2025 national minimum wage increased by 4.4%

The Minister of Employment and Labour, Nomakhosazana Meth, published the adjustment to the national minimum wage for 2025 in the Government Gazette on 4 February 2025. The new national minimum wage, which came into effect on 1 March 2025, is set at R28.79 per normal working hour. This wage applies to employees who fall under the scope of the Basic Conditions of Employment Act, Act 75 of 1997 as amended (BCEA).

National Minimum Wage Commission

In terms of the National Minimum Wage Act, Act 9 of 2018 as amended (NMWA), the National Minimum Wage Commission (the Commission) annually assesses and reviews the national minimum wage. The Commission then makes a recommendation to the Minister of Employment and Labour to adjust the wage.

The criteria that the Commission generally uses to determine the proposed increase is the Consumer Price Index (CPI) plus an additional percentage point (usually 1.5%). Key factors as prescribed by the NMWA are also taken into account and include the following: inflation and cost of living, wage levels and collective bargaining outcomes, the Gross Domestic Product (GDP) and productivity. Other factors include employer viability and the impact on employment, as well as public input.

The Department of Employment and Labour indicated in a media release on 18 December 2024 that the Commission, in its preliminary report, is examining an annual increase in the national minimum wage in the region of CPI + 1.5% for 2024/2025.

Given information already available from Statistics South Africa at the time of the article, we can see that the CPI increased by 0.1% from 2.9% for November 2024 to 3.0% for December 2024, which therefore calculated the national minimum wage increase at approximately 4.4%. The Commission accordingly made this proposal to the Minister.

It is interesting that the new wage is also in line with the overall average CPI for 2024 of 4.4% as published by Statistics South Africa earlier this year.

Exemption

As an employers’ organisation, we know that businesses operate in a challenging environment. The national minimum wage and associated increases often place additional pressure on employers as the payment of the wage is non-negotiable. It is important for employers to be aware that failure to comply with the NMWA can result in severe fines.

The NMWA states that if employers cannot afford the national minimum wage, they can apply online for exemption (http://nmw.labour.gov.za). If exemption is granted, the employer will still have to pay at least 90% of the national minimum wage. Exemption is only valid for a maximum period of 12 months.

As part of the exemption application, the employer must provide a good reason for the exemption, as well as evidence of meaningful consultation with employees and representative trade union(s) where applicable. The regulations further stipulate that such an application will not be granted if the employer does not meet the affordability elements in terms of profitability, liquidity and solvency. The calculations for these tests are included as part of the schedules to the Act. Exemption will only be considered if the employer is up to date with all statutory payments, including the Unemployment Insurance Fund, the Occupational Injuries and Compensation Fund (Compensation Commissioner) and any other applicable levies.

The outcome will confirm the date of commencement of the exemption, as well as the period for which it is granted, the wages that the employer is obliged to pay and any other relevant conditions. If exemption is granted, a copy of the exemption certificate must be displayed in the workplace and provided to the employees concerned and representative trade union(s) where applicable. If the application is unsuccessful, the employer will receive a notice stating the reasons for the refusal.

This article is intended to be considered general information and is not intended to be considered legal advice and employers are advised to contact us to confirm the correct minimum wage applicable to their specific industry, as it may differ from the national minimum wage as set out above.

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