Steps in preparation of the national minimum wage

Steps in preparation of the national minimum wage

Steps in preparation of the national minimum wage

In terms of the National Minimum Wage Act (NMWA), the National Minimum Wage Commission annually assesses and reviews the national minimum wage. The Commission then submits a recommendation to the Minister of Employment and Labour to adjust the national minimum wage for the 2022/2023 period, which will come into effect on 01 March 2022.

The criteria the Commission uses to determine the proposed increase, is the consumer price index (CPI) plus 1,0%.  The CPI was 5,0% in September 2021 and the national minimum wage increase is thus calculated at 6,0%.  This means an increase in the current national minimum wage of R21.69 per hour to R22.99 per hour (based on September 2021’s CPI, available when this article was written).

IMPORTANT UPDATE: TAKE NOTE THAT THE MINISTER OF EMPLOYMENT AND LABOUR ANNOUNCED THE AMENDED NATIONAL MINIMUM WAGE ON 07 FEBRUARY 2022 IN THE GOVERNMENT GAZETTE 45882: THE WAGE PER HOUR WAS INCREASED TO R23.19 PER HOUR EFFECTIVE FROM 01 MARCH 2022 – READ THE COMPLETE UPDATE HERE (ENGLISH) OR HERE (AFRIKAANS).

Businesses operate in a challenging environment and the national minimum wage and associated increases puts additional pressure on employers, as there is no negotiating the payment of the wage. However, Section 15 of the NMWA stipulates 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.
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What about exemption from the wage?

As part of the exemption application, the employer must provide a good reason for the exemption, as well as proof that there has been meaningfully consulted with employees and representative 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 with regard to profitability, liquidity and solvency. The calculations for these tests are further included as part of the schedules to the law. Exemption will only be considered if the employer is up to date with all legal payments, including the Unemployment Insurance Fund, the Occupational Injuries and Compensation Fund (Compensation Commissioner) and any other applicable levies.

The application is done online

Because the application is done online, the outcome is immediately available, unless the application is singled out for an audit (which will take place within 30 days from the date of application). The outcome will confirm the date of commencement of the exemption, the period for which it is granted, the wages that the employer is obliged to pay employees, as well as any other relevant conditions. If the exemption is granted, a copy of the exemption certificate must be displayed in the workplace, as well as provided to the relevant employees and representative trade union(s) where applicable. If the application is unsuccessful, the employer will receive a notice with the reasons for the refusal.

What about disputes?

A dispute over non-compliance with the NMWA can be referred either to the Commission for Conciliation, Mediation and Arbitration (CCMA), or to the Department of Employment and Labour. If an employer fails to comply with the NMWA, the employer can be fined as follows (whichever amount is the greater):

  • Twice the value of the amount paid to the employee below the prescribed minimum wage; or
  • Twice the employee’s monthly salary.

Restrictive labour regulations are considered as one of the most problematic factors when it comes to doing business in South Africa. Employers need to realise that by making a mind shift and proactively managing the business risk associated with labour law compliance, employers are positioning themselves for the employment relationship going forward, as well as any possible future disputes.

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COVID-19: self-quarantine versus isolation

COVID-19: self-quarantine versus isolation

COVID-19: self-quarantine versus isolation

What is the difference between self-quarantine and isolation? According to the Government Gazette 44700, dated 11 June 2021, the definitions are as follows:

ISOLATION – REGULATION 6(4)

Isolation takes place when an employee develops COVID-19 symptoms or positively diagnoses for COVID-19. Isolation is mandatory to avoid spreading the virus to other employees. Isolation can take place at home, in an approved isolation facility or even in a hospital if the employee has serious symptoms and need medical assistance. If the employee is hospitalised, the isolation period of 10 days may be longer until the employee achieves clinical stability according to a medical practitioner.

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SELF-QUARANTINE – REGULATION 6(5)

An assessment must be done regarding a “low risk” or “high risk” exposure as soon as an employee was in contact with another person who has been diagnosed with COVID-19.
  • “Low risk” exposure – Regulation 6(6): the assessment must be done in terms of the workplace’s risk assessment plan. Once low risk exposure is determined, the employer can allow the employee to continue working. Wearing a face mask is mandatory and the employee must be monitored for 10 days for symptom development.

