The earnings threshold affects getting paid overtime, lunchtimes, ordinary hours of work and where to lodge a dispute with your employer.
The earnings threshold will expand the pool of “protected” employees when it increases on 1 April, ensuring that employees earning a salary that falls below the threshold have stricter protection under labour legislation.
The statutory earnings threshold will increase to R261 748.45 per year, representing a R7 376.78 increase from the current threshold of R254 371.67.
The threshold is a determination in terms of section 6(3) of the Basic Conditions of Employment Act. If you earn a salary that falls below this earnings threshold, certain provisions of the Basic Conditions of Employment Act, Labour Relations Act and Employment Equity Act apply to you.
The purpose of the earnings threshold is to ensure greater protection for more vulnerable employees earning below a specified income, Kate Collier and Brett Abraham, partners and Jamie Jacobs, an associate at law firm Webber Wentzel say.
They point out that protections include sections of the Basic Conditions of Employment Act regulating ordinary hours of work, overtime, meal intervals, daily and weekly rest periods, Sunday pay, night work pay and public holidays.
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If you earn more than the earnings threshold
Employees earning above the threshold are not subject to the deeming provisions that apply to atypical employment arrangements, including those regulated under the temporary employment services (labour brokers) and fixed-term employment provisions in the Labour Relations Act, Collier, Abraham Jacobs say.
“If you earn a salary above the threshold, you cannot refer unfair discrimination disputes under the Employment Equity Act to the Commission for Conciliation, Mediation and Arbitration (CCMA), unless the dispute relates to sexual harassment or all parties agree to arbitration. Such disputes must instead 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 earnings threshold, Collier, Abraham Jacobs say. ‘Earnings’ refers to an employee’s gross annual salary before deductions, including tax, UIF, medical aid and pension contributions.
They also point out that in this context, ‘earnings’ 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.
“The increase in the earnings threshold is a noteworthy development, as it may expand the number of employees entitled to stricter protections under labour legislation, such as overtime pay. As a result, employers may face financial implications, as they may now be required to comply with additional protections under the Basic Conditions of Employment Act for employees who now fall below the new threshold.”
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Important for employers to take heed of increase
Collier, Abraham Jacobs warn that employers should take heed of the new earnings threshold, as understanding which employees fall below it is essential to minimise the risk of non-compliance with the Basic Conditions of Employment Act.
“It is prudent for employers to review salary structures to account for the new threshold and its associated costs. Employers who use atypical employment arrangements should also review these arrangements to ensure ongoing compliance with the Act to avoid the consequences of the deeming provisions under the Labour Relations Act.”
According to law firm Cliffe Dekker Hofmeyr, employees earning more than the threshold fall outside the scope of the provisions for fixed-term employees who are deemed to be employed indefinitely after three months in the absence of justifiable reasons for fixing the term of the contract.
