National Minimum Wage: What You Need To Know

by | Nov 14, 2023 | NDA Blog

The National Minimum Wage is an important move toward making sure everyone gets paid fairly. But it’s about more than just the money. In this blog, we’ll look closely at the South African minimum wage per month, how it changes things for both employees and employers and clear up some of the usual misunderstandings about it. We’ll also tackle a big question: Is the minimum wage in SA enough for people to live well, especially with the massive rise in the cost of living?

What is the National Minimum Wage

What is the National Minimum Wage?

Starting on March 1, 2023, the national minimum wage that workers should be paid is R25.42 for each hour they work. This is a 9.6% increase from the old rate of R23.19 per hour. Different types of jobs have different minimum wages:

  • The farm worker and domestic worker minimum wage 2023, is set at R25.42 per hour.
  • People working in expanded public works programmes that have been expanded will get a bit less, R13.97 per hour.

It’s also important to know that the minimum wage is only the basic salary and doesn’t include extra money that some jobs give for things like travel or using your tools. At a minimum, therefore, domestic workers salary should at least be R4,067.20. Also, free things that you might get from the job, like a place to live or meals, don’t count towards the minimum wage. Tips or extra money given as a ‘thank you’ aren’t part of it, either. This all means that employers can’t use the extra benefits as a reason to pay workers less than the minimum wage.

How Does The National Minimum Wage Impact Workers?

According to research from the Development Policy Research Unit (DPRU) at the University of Cape Town, recent data reveals that the national minimum wage doesn’t seem to have a huge effect on workers’ pay. By the end of 2019, about 43.5% of workers were still making less than the national minimum wage, which is not different from what was happening before.

Cross-sectional data analysis did not find any statistically significant impact on wages or employment in the year following the introduction of the National Minimum Wage. Originally, employees conveyed concern that a lot of people would be out of work because of the minimum wage. But when the study tracked the same workers over time, they noticed that people who were supposed to benefit from the minimum wage in South Africa saw their pay go up by almost 16%, and it didn’t lead to them losing their jobs.

These findings tell us that we need to look at this issue over a longer period and understand the importance of minimum wage in South Africa to get the full picture of what the national minimum wage does in South Africa. If we want the policy to help workers, we have to make sure employers follow the rules and employees are educated on their rights set out in the Basic Conditions of Employment Act in 2023.

National Minimum Wage - What Are Your Rights and Responsibilities

National Minimum Wage: What Are Your Rights and Responsibilities

Both employers and employees need to know exactly what is the minimum wage in South Africa and understand the ins and outs of the National Minimum Wage Act. Following the rules about the national minimum wage helps make sure that workers get paid fairly, and failure to comply with these regulations can result in penalties enforced by the Department of Employment and Labour.

Employer Responsibilities

Employers are legally obligated to pay their employees at least the basic wage in South Africa. If a worker’s contract says they should get paid more than the minimum wage, the employer can’t just decide to pay them less. But if the contract says the pay is less than the minimum wage, the employer should raise this with the employer and ensure it is raised to the minimum amount before signing the contract or starting work.

It is also crucial to note that if there is already a contract in place, an employer may not unilaterally make changes to the contract when they decide to start paying minimum wage. This means that they may not cut the workers’ hours or change the employee’s contract without their agreement. Unilateral changes are illegal and can result in employees seeking assistance from The Commission for Conciliation, Mediation and Arbitration (CCMA) for unfair labour practices.

Dispute Resolution Mechanisms

When there’s a disagreement between the employer and employee about whether an employee is getting paid the minimum wage and it can’t be resolved internally, the employee has the right to refer the matter to the CCMA or the Department of Labour.

1. Approaching The Labour Department

If an employee chooses to report the issue to the Department of Labour for a minimum wage dispute, then they will more than likely appoint a labour inspector to visit the workplace. They will inspect the premises and the documentation that refers to the remuneration received by employees. If the inspector finds that the employer isn’t in line with labour legislation and paying less than the national minimum wage, they will issue the employer with a certificate of non-compliance. The employer will then be given a specific amount of time to sort out the issue.

If the employer does not fix the issue in the allotted time, then the Department of Labour will refer the case to the CCMA for arbitration. The CCMA will then issue an Arbitration Award to force the employer to comply.

