The Department of Labour has during May 2011 increased the earnings threshold for employees, which exists in terms of the Basic Conditions of Employment Act (“the BCEA”). The threshold has since 2008 been an annual remuneration of R149,736.00 (one hundred and forty-nine thousand, seven hundred and thirty-six rands), which has now been increased to R172,000.00 (one hundred and seventy-two thousand rands).
An employee’s “earnings” means his or her “regular annual remuneration before deductions”, i.e. the employee’s own contributions to income tax, pension, medical insurance and similar payments, but expressly excludes similar contributions made by the employer in respect of the employee. Such remuneration does not include subsistence and transport allowances received, achievement awards and payments for overtime worked.
For employers, the effect of this amendment is that any employee earning more than R172,000.00 per year will now fall outside the scope of certain basic conditions of employment which would ordinarily apply in terms of the BCEA. These affected conditions of employment would accordingly not apply to such employees, unless otherwise agreed to between the employer and the employee.