How does the minimum wage apply to workers not remunerated by the hour?

The national minimum wage will increase from R27.58 per hour to R28.79 per hour from 1 March this year. But how will it work for those not remunerated by the hour?

The increase is in accordance with the National Minimum Wage Act (NMWA).

Workers employed under the expanded public works programme will increase their wages from R15,16 to R15,83 per hour.

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The National Minimum Wage Act

Dhevarsha Ramjettan, partner at Webber Wentzel says the Act requires employers to pay the minimum wage to every worker except members of the South African National Defence Force (SANDF), the National Intelligence Agency, and the South African Secret Service.

“The minimum wage constitutes a term and condition of a worker’s contract unless a more favourable wage is agreed upon.

“Workers and employers cannot waive the payment of the minimum wage, as it takes precedence over any contrary provision in a contract, collective agreement, sectoral determination, or law, except a law amending the NMWA.”

A minimum wage for workers not paid by the hour

Siya Ngcamu, Senior Associate from Webber Wentzel says determining whether an employer complies with the obligation to pay the minimum wage is straightforward when workers have fixed working hours or a fixed wage.

“The wage is calculated based on hours worked, with a minimum of four hours paid daily even if fewer hours are worked. The situation becomes more complex for commission-based workers.”

Commission-based remuneration is common in sales and market networking industries. In this type of remuneration, workers earn income by selling products or services on behalf of a business.

Ngcamu adds that commission earners are also eligible to be paid the minimum wage.

However, challenges arise when determining compliance with the NMWA for remuneration not based on the hours worked, such as output or sales targets.

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Commission workers must receive minimum wage

Eugene Chaphi, Associate from Webber Wentzel says the courts have found that commission workers, regardless of how their earnings are structured, must receive the minimum wage within their ‘pay reference period’.

“For example, a commission worker on a purely commission-based income, working an 8-hour shift, 5 days a week, must be paid at least ZAR 1151,60 per week (calculated as R28,79 x 8 hours x 5 days).

“Section 5(2) of the NMWA stipulates that any worker paid on a basis other than the number of hours worked must still receive the minimum wage for the ordinary hours of work permitted in terms of the Basic Conditions of Employment Act 75 of 1997 (BCEA).”

This is subject to section 9A of the BCEA, which mandates that workers be paid for a minimum of four hours, even if they work fewer hours on a given day.

This implies that if a worker earns based on sales volume but makes no sales in a day, they must still receive at least four hours’ worth of the minimum wage.

Non-compliance

He adds that non-compliance with the NMWA may have financial consequences for employers, including fines for failing to adhere to compliance orders issued by the Department of Employment and Labour.

“Additionally, if workers successfully challenge an employer’s failure to comply with the NMWA, the employer may be ordered to pay workers the minimum wage retrospectively.”

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