Minimum wage exemption process for employers

DURBAN – The National Minimum Wage Act 9 of 2018 (NMWA) came into operation on January 1, 2019. The Minister of Labour also released the National Minimum Wage Regulations, 2018 (regulations).

The regulations provide information on the criteria to be met and process to be followed by any employer wishing to be exempted from the national minimum wage.

The national minimum wage for all workers is R20 per hour, for farmworkers it’s R18 per hour and for domestic workers it’s R15 per hour.

The national minimum wage figures will remain in force for the next two years (i.e. until December 2020).

In January 2021, the minister will announce whether the national minimum wage will be adjusted.

Section 15 of the NMWA, read together with the regulations, provides an exemption process. The exemption process is specifically created for employers who can show that they cannot afford to pay the national minimum wage to workers.

An exemption will only be granted if the following criteria are satisfied by the applicant employer:

The employer cannot afford to pay the national minimum wage

Representative trade union(s) of the workers have been meaningfully consulted or, if there are no trade union(s), the affected workers have been meaningfully consulted.

To assess affordability, elements of profitability, liquidity and solvency are taken into account. The decision-making process is rigorous and employers will need to ensure that they submit comprehensive financial and organisational information. No exemption may be granted where the wage is below the following wage thresholds:

90% of the national minimum wage in respect of workers other than farmworkers and domestics

90% of the national minimum wage in respect of farm workers; or

90% of the national minimum wage of domestic workers.

It is therefore not possible for an employer to be exempt from the national minimum wage by a large amount. It is essentially only possible for an employer to obtain a 10% decrease (as a maximum) in the national minimum wage through the exemption process.

If successful, the employer will be provided with an exemption notice, which will contain the following information:

The period of exemption

The wage(s) that the employer is required to pay workers; and any other relevant condition.

If unsuccessful, the employer will also be provided with a notice which will contain reasons for the refusal.

The exemption process is managed by the Department of Labour through an online system called the National Minimum Wage Exemption System.

In order to apply for an exemption, visit www.nmw.labour.gov.za

– THE MERCURY 

107782504 - Minimum wage exemption process for employers

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