On 30 May 2018, the Minimum Wage Bill (the Bill) was approved by Parliament with a margin of 50% plus 1 vote. The Bill will now be sent to the National Council of Provinces for confirmation, before being signed into law. It will enforce a national minimum wage of R3 500 per month for full-time workers, or R20 per hour for any number of hours worked per day.

The national minimum wage will exclude any payment made to enable an employee to work including transport, equipment, food or accommodation allowance, any payment in kind, which includes board or accommodation, gratuities including bonuses, tips or gifts and any other prescribed category of excluded payments. Section 2 of the Bill further provides for allowances ranging from R301.01 to R1 755.84 per week for learners who have concluded learnership agreements in terms of the Skills Developments Act, 1998.

The Bill prescribes that the payment of a national minimum wage will take precedence over any contrary provision in any contract, collective agreement or law, except a law amending the Act. The Bill further states that national minimum wage will constitute a term of the worker’s contract except to the extent that the contract provides for a more favourable wage.

The purpose of the Bill is to advance social economic development and social justice by improving the wages of the lowest paid employees and protecting employees from unreasonably low wages.

The Bill will exempt low-income professions such as farm workers and domestic workers. Domestic workers will be paid 75% and farm workers will be paid 90% of the national minimum wage, but the Department of Labour stated that both sectors will be brought up to 100% within two years of implementation of the Bill, but pending research by the commission on this proposed timeframe.

Whilst the implementation of the Bill is a great victory for employees, it may however prove to be a challenge for employers who are genuinely unable to pay employees wages in line with the prescribed minimum.

The Bill does provides some relief for employees who are unable to meet the minimum wage level. Section 15 of the Bill empowers the Minister, on application by any relevant employer, to grant exemptions from the national minimum wage. This means that any employer who can show they will not be able to afford the minimum wage will be able to apply for temporary exemption.

Employers will be required to submit documents like audited financial statements, household income, commercial balance sheet, working hours, supporting statements from workforce, motivation and any other documents as evidence to justify the application for an exemption.

The Department will conduct a thorough audit of the company and then grant or reject an exemption.

The Department of Labour is currently developing an online system to help analyse data submitted by employers when applying for national minimum wage exemptions. The department has not indicated when the online system will be available, but has cautioned employers about the consequences of misrepresenting facts in the application for exemptions. The department emphasised that exemptions will only be granted to firms in significant economic distress.

Exempted businesses will be required to pay a determined percentage of the prescribed minimum wage. The exemption granted will be for a maximum 12-month period at a time, giving employers time to adjust to the prescribed minimum wage. The exemption granted by the minister will specify the wage that the employer is required to pay its employees and any other relevant condition. An employer will be required to submit a motivation for any subsequent exemption applications.

Exemptions will strike a balance between the needs of employees and relief for employers who will struggle to remunerate at the minimum wage level and will also encourage employers to work with the government in eradicating poverty and unemployment.

This article was written by Mandisa Duma, Candidate Attorney,  Norton Rose Fulbright South Africa Inc