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BCEA: Overtime earning threshold raised

BCEA EARNINGS THRESHOLD RAISED FROM R149 736 TO R172 000

The Minister of Labour, M N Oliphant, announced on 13 May 2011 that the Earnings Threshold* determined under the Basic Conditions of Employment Act, 1997, has been raised from R149 736 to R172 000 per annum with effect from 1 July 2011. (Government Gazette No 342873)

“The effect of this increase means that employees earning below the new threshold of R172 000 p.a. or R14 333.33 p.m will be entitled to be remunerated for overtime, work on Public Holidays and Sundays.”

The Minister has alerted employers to the fact that employees earning above the previous threshold of R149 730 but below the new one of R172 000 should be aware that these employees will now be entitled to the above entitlement.

Should they not comply, employers could end up with multiple and backdated claims which will have a significant cost implication. At the same time, the possibility exists that an employee could bring a contractual claim to the Labour Court for non payment.

Therefore where employers have structured salaries and payments in line with the previous threshold, they need to ensure that they are now aligned to the new provisions.  It is suggested that some employers may opt to pay employees above the threshold in order to circumvent the obligation to pay such overtime,   as well as the other provisions relating to the regulation of working time such as compressed working week, averaging of hours and meal intervals etc.

Another question that arises is that of an employee who has a contractual agreement to work overtime but now earns above the threshold.  Previously compensated in terms of the provisions of the BCEA, they now no longer fall under its umbrella. In such cases, payment for overtime, or time off in lieu, should be negotiated directly with the employer.  

*Earnings is defined in the Government Gazette Notice as ‘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: Provided that subsistence and transport allowances received, achievement awards or payments for overtime shall not be regarded as remuneration for the purpose of this notice.’

The previous definition to be found as a footnote in the BCEA under Chapter Two: Regulation of Working Time s6, referred to ‘intermittent payments for occasional overtime’. The new wording which excludes overtime altogether has brought some certainty to the payroll equation and does away with fluctuations whereby an employee might be under the threshold one month and above it the next.

Andrew Levy Employment June 2011

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