On 1st April 2024, the earnings threshold officially increased from R241 110.59 per annum to R254 371.67 per annum pursuant to section 6(3) of the Basic Conditions of Employment Act. The threshold is designed to safeguard vulnerable, lower-earning employees from exploitation and is central to the application of various provisions under labour legislation.
For clarity, ‘earnings’ is defined as an employee’s ‘regular annual remuneration before deductions’ for income tax, pension contributions, medical aid, and other similar payments, but excludes similar contributions made by employers, ‘subsistence and transport allowances received, achievement awards, and payments for overtime worked’.
The practical effect of the approximate 5.5% increase is that employees who fall within the revised threshold will enjoy the benefit of the protective provisions contained under Chapter 2 of the Basic Conditions of Employment Act (‘the BCEA’). Inclusive of sections 6 to 18, Chapter 2 regulates employees’ working hours, including meal intervals, payment for work performed on Sundays and public holidays, and daily rest periods.
Conversely, employees who earn above the determined amount are excluded from the scope of the Chapter. For instance, section 9(1) of the BCEA specifies that the maximum number of hours an employee who earns below the earnings threshold may work is 45 hours per week. This translates to a maximum of nine hours in any day for employees who work five days per week or less, and eight hours in any day for employees who work more than five days in a given week, which working hours exclude lunchbreaks. This does not mean that an employee must work 45 hours per week – just that an employer may not mandate an employee to work beyond these hours.
Given the demands of industry, it is not uncommon for employees to work outside of specified working hours. To that end, section 10 of the BCEA regulates the particularities of overtime. Under the Act, ‘overtime’ is defined as ‘the time that an employee works during a day or a week in excess of ordinary hours of work’. Accordingly, all hours worked in excess of an employee’s normal working hours, as stipulated in their contract of employment, are deemed overtime. Section 10(1) of the BCEA specifies that employees may only work overtime in accordance with an agreement and prohibits employees from working in excess of ten hours’ overtime per week. Overtime is calculated at 1.5 times the employee’s normal wage, except for work conducted on Sundays and public holidays which is calculated at twice the normal wage rate.
Despite these detailed statutory arrangements, employees who earn above the current threshold are not automatically entitled to payment for overtime worked. While they cannot demand to be compensated for overtime worked, their employers cannot, however, require them to work overtime without adequate compensation. Instead, the working hours of higher earners are generally determined during contractual negotiations prior to the commencement of employment.
Under section 73A of the BCEA, an employee who earns below the threshold may refer a dispute relating to the failure to remunerate any amount owed to them in terms of an employment contract, collective agreement, or sectoral determination to the Commission for Conciliation, Mediation and Arbitration (‘the CCMA’). Contrastingly, employees earning above the current threshold may only approach the Labour Court, High Court, Magistrates’ Court, or the Small Claims Court, depending on the size of the claim.
The adjustment to the earnings threshold similarly impacts the protective reach of other labour legislation. For instance, under section 198B(7) of the Labour Relations Act (‘the LRA’), employees who earn below the revised threshold – and are employed on a fixed-term contract – are deemed permanent employees in instances where an employer cannot prove that there was ‘justifiable reason for fixing the term of the contract…and that the term was agreed’. Under section 198A(3)(b) of the LRA, employees of a client of temporary employment services are deemed to be employed by said client on an ‘indefinite basis’, provided only that they earn below the threshold and have worked for the client for at least three months.
Further, section 10(2) of the Employment Equity Act (‘the EEA’) enables employees who earn below the current threshold to automatically refer an unresolved dispute concerning unfair discrimination on the basis of inter alia race, gender, sexual orientation, or marital status at the CCMA to same body for arbitration. Conversely, higher income earners are not afforded this option unless all parties mutually agree to arbitration, or the dispute involves sexual harassment, per section 10(1) of the EEA.
Designed to extend labour law protections to lower-income earners, the increase to the earning threshold has the effect of extending the protective reach of various labour law provisions to more workers. Employers are accordingly advised to thoroughly review their current workforce and relationships with labour brokers (if applicable), specifically regarding employees’ earnings, to ensure adherence to the statutory provisions discussed above.
