The Prescribed Minimum Wage: An Employer’s Responsibility
The Minimum Wage Act 9 of 2018 (“the Act”) was introduced with the aim of protecting low-income workers by providing a platform that aims to reduce inequality and the disparities that exist in the labour market with regards to income.
A wage is defined as the amount of money that is paid/payable to a worker in respect of ordinary hours of work or, if they are shorter, the hours that worker ordinarily works in a day/week and an employer is required to pay same within seven (7) days from the completion of the wage period for which those wages are payable to the worker.
As of 1 March 2022, the prescribed minimum wage is set at R23.19 (twenty three Rand and nineteen Cents) for each ordinary hour worked and extends to, inter alia, farmworkers and domestic workers, who were previously prescribed a minimum wage that was lower than that applicable to other workers in terms of the Act.
With regards to the applicability of the Act and to ensure compliance with same, it is imperative for employers to note, inter alia, the following:
1. The Act applies to all workers, save for those in the National Defence Force, the National Intelligence Agency and Secret Service or as otherwise provided by a Sectoral Determination;
2. An employer cannot pay wages that are below the prescribed minimum wage and can similarly not reduce the prescribed minimum wage payable to a worker in terms of an agreement, be it employment or otherwise. Employers are, of course, encouraged to pay their workers more favourably than the prescribed minimum wage;
3. An employer cannot use the prescribed minimum wage as a way of unilaterally reducing an employer’s wage where same is higher than the prescribed minimum wage. This would be considered an unfair labour practice wherein liability could attach to the employer; and
4. Where an agreement provides for a wage that is less than the prescribed minimum, the employee’s wage must be increased to align with the prescribed minimum wage; and
The prescribed minimum wage does not include payment of allowances such as transport, tools, food or accommodation, tips, commission and/or bonuses.
It is important that employers pay their workers more than, or an amount equal to, the prescribed minimum wage, failing which the following legal consequences may result to the employer:
1. The employer may be liable to a pay fine, which is calculated based on double the value of the amount which the employee is paid below the prescribed minimum wage or double the value of the employee’s monthly wage, whichever will render a higher amount payable; or
2. A worker may approach the Department of Labour to appoint a Labour Inspector to conduct an inspection of, inter alia, the premises and all documents that the employer is legally required to have in its possession. If the Inspector finds that the employer is not paying the prescribed minimum wage to its workers, it will give the employer an opportunity to comply with the Act, failing which the matter may be referred to the CCMA wherein an arbitration award will be granted against the employer; or
3. Refer the dispute to the CCMA for conciliation and, failing successful conciliation, to arbitration wherein an arbitration award may be made against the employer, requiring it to, inter alia, comply with the Act and pay any outstanding money due to its workers as a result of their non-compliance with same. This could be a significant amount depending on the extent of non-compliance.
It is therefore imperative to ensure that workers are paid the prescribed minimum wage (or more), not just to ensure compliance with the Act as aforesaid but to facilitate reduction in the income inequality that is prevalent in South Africa, as envisaged by the Act, in an effort to ensure that low-income workers are protected.