Increased Earnings Threshold 2021

On 8 February 2021, the Minister of Labour and Employment passed new regulations increasing the earnings threshold from R205 433.30 per annum to R211 596.30.  The new threshold will be effective from 1 March 2021.

In the Regulations, earnings are defined as: the regular annual remuneration before deductions, i.e. PAYE, pension or provident fund, medical aid and similar payments, but excluding employer contributions to these benefits.  The regulations also state that transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration.

The earnings threshold has increased by 3% from R17 119,44 per month (basic salary) to R17 633.03.  This threshold is not to be confused with the maximum benefit threshold for UIF which remains R17 712.00.

Why is the earnings threshold important?

Employees who earn below the threshold are more protected by the labour laws than those that earn more than the threshold.  This threshold forms part of the Basic Conditions of Employment Act, (section 6.3) which states:

6.3    The Minister must, on the advice of the Commission, make a determination that excludes the application of this Chapter or any provision of it to any category of employee earning in excess of an amount stated in that determination.

This comes from the part of the act that deals with the Regulation of Working Time.  It states that the employees earning more that the earnings threshold are excluded from certain rights in terms of this Act.  These are:

Clause 9: Ordinary hours of work

This means that people earing above the threshold can have variable hours whereas those below the threshold should have defined hours of work.

Clause 10. Overtime

Employees earning above the threshold are not entitled to overtime pay or time off in lieu of overtime worked.

Clause 11. Compressed working week

The rules around working a compressed working week are not applicable to employees earning above the threshold (i.e., working a 12-hour day without overtime being paid). Typically, staff working in this manner work 4 days at 12 hours and 3 days off (security industry for example)

Clause 12. Averaging of hours of work

This clause allows overtime worked to be averaged over a three-month period.  Again, these rules do not apply to employee who earn above the threshold.

Clause 14. Meal intervals

Employees earning above the threshold are not entitled to a fixed lunch hour.

Clause 15. Daily and weekly rest period

Employees earning above the threshold are not entitled to the daily rest period or the weekly rest period of 36 hours.

Clause 16. Pay for work on Sundays.

Employees earning above the threshold are not entitled to additional pay (1.5 or double time depending on the nature of the work) when asked to work on a Sunday.

Clause 17(2). Night work

Employees earning above the threshold are not entitled to a shift allowance or transport when working night shift.

Clause 18 (3) Public holidays

Although the act says that employees earning above the threshold are not entitled to additional pay when working on a public holiday, the Public Holiday Act does require pay for all employees who are required to work on a public holiday or time off in lieu.

Labour Relations Act

Amendments to the LRA in 2014 have made reference to the earnings threshold, with specific reference to protections for specific employees.  These are:

  • Temporary Employees employed though a Temporary Employment Service
  • Fixed Term Contract Employees
  • Part Time Employees

Employees in these categories who earn more than the earnings threshold are not protected by the provisions of section 198 of the LRA.  This section of the act is aimed at preventing the abuse of employees who are never given the opportunity to become permanent employees.

In addition to this, the CCMA undertook to assist administratively any employee whose earnings fell below the earnings threshold.  This included:

  • The preparation of dispute documentation
  • The serving of dispute forms to the employer
  • Assistance with collecting awards (the CCMA will pay the sheriff of the court to execute collections)

Over the threshold, employees have to do all of this themselves.

Employment Equity Act

Amendments to the Employment Equity Act also in 2014 makes reference to the earnings threshold in terms of access to the CCMA.  The amendment ruled that the CCMA had jurisdiction to arbitrate sexual harassment matters while other disputes relating to discrimination could be referred to arbitration if the employee earned below the threshold and, unless otherwise agreed, disputes where the employee earns more that the threshold would be referred to the Labour Court.

Access to the Department of Employment and Labour

Perhaps the most problematic provision is that if an employee earns above the threshold the Department of Employment and Labour will not give them access to an inspector if they believe that your employer is not complying with the acts.  The employee would have to use the Labour Court or their own legal representatives to fight for their rights.

Conclusion

Essentially the Earnings threshold is the divide between those employees who have the necessary skills and abilities to negotiate their own working conditions and those who need the full protection to the law to ensure that they are not exploited.

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