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Employers urged to hold off on increases

Jan 10 2011 17:36
Cape Town - Employers should wait for the announcement of the new earnings threshold before finalising decisions on annual increases for 2011, a law firm said on Monday.

"During December 2010 the Minister of Labour requested the Employment Conditions Commission to review the earnings threshold determined in terms of the Basic Conditions of Employment Act 75 of 1997 (the BCEA)," Johan Botes, a director in the Employment Law Practice at Cliffe Dekker Hofmeyr business law firm said.

"Employees earning in excess of the earnings threshold (R149 736 per annum) are excluded from specific provisions of the BCEA, notably the obligation to pay overtime and extra remuneration for work performed on Sundays.

"Employers are not obliged to provide these employees with a meal interval and also receive a reprieve from certain obligations relating to nightwork and additional remuneration for work on public holidays."

No date has been set for the amendment. The closing date for representations to the Employment Conditions Commission was 8 January 2011. An announcement regarding the amendment is expected to be made soon.

Botes said "prudent employers" had reviewed their employment contracts to ensure no contractual right to the exclusions were created.

Where this was not done, for example, an employee earning above the threshold may be excluded from claiming statutory overtime, but may still have a claim for overtime in terms of the employment contract concluded.

Employment contracts should carefully be scrutinised to ensure that such rights were not created unintentionally, Botes said.

"The earnings threshold is an important and relevant factor to consider when reviewing employee salaries," Botes said.

"The indirect variable salary costs arising from the BCEA (including payment for overtime, public holidays and work performed on Sundays) can play havoc with the labour portion of any employer's budget."

Botes said an employer could achieve "a greater level of stability" by ensuring that employees were remunerated in excess of the earnings threshold.

"Even though irregular overtime payments are not included in determining whether an employee earns in excess of the earnings threshold, in many instances the additional cost of increasing employee remuneration to above the earnings threshold may be offset by the saving achieved when the obligation to pay the variable costs falls away."
employment  |  bonuses  |  salary increases  |  tax


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