On 17 November 2017, the National Minimum Wage Bill was gazetted for public comment. Given that the Bill was the subject of negotiation and agreement at the National Economic Development and Labour Council (“NEDLAC”), its progress through the legislative process is likely to be fairly smooth. The Bill envisages that it should be in force by 1 May 2018. We highlight its most important provisions below.
The Bill establishes the National Minimum Wage Commission, comprising an independent chairperson appointed by the Minister of Labour, three representatives of organised business, three representatives of the “organised community”, three representatives of organised labour and three independent experts. The “organised community” is defined as “those non-governmental organisations identified by the Minister without Portfolio in the Office of the President, which represent community interests relating to reconstruction and development in terms of section 3(5) of the National Economic Development and Labour Council Act”.
The Minimum Wage Commission will review the national minimum wage annually and make recommendations to the Minister of Labour on any adjustment (to commence on 1 May each year) to the national minimum wage.
The minimum wage of R20 per hour for the year commencing 1 May 2018 has been agreed at NEDLAC. However, farmworkers will be entitled to a minimum wage of R18 per hour, and domestic workers (including gardeners, carers and drivers employed by a household) will be entitled to a minimum wage of R15 per hour. Individuals who are employed in the expanded public works programme will be entitled to a minimum wage of R11 per hour.
Once this Bill is enacted, employers will be obliged to pay their employees no less than the minimum wage.
The enforcement of the National Minimum Wage Bill is dealt with in the Basic Conditions of Employment Amendment Bill, which was also gazetted on 17 November 2017. Broadly speaking, the same mechanisms utilised to enforce the provisions of the Basic Conditions of Employment Act, 1997 (the “BCEA”) will be utilised to enforce the national minimum wage. The proposed amendments to the BCEA contain important changes to its enforcement provisions, which will also apply to breaches of the National Minimum Wage Act. This means that inspectors appointed in terms of the BCEA will be entitled, for example, to seek undertakings from employers to comply with the national minimum wage or to issue compliance orders. Should the employer nevertheless fail to comply with an undertaking given or a compliance order issued, the Director-General of Labour may apply to the Commission for Conciliation, Mediation and Arbitration (the “CCMA”) to have an undertaking or compliance order given an arbitration award. An intriguing proposed insertion to the BCEA envisages a situation where a labour inspector may, of his or her own accord, refer a dispute to the CCMA concerning a failure to comply with the National Minimum Wage Act. This seems to short circuit the compliance order process.
The proposed amendments to the BCEA prescribe a fine for non-compliance of either twice the value of the underpayment or twice the employee’s monthly wage, whichever is the greater. We will have to wait and see to what extent the already over-extended inspectors of the Department of Labour will be able to manage this additional workload.
It is perhaps in light of this problem that the amendments also propose another mechanism for enforcing the provisions of the BCEA and the National Minimum Wage Act. The proposed amendments to the BCEA envisage that “any person” will be able to refer disputes concerning the failure to pay any amount owing to that person in terms of the BCEA, the National Minimum Wage Act, any collective agreement, contract of employment or sectoral determination to the CCMA, to enforce compliance with these Acts. The term “any person” excludes employees who earn more than the threshold amount referred to in section 6(3) of the BCEA, but these individuals may refer such a dispute to the Labour Court, the High Court or, subject to their jurisdiction, to the magistrate’s court or small claims court. This probably means that there will be a significant increase in employment litigation on the basis of non-compliance with the national minimum wage.
Interestingly, the proposed amendments to the BCEA envisage the repeal of chapters 8 and 9 of the BCEA, dealing with the establishment of the Employment Conditions Commission and the publication of sectoral determinations. However, existing sectoral determinations will remain in force except to the extent that they prescribe a wage that is less than the national minimum wage. The transitional provisions further provide that, should a sectoral determination already prescribe wages that are higher than the national minimum wage, the wages in that sectoral determination, and the remuneration and associated benefits based on those wages, must be increased proportionally to any adjustment of the national minimum wage for three years from when the Bill is enacted.
Also of practical importance, is that it will be an unfair labour practice to unilaterally alter wages, hours of work or other conditions of employment “in connection with the implementation of the national minimum wage”.
The stated aim of the National Minimum Wage Bill is to reduce the levels of inequality, unemployment and poverty. However, there has been a spirited debate as to the level at which the minimum wage should be set. If it is too high, the resultant job losses may defeat its aim. If it is too low, it will also not achieve its aim.
Concerns have been expressed that a minimum wage may impact unfavourably on certain sectors of the economy. This has been recognised, at least in part, by setting a lower rate for farmworkers and domestic workers. Concerns relating to the impact of a national minimum wage on small employers are potentially addressed by the fact that the Bill envisages that employers can apply for an exemption. However, it is unclear what this process will entail and what factors will be required to be present in order to justify an exemption.