Employers should take note of the recent changes in the earnings threshold that are about to come into effect.
As of 1 April 2024, the earnings threshold prescribed by section 6(3) of the Basic Condition of Employment Act 75 of 1997 (BCEA) will increase from R 241 110,59 to the amount of R254 371,67.
The term ‘earnings’ means regular remuneration before deductions, such as, for example, income tax; pension; medical aid; as well as similar payments made by the employer on behalf of the employee. On the other hand, employer contributions made in respect of the employee are not included in the calculation of remuneration for this purpose, nor are subsistence andtransport allowances, achievement awards and payments for overtime.
Increase in the Minimum Earnings Threshold effective 1 April 2024, what does the increase mean for employers?
The increase in earnings entails that those employees earning less than R 21 197,64 per month (previously R 20 092,55) will now fall within the scope of the special requirements as provided for by legislation.
As a result of this new increase, employers now face additional obligations in relation to their employees who earn below the new threshold.
Some of the further obligations on employers and protections offered to employees are outlined in the following paragraph sections.
Basic Conditions of Employment Act (“BCEA”)
We set out below a summary of some of the provisions of the BCEA which affect those earning below the earnings threshold:
- ordinary hous of work;
- overtime;
- compressed working week;
- averaging of hours of work;
- meal intervals;
- daily and weekly rest periods; and
- compensation for work performed on Sundays, at night or on public holidays.
Employment Equity Act (“EEA”)
Turning to the Employment Equity Act of 1998 (EEA), for purposes of referring certain disputes under the EEA, an employee earning below the threshold amount may refer such dispute to the Commission for Conciliation Mediation and Arbitration (CCMA) to be arbitrated instead of the Labour Court to be adjudicated.
Labour Relations Act (“LRA”)
The threshold also has relevance under the Labour Relations Act, 1995 in connection with labour broker employees (temporary employment services), fixed term contracts and part-time employees.
Conclusion
It is important that employers familiarise themselves with the impact of the new the earnings threshold and ensure compliance with the new earnings should they not wish to adhere to the additional obligations and consequences. Employers will of course need to ensure that they are prepared for the possible increase in remuneration costs.
