In an effort to address wage inequality and stimulate economic growth, president Cyril Ramaphosa signed the national minimum wage bill into law last month.
The National Minimum Wage Act stipulates that the minimum wage is to be administered on an hourly basis and is set at R20 per hour. This minimum wage will be effective from 1 January 2019.
This means that the hourly rate will need to be changed for employees who are currently earning a wage lower than R20 per hour. To review or edit the hourly rate for employees, go to Employees > Bulk Actions > Regular Inputs and select “Basic Salary” and “Hourly Paid” under Filters.
Remember that a change in the ordinary hourly wage will also impact the rate for Sunday pay and public holiday pay. For more information on these, refer to our help page here.
Impact on ETI
The ETI Act states that when there is no “wage regulating measure”, the minimum wage to qualify for ETI is R2 000 per month. SARS has confirmed that the national minimum wage does not count as a wage regulating measure and the R2 000 minimum stands. However, the national minimum wage should ensure that employees will meet this minimum anyway.
Proposals have been made by professional bodies to amend the ETI Act to clarify this and to replace the R2 000 minimum on ETI with a use of the national minimum wage, but this potential change has not yet been approved.
If you have any further queries regarding the impact of this Act on your payroll and on the system, please do not hesitate to contact us.