With the new earnings threshold of R269 600.90 per year now in effect, South African employers face a practical compliance moment.
Failing to adjust payroll structures, employment contracts and HR policies to reflect the new threshold can expose businesses to unfair labour practice claims, disputes at the CCMA, and costly Labour Court proceedings.
At Welman Attorneys Inc, our labour and employment law team works with businesses of all sizes to manage their legal obligations under South African labour legislation. This guide sets out what employers need to do – right now.
Step 1: Identify Affected Employees
The first practical step is to identify employees earning between R261 748.45 and R269 600.90 per year.
These employees have moved from above to below the threshold and are now newly entitled to the protections of sections 9 to 18 of the BCEA. Payroll departments should conduct a threshold audit immediately to identify affected staff members.
Remember: “earnings” for threshold purposes is regular annual remuneration before deductions, excluding employer contributions to pension or medical aid, subsistence and transport allowances, achievement awards and overtime payments.
Step 2: Review Employment Contracts
Employment contracts that previously excluded BCEA protections on the basis that the employee earned above the threshold may now be inconsistent with the law.
Welman Attorneys Inc advises employers to review all contracts for employees near the threshold band and to seek legal advice before making any changes.
Critically, where a contract provides benefits – such as overtime pay or Sunday premiums – that go beyond the minimum required by law, those provisions remain binding even if the employee earns above the threshold. Employers may not unilaterally remove contractual entitlements. Any variation must be agreed upon with the employee.
Step 3: Revisit Fixed-Term and TES Arrangements
Two important LRA provisions apply only to employees earning below the threshold:
- Fixed-term employees: An employee earning below the threshold who is engaged on a fixed-term contract for longer than three months may be deemed to be employed indefinitely, unless there is a justifiable reason for fixing the term (section 198B of the LRA). Source: LRA
- TES workers: An employee earning below the threshold who is placed by a temporary employment service for more than three months, or who is not merely substituting for a temporarily absent employee, may be deemed a permanent employee of the client (section 198A(3)(b) of the LRA)
Employers using fixed-term or TES arrangements should assess whether newly threshold-captured employees now fall within these provisions, and take steps to regularise such arrangements if necessary.
Step 4: Understand CCMA vs Labour Court Jurisdiction
The threshold also affects where disputes must be adjudicated. Employees earning below the threshold who have monetary claims arising from the BCEA, a contract of employment, a sectoral determination or a collective agreement may refer unresolved conciliation disputes to the CCMA for arbitration. Employees earning above the threshold must take such disputes to the Labour Court.
Similarly, unfair discrimination disputes under Chapter II of the EEA (other than sexual harassment claims) may only be arbitrated at the CCMA if the claimant earns below the threshold. Above-threshold employees must litigate in the Labour Court.
Step 5: Seek Expert Legal Advice
The earnings threshold touches every facet of employment law. Non-compliance carries real risk: claims for underpaid overtime, reinstatement of employees incorrectly classified as fixed-term workers, and costly Labour Court litigation are all potential consequences.
Proactive legal advice is always less expensive than reactive litigation.
Welman Attorneys Inc provides comprehensive labour and employment law services to employers across South Africa, including:
- Threshold compliance audits and payroll reviews
- Drafting and updating employment contracts and HR policies
- Advice on fixed-term and TES worker classifications
- Representation at the CCMA and the Labour Court
- Proactive training and workshops for HR and management teams
Contact Welman Attorneys Inc today to schedule a consultation with one of our experienced labour lawyers. We are here to ensure your business remains compliant, your employees are treated fairly, and your interests are protected