  • “High risk” exposure – Regulation 6(7): self-quarantine for 10 days take place when an employee has had high risk exposure to COVID-19. High risk exposure means that an employee had direct, close contact (less than one meter), for longer than 15 minutes with someone that tested positive for COVID-19, did not wear a protective face mask, or had physical contact. The employee must self-monitor for symptoms.

Is the mandatory self-quarantine and isolation period 14 or 10 days?

The period was reduced in July 2020 from 14 days to 10 days.
self-quarantine versus isolation

Sick leave for self-quarantine and isolation? Regulation 6(3)(iii)

In terms of section 22 of the Basic Conditions of Employment Act, the period for self-quarantine and isolation will be sick leave.
It is not necessary to test for COVID-19 during the period of self-quarantine, UNLESS the employee develops symptoms. Once the employee develops symptoms during this period, the employee must isolate for 10 days from the day the employee’s symptoms started.

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2021 – Employment Equity Act, are you a designated employer?

2021 – Employment Equity Act, are you a designated employer?

2021 – Employment Equity Act, are you a designated employer?

The Employment Equity Act (“EEA”) applies to all employers, but a “designated employer” (who meets the minimum requirements) has additional responsibilities. Make sure you know what is expected of YOU and that you comply! The EEA aims to eliminate unfair discrimination in the workplace by promoting equal opportunities and fair treatment.

Are you a “designated employer”?

A “designated employer” is any employer with 50 or more employees OR an annual turnover of:

  • R6 million – Agriculture
  • R22.5 million – Mining and Quarrying
  • R30 million – Manufacturing
  • R30 million – Electricity, Gas and Water
  • R15 million – Construction
  • R45 million – Retail, Motor trade and Repair services
  • R75 million – Wholesale trade, Commercial agents and Allied trades
  • R15 million – Catering, Accommodation and other Trade
  • R30 million – Transport, Storage and Communications
  • R30 million – Finance and Business services
  • R15 million – Community, Special and Personal services
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What happens if I don’t comply?

Should a “designated employer” fail to comply with these obligations, the fine for the first offence is:

  • R1.5 million or 10% of the employer’s annual turnover (whichever is the greatest); and/or
  • 10 years imprisonment

What is expected of a “designated employer”?

A “designated employer” has additional obligations and must take care to ensure the following is in place:

  1. Appoint a Senior Employment Equity Manager to develop, monitor and implement the Employment Equity Plan (see step 7 below). This appointment must be a permanent employee and report directly to the CEO of the business.
  2. Collect information – each employee must complete the EEA1 form confirming the employee’s race, gender, nationality and any disabilities where applicable.
  3. Create employment equity awareness with regards to all employees – all employees should be made aware of and informed with regards to the objectives, content and application of the EEA, its regulations and Code of good practice.
  4. Establish an Employment Equity Committee to hold regular consultations with regards to compliance with the EEA. This committee must be representative of both designated and non-designated employees and all occupational levels. Trade unions in the workplace must also be involved and form part of consultation.
  5. Hold regular (at least quarterly) consultations to discuss the conducting of an analysis, development of a plan and submitting of the reports to the Department of Employment and Labour. These consultations must be structured and recorded via agendas, attendance registers and minutes of meetings held.
  6. Draft an analysis (EEA12) which must include the following:
    • Policies and procedures to address the under-representation of designated groups and a lack of diversity in the workplace
    • Practices and factors to promote employment equity
    • Under-representation of designated groups and occupational levels
  7. Draft an Employment Equity Plan (EEA13) which must state the following:
    • Objectives for each year (the plan is valid between one to five years)
    • Affirmative action measures
    • Numerical goals for achieving equitable representation
    • A timetable for each year
    • Internal monitoring and evaluation procedures, including internal dispute resolution mechanisms
    • Identified persons to monitor and implement the plan
  8. Submit Employment Equity reports (EEA2 and EEA4) on progress made with regards to the implementation of the plan. The reporting period is a twelve month period (we recommend using the employer’s financial period). Reports can be submitted electronically on the Department of Employment and Labour‘s website before 15 January 2022.

The LWO has collaboration agreements in place with various service providers where LWO members enjoy preferential rates, including specialists regarding the Employment equity Act. We encourage members to contact MOULDER SKILLS DEVELOPMENT CC directly for specialist assistance:

  • James Moulder: 073 096 0078 | jamesm@msdev.co.za
  • Rochelle Botes: 064 656 2313 | rochelleb@msdev.co.za

(Read more about the collaboration agreement between the LWO and Moulder Skills Development here.)

