ARE COMMISSION EARNERS ENTITLED TO ANNUAL LEAVE?

Annual leave is a fundamental right for all employees in South Africa, including those who earn commission. This FAQ addresses common questions that employers in the hairdressing, cosmetology, beauty, and skincare industry face regarding annual leave entitlements under South African labour law and the National Bargaining Council for Hairdressing, Cosmetology, Beauty, and Skincare Industry (HCSBC) Main Collective Agreement.

Q1: Are commission earners considered employees under South African law?

Yes, commission earners are typically considered employees. Section 200A of the Labour Relations Act creates a legal presumption that a person is an employee if certain conditions are met, including:

• Working under your control or direction

• Providing services personally rather than through substitutes

• Being economically dependent on your business for income

Commission earners generally meet these tests and are therefore presumed to be employees entitled to full labour law protections.

Important note: This presumption applies automatically to workers earning below the Basic Conditions of Employment Act (BCEA) threshold of R261,748.45 per year (2025). For those earning above this amount, the presumption no longer applies automatically, but common law tests examining control, economic dependence, and integration into your business often still confirm employee status.

Q2: Does paying commission affect an employee's right to annual leave?

No. Commission is simply a form of remuneration, just like a salary or hourly wage. The method by which you pay your employees does not affect their statutory entitlement to annual leave. Whether your employees earn a fixed salary, hourly wages, commission, or a combination of these, they remain entitled to the same leave benefits as any other employee.

Annual leave is an employment expectation and statutory requirement that is not affected by how pay is structured.

Q3: What are employees' annual leave entitlements under the BCEA?

The Basic Conditions of Employment Act sets the national minimum standard for all employees in South Africa. Under the BCEA:

• Employees are entitled to 21 consecutive days of annual leave for every 12-month employment cycle

• Leave must be paid at the employee's normal remuneration rate

• You may not require or permit employees to work during their annual leave period

These are minimum standards that apply across all industries and cannot be reduced by any agreement or contract.

Q4: How should you calculate leave pay for commission-earning employees?

For commission earners, leave pay must be calculated to reflect their normal remuneration. In practice, this is typically done by averaging the employee's commission earnings over the previous 13 weeks. This averaging method ensures that leave pay fairly represents the employee's usual income, accounting for fluctuations in commission earnings.

This approach ensures compliance with the BCEA requirement that leave must be paid at the employee's normal remuneration.

Q5: What additional requirements apply to employers in the hairdressing, cosmetology, beauty, and skincare industry?

As an employer in this sector, you are bound by the HCSBC Main Collective Agreement (2023-2026), which provides sector-specific rules and protections. Key provisions include:

• Annual leave entitlement consistent with the BCEA (21 days per cycle)

• Leave must be taken within six months of falling due

• Leave may not run concurrently with notice periods or sick leave

• Payment in lieu of leave is only permitted upon termination of employment or in specific circumstances outlined in BCEA sections 40(b) and (c)

Critical point: Leave pay calculations are Area-specific. The industry is divided into Areas A, B, C, and D, and each has different formulae and applications for calculating leave pay. You must contact your EOHCB (Employers' Organisation for Hairdressing, Cosmetology and Beauty) representative to ensure you apply the correct calculation for your specific Area.

Q6: What is Personal Services Commission (PSC) and how does it affect leave pay?

Personal Services Commission is a specific calculation method outlined in Clause 22 of the HCSBC Main Collective Agreement for determining leave pay, notice pay, and severance pay for commission earners.

PSC is calculated as follows:

• Determine the average monthly target-based commission over the preceding 12 months (or pro-rated for shorter employment periods)

• Multiply by the agreed PSC percentage

• Divide by 21.67 (for employees working a 5-day week) or 26 (for a 6-day week)

• Multiply by the number of leave days, notice days, or severance days payable

When PSC does NOT apply:

• If the employee's normal monthly pay (base wage plus commissions for that month) exceeds the calculated PSC amount, the PSC does not apply

For example, if a stylist's base salary plus commissions in the payment month are higher than the averaged PSC figure, you pay the actual earnings instead

• PSC is also not payable if leave taken exceeds the statutory entitlement in any 12-month cycle

Important: PSC calculations vary across Areas A, B, C, and D. You should consult your local EOHCB representative for Area-specific guidance and refer directly to Clause 22 of the HCSBC Main Collective Agreement (2023-2026) for the complete rules.

Q7: Can you pay employees instead of granting them leave?

Generally, no. You cannot substitute cash payments for annual leave whilst employment continues. Payment in lieu of leave is only permitted in the following circumstances:

• Upon termination of employment

• In specific situations outlined in BCEA sections 40(b) and (c)

Annual leave is intended to provide rest and recuperation, and this purpose cannot be achieved through payment alone. You must grant your employees their full leave entitlement.

Q8: Where can you get Area-specific guidance?

The HCSBC Main Collective Agreement applies differently depending on whether your business falls within Area A, B, C, or D. Whilst the fundamental entitlements remain the same, the detailed formulae and application methods differ between Areas.

You should contact your EOHCB representative to ensure you are applying the correct calculations and complying with Area-specific requirements. This is essential to avoid non-compliance and potential disputes.

Summary

Annual leave is a statutory requirement for all employees in South Africa, including commission earners. Commission is merely a method of remuneration and does not affect employee status or leave entitlements. In the hairdressing, beauty, and barbering sectors, the BCEA provides the foundation, whilst the HCSBC Main Collective Agreement establishes sector-specific applications, including Personal Services Commission and Area-specific calculation methods.

As an employer, you must ensure you understand and apply the correct rules for your specific Area to remain compliant with labour law. Contact your EOHCB representative for guidance on Area-specific calculations and refer to the HCSBC Main Collective Agreement (2023-2026) for complete details.