In a significant development for South Africa’s labour landscape, the national earnings threshold is set to increase to R261,748 per annum (approximately R21,800 per month) in March 2025. This change, which aligns with inflation, will expand the pool of employees entitled to key protections under the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA), and the Employment Equity Act (EEA). Here’s what employees and employers need to know about this pivotal shift.
What Is the Earnings Threshold?
The earnings threshold determines which employees are protected by certain labour laws. Employees earning below the threshold are entitled to protections such as:
- Regulation of ordinary working hours
- Overtime pay
- Meal intervals and rest periods
- Sunday pay, night work pay, and public holiday pay
Those earning above the threshold are not automatically covered by these provisions and must negotiate them with their employers. Additionally, higher-earning employees cannot refer unfair discrimination disputes to the Commission for Conciliation, Mediation, and Arbitration (CCMA) unless the dispute involves sexual harassment or all parties agree to arbitration. Such cases must instead go to the Labour Court.
Key Changes in 2025
The new threshold represents a 2.9% increase from 2024, adding just under R7,400 to the annual figure. While this adjustment is in line with inflation, it could have significant implications for businesses and workers alike.
Legal experts at Webber Wentzel caution that employers who have not increased salaries in line with inflation may now have more employees falling below the threshold. This means they will need to comply with additional BCEA protections, potentially increasing operational costs.
Who Benefits?
The increase is designed to protect vulnerable employees who earn lower incomes. According to recent data, the average salary in South Africa is R28,000 per month, but the median salary is just R5,800, highlighting the stark income inequality in the country. For many workers, the new threshold will bring much-needed protections.
What Counts as Earnings?
The threshold is calculated based on an employee’s gross annual remuneration before deductions like tax, UIF, medical aid, and pension contributions. Notably, this definition differs from the concept of ‘remuneration’ under the BCEA, which has its own specific criteria.
Implications for Atypical Workers
Employers who rely on atypical employment arrangements—such as commission-based work, gig work, or casual labour—must also review their practices to ensure compliance with the BCEA and the National Minimum Wage (NMW).
A recent court case highlighted by Cliffe Dekker Hofmeyr serves as a stark reminder: employers cannot use “creative” methods to avoid paying the NMW. Even workers employed for less than four hours a day must be paid for four hours of work if they earn below the threshold. From March 2025, this equates to a minimum of R115 per day.
What Employers Need to Do
To avoid non-compliance risks, employers should:
- Review salaries: Ensure that employees earning below the new threshold are aware of their rights and protections.
- Audit atypical arrangements: Confirm that gig, casual, and commission-based workers are paid in line with the NMW and BCEA.
- Update policies: Align workplace policies with the latest labour laws to minimise legal risks.
What Employees Should Know
Employees earning below the threshold should familiarise themselves with their rights, including:
- Overtime pay for hours worked beyond the standard workweek.
- Rest periods and meal intervals.
- Public holiday pay and additional compensation for night and Sunday work.
Those earning above the threshold should understand that they may need to negotiate these benefits directly with their employers.
The Bigger Picture
The increase in the earnings threshold reflects South Africa’s ongoing efforts to protect vulnerable workers and reduce income inequality. However, it also places additional responsibilities on employers, particularly small businesses and those with atypical workforces.
As the new threshold takes effect in March 2025, both employees and employers must stay informed and proactive to navigate these changes successfully.
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