The New Minimum Wage Act – What Now?

The New Minimum Wage Act – What Now?
January 18, 2019 Chante Hobbs

On 27 November 2018 President Cyril Ramaphosa signed the National Minimum Wage Act No 9 of 2018 (hereafter “the Act”), and thereafter confirmed the commencement date as being 1 January 2019.

The Act has established a new minimum wage of R20.00 per hour for every ordinary hour worked, excluding farm workers, domestic workers and workers employed on an expanded public works program.

The short notice of the commencement date has caused wide spread panic among employers and various queries have been lodged as to how one can get out of paying the minimum wage.

Section 15 of the Act provides for an exemption procedure which employers can follow to be released from their obligation to pay minimum wage. In terms of Section 16 of the Act, regulations are to be made by the Minister of Labour which set out inter alia, the procedure to be followed, the information required for exemption, the manner of consultation with employees and the period within which an application for exemption should be made. The Department has warned that intensive and meaningful consultation with the employees and representative trade unions will have to be held and that thorough financial audits will be required before an exemption application is considered. Exemption from minimum wage may not be for a period exceeding 1 year.

To date no regulation referred to above has been made and no exemption procedure has been established. The Labour Department is in the process of creating an online National Minimum Wage Exemption System, through which employers can apply for exemption. The date of the launch of the system is still unknown.

Despite the absence of an existing regulation it is anticipated that the following documentation and information will have to accompany an application:

  1. Audited financial statements substantiating that the employer is not in a position to pay the minimum wage.
  2. Written submissions of employees’ reactions to the exemption application.
  3. The employer’s particulars, including UIF number, COIDA number, SARS number and the Company Registration number.

Question now remains: what do employers pay during this period of limbo? Until exemption has been granted all employers are required to pay the prescribed minimum wage and all employees are entitled to earn no less than the prescribed minimum wage. Should an employer fail to pay the minimum wage prior to exemption being granted, the employees will be entitled to approach the Labour Department and demand back pay as they did not earn the monies due to them.

ABOUT THE AUTHOR

Carla Pauw is a SEESA legal advisor at our Cape Town Office. She obtained her LLB degree from Stellenbosch University 2015, admitted as an attorney of the High Court, July 2016. Currently doing my LL.M (Labour Law) at the University of Stellenbosch.
Carla Pauw is a SEESA legal advisor at our Cape Town Office. She obtained her LLB degree from Stellenbosch University 2015, admitted as an attorney of the High Court, July 2016. Currently doing my LL.M (Labour Law) at the University of Stellenbosch.

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