The current President of South Africa, Cyril Ramaphosa, enacted into law a new national minimum wage which came into effect on January 1, 2019.The new rate is 20 Rand per hour and is meant for employees of all industries except domestic workers and farm workers.
The National Minimum Wage Act (NMWA) may have triggered amendments to other laws such as the Labour Relations Act (LRA) as well as the Basic Conditions Employment Act (BCEA), with the most significant change being the introduction of Parental and Adoption leave.
So, what does the NMWA Mean to the Employers?
Since it is now signed into law, employers are obliged to compensate their workers at least the established rate of R20/hour, which does not include lunch breaks. On average, the resulting monthly minimum salary now ranges between R3,200 and R3,500.
Other provisions in the Act, specifically regarding leave, overtime, housing, deductions, and some others remain the same. Also, if a sector has already set their minimum wage above this new rate, they should continue paying the higher rate.
Farm, forest, and domestic worker employers are exempted from the new provision under the national minimum wage act. Farm and forest employers only need to pay 90% of the national minimum wage, while domestic workers must receive at least 75%. This translates to R18 per hour for farm and forest sectors and R15 per hour for the domestic worker industry.
Finally, employees who normally work fewer than four hours per day must receive remuneration equal to four hours’ worth of work.
Employers Who Cannot Afford the New Rate
The National Minimum Wage Act and regulations have provided for employers who believe they cannot afford to pay the new national minimum wage, by allowing for an exemption via an application process. To qualify, an employer has to demonstrate that they have not made a profit in the previous two financial years. Alternatively, an employer could also demonstrate that the profit was less than 6% of the total value of their assets.
These broad criteria for exemption from paying the national minimum wage assures businesses, especially small and medium-sized enterprises, that the government has listened to their concerns and responded in a way where most will avoid the new rate obligations for now.
Parental and Adoption Leave
This is a new provision in South African employment law and is intended to be implemented as follows:
- The 3 days leave per year provided to new parents in the past under Family Responsibility Leave will be replaced by 10 days’ unpaid leave, which now falls under Parental and Adoption leave.
- The 3 days per year under the Family and Responsibility Leave is still available, but only when the child is sick or else, upon the death of a closely related family member.
- Finally, when a child is born, the employee would be eligible for either parental leave or maternity leave, but not both. In the event of an adoption, the parent is eligible for adoption leave or parental leave, but not both. All the categories for parental, maternity, as well as adoption leave are considered unpaid.
Under the new parental and adoption leave, employees who are parents are entitled to this leave regardless of their marital status. It is also applicable to both same-sex and different sex (heterosexual) parents, a signal of social progress from the South African government.
Ultimately, businesses or employers will have to make sure that their employment guidelines and procedures are compliant with the amendments under the National Minimum Wage Act and the Basic Conditions of Employment Act. Businesses that fail to adhere to the relevant stipulated legislation can be held liable and find themselves caught up in unnecessary legal disputes. These new laws are a sign of acknowledgement from the government that both employee and employer rights must be considered in order to continue to keep the country a thriving place for business.