Companies and staff employed in South Africa should take note within their human resource management that the employees who earn in excess of a certain amount per year (the “earnings threshold”), in South Africa, do not enjoy the same protection under our labour legislation as lower-earning employees.
Earnings Threshold Increase from 1 April 2025
The earnings threshold (Threshold) is set to increase to a threshold level of ZAR 261,748.45, or a salary of R 21812,37 (ZAR) per month before deductions that represents a ZAR 7,376.78 increase from the current Threshold. The change is set to be enforced as of 1 April 2025.
The Threshold, is a determination in terms of section 6(3) of the Basic Conditions of Employment Act (BCEA), which affects the applicability of certain provisions of the BCEA, Labour Relations Act (LRA), and Employment Equity Act (EEA).
Employees earning above the Threshold are therefore not entitled to certain protections afforded to those earning below it.
The effect of the earnings threshold is that the limitations, protections or the right to additional pay afforded by certain provisions of the BCEA, do not apply to employees earning in excess of the new threshold.
The Provisions Cover:
– Hours of work – Section 9
– Overtime – Section 10
– Compressed working week – Section 11
– Averaging of hours – Section 12
– Meal intervals – Section 14
– Daily and weekly rest periods – section 14
– Pay for work on Sundays – Section 14
– Night work – section 17 (2)
– Public holidays on which the employee would not ordinarily work – section 18 (3)
The stated purpose of the Threshold is to ensure greater protection for more vulnerable employees earning below a specified income.
Legal Advice for Employers
According to Kate Collier, Partner Brett Abraham, Partner & Jamie Jacobs, Associate at Webber Wentzel, employees earning above the Threshold are not subject to the deeming provisions that apply to atypical employment arrangements These include those regulated under the temporary employment services (labour brokers) and fixed-term employment provisions in the LRA.
Employees earning above the Threshold are precluded from referring unfair discrimination disputes under the EEA to the Commission for Conciliation, Mediation, and Arbitration (CCMA) unless the dispute relates to sexual harassment, or all parties agree to arbitration. Such disputes can however be referred directly to the Labour Court for adjudication.
The determination outlines the definition of ‘earnings’ for the purpose of calculating whether an employee falls above or below the Threshold, stating that ‘Earnings’ refers to an employee’s gross annual remuneration before deductions, including tax, UIF, medical aid, and pension contributions.
Notably, ‘earnings’ in this context differs from the definition of ‘remuneration’ under the Ministerial Determination on the Calculation of Employee’s Remuneration in terms of section 35(5) of the BCEA.
Financial Implications for Companies
The increase in the Threshold is a noteworthy development, as it may expand the number of employees entitled to stricter protections under labour legislation, such as overtime pay.
Employers should be aware that they may face financial implications, as they would now be required to comply with additional BCEA protections for employees who now fall below the new Threshold.
Employers should take heed of the new Threshold, as understanding which employees fall below it is essential to minimising the risk of non-compliance with the BCEA. It is prudent for employers to review remuneration structures to account for the new Threshold and its associated costs.
Employers who utilise atypical employment arrangements should also review these arrangements to ensure ongoing compliance with the BCEA and to avoid the consequences of the deeming provisions under the LRA.
Changing of Existing Contracts
Importantly for staff with existing contractual provisions and who earn in excess of the threshold that are more favourable to the employee may not be altered.
An example is for provisions that provide for additional pay for overtime, Sunday work etc., remain valid and enforceable and the employer may not simply take these away.
Any changes to existing terms and conditions of employment will have to be negotiated with the employee and agreed in a written contract.
