The national minimum wage – one year later
Author: Imraan Mahomed – Director
The National Minimum Wage Act 9 of 2018 (“the Act”) came into operation on 1 January 2019. By the end of last year, an amendment to the Act was proposed to correct a technical error that would allow the absurd situation of the national minimum wage taking precedence over any contrary provision in any contract, collective agreement, sectoral determination or other law retrospective to 1 May 2017 (relating to the waiving of payment of the national minimum wage). The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour at the tail end of 2019 invited submissions on a proposed amendment that would make the Act clearer in preventing employers from unilaterally changing conditions of employment to avoid paying the national minimum wage.
Johannesburg based law firm Lawtons Africa practice area leader for employment law, Imraan Mahomed and senior associate, Tricia Tsoeu explain:
The National Minimum Wage came into operation on 1 January 2019. Shortly after the Act became operational, it was brought to the attention of the Portfolio Committee that section 17(4) of the Act contained a technical error. The technical error relates to the incorrect cross-referencing of section 4(6) of the Act as opposed to section 4(8) of the Act. The technical error created a number of practical problems for employers over 2019, says Tsoeu.
Currently, section 17(4) of the Act read with section 4(6) suggests that the payment of a national minimum wage cannot be waived retrospectively and the national minimum wage takes precedence over any contrary provision in any contract, collective agreement, sectoral determination or law with effect from 1 May 2017.
The application of these provisions as is would be problematic in that employees who earned less than the minimum wage would validly have a claim for back pay with effect from 1 May 2017, while those who earned above the minimum wage would not in fact have been entitled to such payment since the minimum wage takes precedence over the contract of employment, sectoral determination, collective agreement or law. Furthermore, the application of these provisions would be absurd since the Act was only assented to on 23 November 2018 and commenced on 1 January 2019, which means that there was no minimum wage set by 1 May 2017 and therefore no employer could have reasonably complied with paying the minimum wage.
The proposed amendment envisages that section 17(4) be read instead with section 4(8) of the Act. The section aims to prevent and rectify a situation where an employer unilaterally changes certain conditions of employment to circumvent paying the minimum wage.
Effectively, with the amendment, employees can raise unfair labour practice disputes in the CCMA relating to any alleged unilateral alteration to wages, hours of work or other conditions of employment related to the minimum wage. It is advisable that employers consider the rate that they pay employees to mitigate any potential liability in respect of the national minimum wage. Mahomed comments that in the last 12 months there has been a large influx of cases brought before the CCMA in relation to issues related to non-compliance with the national minimum wage.
The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour had invited individuals and stakeholders to make submissions on the amendment to the Act to correct the cross-reference error. The closing date for submissions were on 13 December 2019. Mahomed and Tsoeu both comment that the amendment is necessary and are supportive of the amendment.
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