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Employers and employees must take note that the Minister of Employment and Labour has announced an upward adjustment to the earnings threshold in terms of section 6(3) of the Basic Conditions of Employment Act, 75 of 1997 (“BCEA”), which will take effect from 1 March 2023. The earnings threshold shall increase to R241 110.59 per annum. This is a substantial increase of 7,59%. Previously, the earnings threshold was R224 080.48 per year.

‘Earnings’ means the regular annual remuneration of an employee before deductions in respect of income tax, pension, medical aid, and similar payments made by the employer in respect of the employee. Subsistence and transport allowances received, and payments for overtime worked, among others, are not regarded as remuneration for the purpose of the earnings threshold.

The earnings threshold impacts upon the application of various provisions of the BCEA, Labour Relations Act, 66 of 1995 (“LRA”) and the Employment Equity Act, 55 of 1998 (“EEA”). For example:

  • Employees who earn below the earnings threshold are entitled to certain automatic rights and minimum protections contained in several provisions of the BCEA regulating ordinary hours of work; overtime; compressed working week; averaging of hours of work; meal intervals; daily and weekly rest period; pay for work on Sundays; night work; and public holidays. Employees who earn above the earnings threshold are excluded from these automatic rights and minimum protections.
  • Under the LRA, there are additional protections afforded to employees who earn below the threshold, relating to where those employees (i) are engaged in temporary employment services, (ii) are employed on fixed-term contracts and (iii) are employed on a part-time basis.
  • Under the EEA, where employees allege unfair discrimination and earn above the threshold, ordinarily they are not permitted to refer the dispute for arbitration to the Commission for Conciliation, Mediation and Arbitration (“CCMA”), but must refer the dispute for adjudication before the Labour Court instead. Employees who earn above threshold can still refer the matter for arbitration at the CCMA if the parties to the dispute agree to do so. Where an employee earns below the threshold, they may elect (unilaterally) to refer an unfair discrimination dispute for arbitration at the CCMA.

Employers and employees should seek and obtain legal advice should they have any queries in respect of the impact of the increased earnings threshold.