2. Going To The CCMA

An employee has the right under the BCEA to refer a dispute to the CCMA when an employer owes an employee money in terms of either the Wage Act, a Sectoral Determination or a Collective Agreement. The matter is likely to be scheduled for conciliation, where a commissioner will hear both sides and try to resolve the issue. If an agreement can’t be reached, the matter will be referred for arbitration.

The CCMA will then investigate, and if they find that the employer is non-compliant, they will issue the employer with an Arbitration Award, and the employer will be instructed to pay the employee the money they owe them.

But it’s important to know that if you’re the worker who’s not being paid national minimum wage, you must choose whether to report it to the CCMA or the Department of Labour, not both.

Penalties for Employers: Non-compliance With The National Minimum Wage

If an employer is found to be in violation of the National Minimum Wage (NMW) laws, they will be subject to a fine imposed by the relevant labour inspector. The fine for first-time offenders is calculated as either two times the wage shortfall or two times the monthly wage, depending on which amount is larger.

Repeat offenders face steeper penalties, with fines escalating to three times the wage shortfall or three times the monthly wage, again depending on which amount is greater. It’s crucial for businesses to adhere to these regulations to avoid such fines.

What Common Misconceptions Exist About The National Minimum Wage

What Common Misconceptions Exist About The National Minimum Wage?

The national minimum wage debate is rife with misconceptions. Critics often argue that it would lead to job losses and harm the economy. Looking at what’s happened in other countries, studies suggest that a reasonable increase in the national minimum wage can help workers and not hurt the economy. Here are some common misconceptions about the national minimum wage that have been proven untrue:

Misconceptions Debunked

Job Loss Myths: It’s often thought that higher national minimum wages will mean fewer jobs. But that hasn’t happened. Countries in Latin America, such as Brazil and Uruguay, have seen more jobs being created when they raise the national minimum wage.

South Africa’s Experience: Raising the national min wage in South Africa hasn’t led to a big drop in jobs. Research shows that the way wages and jobs are linked isn’t as simple as some people say.

What Unions Think: People sometimes get it wrong about unions’ views on national minimum wages. The Congress of South African Trade Unions (COSATU) agrees that many different economic factors influence jobs, and it supports using wage policies along with other big-picture economic tactics.

More Than Just Minimum Wage: Unions believe that a national minimum wage is key, but it’s not the only answer. They see it as just one piece of a larger puzzle that should include things like social support, better rules for collective bargaining, and the right overall economic policies.

Is The National Minimum Wage Enough To Live On

Is The National Minimum Wage Enough To Live On?

The minimum wage in South Africa in 2023 has gone up to R25.42 an hour, showing that there’s an effort to pay workers fairly. However, people are still asking if this is enough to live on. In 2021, The Decent Standard of Living (DSL) Project found that in order to live decently in South Africa, a person needs about R7,911 every month.

Now, two years down the line, that amount will need to increase in line with inflation and also take into account the increase in the cost of living in South Africa. So, despite the higher national minimum wage, many South Africans still don’t earn enough to live decently and cannot afford everything they need.

What Is a Good Salary in South Africa

A “good salary” is more than just a number; it’s about earning enough to pay for important things like food, a place to live, education, and medical care. Considering the DSL Project’s estimate of a decent standard of living salary of R7,911 in 2021, it is clear the national minimum wage at approximately R4,067.20 per month is not covering people’s needs. This shows that we need to take a closer look at what it takes to have enough money to live securely.

The Harsh Reality of Poverty

Despite the national minimum wage, 18.2 million people in South Africa are living in extreme poverty. Many have to borrow money just to cover their daily expenses, which only makes their money problems worse. Organisations like National Debt Advisors help people who are drowning in debt, even those who earn the national minimum wage.

Beat Debt Problems With National Debt Advisors

If you’re having a tough time paying your bills and making ends meet, you’re not alone. Living on the national minimum wage in South Africa might not cover all your needs, but don’t worry; there’s help out there for you. National Debt Advisors can offer you the support and advice you need.

We’re here to help people who are having trouble with debt. We can create a debt management plan just for you, with solutions that can help you stop the cycle of not having enough money. No matter if you’re just making the national minimum wage or dealing with other money problems, it’s important to do something about it to make sure you have a secure financial future. Don’t let debt control your life; take charge now so you can have a more secure and stable future. Contact us today.

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