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?

The new minimum wage of R20 per hour applies across all sectors, with a few exceptions.  The exceptions include domestic workers, farm/forestry workers and workers employed in Expanded Public Works Programmes.

The exceptions will only be temporary.  It is envisaged that there will be a gradual adjustment of domestic and farm/forestry workers’ wages to come in line with the NMW.  As a first step domestic workers’ minimum wages will be increased to a minimum rate of R15 per hour, and farm/forestry workers’ wages to a minimum rate of R18 per hour. The implementation dates of these increases have not yet been announced.

Some sectors will have to adjust their minima upwards with effect from 1 January 2019 – these include the Hospitality Sector, Wholesale and Retail Sector.

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 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.

Employers are not 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 by means of an electronic system.  At the time of the announcement of the implementation date there was no information available on how to go about this in practice.

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