Monday, 13 March 2017.
PROPOSED MINIMUM WAGE (UPDATE)
1. As a follow- up to our previous Channel Chat dated 22 November 2016 regarding the Proposed Minimum Wage, there has been much talk since then about the implementation of the national minimum wage (“NMW”). These discussions have culminated in an agreement which has been signed by business representatives, government and labour federations, but for Cosatu, and will be implemented by no later than 1 May 2018, with the NMW set at R20 (Twenty) an hour.
2. As of 1 May 2018, all employers will be required to comply with the NMW which translates to about R3,500 (Three thousand five hundred) for those working 40 (Forty) hours per week and about R3,900 (Three thousand nine hundred) for those who work for 45 (Forty-five) hours per week.
3. For those businesses who cannot afford the NMW, and to avoid any job losses, such business will be able to apply for an exemption for up to 12 (Twelve) months.
4. As Mr Ramaphosa has stated “Any fragile sectors that are having difficulty in complying with the national minimum wage will be considered for assistance within the available means, including through incentives”.
5. Furthermore an employment tax incentive, expanded support for small and medium enterprises, as well as sectoral-specific tax incentives is envisaged.
6. A national minimum wage commission (consisting of 3 (Three) representatives each from business, labour and communities, as well as 4 (Four) independent experts) will also be established to recommend annual adjustments to the national minimum wage and it will evaluate its effect on employment, poverty and inequality.
7. Issues to be worked out with Nedlac over the next few weeks include the minimum number of working hours and whether workers in the government’s expanded public works programme will also come under the NMW.
The way forward:
8. The NMW will be implemented by 1 May 2018 and we would therefore propose that businesses immediately start considering the impact this will have on their business. This should include an evaluation of the staff complement to verify the numbers of employees who fall below the NMW and what will need to be done in order to bring your business in line with NMW requirement.
9. Job losses can and should be avoided, given the exemption process and should therefore not be used as a first instance.
10. Should you have any queries arising with regard to the above, please do not hesitate to contact us.
Thank you for the trust that you have placed in us thus far we look forward to an ongoing long and mutually beneficial relationship.
André Naudé Ph.D.
Chief Commercial Officer- Indgro Multi Services Group