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Adjusted alert level 2: COVID-19

Adjusted alert level 2: COVID-19

Adjusted alert level 2: COVID-19

Adjusted alert level 2

South Africa moved to an adjusted alert level 2 status regarding the Coronavirus (COVID-19) pandemic since 31 May 2021. Download the Government Notice dated 30 May 2021 to take note of and implement.
This pandemic undoubtedly has a wide impact on businesses. Although we are currently on an adjusted alert level 2, businesses’ loss of income and obligation towards employees is still a great concern for many employers, especially where employers are unable to pay their employees in full.

Every business is unique and we encourage our members to contact the LWO for advice.  The LWO is available 24/7 to assist employers with regards to labour law.  Please contact the LWO for assistance at 086 110 1828 or if you have any queries in this regard.

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What about the LWO?

The LWO is authorised to provide services to LWO members on the following basis (not yet a member – have a look at our cost-effective and user friendly membership packages):
  • 24/7 telephonic and electronic advice – phone 086 110 1828 or send an e-mail to info@lwo.co.za;
  • Legal services on the work premises of employers who are classified as essential services, or who are permitted to resume business activities under adjusted alert level 2.  These services for members are strictly monitored on a continuous basis and take place in line with applicable safety regulations.
  • Legal services via online platforms such as Skype, Microsoft Teams, Zoom, Google Meet, etc. for employers who are classified as essential services, or who are permitted to resume business activities under adjusted alert level 2.

We confirm that the LWO complies with the set requirements in terms of health and safety in the workplace.

Stay updated – www.sacoronavirus.co.za

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COIDA – regulations and amendments

COIDA – regulations and amendments

COIDA – regulations and amendments

COIDA – Tariffs of assessment

During November 2020 the Minister of Employment and Labour approved new regulations relating to the tariffs of assessment under the Compensation for Occupational Injuries and Diseases Act (COIDA). These tariffs, in combination with a business’s declared payroll, are used to calculate the business’s account payable annually to the Compensation Fund. These tariffs are associated with an industrial asset class (business industry) and the higher the risk of getting injured, the higher the tariff. There are currently 13 different asset classes.

Once a business declares its annual payroll to the Compensation Fund, an account is issued which is payable within 30 days. The declaration for 2021 must be done between 1 April 2021 to 31 May 2021 and during this period businesses must declare what their payroll was from 1 March 2020 to 28 February 2021 and estimate what it will be from 1 March 2021 to 28 February 2022.

Important to note: businesses must declare payroll up to only R484 200.00 until 28 February 2021 and R506 472 until 28 February 2022. Failure to declare the payroll, as well as make payment within 30 days will result in a penalty of 20% based on the assessment. This can have a huge impact on the cash flow of any business. During 2018/2019 close to R1 million was calculated in penalties by the Compensation Fund.

Companies who are not in a position to pay their full account, can apply within 30 days of the account being issued for a payment arrangement with the Compensation Fund.

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COIDA – Injury on duty

COIDA requires that work accidents must be reported within seven days to the Compensation Fund. Failure to do so will result in heavy penalties.
The employer is required to complete an Employer’s Report of Accident and submit this report together with a certified copy of the injured employee’s ID and payslip on the Compeasy system. The injured employee should take a copy of the Report of Accident to the treating doctor.
Employers must pay the injured employee his/her normal salary if the employee is booked off for at least four days, but can claim this back from the Fund once the employee returns to work. Neither the employer nor the injured employee should pay for medical costs, as the Fund also operates as a medical aid and the treating doctor should submit the claim directly to the Fund.

Benefits payable in terms of COIDA include:

  • Payment of salaries to injured employees (refund of paid salaries to employers)
  • Permanent disability
  • Medical expenses, including chronic medication
  • Death benefits: funeral benefits and pension to widow/widower/children
  • No compensation is payable for pain and suffering

COIDA – Amendments under review

Several amendments are currently under review by the Compensation Fund regarding penalties for non-compliance. Some of these amendments are as follows:
  • Failure by the employer to report an accident within seven days will result in a 10% penalty of the declared annual payroll.
  • Failure by the employer to complete the Employer’s Report of Accident in full will result in a penalty equal to the full amount of compensation plus interest.
  • Failure by the employer to pay an injured employee his/her salary while off duty for more than four days will result in a penalty equal to double the full amount of three months’ compensation plus interest.
  • Failure by the employer to transport an injured employee to the nearest doctor will result in a fine equal to the full cost of the conveyance.
  • Failure by the employer to keep a record of an employee’s earnings will result in a penalty of 10% of the actual or estimated annual earnings.
These penalties can have severe consequences for the employer if the correct procedure is not followed. Employers must familiarise themselves with these and educate their employees about what to do when an accident at work happens.

