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Important aspects of the new minimum wage

Due to its contentious nature the debate over the minimum wage amendments which became effective on January 1st 2019, the topic continues to lead news highlights. Theoretically, there should be agreement that the effects of the increase should result in benefits to the entire country but yet, and as usual the battle of Labour vs Business vs Government persists as each party remains squarely in their own corners with their opinion of the amendments. Leading from their corner, the second largest labour federation, the South African Federation of Trade Unions, SAFTU, has branded the new wages as being tantamount to slave wage, while COSATU trade union federation reports that they believe that 6.4 million employees would undoubtedly benefit from the amendments, welcoming it is as “a major cash injection into workers’ pockets”. Government praises the increase as being the catalyst for change to the lives of millions of South African’s and in an election year, what better assurance to present. Business on the other hand, predicts continued loss of jobs perpetuating the already exhaustingly high unemployment rates. Stating the minimum wage will ultimately be detrimental to the South African economy and productivity within the country. Currently the South African economy has reported just 0.7 percent growth during 2018, and an unemployment rate of 27%. The knock-on effect of which certainly does not perpetuate growth and development and which affects the entire country as a result.

Contentious as the subject may be, rest assured that employers who do not abide by the ruling will be taken to task by the Department of Labour so employees are well advised of their legal rights and swift to turn to the CCMA for assistance. Employers, who may intend ignoring the new minimum wages by merely budgeting for fines, should note that fines will be steep and progressive as The Department of Labour takes a zero-tolerance approach. Employers should be aware that the simply budgeting for additional fines will suffer the consequences from the Department with their progressive approach to fining for non-compliance, with first time offenders receiving significantly less repercussions that second and continuous offenders. Addressing your budget now to include the increases would go a long way to saving your business additional costs of fines and CCMA proceedings.

Some relief is however available to those employers who wish to avoid retrenchments and job losses as the result of the increase in minimum wage. Minister Mildred Oliphant has issued regulations permitting the request for an exemption for employers who are unable to pay the national minimum wage which, if granted will buy an employer a 12 month reprieve allowing time in which to adjust accordingly, during which time you may pay no less than 90% of the new wage figures. Note that consultation with all employees and union representatives must be performed meaningfully prior to exemption application.

For those employers who may require assistance with their wages and payroll or who have queries pertaining to the effect of the minimum wage on their payroll, please contact Pay Solutions for professional advice and guidance.