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Employees earning more than R254 371.67 or just less than R21 198 per month, will be excluded from labour law provisions from 1 April when the increased annual earnings threshold determined by the minister of employment and labour is implemented.
According to law firm Cliffe Dekker Hofmeyr, the earnings threshold affects the application of provisions of the Basic Conditions of Employment Act, the Labour Relations Act and the Employment Equity Act.
Sections in these acts are designed to protect vulnerable employees and regulate aspects of work such as working hours, overtime, working on weekends, lunch breaks and whether labour disputes must be handled at the CCMA or in the Labour Court.
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That means that if you earn more than R254 371.67 per year, you are excluded from the provisions in the Basic Conditions of Employment Act that regulate:
It also means that regarding the Labour Relations Act, you are not considered an employee if a temporary employment service or labour broker places you at a client. You also fall outside the scope of the provisions regarding fixed-term employees who are deemed to be employed indefinitely after three months in the absence of justifiable reasons for fixing the term of the contract.
When it comes to the Employment Equity Act, you are not permitted to refer a dispute regarding unfair discrimination to the CCMA for arbitration, unless the dispute relates to alleged unfair discrimination on the grounds of sexual harassment, or you and your employer agree to arbitration. Otherwise, you are obliged to refer the dispute to the Labour Court for adjudication.
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To determine if you earn more than the earnings threshold, “earnings” means your regular annual salary before income tax, pension fund contributions, medical aid contributions and similar payments are deducted.
However, it excludes your employer’s similar payments or contributions. This is subject to the provision that subsistence and transport allowances, as well as achievement awards and payments for overtime worked do not fall within the scope of your salary.
The new threshold of R254 371.67 is an increase of R13 261.08 from the previous amount of R241 110.59, which has been in effect since 1 March 2023. It is the fourth consecutive annual increase to the threshold after a period of seven years without any adjustment.
“This depends on the extent of increases awarded to employees during the last year and potentially where in the remuneration review cycle an employer is. This may, in turn, have financial consequences for employers.”
They urge employers to review their remuneration structures to account for the change and the associated costs.
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