Government raises earnings threshold and minimum wage: What does this mean for workers?

The annual earnings threshold will increase on April 1 to R261,748, granting employees who fall below this new threshold enhanced protections under various labour laws.

This change, alongside a rise in the national minimum wage, is expected to have significant implications for both employees and employers across the country.

According to LegalWise, a South African legal advice firm, the earnings threshold plays a crucial role in determining whether certain labour law protections apply to an employee.

“South African labour law provides for an annual earnings threshold used to establish whether certain protections provided by labour law will apply to an employee or not. Many employees do not know what this earnings threshold actually means and what impact an increase to this earnings threshold will have on them,” said LegalWise.

For employees earning more than R261,748 annually, certain protections provided by the Basic Conditions of Employment Act (BCEA) and other key labour laws will not apply.

“Employees who earn more than the threshold are excluded from provisions regulating certain basic conditions, such as ordinary hours of work, overtime, and daily and weekly rest periods,” LegalWise said.

However, this exclusion does not mean that employers have complete freedom over working conditions for higher earners.

“Employers and employees can still negotiate these conditions to be in line with the law.”

Despite this employers are still required to act fairly and reasonably in their dealings with these employees.

For those earning below the new threshold, the protections of the Labour Relations Act (LRA) and Employment Equity Act (EEA) also come into play. Under the LRA, for instance, fixed-term contracts for employees below the threshold cannot exceed three months unless justified by specific circumstances.

Similarly, in disputes about unfair discrimination under the EEA, employees earning below the threshold can pursue arbitration through the Commission for Conciliation, Mediation, and Arbitration (CCMA), except in cases of sexual harassment or where both parties agree.

LegalWise said the earnings threshold refers specifically to an employee’s regular annual salary, excluding contributions made by the employer, such as medical aid or pension fund contributions.

“It does not include subsistence and transport allowances, achievement awards, or payments for overtime worked.”

In addition to the earnings threshold increase, the department of employment and labour announced a new national minimum wage effective from March 1. The minimum wage rose from R27.58 to R28.79 per hour.

The minimum wage law excludes allowances and benefits, such as transport and accommodation, from being considered part of the employee’s salary.

“One cannot argue that you pay an employee less than the minimum wage because you contribute to their uniform or provide them with meals,” said LegalWise.

The increase in both the earnings threshold and minimum wage reflects a continued effort to protect vulnerable workers in South Africa and ensure fairer working conditions.

“The earnings threshold is a measure to ensure lower-income employees are sufficiently protected against exploitive practices by employers,” said LegalWise, adding that the expanded threshold means a broader group of employees will now be entitled to the benefits and protections provided by labour law.

TimesLIVE