Labour and employment minister Thulas Nxesi has announced a new annual earnings threshold under the Basic Conditions of Employment Act (BCEA), which will have implications for South African employees.
In a gazette published on Monday, Nxesi said that the new earnings threshold is R211,596.30 before tax and contributions. This represents an increase of R6,163 from the previous amount of R205,433.30, which has been in effect since 1 July 2014.
The earnings threshold is the dividing line where certain provisions of the Labour Relations Act (LRA) and the Employment Equity Act (EEA) apply, says
The sections covered in these acts are intended to protect vulnerable employees and regulate, amongst other things, hours of work, overtime, work over weekends, lunch breaks and even where labour disputes need to be handled.
Employees earning under this threshold enjoy the full protection of the BCEA, and can, for example, demand overtime pay at a rate of 1.5 times, or legally refuse to do more than the 45 hours of work a week.
However, any employees earning above the threshold are precluded from these automatic protections – meaning they are not automatically entitled to overtime or weekends off, for example. These issues are still relevant to higher earners, but are typically handled in contract negotiations with respective employers at the time of employment.
explained the importance of the new threshold in terms of the various acts as follows:
- Hours of work: In terms of the BCEA, employees earning in excess of the earnings threshold are excluded from the provisions which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work and pay for work on public holidays;
- De facto employee: In terms of the LRA, employees earning in excess of the earnings threshold are not subject to the deeming provision in accordance with which employees engaged by a temporary employment service/labour broker who are not performing a temporary service are deemed to be employees of the client for purposes of the LRA.
- Automatic employment: Also in terms of the LRA, employees earning in excess of the earnings threshold fall outside the scope of the provisions relating to fixed-term employees who are deemed to be employed indefinitely after three months (in the absence of justifiable reasons for fixing the term of the contract);
- Dispute handling: In terms of the EEA, an employee earning in excess of the earnings threshold who has a dispute under Chapter two of the EEA relating to unfair discrimination, is not permitted to refer the dispute to the CCMA for arbitration (unless the dispute relates to alleged unfair discrimination on the grounds of sexual harassment, or the parties all agree to arbitration) and is obliged to refer the dispute to the Labour Court for adjudication.
“For purposes of determining whether an employee earns in excess of the earnings threshold, ‘earnings’ means an employee’s regular annual remuneration before the deduction of income tax, pension fund contributions, medical aid contributions and similar payments, but excludes similar contributions made by the employer in respect of the employee,” said
“This is subject to the proviso that subsistence and transport allowances received, achievement awards and payments for overtime worked do not fall within the scope of remuneration,” she said.