Newsflash! New Earnings Threshold as from 1 April 2024

2024-Earnings-Threshold-Announced

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As of 1 April, the new threshold will be R254,371.67 – an increase of R13,261.08 from the 2023 earnings threshold of R241,110.59. This will entitle employees falling below the new threshold to stricter protections in terms of labour legislation.

The earnings threshold impacts the application of the provisions in the following Acts:

The Basic Conditions of Employment Act, 1997 (BCEA)

Employees earning more than the earnings threshold are excluded from the provisions, which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work, and pay for work on public holidays.

 

The Labour Relations Act, 1995 (LRA)

Employees earning more than the earnings threshold are not subject to the deeming provision in accordance with which employees engaged by a temporary employment service or labour broker who is not performing a temporary service are deemed to be employees of the client for purposes of the LRA. In addition, employees earning more than the earnings threshold fall outside the scope of the provisions relating to fixed-term employees who are deemed to be employed indefinitely after three months (in the absence of justifiable reasons for fixing the term of the contract).

 

The Employment Equity Act, 1998 (EEA).

An employee earning in excess of the earnings threshold, who has a dispute under Chapter II of the EEA relating to unfair discrimination, is not permitted to refer the dispute to the CCMA for arbitration (unless the dispute relates to alleged unfair discrimination on the grounds of sexual harassment, or the parties all agree to arbitration) and is obliged to refer the dispute to the Labour Court for adjudication.

For purposes of determining whether an employee earns more than the earnings threshold, “earnings” means an employee’s regular annual remuneration:

  • Before the deduction of income tax.
  • Before the deduction of pension fund contributions.
  • Before the deduction of medical aid contributions and similar payments.
  • Excluding similar contributions made by the employer in respect of the employee.

 

This is subject to the proviso that subsistence and transport allowances received, achievement awards, and overtime payments worked, do not fall within the scope of remuneration.

An assessment should be conducted by all employers to ensure that the increase and its consequences are accounted for in the workplace and, where necessary, that changes to the employment contracts or remuneration structures are affected to mitigate the risks of any unintended contraventions of the BCEA or the deeming provisions applicable to atypical employment arrangements.

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