The national minimum wage (NMW) remains a hot topic within South Africa’s labour market and there are several important developments that business leaders need to be aware of.
The NMW was agreed upon by parties to the National Economic Development and Labour Council (NEDLAC) on 8 February.
It was agreed that the implementation date should be no later than 1 May 2018, and thirdly the rate will be R20 per hour or approximately R3 500 per month for employees working 40 hours per week and about R3 900 per month for those who work 45 hours per week.
It is important to know that the NMW covers all businesses, irrespective of size, and employers will not be allowed to reduce hours of work because of the introduction of the NMW – this will be regarded as non-compliance and/or unfair labour practice.
One of the main reasons why NMW is significant is because most businesses adopted a lean, streamlined approach to operation costs. The emphasis today is on cutting costs and ‘doing more with less’.
The fact is that when it comes to operating costs, wages and benefits represent the highest costs to a business.
When the government mandates that small businesses must pay employees more, all wages must relatively rise, as skilled and experienced workers become more valuable.
Consequently, small businesses must either downsize (retrench) their workforces or stop hiring. By extension, a raise in the minimum wage also forces small businesses to move operating capital away from expansion.
But, and this is a significant ‘but’, businesses which cannot afford the NMW will be able to apply for exemption, lasting a year.
CRS Technologies has an established legal arm, led by seasoned HR and HCM specialistsand experts, trained in the latest regulation and legislation, to help our clients with any process related to NMW.
Contact us today at firstname.lastname@example.org to ensure your compliance!