The Department of Employment and Labour has recently adjusted the earnings threshold under the Basic Conditions of Employment Act (BCEA).  The new threshold will take effect on 1 April 2024. This modification brings about changes in certain protections offered by the BCEA, particularly regarding ordinary hours of work, overtime, and public holiday pay.

Section 6 of the Basic Conditions of Employment Act empowers the Minister of Employment and Labour to determine an earnings threshold, effectively excluding employees earning above the determined amount from the provisions Chapter 2 of the Act.

Additionally, as per sections 198, 198 A, B, C, and D of the Labour Relations Act, employees earning below the earnings threshold are deemed vulnerable and are entitled to additional protection[1].

As of 1 April 2024, the new threshold will be R254,371.67 per annum, which amounts to an increase of R13,261.08 from the 2023 threshold of R241,110.59. This equates to just under R21,198 per month.

Employees exceeding the earnings threshold are excluded from various BCEA provisions regulating ordinary hours of work, overtime, compressed working weeks, meal intervals, and more. Furthermore, they are exempt from deeming provisions applicable to temporary employment services and fixed-term employment under the Labour Relations Act.

In practice this means that an employee who earns in excess of R21 198 per month does not have an automatic right to payment in lieu of overtime worked, paid meal intervals, the rest periods prescribed in the BCEA, additional payment for work on Sundays and Public Holidays and night work allowances.

Under the Employment Equity Act, employees exceeding the threshold cannot refer disputes related to unfair discrimination to the CCMA for arbitration, unless it concerns sexual harassment or a mutual arbitration agreement, thereby requiring resolution through the Labour Court.

The increase in the earnings threshold may extend protections to more employees, potentially impacting employers financially. It is recommended that employers conduct thorough assessments to ensure that all employees who no longer earn in excess of the threshold are accommodated. Adjustments to employment contracts or remuneration structures may be necessary to mitigate the risks of unintended contraventions of the BCEA or deeming provisions applicable to atypical employment arrangements.

“Earnings” for determining threshold refers to the total pay before any deductions, such as income tax, pension, medical insurance, and comparable payments. However, “earnings” does not encompass the corresponding payments (contributions) made by the employer on behalf of the employee. In essence, it focuses solely on the amount earned by the employee before any deductions or employer contributions are considered.

[1] https://labourguide.co.za/employment-condition/remuneration/increase-in-basic-conditions-of-employment-act-earnings-threshold-for-2024