South Africa Minimum Wage Laws

April 16th 2024

Fair wages build the foundation of a thriving society; minimum wage isn’t just a number, it’s a measure of dignity and respect for every worker’s contribution.

The Basic Conditions of Employment Act defines the term “wage” as the money a worker gets for their regular working hours or, if those hours are shorter, the usual hours they work in a day or week. To regulate wages within the country and ensure every employee is fairly compensated, South African President Cyril Ramaphosa signed into law the National Minimum Wage Bill (now the National Minimum Wage Act) on November 26, 2018.

Currently, there is a National Minimum Wage that employers need to follow alongside minimum wages set at the sectoral level and area level. So, whether you’re a business owner trying to avoid legal troubles or a worker wanting to know your rights, understanding these regulations is very important.

In this guide, we’ll help break down the basics of minimum wage laws in South Africa, who they apply to, exemptions, and penalties that employers may face for not following them. Let’s get started!

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What is the National Minimum Wage in South Africa?

The Department of Employment and Labour in South Africa announced a new National Minimum Wage (NMW) in 2024.

On March 1, 2024, the minimum wage went up from R25.42 per hour to R27,58 per hour, which is about a 8.5% increase. The new minimum wage also set out specific rates for workers in certain industries. Minimum wage for domestic workers and farm workers will follow this new rate. However, those in expanded public works programs are going to receive a lower rate of R15,16 per hour.

For those in the Wholesale and Retail Sector (SD9), the specific wage increase depends on the job category, with the lowest rate aligning with the national NMW at R27,58 per hour. In the Contract Cleaning Sector (SD1), employers must also raise their minimum rates depending on the area. In metropolitan areas, the new minimum is R30,35, while in certain rural areas, it is R27,67.

It’s important to note that the National Minimum Wage does not include allowances for work-related expenses (like transport or equipment), in-kind payments (such as board or accommodation), bonuses, or food. This means you can’t argue that you’re paying an employee less than the minimum wage because you provide them with certain benefits.

South Africa Updated Earnings Threshold

Alongside the introduction of the 2024 National Minimum Wage, the Minister of Labour and Employment, Thulas Nxesi, also introduced a new annual earnings threshold as part of the Basic Conditions of Employment Act.

On March 1, 2024, the annual earnings threshold was set to R254 371.67 per year, which is an increase from the previous R241,110.59. This means that the monthly threshold increased to R21 197.64 from the previous R20,092.55.

The annual earnings threshold, as defined in the announcement, includes an employee’s regular annual pay before deductions like income tax, pension, and medical aid. However, it excludes similar payments or contributions made by the employer on behalf of the employee. It’s also important to keep in mind that certain allowances, achievement awards, and payment for overtime worked are not considered part of the remuneration for this notice.

Employees earning above this threshold are not covered by certain provisions in the Basic Conditions of Employment Act, including regulations on regular working hours, overtime, compressed working weeks, averaging of hours, meal intervals, rest periods, Sunday pay, night work pay, and public holiday pay.

Who Enforces the Minimum Wage Law in South Africa?

According to the International Labour Organization, ensuring that minimum wages are followed falls under the responsibilities of the labour inspectorate. The primary role of labour inspection is to encourage compliance with labour laws and promote good labour practices to uphold basic worker rights and effective industrial relations.

In South Africa, the Department of Labour is responsible for enforcing labour regulations, including minimum wages. The Inspection and Enforcement Service (IES) Business Unit conducts two types of inspections: proactive and reactive. Proactive inspections, also known as routine or ‘blitz’ inspections, are regularly carried out in various sectors and regions. Reactive inspections, on the other hand, occur in response to lodged complaints.

Are Young Workers in South Africa Entitled to Minimum Wage?

Yes, young workers in South Africa are entitled to the set minimum wage by the government.

It’s important to note though that employing a child under the age of 15 is considered a criminal offense as per the Basic Conditions of Employment Act. Additionally, children under the age of 18 should not be engaged in work that is not suitable for their age or puts them at risk.

Are Tips Counted as Part of South Africa’s National Minimum Wage?

Currently, tips are not considered when calculating the minimum wage in South Africa. Because tip income is often not reported, and it’s challenging to monitor and enforce this part of earnings, it makes sense to leave out tips from the calculation of the National Minimum Wage (NMW).

Exemptions from Minimum Wage in South Africa

The National Minimum Wage Act of 2018 (NMWA) allows employers to request a reduction in the full National Minimum Wage.

The rules state that total exemption is not allowed, but a maximum reduction of 10% can be granted. For instance, the NMW is R27.58 per hour, a qualifying employer could be approved for a reduced rate of R24.82 per hour. This adjustment would lead to an estimated monthly wage of R4,543.44 instead of R5,049.76, based on a 40-hour workweek. An exemption can only be applied from the date of the request and lasts for a maximum of 12 months.

To be eligible for exemption, the Director-General of the Department of Employment and Labour or a delegated official must be convinced that:

  • The employer cannot afford to pay the minimum wage.
  • The employer has consulted all representative trade unions in the workplace, and if there is no union, the affected workers.

The regulations provide criteria, such as profitability, liquidity, and solvency, which companies can use to qualify for NMW exemption. When considering an exemption request, the first step is to calculate how much the NMW increase would cost the employer. And the next step is to assess whether the employer can afford this increase.

Penalties for Not Following the National Minimum Wage in South Africa

According to Dr Pravine Naidoo from the Advocacy & Stakeholder Relations unit in the Department’s Inspection and Enforcement Service, if an employer doesn’t follow the National Minimum Wage (NMW), a labour inspector can impose a fine.

For first-time violations, the fine is double the amount of the underpayment or twice the monthly wage, whichever is higher. As for repeated violations, the fine increases to triple the underpayment or three times the monthly wage, whichever is greater.

Will the South Africa National Minimum Wage Change in 2024?

Minimum wages aren’t set in stone. They can change occasionally to adjust to the ever-shifting cost of living and economic conditions. For 2024, there are currently minimum wage adjustment recommendations under review according to the government gazette published by the Department of Employment and Labour. This is why keeping yourself updated on these changes is crucial to ensure compliance with the law.

To get a full picture of other labour laws that affect work in South Africa, you can check out our comprehensive guide on South Africa Labour Laws.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.