Can my business be exempted from paying the national minimum wages?

“I run a local supermarket and have quite a number of employees that work for me. I understand that with the new Minimum Wage Act I am now required to pay the minimum wages. This will definitely hurt my business. Is this compulsory and must I immediately pay these minimum wages?”

You are correct that a new national wage dispensation came into effect on 1 January 2019 with the passing of the National Minimum Wage Act (“Act”). This Act was promulgated to specifically address large disparities in income that exist in our labour market.

The Act will apply to most workers and their employers, with a limited number of exclusions like the SANDF etc. allowed for. The Act requires employers to pay their workers the national minimum wage of R20.00 per hour. A minimum wage of R18.00 per hour for farm workers or R15.00 per hour for domestic workers will commence on a date still to be fixed by the President. 

Understanding, that certain employers may be adversely affected by the national minimum wage, the Act also provides for a process of exemptions whereby an employer can apply online for an exemption of paying the minimum wage if they can show that they cannot afford to pay the national minimum wage to their workers. Here elements such as affordability, profitability, and prior consultation will be taken into account.

No exemption will be granted that is less than 90% of the minimum wage set for that worker. In other words, even with an exemption, an employer will still be required to pay no less than 90% of the established minimum wage for that worker.

An exemption granted will have to specify the period for which the exemption is granted, but which may not be longer than one year, the wages that the employer will be required to pay and other conditions that may be deemed relevant. 

In your case, you will have to pay your workers the required minimum wage. Should you consider applying for an exemption, it would be advisable to approach your labour advisor for assistance in formulating your request for exemption to ensure that it meets all the regulatory requirements for a correct exemption application.

March 11, 2019
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