Employers – can you afford NOT to pay?

EMPLOYERS who fail to pay their employees the minimum wage because they say they cannot afford to have been warned.

According to the South African Payroll Association, those who felt they were unable to pay the national minimum wage should apply for an exemption with the Department of Labour, through the National Minimum Wage online service.

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“The National Minimum Wage Act stipulates a minimum national rate of R20 per hour, or R3 500 per month, depending on the number of hours worked,” said Jetro Malapane, executive committee member of the South African Payroll Association.

According to Mr Malapane, the maximum discount in terms of an exemption would be 10 percent of the hourly rate.

The R20 per hour rate will be phased in slowly for workers currently earning R15 to R18 per hour in the agriculture and domestic work sectors.

Mr Malapane said the department had given the assurance that its systems were up and running and that the exemption process was live, meaning employers could expect quick turnaround times.

The department had received 385 exemption applications since the introduction of the minimum wage rates in January this year.

Most of these were from non-profit organisations and companies in the manufacturing sector.

More than 240 exemptions were granted, 102 were declined and two were revoked because of fraud and misrepresentation.

The remainder of the applications were still in the audit process.

In terms of the process, a business must provide the department with an income statement for the past two years; its forecast for the current year; balance sheets; the number of employees; their working hours and wage information.

The company must be able to prove that it had consulted with union representatives or affected workers if there was no union.

According to Mr Malapane, a company may apply the reduced rates only from the date on which the exemption was granted.

The exemption would be applicable for 12 months, and employers would have to re-apply on an annual basis.

“My advice is to focus on compliance. If there are any uncertainties or if there is any need for more clarity on issues, it is best to approach the department timeously,” he said.

He warned that the exemption could be revoked during the exemption period if there was evidence that the employer had given false information, or that the company’s financial position had changed in the course of the year.

A trade union representative or an employee could approach the department with information that may cause the exemption to be revoked.

Concerns had been raised about the impact of a minimum wage on South Africa’s already dire unemployment statistics.

“An employer who cannot afford to pay the prescribed rate obviously may reduce the number of employees. which will affect the unemployment rate,” acknowledged Mr Malapane.

However, he referred to the partnership between the Department of Labour and Productivity SA which aimed to assist companies facing challenges.

A company with more than 50 employees could approach Productivity SA to assess problem areas, develop strategies to better market the company, improve operations and formulate financial plans.

It could provide employee training on basic business principles, operations, and improved productivity.

When a company was already in crisis, it could assist with immediate actions to avert the closure of the business and job losses.

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