By Michelle Naidoo and Diyara Ishwarlall
The Basic Conditions of Employment Act regulates an earnings threshold. The earnings threshold is significant because it serves as a dividing line between categories of employees (lower earners versus higher earners).
In a nutshell, employees earning under the threshold are entitled to all basic conditions of employment whilst employees earning over the threshold are excluded from certain provisions, including the regulation of hours of work (maximum 45 ordinary hours per week and maximum 10 hours overtime per week).
Employees earning over the threshold are excluded from qualifying for additional compensation for working:
- overtime
- on Sundays
- Public Holidays
- during meal intervals
- on weekends
This means that if an employee earns over the threshold, the number of hours of work per day and week is not regulated, unless the entitlement is derived from an employment contract. It is thus critically important to review employment contracts (indefinite period contracts [permanent] and fixed term contracts) to ensure that employment contracts include provisions which provide for these exclusions.
Typically, situations arise where an employee may have commenced employment earning under the threshold but progresses to earn over the threshold. Contracts of employment should provide for such an eventuality. Failing this, a right of entitlement to a benefit (such as overtime pay), may be created, and may be binding on the employer based on the law of contract.
Effective 1 April 2025 the threshold of earnings shall increase by 2,9% from R254,371.67 to R261,748.45 per annum (R21 812.37 per month). Earnings means gross pay before deductions for income tax and benefits but excludes employer contributions to benefits.
Key takeaways:
- Review standard contracts of employment to include provisions about the exclusions applicable to employees earning over the threshold.
- Review employment policies dealing with the regulation of working hours and scope of application.
Photo by Josh Appel on Unsplash
