South Africa: The National Minimum Wage Act Is Now Law

On November 23, 2018, the president of the Republic of South Africa (RSA), Cyril Ramaphosa, assented to and signed into law the National Minimum Wage Bill, which gave effect to the National Minimum Wage Act 9 of 2018. The act provides for a national minimum wage, deals with all issues surrounding its introduction, and establishes a National Minimum Wage Commission.

The preamble to the act states that it results from the recognition that the RSA is one of the most unequal societies in the world and that there are huge disparities in income in the national labor market. It further states that it aims to eradicate poverty and inequality and to promote fair and effective competition and stability in the labor market, and is also a result of the constitutional obligation of the state and employers to promote and fulfil the right to fair labor practices.

The act prescribes a national minimum wage of R20 per hours worked, with certain exceptions for farm workers, domestic workers, workers employed on an expanded public works program, and workers who have concluded learnerships considered in the Skills Development Act 97 of 1998. Employees who earn less than the annual earnings threshold (currently R205,433.30 per annum) and who work for less than four hours on any day must be paid for four hours work on that day.

The act provides for an exemption from the national minimum wage in certain circumstances. Those circumstances and the procedure for applying to be exempt as well as other practical issues are set out in regulations (promulgated by the Minister of Labour), which allow for limited time exemptions (not more than 12 months) and which limit the reduction to not below 90 percent of the usual minimum wage.  The financial data that must be provided in order to demonstrate that the minimum wage is not affordable is quite extensive and onerous. Exemptions will not be easy to obtain.

Disputes relating to payment in terms of the act will be adjudicated by the Commission for Conciliation, Mediation and Arbitration (CCMA), a pre-existing employment dispute forum.

Employers that pay an employee less than the national minimum wage may be subject to a fine that is either twice the value of the underpayment or twice the employee’s monthly wage, whichever is greater.

The extent of the practical implications of the act will become apparent over time as issues arise; the solutions to such issues will be determined with the help of courts and other dispute resolution tribunals such as the CCMA and bargaining councils.

Written by Bradley Workman-Davies of Werksmans Attorneys and Roger James of Ogletree Deakins

© 2019 Werksmans Attorneys and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.