18 Aug The National Minimum Wage Act
The National Minimum Wage Act
As of January 2019, the first ever National Minimum Wage Act came into effect, and while most employers have embraced this initiative, we thought that we would give you a summary to re-cap.
What is the rate?
The legislation stipulates a minimum national rate of R20 per hour, or R3 500 per month, depending on the number of hours worked.
The R20 an hour rate will be phased in slowly in the agriculture and domestic work sectors, with workers earning R18 and R15 per hour respectively. Employees who are on volunteer programs or learnerships are exempt from the act.
DAILY MINIMUM WAGE R20 x 8 hours = R160 or R20 x 9 hours = R180
WEEKLY MINIMUM WAGE R20 x 40 hours = R800 or R20 x 45 hours = R900
MONTHLY MINIMUM WAGE R800 x 4.333 = R3 466.40 or R900 x 4.333 = R3 899.70
Employees are also entitled to be paid for a minimum of 4 hours, even if they work fewer.
Allowances that make an employee able to work such as tools; equipment; transportation and accommodation) will have these allocations included when calculating their wage; as will bonuses, incentives, tips and gifts be excluded from the minimum wage.
No employee may make deductions in excess of 25% of the employee’s remuneration.
When did it become law?
The National Minimum Wage will be applicable and enforced as from 1 January 2019
What happens if you do not pay the minimum wage of R20.00 an hour?
The minimum wage is law, so if you do not pay it, your staff can report you to the department of labour or the CCMA. Even if your staff agree to work for less, or to get paid for fewer hours than four hours, they are still legally entitled to it, as it falls under the Basic Conditions of Employment Act.
The Act does allow for an employer to make an application to be exempt from paying the minimum wage, for not longer than one year.
When will the Minimum Wage Increase?
The Act states that the minimum wage must be reviewed after 18 months and increases in two years. The review will specifically take into account inflation, productivity, the effect on employment and businesses ability to cope with the increase in wage expenses.
If you would like a copy of the National Minimum Wage Act, you can obtain one from the Department of Labour’s Website. (http://www.labour.gov.za/DOL/legislation/acts/national-minimum-wage/national-minimum-wage)