Two important amendments affecting the minimum wage and earnings threshold have come into effect.

From 1 March 2025, the National Minimum Wage increased as follows:

• Employees (including domestic workers and farm workers) are now entitled to a minimum of R28,79 for each ordinary hour worked.  This represents an increase from R27.58, which was in place the previous year.
• Workers in the expanded public works programme are entitled to R15,83 per hour worked.  This represents an increase from R15.16, which was in place the previous year.

The National Minimum Wage Act defines “wage” as the amount of money paid or payable to a worker in respect of ordinary hours of work or, if they are shorter, the hours a worker ordinarily works in a day or a week. 

The LAC judgment in Quantum Foods (Pty) Ltd v Commissioner H Jacobs N.O. and Others (JA85/2022) [2023] ZALAC 27 further clarified that contractual bonuses and provident fund contributions made by an employer should be included when calculating the minimum wage.

The exclusions to the calculation of the minimum wage are the following:

• any payment made to enable a worker to work, including any transport, equipment, tool, food or accommodation allowance, unless specified otherwise in a sectoral determination;
• any payment in kind including board or accommodation, unless specified otherwise in a sectoral determination;
• gratuities including bonuses, tips or gifts; and
• any other prescribed category of payment.

Non-compliance with the National Minimum Wage Act can result in hefty fines being imposed on employers who are then liable; therefore, it is essential to ensure compliance.

From 1 April 2025, the earnings threshold increased to R261 748,45 per annum.  

The earnings threshold is crucial in determining which employees are exempt from certain basic employment rights.  For example, employees who earn above the threshold are not entitled to overtime pay by law. These employees may also be employed on fixed term contracts for longer than 3 months without the risk of being deemed a permanent employee

In order to determine whether an employee earns less than, or in excess of the 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.  This is provided that subsistence and transport allowances received, achievement awards and payments for overtime worked are not regarded as remuneration.