Earnings thresholds, Income Tax thresholds and Minimum Wage updates

Reference documents

Basic Conditions of Employment Act, as amended
Income Tax Act, as amended
National Budget Speech, February 2021
National Minimum Wage Act, as amended

This article gives a brief overview of salary and wage related thresholds and how it is applied in the workplace. As with all income brackets it has the usual application of income tax too. Income tax thresholds and minimum wage information are briefly discussed too.

Section 6 of the Basic Conditions of Employment Act makes provision for the Minister of Labour to publish a determination on the advice of the Commission that will exclude employees earning above a certain amount per year from sections of chapter 2 of the Act. Chapter 2 primarily deals with the regulation of working hours of employees.

“Earnings” means gross pay before deductions, i.e. before deducting income tax, pension, medical and similar payments, but excluding contributions made by the employer in respect of the employee.”

The sections from which employees that earn ABOVE the threshold are excluded:

Ordinary hours of work
Compressed working week
Averaging of hours of work
Determination of hours of work by Minister
Meal intervals
Daily and weekly rest period
Pay for work on Sundays
Night work -17(2) that deals with transport and night shift allowances
Public holidays – 18(3) that deals with payment for work on a public holiday that falls on a day on which the employee would ordinarily not have worked.

Employees earning UNDER the threshold amount have the full protection of every section of the Basic Conditions of Employment Act.

Employees earning ABOVE the threshold amount do not have a legal right to demand anything in respect of Sections 9, 10, 11, 12, 14, 15, 16, 17(2), and 18(3) of the Act but they do have the right to negotiate where possible.

ALL employees also have the right to have their hours or work regulated:

(a) in accordance with the provisions of any Act governing occupational health and safety;
(b) with due regard to the health and safety of employees;
(c) with due regard to the Code of Good Practice on the Regulation of Working Time issued under section 87 (1) (a); and
(d) with due regard to the family responsibilities of employees.”

Now for the all-important threshold value.

Previously, the earnings threshold was R205 433.30 per year. As from 1 March 2021, the new earnings threshold is R211 596.30 per year (or approximately ZAR17 633.00 per month).

Additionally, The Minister of Employment and Labour has also published increases in the National Minimum Wage and various sectoral determinations. These increases are also effective from 1 March 2021.

The national minimum wage changed from ZAR20.76 per hour to ZAR21.69 for each ordinary hour that an employee works. This is an increase of approximately 4.9%. All sectors will be subject to the new national minimum wage, save for a few exceptions, including:

  1. farm workers, who are entitled to ZAR21.69 per hour;
  2. domestic workers, who are entitled to ZAR19.09 per hour; and
  3. workers employed on an expanded public workers programme, who are entitled to ZAR11.93 per hour.

Lastly, from a personal tax perspective, updated thresholds were published in February 2021 by the Minister of Finance and shown in the table below.

Author Craig Tonkin

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