Article South Africa: National Minimum Wage Bill Enacted

(Nov. 30, 2018) On November 26, 2018, South African President Cyril Ramaphosa signed into law the National Minimum Wage Bill (now the National Minimum Wage Act), which the National Assembly and the National Council of Provinces, the two houses of the country’s Parliament, passed on May 29 and August 21, 2018, respectively. (South Africa’s Ramaphosa Signs Minimum Wage Bill into Law, REUTERS (Nov. 26, 2018); National Minimum Wage Bill (B31-2017): Bill History, PARLIAMENTARY MONITORING GROUP (last visited Nov. 26, 2018); National Minimum Wage Act (NMWA), Act No. 9 of 2018, GOVERNMENT GAZETTE (Nov. 27, 2018).) According to the memorandum accompanying the Bill, the “main object of the Bill is to provide for a national minimum wage in order to advance economic development and social justice by improving the wages of lowest paid workers, protecting workers from unreasonably low wages and promoting collective bargaining and supporting economic policy.” (National Minimum Wage Bill, B 31B—2017, Memorandum on the Objects of the National Minimum Wage Bill, 2017, at 11.)

The NMWA sets a mandatory, national minimum wage at 20 South African rand (ZAR) (about US$1.44) “for each ordinary hour worked.” (NMWA § 4.) Ordinary hours of work are generally defined as “45 hours in any week … and nine hours in any day if the employee works five days or fewer in a week … or … eight hours in any day if the employee works on more than five days in a week.” (Basic Conditions of Employment Act 75 of 1997, § 9 (Dec. 1, 1998), University of Pretoria website.) The NMWA states that all employees are entitled to receive and all employers are required to pay wages no less than the national minimum wage. (NMWA § 4.)  It further states that the national minimum wage “cannot be waived and … takes precedence over any contrary provision in any contract, collective agreement or law, except a law amending this Act.” (Id.)

The national minimum wage is not universal in its application; the NMWA imposes lower minimum wage rates for farm workers, domestic workers, and persons engaged in expanded public works programs. The definition of each role and the applicable hourly wages are reflected below:

Category Definition Hourly wages
Farm worker “a worker who is employed mainly or wholly in connection with farming or forestry activities, and includes a domestic worker employed in a home on a farm or forestry environment and a security guard on a farm or other agricultural premises” ZAR18

(about US$1.3)

Domestic worker “a worker who performs domestic work in a private household and who receives, or is entitled to receive, a wage and includes— (a) a gardener; (b) a person employed by a household as a driver of a motor vehicle; (c) a person who takes care of children, the aged, the sick, the frail or the disabled; and (d) domestic workers employed or supplied by employment services” ZAR15 (about US$1.08)
Persons engaged in expanded public works programs “a programme to provide public or community services through a labour intensive programme determined by the Minister [of Labour]” ZAR11 (about US$0.79)

(NMWA sched. 1.)

In addition, the NMWA permits certain employers to seek and obtain exemptions from the mandatory, national minimum wage. According to the NMWA, “[a]n employer or an employer’s organisation registered in terms of section 96 of the Labour Relations Act, or any other law, acting on behalf of a member, may, in the prescribed form and manner, apply for an exemption from paying the national minimum wage.” (Id. § 5.) However, the NMWA restricts the application of any such exemption to a maximum of one year and requires that the exemption specify the wage that the employer will pay his or her employees during that period. (Id.)

The NMWA makes the national minimum wage rates subject to annual review and adjustment. To this end, it has established the National Minimum Wage Commission, one of whose functions is to “review the national minimum wage and recommend adjustments.” (Id. § 11.)  The NMWA mandates the Commission to review the national minimum wage annually and make recommendations regarding any adjustments it deems necessary to the Minister of Labour, who then determines the changes to the wages. (Id. § 6.)  In making recommendations of minimum wages, the Commission is required to 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. (Id. § 7.) 

The NMWA has yet to take effect; it will do so “on a date fixed by the President by proclamation in the [Government] Gazette.” (Id. § 17.)

The South African government predicts that the implementation of the national minimum wage “will raise the earnings of an estimated six million South Africans – more than half of the labour force – who earn below [minimum wage] at present.” (Press Release, The Presidency, President Cyril Ramaphosa Signs National Minimum Wage Bill into Law (Nov. 26, 2018), South Africa Government website.) A 2016 report issued by the country’s National Minimum Wage Panel found that over 6.7 million people in South Africa earned less than ZAR4,000 (about US$287) per month, below the working poverty line, which was at the time estimated to be ZAR 4,317 (about US$309). (NATIONAL MINIMUM WAGE PANEL, A NATIONAL MINIMUM WAGE FOR SOUTH AFRICA 7 (2016).)  According to the same report, more than half of  the country’s workforce earned below ZAR3,700 (about US$265). (Id.) According to the World Bank, over 55% of the South African population is living in poverty and, with a Gini Index of 63, South Africa has one of the world’s highest levels of inequality. (WORLD BANK, POVERTY & EQUITY BRIEF, SUB-SAHARAN AFRICA: SOUTH AFRICA (Apr. 2018), World Bank website.)

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