New Earnings Threshold from 1 April 2024 – Its Impact on South African Employers
New Earnings Threshold from 1 April 2024 – Its Impact on South African Employers
Following the recent budget speech, the Minister of Employment and Labour has announced a significant increase in the annual earnings threshold, effective from 1 April 2024. This threshold, set in accordance with section 6(3) of the Basic Conditions of Employment Act (BCEA), has risen to R254,371.67 per year (approximately R21,197.63 per month). Previously, it stood at R241,110.59 per year, marking a notable increase of R13,261.08 from the previous year.
Understanding Earnings and Its Implications
“Earnings” refer to the regular annual remuneration before deductions, excluding certain payments made by the employer. This includes income tax, pension, medical payments, but not subsistence and transport allowances or payments for overtime worked.
Effects on BCEA
Employees falling below the new threshold will now benefit from specific BCEA sections, including those covering ordinary hours of work, entitlement to and rates of overtime pay, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, pay for work on Sundays, night work, and public holidays.
Legal Recourse and Dispute Resolution
Employees earning below the annual threshold may refer disputes to the CCMA concerning non-payment or disputes related to their employment conditions. However, those earning above the threshold must pursue legal action through the Labour Court or other relevant courts.
Implications Under the LRA
Under the Labour Relations Act (LRA), employees on fixed-term contracts exceeding three months may be considered permanent if justifiable reasons for the fixed term cannot be proven by the employer. Additionally, temporary employment service employees earning below the threshold may be deemed permanent employees of the client after working for a period exceeding three months.
Employment Equity Act (EA) Considerations
Employees earning below the threshold have automatic recourse to the CCMA for arbitration in cases of unresolved disputes related to unfair discrimination. However, those earning above the threshold do not possess the same automatic right.
Conclusion
The increase in the annual earnings threshold will undoubtedly impact South African employers, particularly in their employment practices concerning individuals below the threshold. For further guidance on navigating these changes and understanding your obligations under the BCEA, LRA, and EA, do not hesitate to reach out to us.
