HRTorQue Outsourcing
HRTorQue Reporter
January 2019
 
HRTorQue Reporter Archive
Table of Contents
1. National Minimum Wage - Things to Consider
2. "Paid" Paternity Leave - Misleading
3. BCEA Changes - Employee Minimum Pay of Four Hours Per Day
4. Changes to the Labour Relations Act
5. Employee Benefits - Late or Incorrect Payments and Information - Consequences
6. Application for an Exemption from the National Minimum Wage
7. Domestic Workers - Unemployment Insurance Return Filing
8. Course in Zulu - Basics of Managing Misconduct, Incapacity and Poor Performance
9. Contact HRTorQue

Should you require any further detail on any of these topics, please feel free to contact us.
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1. National Minimum Wage - Things to Consider
Author: Jonathan Aitken
President Cyril Ramaphosa signed the National Minimum Wage (NMW) Bill into law on Friday, 23 November 2018.

The Bill came into effect on 1 January 2019.

There are a few exceptions to the national minimum wage of R20 per hour, which include:

•  The minimum wage for farm workers will be R18 per hour.
•  The minimum wage for domestic workers will be R15 per hour.
•  The minimum wage for workers on an expanded public works program is R11 per hour.

Employers should also be aware of some of the following points in relation to the National Minimum Wage:

The NWM is an hourly rate.

It is clear from the wording in the NMW Act that the national minimum wage must be administrated in an hourly rate basis.

Schedule 1 of the NMW Act states that:
"...the national minimum wage is R20 for each ordinary hour worked."

The concessions for farmworkers, domestic workers, workers on an expanded public works program and workers who have concluded learnership agreements are also based on a minimum wage rate per hour.

From a practical perspective this means employers need to review their wage rates on an hourly basis to form a proper comparison.

Definition of "Worker"

The following new concepts are defined by and for the purpose of the NMW Act:

•  "Employer" ("any person who is obliged to pay a worker for the work that that worker
    performs for that person")
•  "Worker" ("any person who works for another and who receives…any payment for that
    work whether in money or in kind").

We foresee that there can be confusion between an independent contractor and the new concept of a "worker". Employers may wish to be cautious and make sure independent contractors' rates are also tested.

Employment Tax Incentive Act (ETI)

Section 4(1)(a) of the ETI Act requires the employer to pay a wage in each month that is not less than "the amount payable by virtue of a wage regulating measure...".

Wage regulating measures always specify an hourly minimum rate, and sometimes specify a monthly and/or a weekly minimum wage in addition to the hourly rate. The result is that payroll systems and employers that apply the hourly minimum wage rate specified by the wage regulating measure, will comply with section 4(1)(a).

If there is no wage regulating measure, section 4(1)(b) specifies a monthly minimum wage of R2 000 and requires the employer to 'gross-up' the actual wage paid in the month if there are less than 160 "employed and paid remuneration" hours in that month.

Section 4(1)(b) does not provide for, and therefore does not allow, the minimum wage to be validated against an hourly wage rate, whereas the national minimum wage will be applied on an hourly basis.

This creates a challenge for employers and payroll systems. The Payroll Authors Group of South Africa has raised this with National Treasury in the hope this will be addressed in the coming months. In the meantime employers will need to take comfort from the fact that if the NMW hourly rate is paid it is likely the monthly test under ETI will be met.

Financial Exemption

The original drafts of the NMW allowed for a one year exemption for companies who could show they would be faced with financial hardship in implementing the NMW. In the final Act this has been replaced with a 10% reduction so even if hardship is claimed and on successful application these companies would need to comply with a minimum hourly rate of R18.

Adjusting Payrolls

Once you have carried out an assessment of your workforce, please make sure you inform payroll to make any amendments. Your payroll systems will not adjust themselves (while this may seem intuitive we have seen multiple employers who have assumed this would be the case). For HRTorQue clients, we can only adjust payrolls on clients' instructions.

If you would like assistance reviewing your payroll/workers and are considering how to implement the NMW while minimising the impact on your business please give us a call.
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2. Paid Paternity Leave - Misleading
Author: Jonathan Aitken
Together with the NMW Bill, three other bills were also signed into law on the same day in November 2018. These are the Labour Laws Amendment Bill, amendments to the Basic Conditions of Employment Act, and the Labour Relations Amendment Bill.

The most important aspect of the Labour Law Amendment Bill is that it allows for all parents, including fathers, same-sex couples, adoptive and surrogate parents, to access leave as follows:

•   An employee, who is a parent of a child, is entitled to ten consecutive days of parental leave;
An employee, who is an adoptive parent of a child below the age of two, is entitled to:
-  Adoption leave of at least ten consecutive weeks; or
-  At least ten consecutive days of parental leave
An employee, who is a commissioning parent in a surrogacy agreement, is entitled to:
-  Commissioning parental leave of ten consecutive weeks; or
-  At least ten consecutive days of parental leave.

The Labour Laws Amendment Act, 2018 also amends the Basic Conditions of Employment Act, 1997 to insert new definitions and make provision for parental, adoption and commissioning parental leave to employees.

It should be noted that a collective agreement may not reduce an employee's entitlement to parental, adoption or commissioning parental leave.

In addition to this, the Unemployment Insurance Act, 2001, was also amended to make provision for the right to claim parental and commissioning parental benefits from the Unemployment Insurance Fund.

Practical Application:

While the legislation is clear on what was intended in relation to parental leave in practice the reporting by national newspapers has lead to a difficult situation for employers.

