Laila Cassim | Conveyancing Supervisor – Conveyancing Division
Mohamed Raees Hussain | Attorney – Legal Division
South Africa's new annual earnings threshold, which came into effect on 1 March 2023, has been subject to much controversy and debate. The annual earning threshold, which determines who is entitled to certain protections under the Basic Conditions of Employment Act, 75 of 1997 (“the Act”), has been raised from R224,080.48 to R241,110.59 per annum. This means that many employees who were previously protected under the BCEA will now lose their automatic protections.
The BCEA is a critical piece of legislation that governs the minimum employment standards for all workers in South Africa. It provides a framework for fair labour practices and sets out the minimum standards applicable to working hours, overtime, leave, and other important aspects of the employment relationship.
The new annual earnings threshold (“the new threshold”) means that workers who earn less than R241,110.59 per annum will still automatically be covered by the protections offered by the Act. However, those who earn more than the new threshold will have to negotiate their terms and conditions of employment with their employers and will not be afforded the protection of the Act. The increase in the threshold also impacts other labour legislation, such as the Labour Relations Act, 66 of 1995 and the Employment Equity Act, 55 of 1998.
The annual earnings threshold is defined as an employee’s normal annual remuneration before any deductions, such as income tax, pension, etc.
Trade unions and worker advocacy groups have criticized the decision by Government, arguing that it will leave many workers without essential protections. They have also pointed out that many workers who earn just above the new threshold are still in low-paid, vulnerable jobs and will struggle to negotiate fair terms and conditions with their employers.
However, the South African Government has defended the decision to increase the threshold, arguing that it will help to stimulate job creation by reducing the regulatory burden on employers. The Government has also stated that it will work with trade unions and other stakeholders to ensure that workers who are no longer automatically covered by the Act, are not left vulnerable and exposed to exploitation by the employer.
Given the position put forward by the Government, it is possible that this change could lead to increased job creation as employers are empowered to negotiate the terms of employment with prospective employees. However, as employers seek to cut costs in these difficult economic times by offering less favourable terms to their employees, it could also lead to an increased exploitation of vulnerable employees.
South Africa's new annual earnings threshold is a significant development for the Country's labour market, and whilst it may provide some benefits in terms of job creation, it is also likely to leave many workers without essential protections. The full impact of the new threshold is yet to be seen with the change only having come into effect on 1 March 2023, however, Government and other stakeholders must work together to ensure that the rights of these workers are protected and that the Country's labour market remains fair and equitable.