COIDA – What about domestic workers?

On 10 February 2021 the Compensation Fund Commissioner signed into effect the inclusion of domestic workers under COIDA (download the Government Gazette 44250), ensuring that domestic workers will be covered by the Act and qualify for benefits. The Constitutional Court declared on 19 November 2020 that section 1 (xix)(v) of the Act was invalid with immediate and retrospective effect to 27 April 1994.
Private households who employ a domestic worker(s) must register as a domestic employer. Domestic employers will fall under its own sub-class with a rate of 1.04 payable. The following documents must be submitted for an employer to register:
  • Application form for the domestic employer to register
  • Copy of the employer’s ID/passport/work permit
  • Proof of the employer’s residential address
  • Copy of the employee’s ID/passport/work permit
  • Copy of the employment contract
  • Domestic employers must also submit a record of the annual wages paid to the domestic worker(s) (return of earnings).
    Claims for injuries or diseases can be registered online or submitted to the nearest Labour Centre. The earnings must be completed on the prescribed form to calculate and pay benefits. When a domestic worker is employed by more than one employer and an accident/injury occurs, the earnings received by all the employers must be submitted to the Compensation Fund.

    COIDA and the LWO

    As a registered employer’s organisation with the Department of Employment and Labour, the LWO specialises in labour law and can therefore only assist employers in this particular field. We do however always explore opportunities to take hands with service providers in other specialist fields to put solutions on the table for our members. Contact Stephan Pietersen from Work Accident Support for COIDA assistance: 064 360 2638 | support@workaccident.co.za.

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    Retrenchment: what is “bumping”?

    Retrenchment: what is “bumping”?

    Retrenchment: what is “bumping”?

    In the current economic climate, many employers struggle to stay competitive and profitable and must consider different options to adjust to a changing environment. Retrenchment is a no fault dismissal, as the employee did nothing wrong and dismissal is due to operational requirements. As with all dismissals, the retrenchment process must be both substantively and procedurally fair. But how does an employer decide who stays and who goes?

    Selection criteria

    Employers are entitled to adopt a multi-rating selection criteria such as:

    • Years of service (“Last In, First Out”) and “bumping”
    • Qualifications and experience
    • Direct supervisor review (including an assessment of factors such as commitment to the business and team, goals, teamwork and dependability, attendance, flexibility, initiative and career potential)
    • Competency, efficiency, key skills retention
    • Continued service delivery
    • Performance appraisals and past performance (or discipline, for that matter)
    • Voluntary severance package
    • Retirement package
    • Redeployment package
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    LIFO and “bumping”

    Employers and consulting parties often tend to rely on the “Last In, First Out” (LIFO) principle, which is based on years of service. However, when employees are selected for retrenchment within a particular division/department as shorter serving employees in that specific division/department, these employees may in fact have longer periods of service with the employer than employees in other divisions/departments.

    “Bumping” is when employees with longer service with the employer, are then transferred to positions held by employees with shorter service in other divisions/departments.

    2 forms of “bumping”

    • Horizontal “bumping” – where an employee is transferred to a position of similar status, conditions of employment and remuneration; and
    • Vertical “bumping” – where an employee is transferred to a position with less favourable status, conditions of employment and remuneration.

    An employer must first apply horizontal “bumping” before vertical “bumping”.

    The Labour Appeal Court says…

    The Labour Appeal Court has now made it clear that where employers choose to consider LIFO as a selection criterion, employers must consult on the application of “bumping” in selecting employees for retrenchment. Employers must be able to explain why it would not be fair and appropriate to apply “bumping”.

    We strongly advise employers to implement clear rules in the workplace and follow correct procedures with regards to all labour matters. Employers must be proactive and act consistently especially with retrenchment and general discipline in the workplace.

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