It was widely reported that employees would be entitled to paid paternity leave. We can assume reporters did understand the distinction that the "paid" element would be through claiming UIF, as opposed to employers having to foot the bill. Nevertheless, this has created an expectation of payment which cannot be met until the Department of Labour claims processes and the Unemployment Insurance Amendment Act and BCEA are amended to allow applicants to actually claim for this leave. In the interim, we recommend employers communicate internally their approach to paternity leave and look to amend their internal policies when practical to do so.
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3. BCEA - Employee Minimum Pay of Four Hours Per Day
Author: Jonathan Aitken
The November 2018 amendments to the Basic Conditions of Employment Amendment Act (BCEA), Act 7 of 2018, provide for the inclusion of the National Minimum Wage. They also include the insertion of a new section to provide for daily wage payments applicable to employees or workers who earn less than the earnings threshold - an employee who works for less than four hours on any day must be paid for four hours work on that day.
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4. Changes to the Labour Relations Act
Author: Jonathan Aitken
The Labour Relations Amendment Act, 2018 was amended in November 2018 to include provision to:

•   Increase the period the Minister has to extend a collective agreement to non-parties from 60 to 90 days and the agreement shall only be extended if parties are sufficiently represented within the scope of the council;
Provide criteria for the Minister before the Minister is compelled to extend the collective agreement;
Provide for the renewal and extension of funding agreements;
Provide for picketing by collective agreement or by determination by the Commission in terms of picketing regulations;
Provide for the classification of a ratified or determined minimum service, where minimum service refers to the minimum number of employees in a specific essential service who may not strike;
Extend the meaning of ballot to include any voting by members that is recorded in secret with regard to registered trade unions and employer's organisations;
Make way for the establishment of an advisory arbitration panel to deal with long and violent strike action in the interest of labour stability.

It will be interesting to see whether the amendments will improve the position of smaller businesses. In the past many unrepresented businesses have been forced to apply collective bargaining arrangements which have at times entrenched the positions of larger businesses better able to afford the collective conditions.
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5. Employee Benefits - Late or Incorrect Payments and Information
Author: Jonathan Aitken
Consequences for Employers and Employees

S13A of the Pensions Fund Act requires employers to meet certain deadlines with respect to both the payment of contributions and the submission of information to funds for these contributions to be allocated and invested swiftly.

•  Contributions must be paid by the 7th day of the following month; and
•  Information must be supplied by the 15th day of the following month

The consequences of getting this wrong are:
•  Potential criminal charge for the directors of the employer including a fine of up to R10m
    and 10 years in prison
•  Interest on late payments
•  A loss of investment returns for employees
•  Potential civil liability for loss of risk cover when premiums are not paid on time or
    misallocated

Employers spend considerable time choosing an appropriate fund for their employers, but then assume all the on-going administration within payroll and subsequent reporting to the fund works seamlessly. In practice this is seldom the case. Payrolls are set up incorrectly, payroll departments struggle to keep up to date with employee movements which impact benefits (engagements, terminations, maternity, disability, pricing changes) and fund portals are sometimes confusing or difficult to use.

With a little assistance this can be managed. HRTorQue administers many payrolls and fund portals and can either look after your entire payroll or help you design processes and reports to manage this risk in your organisation. Contact us at [email protected] if this is an area you need help with.
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6. Applying for an Exemption from the National Minimum Wage
Author: Jonathan Aitken
On 19 December 2018, the Minister of Labour gazetted the process for companies to apply for an exemption from the National Minimum Wage.

It is important to note the following:
•  The exemption, if granted, is only for 12 months.
•  The applicant needs to show it cannot afford the minimum wage and must have
    consulted all applicable unions and bargaining councils.
•  Even if granted, the company will still need to pay a minimum of 90% of the minimum
    wage (R18 per hour currently).
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7. Domestic Workers - Employers can File Annually
Author: Jonathan Aitken

Domestic Workers - Employers can file annually unless employee is terminated.


Regulation 13 of the Unemployment Insurance Regulations has been amended to allow domestic and small enterprise employers to declare employees and contributions annually, provided that the contributor's services are not terminated, in which case the declaration must be done on termination.
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8. Basics of Managing Misconduct, Incapacity and Poor Performance
Author: Jonathan Aitken

Course in Zulu


Following feedback from clients, HRTorQue is running a series of workshops in Zulu on managing misconduct, incapacity and poor performance. For more information please contact us on [email protected]. While the course material is in English, the workshop will be held in Zulu and aimed at improving an understanding of the key areas.

The workshop is open to all Zulu-speaking individuals who are involved at a basic level in managing staff and need to identify areas of misconduct, poor performance, and incapacity. The workshop is most suitable to individuals at a supervisory level who can speak English but would gain a better and fuller understanding of the requirements if facilitated in Zulu.

If you would like us to set up specific course for your teams, whether in Zulu or Sotho, we can look to arrange this.
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9. Contact HRTorQue
Durban
Phone: 031 564 1155  •  Email: [email protected]  •  Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive, Durban North, KwaZulu-Natal
 
Johannesburg
Ground Floor, West Wing, 6 Kikuyu Road, Sunninghill, 2191
 
Cape Town Office
Ground Floor, Liesbeek House, River Park, Gloucester Road, Mowbray, Cape Town, 7700

Bloemfontein Office
62 Kellner Street, Westdene, Bloemfontein

East London
24 Pearce and Tecoma Street, Berea, East London

Port Elizabeth
280 Cape Road, Newton Park, Port Elizabeth

Polokwane
125 Marshall Street, Polokwane

Nelspruit
Promenade Centre, First Floor, Suite 11A, Nelspruit
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