Following increases to the national minimum wage which took effect on 1 March 2025, the Minister of Employment and Labour has determined an increase to the annual earnings threshold in terms of the Basic Conditions of Employment Act (BCEA).
With effect from 1 April 2025, the earnings threshold will be increased from ZAR 254 371.67 to ZAR 261 748.45 per annum (the equivalent of ZAR 21 812.37 per month).
‘Earnings’, in this context, means an employee’s regular annual remuneration before the deduction of any income tax, employee benefit scheme contributions and similar payments, but excludes benefit contributions made by employers, subsistence and transport allowances, achievement awards and payments for overtime worked.
The annual earnings threshold determines the application of certain provisions of the BCEA, the Labour Relations Act (LRA), and the Employment Equity Act (EEA).
In terms of the BCEA, employees who earn below the earnings threshold are subject to protection under provisions that regulate, amongst other things, working hours, overtime, overtime pay, pay for work on Sundays and public holidays, averaging of working hours and compressed working weeks, meal intervals and rest periods.
The LRA extends protection to employees earning below the earnings threshold who are engaged in atypical forms of employment (ie fixed term or part-time contracts of employment and employees provided to clients by a temporary employment service, commonly referred to as a ‘labour broker’). Importantly:
- in the absence of a justifiable reason for fixing the term of the contract, employees earning below the earnings threshold and engaged on fixed-term contracts of employment may be deemed to be employed indefinitely; and
- employees engaged by a labour broker and assigned to work for a client will be deemed to be employees of the client if they earn below the earnings threshold and are not performing a ‘temporary service’ (eg a period not exceeding three months or substituting for an employee who is temporarily absent).
In terms of the EEA, employees earning equal to or below the earnings threshold may elect to refer an unfair discrimination dispute to the CCMA for arbitration (whereas employees earning above the earnings threshold are required to refer such dispute to the Labour Court for adjudication, unless the dispute relates to sexual harassment).
In light of the imminent increase to the annual earnings threshold employers are encouraged to carefully consider their current workforces and engagements with labour brokers (if any) with reference to employees’ earnings, to ensure compliance with these provisions.
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