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National Minimum Wage Increase effective 1 March 2021

The Minister of Employment and Labour published Government Gazette 44136 on 8 February 2021, amending the following:

  • The National Minimum Wage Act (NMWA) Schedule 1 and Schedule 2 effective 1 March 2021

Effective 1 March 2021, the national minimum wage rates will increase -

  • from R20.76 to R21.69 per hour,
  • from R18.68 to R21.69 per hour for farm workers,
  • from R15.57 to R19.09 for per hour domestic workers,
  • from R11.42 to R11.93 per hour for workers employed on expanded public works programme, and
  • to the table in Schedule 2 for workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Levies Act (please see extract below).

 Important notes to take into consideration with the increase of the national minimum wage rates effective 1 March 2021:

  • The national minimum wage takes precedence over any contrary provision in any contract, collective agreement, sectoral determination or law, except a law amending the National Minimum Wage Act. The national minimum wage must constitute a term of the worker’s contract except to the extent that the contract, collective agreement of law provides a wage that is more favourable to the worker.
  • Therefore, the below sectoral determinations are being updated effective 1 March 2021 with wages at least equal to or more than the new national minimum wage rates.
  • Any other wage agreement (including bargaining councils and collective agreements) must be updated effective 1 March 2021 to be at least equal to or more than the new national minimum wage rates.
  • For ETI purposes, effective 1 March 2021, if a wage regulating measure is applicable to an employee (collective agreement, bargaining council or sectoral determination) and the minimum rates according to the wage regulating measure is less than the new national minimum wage rates, and the employee is paid the minimum wage according to the wage regulating measure then the employee should not qualify for ETI.

To pass the ‘minimum wage test for ETI purposes’, the employee should be paid the higher of -

  • the applicable minimum wage rate per hour according to the National Minimum Wage Act, or
  • the applicable minimum wage rate per hour according to the wage regulating measure.

If none of the above is applicable (i.e. no wage regulating measure and the employer is exempt from the national minimum wage after successful application), then the R2000 wage per month for 160 ordinary employed and remunerated hours must be used.

Therefore, the employer must ensure that the minimum wage which is applicable to the employee is correctly indicated on the system. In other words, the employer must update/change the minimum wage on the system if applicable to prevent employees from qualifying for ETI if they are not supposed to qualify based on the new national minimum wage rates.

For assistance on how to create new minimum wage codes on the payroll system, click here

  • If the employer pays less than the national minimum wage but equal to or more than the minimum wage specified in the wage regulating measure, then the employee must not qualify. To ensure the employee does not qualify, the employer must ensure the minimum wage on the system is the national minimum wage rate as indicated above.
  • If the employer pays at least the minimum wage as per the wage regulating measure, and those rates are equal to or more than the national minimum wage rate, then the employer must indicate the wage rates as per the wage regulating measure as the employee should only qualify if the employer pays at least the minimum wage rates as per the wage regulating measure.
  • If no wage regulating measure is applicable and the employer is exempt from paying the national minimum wage, then a minimum wage of R2 000 per month is still applicable. For these employees, it must be indicated that no wage regulating measure is applicable in order for the system to apply R2 000 as the minimum wage.
  • If an employer cannot afford to pay the national minimum wage, then the employer can apply for exemption from the National Minimum Wage Act, please refer the client to the online application system https://nmw.labour.gov.za/ for more information.
  • Sectoral Determination 1 (Contract Cleaning Sector) wage increases effective 1 March 2021.

Effective 1 March 2021, employers should pay the minimum wages as contained in Schedule 2 (please refer to Government Gazette to view the rates).

  • Sectoral Determination 9 (Wholesale and Retail Sector) wage increases effective 1 March 2021.

Effective 1 March 2021, employers should pay the minimum wages as contained in Schedule 2 (please refer to Government Gazette to view the rates).