• Sharebar
Law
Tuesday, April 1, 2008
Threshold upped

The idiom: “The more you put in, the more you get out” will mould a new dimension for all employees who earn less than R149 736 per annum.

This band of the South African workforce will, with effect from 1st March 2008, being the date of implementation of the new threshold of earnings issued in terms of the Basic Conditions of Employment Act (“BCEA”), be entitled to regulated ordinary working hours, overtime by consent only, and a prescribed reward for overtime. And employers will have to be aware of the potential impact on the payroll.
In March 2003 the threshold was set at R115 572 per annum. The increase to the threshold of earnings to R149 736 will dramatically increase the pool of the South African workforce that will be eligible to invoke the protections of Chapter 2 of the BCEA) which regulates working times.
Those sections worth specific reference are the employee’s entitlement to:
(a) a maximum of 45 ordinary hours of work per week;
(b) a maximum of 10 hours overtime per week with the prescribed reward;
(c) a compulsory one hour meal interval, or by consent 30 minutes, or to be paid for working during a meal interval;
(d) a daily rest period of 12 hours and a weekly rest period of 36 consecutive hours;
(e) payment for work on Sundays/public holidays.

Chapter Two does not, however, apply to senior managerial employees, employees engaged as sales staff who travel to the premises of customers and regulate their own hours of work, and employees who work less than 24 hours a month. In addition, certain provisions of Chapter Two do not apply to employees who earn in excess of the prescribed threshold of earnings.
From 1st March 2008 the new determination, defines earnings as the regular, annual remuneration in money or kind, before deductions (income tax, pension, medical), excluding similar payments made by the employer. Subsistence and transport allowances, achievement awards and intermittent payments for occasional overtime are not regarded as remuneration.
The first quandary for employers applying and implementing the latest determination is the interpretation of what constitutes earnings. There are two specific challenges in this regard, namely how to quantify “payments in kind”, and how to establish criteria, based on the unique operational requirements of a business, for what constitutes occasional overtime, in the absence of a guideline being issued.
Employers should immediately reduce their risks (such as the risk of claims for back pay or overtime) by immediately consulting with and reaching agreement with individuals who are likely to be affected by the increased threshold, in regard to what constitutes their earnings.  The purpose of the exercise would be to establish which part of the workforce the determination applies to.
The second quandary is that the new determination does not exclude earners in excess of R149 736 per annum being from the provisions relating to meal intervals and pay for work on Sundays.
These two sections were previously included. It is an anomaly to free such an earner from the shackles of the limitations imposed by the BCEA in respect of ordinary working hours and overtime and yet to retain a right for the same employee to take designated breaks and claim payment for work performed on a Sunday.  Time will tell if this is an oversight. Until an amendment is published, whether this category of workers shall be entitled to meal intervals and Sunday pay remains a quandary.
In respect of all employees that earn less than R 149 736 per annum, employers must calculate the economic cost of claims for Sunday pay, and avoid fines for a breach of the Basic Conditions of Employment of R500 per employee per contravention or 200% of the amount due, including interest.
Employers should therefore enter into agreements regulating work on Sundays. An agreement that an employee will only qualify for pay for work on a Sunday specifically designated to be performed on a Sunday and which is authorised in advance to be performed on a Sunday will serve as a measure to minimise this risk.
As this right was previously excluded in relation to this category of workers it could be manipulated or overlooked with significant consequences. Thus, a proactive approach tackling the implementation of the new determination is imperative. Failure to take steps to:
• identify the portion of the workforce that the new determination applies to; and,
• to make provision for the additional costs associated with a much greater portion of the workforce being entitled to rewards for overtime
could pose an imminent threat to the profitability, in some cases survival of businesses, with more of the pie being gorged by ever increasing employment costs.
By: Michelle Naidoo and David Vlcek of Deneys Reitz
 

Copyright © Insurance Times and Investments® Vol:21.3 1st April, 2008
2833 views, page last viewed on December 3, 2019