The implications of the new earnings threshold for South African businesses 

Effective from 1 April 2024, the Earnings Threshold – which is determined by the Minster of Employment and Labour from time to time in terms of section 6(3) the Basic Conditions of Employment Act of 1997 (BCEA) – will increase from R241,110.59 per annum (approximately R20,092.55 per month) to R254,371.67 per annum (approximately R21,197.63 per month).  

As a result, the limitations, protections, or the right to additional pay afforded by certain provisions of the BCEA will not apply to employees earning more than 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 
• Section 18(3) – Public Holidays on which the Employee would not ordinarily work 

It is important to remember, 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 excludes 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 will need to identify those employees earning below and above the earnings threshold. Employees who earn below the earnings threshold are afforded the protection in terms of the relevant provisions of the BCEA.  

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

Employers must remain vigilant and continuously update their knowledge regarding changes to the earnings threshold. This is particularly crucial when employees, who previously earned above the threshold, find themselves earning below it after updates to the threshold are applied. As a result, these individuals, once excluded from specific benefits, now qualify for additional compensation, including overtime pay, holiday work, and Sundays, among others. 

Article by Ali Sonday (Associate) and David Short (Director)