Employment & Pension Law Update, Minister of Labour Increases the BCEA Earnings Threshold

On 1 July 2013, the Minister of Labour, in terms of the Basic Conditions of Employment Act, 1997 ("BCEA"), increased the earnings threshold from R183 008.00 per annum to R193 805.00 per annum (R16 150.42 per month). This means that employees who earn in excess of R193 805.00 per annum will be excluded from the protection afforded by the BCEA in so far as the following are concerned:

• section 9 (ordinary hours of work);
• section 10 (payment for overtime hours worked);
• section 11 (compressed working week);
• section 12 (averaging hours of work);
• section 14 (meal intervals);
• section 15 (daily and weekly rest period);
• section 16 (pay for work on Sundays);
• section 17 (2) (night work); and
• section 18 (3) (Public Holidays).

Employers must take note of the manner in which "earnings" are calculated as this will determine which employees are in fact entitled to benefit from those sections of the BCEA as set out above. "Earnings" means an employee's regular annual remuneration before deductions.  Payment for overtime worked, subsistence allowances, transport allowances and achievement awards are excluded from the earnings calculation.

It is important for employers to carefully assess whether employees who did not previously fall within the earnings threshold are now, because of the increase, entitled to the protection afforded by those sections of the BCEA as set out above.    For example, an employee who earned R190 000.00 per annum up until 1 July 2013 would not have been entitled to be remunerated for overtime hours worked.  However, because the earnings threshold increased to R193 805.00 per annum on 1 July 2013, that employee will now become entitled to be remunerated for overtime hours worked.   As a consequence, employers may need to reassess their employees' hours of work to avoid an increase in the salary bill. 

Clients are welcome to contact Shepstone & Wylie's employment law department to discuss the increase of the earnings threshold in further detail.

Siobhan Leyden, Partner

Contact 011 290 2557 and sleyden@wylie.co.za