Employer arrested for minimum wage fraud

Johannesburg – The Department of Labour on Thursday said it intended to open a case of fraud with the South African Police Services (SAPS) against an employer that misrepresented his company to obtain an exemption from paying the National Minimum Wage (NMW).

The department found that the employer applied for an exemption in January, which was granted, because he could not afford the R20 hourly wage due to insufficient profitability and assets. However, the exemption was granted for R18 per hour, not the R16 per hour displayed by the employer at his workplace.  

Via a statement, the department said it was in the process of imposing punitive measures. "The Department is initiating a process towards withdrawing the granted exemption as per Section 5 of the NMW Regulations."

"Section 15 of the NMW Act makes a provision for an employer that cannot afford to pay the NMW to apply for an exemption. The Labour Minister, Mildred Oliphant, has published regulations in this regard relating to the form and manner in which exemptions must be made," said the statement. 

Applications for exemptions from paying the NMW are submitted through a NMW online system accessible from the Department’s website.

Department of Labour spokesperson Teboho Thejane said: "The office of the Director General, Thobile Lamati, received an e-mail on the 19th January 2019 from an employee at Fleeceytex Knitting Company based in Alberton, Johannesburg. The employee wanted to confirm the authenticity of an exemption notice displayed at the workplace. The employee indicated that the exemption notice displayed showed a rate of R16.00 per hour effective from the 17th January 2019 which the employees were subsequently paid on the 18th January 2019."

According to the department, section 5 of the NMW Regulations provides that an exemption notice may be withdrawn if the employer has provided false or incorrect information in its application. 

The exemption can also be withdrawn if the employer is not complying with the exemption notice and if the employer’s financial position has improved to the extent that the employer is able to pay the NMW. Other justifiable grounds exist for withdrawing the notice, said the department.  

"The chief director of labour relations scheduled a meeting with the employer on the 22nd January 2019 at the workplace in order to ascertain his version of what transpired in this case. At the meeting, the employer confirmed that he applied for an exemption on the 17th January 2019 and was granted an exemption at a rate of R18.00. He also confirmed that an exemption notice showing a rate of R16.00 was erroneously displayed at the workplace and used to calculate employee’s wages which they were subsequently paid on the 18th January 2019," Thejane said.

The employer said he had since rectified the misrepresentation and that the correct exemption notice was displayed at the workplace.

"Considering the facts presented by the complainant and the employer the department has concluded that it is a case of fraud and is addressing it." 

"The Department of Labour is intent on naming and shaming employers who are engaging in fraudulent activities," said Thejane.

African News Agency (ANA)

Handcuffs on table - Employer arrested for minimum wage fraud

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