Implications of employees earning above the new earnings threshold

Effective from 1 March 2023, the earnings threshold, which is determined by the Minster of Employment and Labour from time to time in terms of section 6(3) of the Basic Conditions of Employment Act of 1997 (“the BCEA“), will increase from R224 080,48 per annum (approximately R18 673.37 per month) to R241 110.59 per annum (approximately R20 092,55 per month).

The effect of the earnings threshold is that the limitations, protections or the right to additional pay afforded by certain provisions of the BCEA do not apply to employees earning in excess of the new threshold. These provisions (“the relevant provisions“) are:

• Section 9 – hours of work;
• Section 10 – overtime;
• Section 11 – compressed working week;
• Section 12 – averaging of hours;
• Section 14 – meal intervals;
• Section 15 – daily and weekly rest periods;
• Section 16 – pay for work on Sundays;
• Section 17(2) – night work; and
• Section 18(3) – public holidays on which the employee would not ordinarily work.

It is important to note, that for purposes of the earnings threshold, “earnings” means the regular annual remuneration before deductions, i.e., income tax, pension, medical and similar payments, but excluding similar payments (contributions) made by the employer in respect of the employee. Subsistence and transport allowances received, achievement awards and payments for overtime worked are not regarded as “earnings” for the purpose of the earnings threshold.

Employers need to identify those employees earning below and above the earnings threshold. Those employees who earn below the earnings threshold are afforded the protection in terms of the relevant provisions of the BCEA and also qualify for certain benefits such as overtime pay, payment for work on Sundays and payment for work on public holidays.

Should those employees earn below the threshold and are refused/denied the protection or benefits afforded to them in terms of the relevant provisions of the BCEA, such employees may refer claims for non-payment to the CCMA for adjudication in terms of Section 73A of the BCEA.

It is important for Employers to monitor any changes made to the threshold of earnings as determined by the Minister of Labour from time to time to ensure that where employees who were earning above the threshold and who as a result of any changes thereto then fall below the threshold, that they then are afforded any benefits and payment in terms of the Basic Conditions of Employment Act, for which they previously did not qualify so as to avoid any claims and/or enforcement proceedings being instituted against the Employer by the Department of Labour of the affected Employee/s.

The Minster of Employment and Labour usually publishes the new earnings threshold during February of each year and same is usually aligned with the inflation rate.

Ali Sonday

Fairbridges Wertheim Becker

In the Employment Law Department

In the event of you requiring any further  information or assistance in respect of either what is set out above or with any other employment related matter, you are invited to contact any member of our Labour Department:

Cape Town – Ali Sonday

Johannesburg – David Short, Ephraim Lehutso