The National Minimum Wage Act (NMWA) sets the minimum hourly rate that must be paid to employees in South Africa, safeguarding workers from exploitation and ensuring fair compensation for their labour. As of 1 March 2024, the National Minimum Wage (NMW) increased to R27.58 per hour. This change has significant implications for various industries, including the hairdressing and beauty sector, governed by the Hairdressing, Cosmetology, Beauty and Skin Care Bargaining Council (HCSBC).
The Role of the HCSBC in Enforcing the National Minimum Wage
The HCSBC is responsible for ensuring that employers in the Hairdressing, Cosmetology, and Beauty industry adhere to wage standards, including the latest amendments to the NMW. In response to the increase, the HCSBC published updated salary schedules on 1 March 2024, aligning most job categories with the new hourly rate. However, certain positions on the salary schedule fall below the R27.58 per hour threshold. These exceptions have been highlighted in red, accompanied by a footnote at the back of the area wage scale explaining how these rates still comply with the NMWA.
Footnote: Inclusion of Employer Contributions in Minimum Wage Calculations
The footnote on the salary schedules clarifies that these lower hourly rates are justified by factoring in the employer's pension fund contributions. This approach is backed by a Labour Court Ruling in the Quantum Foods (Pty) Ltd v Commissioner H Jacobs N.O. and Others (JA85/2022) [2023] ZALAC case. The Labour Appeal Court ruled that an employer’s pension fund contributions (as a payment made on the employee's behalf) could be included when calculating whether an employee's wages meet the NMW requirements.
The Labour Court's interpretation of the term "payable" in the Quantum Foods case emphasized that it includes all payments made directly to employees or on their behalf, such as contributions to a pension or provident fund. This ruling provided clarity for employers, allowing them to incorporate such contributions into the total hourly compensation.
Compliance with the National Minimum Wage
For employees in job categories where the hourly rate falls below R27.58, the inclusion of the employer's pension fund contribution ensures that the overall compensation does not drop below the mandated minimum. When combined, the hourly wage and the pension fund contribution meet or exceed the NMW set by the Act.
This method of calculation allows employers to remain compliant while providing additional benefits to their employees in the form of pension contributions, enhancing their long-term financial security.
For example, an operator working in the Western Cape with an NBC-prescribed basic salary of R5,254.27, along with the employer’s pension fund contribution of R288.95, results in a total of R5,543.22. When divided by 4.333 (the average number of weeks per month) and further divided by 45 (for a 45-hour workweek), the hourly rate amounts to R28.42. This rate exceeds the National Minimum Wage (NMW) as stipulated by the Act, thereby ensuring compliance.
Please note that the basic salaries on the NBC wage scale are calculated based on the employer's compliance with pension fund contributions. If the employer is not compliant with these pension fund contributions, they will consequently not be in compliance with the National Minimum Wage (NMW) requirements.
Employers in industries with sector-specific bargaining councils, such as the HCSBC, are bound by both the NMWA and their council’s regulations. The inclusion of employer contributions, bonuses, commission, and other benefits is an important factor in determining total employee remuneration, as demonstrated by the Quantum Foods decision.
According to the National Minimum Wage Act, the following cannot be included in your remuneration calculation:
Allowances (such as transport, tools, food, or accommodation)
Payments in kind (board or lodging)
Tips
Bonuses
Gifts
The National Minimum Wage is a critical tool in protecting employees’ rights, and the HCSBC plays a key role in ensuring compliance within the hairdressing and beauty industry. While some employees may appear to earn less than the minimum hourly rate, employer contributions to pension funds bring total compensation above the required level. This approach, supported by legal precedent, ensures that employers can provide additional benefits without compromising compliance with the NMWA.
The National Minimum Wage Act continues to evolve, and employers must remain vigilant in adapting to changes while maintaining fair compensation practices for their workforce.
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