New Earnings Threshold from 1 April 2025 – What Employers and Employees Need to Know
As of 1 April 2025, the earnings threshold in South Africa will increase to R261,748.45 per year (or R21,812.37 per month), reflecting a 2.9% increase from the previous threshold of R254,371.67 per year.
This threshold, determined by the Minister of Employment and Labour under the Basic Conditions of Employment Act (BCEA), plays a crucial role in defining which labour protections apply to employees. If you’re an employer or an employee, it’s essential to understand how this change affects working hours, overtime, and other employment conditions.
What Does the Earnings Threshold Mean?
The earnings threshold determines which sections of the BCEA apply to an employee. If an employee earns less than the threshold, they are entitled to several workplace protections, including payment for overtime and extra pay for public holidays.
Employees who earn above the new threshold are excluded from certain BCEA protections related to working hours and additional pay. This means that employers are not legally required to provide compensation for overtime or certain rest periods to these employees unless their employment contract specifically allows it.
Which BCEA Protections Are Affected by the Threshold?
Employees earning above R261,748.45 per year will no longer automatically qualify for the following protections under the BCEA:
Working Hours (Section 9): The 45-hour workweek limit does not apply.
Overtime Pay (Section 10): No legal requirement to pay 1.5 times the hourly rate for overtime.
Compressed Workweek (Section 11): No restriction on compressed workweeks.
Averaging of Hours (Section 12): Work hours can be averaged over a longer period.
Meal Intervals (Section 14): No mandatory break after five hours of work.
Rest Periods (Section 15): No entitlement to daily and weekly rest periods.
Sunday Pay (Section 16): No requirement for double pay for work on Sundays.
Night Work (Section 17(2)): No mandatory night shift allowance or transport assistance.
Public Holiday Pay (Section 18(3)): No entitlement to extra pay for working on a public holiday.
If you currently earn between R254,371.67 and R261,748.45 per year, you will now qualify for these benefits if your employer had previously excluded you based on the old threshold.
What Counts as Earnings?
When calculating whether an employee falls above or below the earnings threshold, “earnings” refers to the employee’s regular annual remuneration before deductions like tax, medical aid, and pension contributions.
However, the following do not count toward earnings:
Overtime payments
Transport and subsistence allowances
Bonuses and achievement awards
Employer contributions (e.g., medical aid, pension)
It’s important for employers to accurately calculate earnings to ensure compliance with the new threshold.
Can Employers Change Existing Contracts?
If an employee earns above the new threshold, an employer cannot automatically remove benefits that go beyond the BCEA’s minimum protections.
For example, if an employment contract already guarantees overtime pay or rest periods, those benefits remain legally enforceable—even if the employee’s earnings exceed the new threshold. Any changes to these terms must be mutually agreed upon between the employer and the employee.
What About Senior Managerial Employees?
Certain senior managerial employees are excluded from BCEA working-time protections regardless of their earnings.
A senior managerial employee is defined as someone who has the authority to hire, discipline, or dismiss employees and can represent the employer in internal and external matters. These employees are generally not entitled to the same protections as other workers, even if they earn below the threshold.
Other Legal Implications of the Earnings Threshold
Beyond working hours and overtime pay, the earnings threshold impacts several other areas of employment law:
Monetary Claims:
Employees earning below the threshold can refer payment disputes to the CCMA for conciliation and arbitration. Those earning above the threshold must take their disputes to the Labour Court, which can be a more complex and costly process.Fixed-Term Contracts:
Employees earning below the threshold who are on a fixed-term contract exceeding three months may be deemed permanent employees if there is no justifiable reason for the temporary contract. Those above the threshold do not receive this protection.Unfair Discrimination Claims:
Employees earning below the threshold can take unfair discrimination claims directly to the CCMA for arbitration. Employees above the threshold must pursue such claims through the Labour Court, which is more formal and resource-intensive.Temporary Employment Services (TES):
Employees earning below the threshold who are placed with a client by a labour broker for longer than three months may become permanent employees of the client. This does not apply to employees above the threshold—they remain under the employment of the labour broker.
Why Understanding the Earnings Threshold Matters
For employers, staying updated on the earnings threshold ensures compliance with South African labour laws and prevents potential disputes. Incorrectly applying the threshold could lead to claims, fines, and reputational damage.
For employees, understanding the threshold helps clarify what legal protections you are entitled to—whether it’s overtime pay, work hours, or rest periods. If you fall below the new threshold, you may now qualify for additional benefits you were previously excluded from.
Need Help Navigating Labour Law Changes?
Staying on top of changes like the earnings threshold is essential for businesses to avoid legal risks and remain compliant. At Chamlabour, we specialise in helping businesses understand and implement labour legislation changes efficiently.
Whether you need assistance updating employment contracts, managing disputes, or ensuring full BCEA compliance, we’ve got you covered.
📢 Stay ahead of labour legislation changes—let Chamlabour guide you.
