NATIONAL MINIMUM WAGE by Christo Bester

South Africa’s labour environment is highly regulated and a wide spectrum of legislation is applicable in the workplace. Employers who don’t act within the guidelines set by legislation face hefty fines, business closures, and even jail time.

NEW MINIMUM

The national minimum wage plays a major role in South Africa’s current labour climate, especially in the agricultural sector. Despite the current weakness of the South African economy, as well as the impact of COVID-19 and the negative effect of the lockdown on employers’ financial position, the Minister of Employment and Labour announced an amended national minimum wage on 8 February 2021 in the Government Gazette. This wage comes into effect on 1 March 2021 and is R21,69 per hour (increased from R20,76 per hour).

EXEMPTION EXPIRED

The agricultural sector previously received an exemption to pay only 90% of the national minimum wage (which amounted to R18,68 in 2020). However, this exemption has now expired and the minimum wage for farmworkers has been made equal to the national minimum wage for 2021. This amounts to a 16,1% increase on the previous minimum wage for farmworkers of R18,68 per hour (2020) to R21,69 per hour (2021). Employers in the agricultural sector should take note that domestic workers on a farm are regarded as farmworkers and must receive the correct wage.

ECONOMY

Business is operating in a challenging environment, where the economy and other external factors leave a business owner with few options if he is to remain competitive and sustainable. The negative effect on the economy of the national lockdown that has been in place since 26 March 2020 is putting further pressure on farmers as business owners. The state of lockdown and alert levels has also forced many employers to explore strategic direction, working methods, resources, and infrastructure in order to adapt to a changing environment. The result is that many employers will be forced to consider restructuring or retrenchment. Note, however, that legislation prescribes strict procedures to be followed and any unilateral changes made to the terms and conditions of employment are regarded as unfair labour practice.

RISK

Employers have to manage many business risks on a daily basis in order to ensure the business’s profitability and sustainability. The strict requirements set by labour law are not negotiable and farmers put their businesses at unnecessary risk by failing to address labour law proactively and with caution.

Employers need to realise that by making a mind shift regarding the business risk linked to compliance with labour law, they can position themselves correctly for the employment relationship going forward, including any possible future disputes.