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postheadericon NEW EARNINGS THRESHOLD AS FROM 1 JULY 2012

Certain provisions of the Basic Conditions of Employment Act of 1997 (the BCEA) pertaining to working time do not apply to senior managerial employees or employees who earn in excess of certain amount per year (the “earnings threshold”).

The earnings threshold will increase to R 183 008 per year with effect from 1 July 2012 (The previous threshold was R 172 000 per year).

How does it affect employees?

The effect of earnings threshold is that the limitations, protections or the right to additional pay afforded by certain provisions of the BCEA do not apply to employees earning in excess of the new threshold. These provision are:
- section 9 (hours of work),
- section 10 (overtime),
- section 11 (compressed working week),
- section 12 (averaging of hours),
- section 14 (meal intervals)
- section 15 (daily and weekly rest periods),
- section 16 (pay for work on Sundays)
- section 17(2) (night work), and
- section 18(3) (public holidays on which the employee would not ordinarily work).

Employees that currently earn between R172 000 and R183 008 per year were previously excluded from these provisions but will now enjoy additional protection and become entitled to payment for overtime, double pay for work on public holidays, etc. notwithstanding the fact that their contracts might state that they do not qualify. Essentially this will result in an additional expense for the employer.

What is meant by earnings?

For purposes of the new threshold “earnings” means the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee. Subsistence and transport allowances received, achievement awards and payments for overtime worked are not regarded as remuneration for the purpose of this notice.

Can existing contracts be changed?

Existing contractual provisions with employees that earn in excess of the threshold that are more favourable to the employee, e.g. that do provide that the employee is entitled to additional pay for overtime, Sunday work, etc., remain valid an enforceable. If an employer wants tot change existing terms and conditions, it will have to be negotiated with the employee.

Disclaimer: The material above is provided for general information purposes only and does not constitute legal or professional advice. Neither the author nor the publisher accepts