South Africa pledges to sort out error in controversial minimum wage law

South Africa pledges to sort out error in controversial minimum wage law
24 Jan 2019

South Africa’s Labour Committee has pledged to correct an error in the country’s national minimum wage legislation that could leave workers vulnerable to unscrupulous employers.

The issue centres on a May 2017 ‘retrospective’ document, which said it was “unfair labour practice for an employer to unilaterally alter wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage”.

But this section ended up being cross-referenced to the wrong clause in the Act. This means that workers whose benefits or working conditions have been changed unilaterally in response to the new minimum wage law may have to wait until Parliament fixes the technical error before they can take action against their employers.

Furthermore, the error implies that payment of the minimum wage rate applies retrospectively to 1 May 2017. Business Unity SA (Busa), which represents the South African business community, previously said there had never been any agreement to make the minimum wage rate retrospective, and that the cross reference was faulty.

According to Business Day, parliamentary legal adviser Michael Prince said that as the Act had already been promulgated by the President, the only way to correct the error was by an Amendment Bill, which could take some time.

The legislation sets a national minimum wage of R20 (US$1.45) per hour or R3,500 (US$252.93) per month — to be reviewed annually — except for domestic and farm workers, whose rate is set at R15 (US$1.08) and R18 (US$1.30) an hour.

Employers can apply for exemptions, but controversially discounts are set at 10% of the set rate. Such discounts will only be granted for a year and be based on the employers’ profitability, solvency and liquidity.

Business representatives have said they had received assurances from the government that the offending clause would not be retained in the final regulations. Fears are that employers will not bother to apply for a paltry R2 (US$0.14) discount, which will lead to non-compliance and render the entire minimum wage system ineffective.

As the National Employer Association of SA pointed out: “This outcome [applying for exemption] hardly seems worth the effort, taking into account the inevitable red tape that will accompany the application.”

Meanwhile, a study from Picodi revealed that expenditure on basic foodstuffs accounts for 33.5% of the minimum wage. According to Eyewitness News, this places South Africa 36th out of a list of 52 countries.

Emma Woollacott

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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South Africa’s Labour Committee has pledged to correct an error in the country’s national minimum wage legislation that could leave workers vulnerable to unscrupulous employers.

The issue centres on a May 2017 ‘retrospective’ document, which said it was “unfair labour practice for an employer to unilaterally alter wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage”.

But this section ended up being cross-referenced to the wrong clause in the Act. This means that workers whose benefits or working conditions have been changed unilaterally in response to the new minimum wage law may have to wait until Parliament fixes the technical error before they can take action against their employers.

Furthermore, the error implies that payment of the minimum wage rate applies retrospectively to 1 May 2017. Business Unity SA (Busa), which represents the South African business community, previously said there had never been any agreement to make the minimum wage rate retrospective, and that the cross reference was faulty.

According to Business Day, parliamentary legal adviser Michael Prince said that as the Act had already been promulgated by the President, the only way to correct the error was by an Amendment Bill, which could take some time.

The legislation sets a national minimum wage of R20 (US$1.45) per hour or R3,500 (US$252.93) per month — to be reviewed annually — except for domestic and farm workers, whose rate is set at R15 (US$1.08) and R18 (US$1.30) an hour.

Employers can apply for exemptions, but controversially discounts are set at 10% of the set rate. Such discounts will only be granted for a year and be based on the employers’ profitability, solvency and liquidity.

Business representatives have said they had received assurances from the government that the offending clause would not be retained in the final regulations. Fears are that employers will not bother to apply for a paltry R2 (US$0.14) discount, which will lead to non-compliance and render the entire minimum wage system ineffective.

As the National Employer Association of SA pointed out: “This outcome [applying for exemption] hardly seems worth the effort, taking into account the inevitable red tape that will accompany the application.”

Meanwhile, a study from Picodi revealed that expenditure on basic foodstuffs accounts for 33.5% of the minimum wage. According to Eyewitness News, this places South Africa 36th out of a list of 52 countries.

Emma Woollacott

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.

OTHER STORIES THAT MAY INTEREST YOU

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South Africa launches tax crackdown

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