It is wait-and-see whether Finance Minister Tito Mboweni will make the administration of the national minimum wage simpler for employers in his Budget 2019, according to Rob Cooper, tax expert at Sage, and independent labour economist Andrew Levy.
"We hope to hear something in the Budget 2019 speech this year to align the Employment Tax Incentive Act (ETI) with the national minimum wage. However, for now, employers should be mindful of complying with both the ETI Act and the National Minimum Wage Act," they caution in a statement ahead of the announcement of Budget 2019 on February 20.
South Africa's national minimum wage legislation came into effect on 1 January 2019, setting the minimum wage at R18 per hour for farmworkers, R15 per hour for domestic workers and R20 per hour across most other sectors of the economy.
According to Cooper and Levy, the Commission for Conciliation, Mediation and Arbitration (CCMA) is already facing a flood of disputes between employers and employees about the new minimum wage.
They, therefore, point out three important aspects about the national minimum wage that employers should know.
Minimum wage and the Employment Tax Incentive Act
The Employment Tax Incentive Act came into effect on 1 January 2014 and President Cyril Ramaphosa announced in his State of the Nation Address (SONA) that it would be extended for another decade.
According to the Act, the employer must pay a wage in each month that is not less than "the amount payable by virtue of a wage regulating measure" for an employee to qualify to generate the tax incentive for the employer.
If payroll systems and employers apply the hourly minimum wage rate specified by the wage regulating measure, they will be in compliance.
However, the act also specifies that a monthly minimum wage of R2 000 must be applied if there is no wage regulating measure. This section does not provide for the minimum wage to be validated against an hourly wage rate, while the national minimum wage is applied on an hourly basis.
Minimum wage and 'independent contractors'
The National Minimum Wage Act does not confine itself to employers and employees as defined in the Basic Conditions of Employment Act.
The intention of the law is clear, in the view of Cooper and Levy, it is meant to prevent employers from shifting to hiring 'contractors' to avoid meeting the requirements of the minimum wage.
They point out that their view on the issue may yet be tested in the courts. But until then, they recommend that employers ensure that their individual contractors, casual part-timers and others not under a formal employment contract earn at least the hourly national minimum wage for the work they do.
Steep penalties for non-compliance
The CCMA may impose a fine that is the greater amount of twice the value of the underpayment or twice the employee's monthly wage on companies that do not comply with the Minimum Wage.
Non-compliant employers may also be named and shamed in a quarterly publication of all employers that were instructed to comply with the national minimum wage. This will be posted on the Department of Labour's website.