The long awaited national minimum wage (NMW) has been signed into law. The effective date is 1 January 2019.

What exactly does this mean for employers and employees?

R20 per hour
The new minimum wage of R20 per hour applies across all sectors.

Immediate adjustments within certain sectors

Employers in some sectors will have to increase their minimum wages to R20 per hour with effect from 1 January 2019 – these include the Hospitality Sector (where the current minimum for employers with less than 10 employees is R17.34 per hour) and the Wholesale and Retail Sector (where the minimum wage for several categories workers is below R20 per hour, the lowest currently being R16.20).

Minimum monthly wage
For employees who work 45 hours per week, the minimum monthly wage will be just short of R3900. If the contract of employment makes provision for less than 45 hours per week, the monthly rate can be less than this amount. Employers are not permitted to unilaterally reduce hours of work or change other conditions of employment in response to the implementation of the NMW.

Are benefits included?
Employers are restricted in the way that they structure the remuneration package. The NMW excludes allowances that are paid to enable employees to work (such as transport and equipment), or payment in kind (such as board or accommodation), as well as bonuses, tips or food. In essence an employer cannot argue that he pays an employee less than R20 per hour because he contributes to their uniform or provide them with meals.

Reducing hours of work
Employers are not be permitted to unilaterally change working hours due to the implementation of the NMW. Any reduction of hours of work will have to be negotiated.

There is provision for employers to apply for exemption of up to a 10% reduction.

Please contact our litigation department should you wish to submit an application for exemption.

Other changes

The other important changes to labour legislation, i.e. those relating to parental, adoption and surrogacy leave, as well as improvements to unemployment benefits, have been signed into law, but the implementation dates are not known.