New Horizons in Employment: Unpacking the 2024 Earnings Threshold Increase and Its Impact on Businesses

The topic of the increased earnings threshold under the Basic Conditions of Employment Act, No. 75 of 1997 (the “BCEA”) has been a subject of widespread discussion across various platforms, resonating with both the general public and the business community. With the threshold set to change on 1 April 2024, understanding its implications is more crucial than ever. As we navigate through the complexities of this significant legal update, our aim is to provide clarity on how these changes will affect the employment landscape of employment South Africa, ensuring your business stays ahead in a dynamic regulatory environment.

On 5 March 2024, the Minister of Employment and Labour published an increase in the annual earnings threshold in terms of section 6(3) of the BCEA. With effect from 1 April 2024, employees who earn less than R254,371.67 per year (which equates to about R21?197.64 per month) will enjoy the full protection of the BCEA, the Labour Relations Act, No. 66 of 1995 (the “LRA”) and the Employment Equity Act, No. 55 of 1998 (the “EA”). The previous earnings threshold was R241,110.59 per year (which equated to about R20 092.54 per month).

What is the Basic Conditions of Employment Act?

Before delving into the implications of the increased earnings threshold, it's essential to grasp the significance of the Basic Conditions of Employment Act. The BCEA serves as a cornerstone of South Africa's labour legislation, aiming to protect and regulate the rights of employees and employers alike. It covers various aspects of employment conditions, including working hours, leave, termination, and remuneration.

Implications for Employers:

1. Legal Compliance: With the increased earnings threshold, employers must ensure compliance with the BCEA. This means adhering to minimum standards regarding wages, working hours and other conditions of employment for workers falling within the prescribed income bracket.
2. Review of Employment Contracts: Employers should review existing employment contracts to ensure they align with the updated earnings threshold. Contracts may need adjustments to reflect any changes in remuneration or entitlements triggered by the threshold increase.
3. Budgetary Considerations: Employers must account for the impact of the increased threshold on their budgetary allocations. This may involve adjustments in payroll expenses, benefits, and overall labour costs.
4. Risk Mitigation: Non-compliance with the BCEA, including failure to adhere to the revised earnings threshold, can result in legal repercussions such as fines, penalties, and reputational damage. Employers should prioritise compliance to mitigate such risks.

?Implications for Employees:

1. Enhanced Protections: Employees earning below the threshold stand to benefit from enhanced protections afforded by the BCEA. These protections encompass minimum wages, overtime pay, annual leave, and other statutory entitlements aimed at safeguarding their rights and well-being in the workplace.
2. ?Potential for Salary Increases: Some employees may see an increase in their salaries or benefits as a result of the elevated earnings threshold. Employers may adjust remuneration packages to ensure compliance with the new requirements, thereby improving the financial standing of affected workers.
3. Awareness of Rights: It is crucial for employees to be aware of their rights under the BCEA, particularly in light of the threshold adjustment. Understanding entitlements regarding wages, working conditions, and recourse mechanisms empowers workers to assert their rights effectively.
4. ?Collective Bargaining: Trade unions and employee representatives may leverage the increased earnings threshold during collective bargaining negotiations to advocate for improved conditions and fair remuneration for workers across various sectors.

Additional Implications:

In terms of the BCEA, certain sections only apply to employees earning below the annual earnings threshold. These sections are as follows:

• Section 9: ordinary hours of work of employees.
• Section 10: employee’s entitlement to and rate of overtime pay.
• Section 11: compressed working weeks.
• Section 12: the averaging of hours of work.
• Section 14: meal intervals.
• Section 15: daily and weekly rest periods.
• Section 16: pay for work on Sundays.
• Section 17 (2): night work.
• Section 18 (3): public holidays on which the employee would not ordinarily work.

The effect of the increase in the annual earnings threshold is that employees who were previously earning less than R254,371.67 per year but more than R241,110.59 per year will now enjoy the protection/have the benefit of the aforementioned sections.

In addition to the above, employees earning below the annual earnings threshold may refer a dispute to the Commission for Conciliation, Mediation and Arbitration (the “CCMA”) concerning the failure to pay any amount owing to that employee or worker in terms of the BCEA, the National Minimum Wage Act, No. 9 of 2018, a contract of employment, a sectoral determination or a collective agreement. Employees who earn in excess of the annual earnings threshold may only institute a claim in either the Labour Court, the High Court or, subject to their jurisdiction, the Magistrates’ Court or the small claims court.

Implications of the increased threshold in terms of the Labour Relations Act (LRA):

In terms of section 198B of the LRA, employees who earn below the annual earnings threshold and who are employed on a fixed-term contract or successive fixed-term contracts for longer than 3 (three) months, may be regarded as permanent employees if an employer is unable to prove that there was a justifiable reason for fixing the term of the contract and that the term was agreed.

Earning below the annual earning threshold has great effects on temporary employment services (what was previously known as a “labour broker”). In terms of section 198A(3)(b), employees earning below the annual earnings threshold may be deemed to be an employee of the client of a temporary employment service (as defined) and may be deemed to be employed on an indefinite basis by the client if they work for a client for a period exceeding 3 (three) months.

Implications of the increased threshold in terms of the Employment Equity Act (EA):

In terms of section 10(2) of the EA, if a dispute concerning unfair discrimination (such as on the basis of race, gender, pregnancy, marital status, family responsibility, ethnic or social origin, sexual orientation, age, etc.) remains unresolved after conciliation at the CCMA, employees earning below the annual earnings threshold may automatically refer such dispute to the CCMA for arbitration. Accordingly, employees earning in excess of the annual earnings threshold do not have an automatic right.

A Case Law Example: Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and Others (2007) 28 ILJ 2405 (LC)

In this landmark case, Assign Services, a labour broker, challenged the constitutionality of section 198A(3)(b) of the Labour Relations Act, which pertains to the employment status of temporary workers earning below the annual earnings threshold. The dispute centred on whether such workers should be deemed employees of the client company after three months of service, thus entitling them to certain benefits and protections under labour law.

The Labour Court upheld the constitutionality of the provision, affirming that employees earning below the earnings threshold are vulnerable and require additional protection against exploitation and unfair labour practices. The court emphasized the importance of promoting job security and dignified working conditions for all workers, including those engaged in temporary employment arrangements.

This case underscores the significance of legislative measures aimed at safeguarding the rights of vulnerable workers and ensuring equitable treatment in the labour market. It serves as a precedent for interpreting and applying provisions related to the employment status of workers earning below the annual earnings threshold, highlighting the judiciary's role in upholding the principles of social justice and labour rights in South Africa.

Conclusion:

The publication of the notice by the Minister of Employment and Labour to increase the earnings threshold under the Basic Conditions of Employment Act is significant in that both employers and employees must familiarise themselves with the implications of this adjustment and take proactive measures to ensure compliance and protect their respective interests. By upholding the principles of fairness, equity, and adherence to statutory obligations, the workforce can foster a conducive environment conducive to mutual growth and prosperity.

In essence, the increased earnings threshold serves as a catalyst for promoting dignity, equality, and social justice in the workplace, aligning with the broader objectives of South Africa's labour laws and promoting inclusive economic development.