minimum wage in certain circumstances. The exemption granted must specify the period for which it is granted, which may not be longer than a year, it must specify the wage that the employer is required to pay its employees and any other relevant condition. This may offer some relief to small employers that are genuinely unable to pay employees wages in line with the prescribed minimum.
The NMW Bill also makes provision for the establishment of the Commission to review the national minimum wage and to make recommendations annually for the adjustment of the national minimum wage. The Commission may also investigate the impact of the national minimum wage on the economy, collective bargaining and income differentials.
The Act is to commence on 1 May 2018.
The Basic Conditions of Employment Amendment Bill, 2017
The purpose of the BCEA Bill is to introduce amendments to the Basic Conditions of Employment Act, 1997 (“the BCEA”) as a result of the proposed NMW Bill.
The BCEA Bill aims to, inter alia, empower labour inspectors to monitor and enforce the application of the proposed Act and the Unemployment Insurance Act, to repeal the provisions dealing with making sectoral determinations and to extend the jurisdiction of the Commission for Conciliation, Mediation and Arbitration (“the CCMA”) by making provision for enforcement procedures relating to underpayment in terms of, inter alia, the BCEA and the Act.
Proposed Amendments to the Functions of the Labour Inspector
The functions of the labour inspector will be extended to include the referral of disputes to the CCMA concerning non-compliance with, inter alia, the BCEA, the Act, the Unemployment Insurance Act and the Unemployment Insurance Contributions Act.
In order to enforce an employer’s compliance with the proposed Act, the amendments will permit the labour inspector to obtain a written undertaking from an employer to comply with the Act and where the employer has failed to do so, the amendments seek to authorise the Director-General to apply to the CCMA to make an employer’s undertaking an arbitration award.
The BCEA Bill also seeks to empower the labour inspector to issue compliance orders to cover an employer’s breach of the Act, the Unemployment Insurance Act and the Unemployment Insurance Contributions Act. Employers are however able to refer a dispute to the CCMA for determination, through arbitration, if they are served with a compliance order by the labour inspector.
Further Proposed Amendments to the BCEA
The BCEA Bill further seeks to enable employees earning below the threshold, R205 433.30 per annum, to refer disputes to the CCMA regarding an employer’s failure to pay wages or any amount owing to them in terms of the BCEA, the proposed Act, a collective agreement, contract or sectoral determination. It is anticipated that this amendment will provide for a cheaper, more expeditious method of resolving disputes, as the recourse to employees in such circumstances until now has been limited to approaching a Court. However employees earning above the threshold will still be able to bring claims in the Labour Court and any civil Court. It remains to be seen how the CCMA is able to cope with this increase to its already over-burdened caseload.
The BCEA Bill furthermore requires an employer who fails to pay an employee the national minimum wage to pay interest on any late payment calculated and for a fine to be imposed on employers for the non-compliance with the Act. The fine would entail an employer having to pay an employee an amount twice the value of the underpayment or twice the employee’s monthly wage, whichever is greater.
In light of the BCEA Bill’s proposed amendments it is clear that an obligation will be placed on employers to comply with the proposed Act, when implemented, by the proposed monitoring and enforcement of the application of the Act by labour inspectors in regard to obtaining written undertakings from employers and by serving employers with compliance orders, and is further illustrated by the imposition of fines for non-compliance with the Act.
In light of the NMW Bill seeking to advance economic development and social justice by improving the wages of the lowest paid workers and the proposed amendments to the BCEA, employers are encouraged to ensure that their employees’ remuneration is brought in line with the proposed Act in order to avoid being held liable for any potential fines or the payment of interest on any late payments to their employees in regard to their non-compliance. Furthermore, an employer’s compliance in that regard would ensure that they do not find themselves defending further disputes at the CCMA or the Labour Court.(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.)