On 6 February 2017, agreement was reached between the parties at the National Economic Development and Labour Council (Nedlac) regarding a national minimum wage. As from May 2018, the national minimum wage will be R 20 per hour. An employee working 45 hours per week will earn approximately R 3 500 per month.

The agreement was due to be signed on 7 February 2017, however, in a public statement the Presidency advised that the event that was meant to take place in Cape Town on Tuesday 7 February 2017 has now been "postponed until further notice".

The agreement, which commits the parties to avoid job losses that may arise, includes a "code of good practice for collective bargaining, industrial action and picketing" and provides measures that aim to mitigate violent and lengthy strikes.

Current Position

Presently, there is no statutory national minimum wage. Section 51 of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA) provides that the Minister of Labour may make a sectoral determination establishing basic conditions of employment for employees in a sector and area, which includes minimum wages.

Sectoral determinations are in place in areas of economic activity where labour has been deemed vulnerable. There are eleven sectoral determinations governing vulnerable workers, in various sectors of the economy, that have been established. These are Forestry, Agriculture, Contract Cleaning, Children in the Performance of Advertising, Artistic and Cultural Activities, Taxi Operators, Civil Engineering, Learnerships, Private Security, Domestic Workers, Wholesale and Retail and Hospitality.

What happens now?

Legislation will be promulgated to give effect to the national minimum wage agreement. Sectoral agreements, collective agreements, bargaining council agreements and employment contracts will need to comply with and be aligned with the minimum wage act, once it is enacted. The national minimum wage is likely to have a knock-on effect on an employer's cost of labour.

The national minimum wage is due to be reviewed annually by a new National Minimum Wage Commission, based on considerations such as cost of living, inequality, health and safety considerations and inflation.

While this may be good news for employees, it may be worrisome for employers who are currently struggling to make ends meet. Employer's will need to be proactive and put the necessary plans in place to absorb the extra labour costs, to avoid any possible negative commercial consequences.

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