South Africa introduces new minimum wage South Africa introduces new minimum wage

South Africa introduces new minimum wage
01 May 2018

From 1 May, South Africa will introduce a new national minimum wage, marking a big change in payroll terms for many employers.

According to Paymaster, the minimum wage will be set at R20 (US$1.60) per hour for all workers apart from farm workers, who will receive R18 (US$1.45) per hour; domestic workers, who will obtain R15 (US$1.21) per hour) and workers on an expanded public works programme, who will get R11 (US$0.89) per hour.

If employers cannot afford to pay the minimum wage, they can apply for an exemption, which must be submitted to the Department of Labour. Organisations also need to prove that the business:

  • Is under considerable financial pressure and does not have capacity to pay;
  • Has no alternative course of action, or method of recovering the additional amounts making up a higher wage bill;
  • Has credible reasons that its application for exemption would be approved.

Accounts and financial records must also be made available for audit, according to GR Newsletters.

In the case of employers that can afford to pay, it is important to share information about implementing the minimum wage to staff within your organisation and also to include trade unions from the outset.

Employers must comply with the new legislation from 1 May onwards. If they struggle to pay initially, they are permitted to introduce a double-payment increase, which involves allocating the increase in January and processing an adjustment in May. In this case, either the pay increase date can be brought forward or payment split between the two.

Meanwhile, thanks to a fall in the repo rate, South Africa’s base interest rate is now 7.5%. This means that employee loan transactions such as the interest on fringe benefits will fall by 0.25%. All loans must be stated on payslips and South Africa Revenue Services' certificates.

 Emma

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

From 1 May, South Africa will introduce a new national minimum wage, marking a big change in payroll terms for many employers.

According to Paymaster, the minimum wage will be set at R20 (US$1.60) per hour for all workers apart from farm workers, who will receive R18 (US$1.45) per hour; domestic workers, who will obtain R15 (US$1.21) per hour) and workers on an expanded public works programme, who will get R11 (US$0.89) per hour.

If employers cannot afford to pay the minimum wage, they can apply for an exemption, which must be submitted to the Department of Labour. Organisations also need to prove that the business:

  • Is under considerable financial pressure and does not have capacity to pay;
  • Has no alternative course of action, or method of recovering the additional amounts making up a higher wage bill;
  • Has credible reasons that its application for exemption would be approved.

Accounts and financial records must also be made available for audit, according to GR Newsletters.

In the case of employers that can afford to pay, it is important to share information about implementing the minimum wage to staff within your organisation and also to include trade unions from the outset.

Employers must comply with the new legislation from 1 May onwards. If they struggle to pay initially, they are permitted to introduce a double-payment increase, which involves allocating the increase in January and processing an adjustment in May. In this case, either the pay increase date can be brought forward or payment split between the two.

Meanwhile, thanks to a fall in the repo rate, South Africa’s base interest rate is now 7.5%. This means that employee loan transactions such as the interest on fringe benefits will fall by 0.25%. All loans must be stated on payslips and South Africa Revenue Services' certificates.

 Emma

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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