Unpacking the elements of the new National Minimum Wage Act

The rapid implementation of the new National Minimum Wage Act (NMWA) has created much uncertainty and friction among all stakeholders affected by the NMWA.

It is imperative that every employer understands the dynamics and core elements of the new National Minimum Wage Act. The media have created a buzz and hive of activity centred around the value of R20 per hour, which needs to be unpacked and understood to avoid any misconceptions regarding the true purpose of the legislation. Other essential elements of the new National Minimum Wage Act that have been ignored are now given closer attention in this piece.

Section 2: Implications of the National Minimum Wage Act

• Every worker is entitled to payment of a wage amounting to no less than the national minimum wage.
• Every employer must pay his/her workers at least the national minimum wage.
• The payment of a national minimum wage cannot be waived and the national minimum wage takes precedence over any contrary provision in any contract, collective agreement, sectoral determination or law, except a law amending this Act.
• The national minimum wage must constitute a term of the worker’s contract except to the extent that the contract, collective agreement or law provides for a wage that is more favourable to the worker.
• It shall constitute unfair labour practice if an employer unilaterally alters wages, hours of work or other conditions of employment relating to the implementation of the national minimum wage.

Section 5: Formula for calculating the National Minimum Wage

• Despite any contract or law to the contrary, the calculation of a wage for purposes of this Act shall be the amount payable in money for ordinary hours of work, excluding—

(i) any payment made to enable a worker to work, including any transport, equipment, tool, food or accommodation allowance, unless specified otherwise in a sectorial determination;

(ii) any payment in kind, including board or accommodation, unless specified otherwise in a sectoral determination;

(iii) gratuities, including bonuses, tips or gifts; and

(iv) any other prescribed category of payment.

• Subject to section 9A of the Basic Conditions of Employment Act, a worker is entitled to receive the national minimum wage for the number of hours that the worker works on any day.
• If the worker is paid on a basis other than the number of hours worked, the worker may not be paid less than the national minimum wage for the ordinary hours of work.
• Any deduction made from the remuneration of a worker must be in accordance with section 34 of the Basic Conditions of Employment Act, provided that a deduction made in terms of section 34(1)(a) of the Basic Conditions of Employment Act does not exceed one quarter of a worker’s remuneration.

Section 7: The potential for future increases of the National Minimum Wage

• For purposes of conducting an annual review and recommending adjustments, the National Minimum Wage Commission shall consider the following factors:

(i) Inflation, the cost of living and the need to retain the value of the minimum wage;

(ii) Wage levels and collective bargaining outcomes;

(iii) Gross domestic product;

(iv) Productivity;

(v) Ability of employers to carry on their businesses successfully;

(vi) The operation of small, medium or micro enterprises and new enterprises;

(vii) The likely impact of the recommended adjustment on employment or the creation of employment; and

(viii) Any other relevant factor.

We at SERR Synergy assist employers in understanding all elements of new employment-related legislation in specific the new National Minimum Wage Act. We focus not only on the risks and negative commentary relating to new amendments but also on possible solutions in this regard. Our professional labour team provide employers with ideas and all forms of tools and possibilities so that they can continue to flourish despite numerous changes to the employment law landscape of South Africa.

About the Author: Jared Francis joined SERR Synergy in October 2016, and currently holds the title of KZN Labour Manager. He is an admitted attorney who has practised in KZN and Gauteng. He holds an LLB degree, a Post-Graduate Diploma in Industrial Relations and a Post-Graduate Certificate in Forensic Investigation from the University of KwaZulu-Natal. He also holds Post-Graduate Certificates in Advanced Labour Law, Corporate Law, Advanced Human Resource Management and Health and Safety from UNISA and has more than 10 years’ experience in the legal and industrial relations fields respectively.