Remuneration in South Africa
What is remuneration
The term “remuneration” as defined in the Basic Conditions of Employment Act 75 of 1997 (BCEA), as amended and other labour legislation includes any payment in money or in kind, or both, made or owing to any person in return for working for another person, including the State.
Employment contracts, collective agreements and remuneration
The employee’s remuneration should also be agreed in the employment contract, even though it should be borne in mind that the employee’s basic rate of remuneration may be subject to change.
Collective agreements may have a direct bearing on the issue of remuneration as well. Even in situations where there is no collective bargaining agreement, the parties usually prefer to deal with the issue of remuneration in an annexure to the main contract. The annexure can then be changed as and when required, without the entire contract having to be negotiated and concluded afresh.
The National Minimum Wage in South Africa
The National Minimum Wage Act 9 of 2018 (the National Minimum Wage Act), which came into effect on 1 January 2019, was enacted to reduce the disparities in the South African labour market in order to address the need to eradicate poverty and inequality. In addition, the aim is to promote fair and effective competition in the labour market and to promote labour market stability. The National Minimum Wage Act aims to:
- improve the wages of the lowest paid workers;
- protect workers from unreasonably low wages;
- preserve the value of the national minimum wage;
- to promote collective bargaining; and
- support economic policy.
The national minimum wage is R20 for each ordinary hour worked for employees.
However, there are certain exceptions:
- farm workers are entitled to a minimum wage of R18 per hour;
- domestic workers are entitled to a minimum wage of R15 per hour
- workers employed on an expanded public works programme are entitled to a minimum wage of R11 per hour.
The Basic Conditions of Employment Act
In terms of section 34(1) of the Basic Conditions of Employment Act 75 of 1997 (BCEA), an employer may only make dedications from an employee’s salary if:
- the employee agrees to the deduction in respect of a debt which is specified in the agreement;
- the deduction is required or
permitted in terms of a law such as:
- UIF deductions;
- deduction of union dues;
- pension or provident fund contributions;
- court orders (garnishee orders); or
- an arbitration award; and
- a deduction made for goods purchased by the employee from the employer.
Deductions to reimburse the employer
Deductions may be made to reimburse the employer for loss or damage:
- the loss or damages occurred in the course of employment and was due to the fault of the employee;
- the employer followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions should not be made;
- the total amount of the debit does not exceed the actual amount of the loss or damage; and
- the total deductions from the employee’s remuneration do not exceed one-quarter of the employee’s remuneration in money.
The court and CCMA arbitrators have ruled that:
- leave pay qualifies as remuneration and an employer can deduct monies for unauthorised withdrawal of leave due to an employee who had resigned;
- severance pay does not qualify as remuneration and therefore deductions cannot be made from it;
- where a deduction exceeds a quarter of the employee’s salary, the court will order a repayment of the excess amount.
An employer may require an employee to repay an overpayment resulting from an error in calculating the employee’s remuneration.
Discrimination in relation to remuneration differences
South African law requires that employees be remunerated accordingly. One of the ways is the concept of equal pay for work of equal value. This does, in specific instances, allow for a differentiation in pay.
The difference in pay and remuneration will only be unfair discrimination if the differences are directly or indirectly based on race, sex, gender, disability or any other listed or any other arbitrary ground. The employer may justify the value assigned to a job in terms of a sectoral determination which applies to that employer. In addition, the differentiation in terms and conditions of employment will not be unfair discrimination if the difference is fair and rational and based on any one or a combination of the following grounds:
- seniority or length of service;
- qualifications, ability, competence or potential above the minimum acceptable levels required for the performance of the job;
- performance, quantity or quality of work provided the employer applies its performance evaluation systems equally and consistently;
- where an employee is demoted as a result of organisational restructuring or for any other legitimate reason with reduction in pay and fixing the employee’s salary at this level until the remuneration of employees in the same job category reaches this level;
- where an employee is employed in a position temporarily for the purposes of gaining experience or training;
- the existence of a shortage of relevant skill, or the market value in a job classification;
- any other relevant factor that is not unfairly discriminatory in terms of section 6(1) of the Employment Equity Act 55 of 1998 (EEA);
- differentiation based on the inherent requirements of the job;
- differentiation as a result of an affirmative action measure;
- differentiation is not biased against an employee or group of employees based on race, gender or disability or any other grounds listed in section 6(1) of the EEA; or
- differentiation is applied in a proportionate manner.
If there is unfair discrimination by virtue of a difference in terms and conditions of employment, the employer must take measures to progressively reduce such differentials subject to guidance as may be given by the minister.
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