New earnings threshold: additional expense for employers (South Africa)

Certain provisions of the Basic Conditions of Employment Act of 1997 (the BCEA) pertaining to working time do not apply to senior managerial employees or employees who earn in excess of certain amount per year (the “earnings threshold”).

The earnings threshold will increase to R 172 000 per year with effect from 1 July 2011 (The previous threshold was R 149 736 per year). This means that the limitations, protections or the right to additional pay afforded by the following provisions of the BCEA will not apply to employees earning in excess of the new threshold:

- section 9 (hours of work),
- section 10 (overtime),
- section 11 (compressed working week),
- section 12 (averaging of hours),
- section 14 (meal intervals)
- section 15 (daily and weekly rest periods),
- section 16 (pay for work on Sundays)
- section 17(2) (night work), and
- section 18(3) (public holidays on which the employee would not ordinarily work).

For purposes of the new threshold "earnings" means the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee. Subsistence and transport allowances received, achievement awards and payments for overtime worked are not regarded as remuneration for the purpose of this notice.

Employers should bear in mind that employees that currently earn between R149 736 and R172 000 per year were previously excluded from these provisions but will now enjoy additional protection and become entitled to payment for overtime, double pay for work on public holidays, etc. notwithstanding the fact that their contracts might state that they do not qualify. The fact that these employees are relatively high earners means that this can amount to a considerable additional payroll expense for employers.

Disclaimer: The material above is provided for general information purposes only and does not constitute legal or professional advice. Neither the author nor the publisher accepts responsibility for any loss or damage that may arise from reliance on information contained in this article.

Jan Truter of Labourwise for www.labourwise.co.za


www.labourwise.co.za is an on-line labour relations service aimed at assisting employers with the implementation of effective labour relations. They can be contacted via the website or info@labourwise.co.za