Minister’s review of earnings threshold stuns lawyers

News that the earnings threshold of R172 000 is up for review again has surprised lawyers.

Employees earning in excess of this threshold do not enjoy the benefit of certain basic conditions of employment.

A higher threshold is likely to lead to additional costs for employers, especially smaller firms, who have to re-align payrolls and benefits, like overtime payments.

“It came as a surprise to many when the minister announced that the employment conditions commission is reviewing the threshold again,” said Johan Botes, director in employment practice at Cliffe Dekker Hofmeyr, on Wednesday.

“While employees would like to see the earnings threshold increase as much as possible, employers will dread a significant increase due to the additional cost associated with such a move.”

Minister of Labour Mildred Oliphant announced on April 26 that the employment conditions commission will consider representations on increasing the earnings threshold and interested parties have until May 25 to make representations to the commission.

Conditions
These conditions include the right to extra pay for overtime, maximum ordinary hours of work per day and week, the right to meal intervals, payment for work done on Sundays and limitations on payment for work done on public holidays.

“Employees earning below the threshold are statutorily entitled to these rights and can demand payment for overtime, work done on Sundays and other rights that remain unaffected by the earnings threshold,” said Botes.

The earnings threshold is a significant factor influencing the labour cost of businesses.

“This is especially visible with many smaller and medium enterprises that struggle to keep this aspect of their operational expenditure under control. Every time the earnings threshold increases, employers have to audit their remuneration to ensure that employees who previously earned above the threshold still earn in excess of the new limit.”

Where employees who were previously excluded now earn below the new threshold, they are automatically entitled to the rights contained in the applicable sections of chapter two of the Basic Conditions of Employment Act.

“This means that an employer could be forced to pay overtime to an employee to whom no overtime was payable under the current threshold. This will have a direct impact on the employer’s labour cost component,” he said.

Employers who may be affected should make representations to the employment conditions commission on the proposed increase.

Prior revisions occurred less frequently, with the previous threshold (R149 736) remaining in place from March 2008. — I-Net Bridge

Advertisting

Mabuza’s ‘distant relative’ scored big

Eskom’s woes are often because of boiler problems at its power plants. R50-billion has been set aside to fix them, but some of the contracts are going to questionable entities

ANC faction gunning for Gordhan

The ambush will take place at an NEC meeting about Eskom. But the real target is Cyril Ramaphosa

Despite tweet, Zuma keeps silent about providing his taxpayer information

The Public Protector has still not received confirmation from former president Jacob Zuma that she may access his tax records —...

Ahead of WEF, Mboweni will have to assure investors that...

The finance minister says despite the difficult fiscal environment, structural reforms are under way to put SA on a new growth path
Advertising

Press Releases

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.

Innovate4AMR now in second year

SA's Team pill-Alert aims to tackle antimicrobial resistance by implementing their strategic intervention that ensures patients comply with treatment.

Medical students present solution in Geneva

Kapil Narain and Mohamed Hoosen Suleman were selected to present their strategic intervention to tackle antimicrobial resistance to an international panel of experts.