Presented by Jonathan Goldberg NATIONAL MINIMUM WAGE: RECOMMENDATIONS

Presented by Jonathan Goldberg NATIONAL MINIMUM WAGE: RECOMMENDATIONS

ABOUT OUR FACILITATOR

3 JONATHAN GOLDBERG QUALIFICATIONS B. Com degree (Bachelor on Commerce) LL.B (Baccalaureus Legum) degree Honours in Business Administration (HBA) degree (cum laude) Masters in Business Administration (MBA) degree (cum laude) 4MAT Instructional Design Training (Michigan University, USA) Chartered Director (SA) Institute of Directors SABPP Master HR Practitioner BUSA CAPES Border Kei Chamber of Business Employment Conditions Commissioner World Presidents International Organisation MEMBERSHIPS Patron South African Payroll Association Tokiso Dispute Resolution Panel Former Commissioner of the Commission for Conciliation, Mediation and Arbitration Institute of Directors

4 JONATHAN GOLDBERG LECTURER AND SPEAKER Stellenbosch Business School Da Vinci Institute of Technology Wits Business School Fort Hare University Rhodes Investec Business School Local and International conferences and events PUBLICATIONS Co-author of four Broad-Based Black Economic Empowerment books Written various articles on Labour Law for publications, including Business Day Law and Tax Review

5 JONATHAN GOLDBERG NEDLAC REPRESENTATION ACCOLADES 2016 Chartered Director of the Institute of Directors (IOD) TOKISO Dispute Resolution Panel 2012 Adcorp Chairman Award Former Commissioner of the Commission for Conciliation, Mediation and Arbitration Commissioner of the Employment Conditions Commission National negotiator lead in numerous sectors Representation of business at numerous forums including the Labour Market Business representative on the Employment Services Board 2012 Co-winner of the Business Person Entrepreneur award: ABSA Jewish Awards Federation of African Professional Staffing Organisations (APSO): Founders Cup Award 2009 Business Person of the Year (Business) Border Kei Chamber of Commerce & Daily Dispatch 2009 Business of the Year Category C (turnover above 10 million) Border Kei Chamber of Commerce and Daily Dispatch

PANELS RECOMMENDATIONS

7 Panels Recommendations 1. The Panel proposed that first national minimum wage for South Africa be set at R20 per hour. This is equivalent to approximately R3500.00 per month on a 40 hours working week. 2. A critical issue that the Panel considered is the adjustment or transition period. The Panel suggests the following: National Minimum Wage The NMW should be announced in December 2016. Legislative The legislative and institutional arrangements be finalised as early in 2017 as possible. At the latest these matters should be dealt with before the end of June 2017; Recommended Level Compliance Over the period 1 July 2017 30 June 2019, compliance with the NMW should be based on the technical assistance and persuasion, rather than penalties; Enforcement Beginning of July 2019 (2020 for small businesses), enforcement of the NMW should be based on the financial penalties for non-compliance, and the Expert Panel can consider implementing an adjustment to the level. The recommended level of R20 per hour should be effective as soon as the legislation is enacted at latest 1 July 2017;

Where are we in relation to Panel Recommendations on the Amendments PANEL RECOMMENDATION 8 1. LEVEL The panel proposes that the first NMW for South Africa be set at R20/h. This is equivalent to approximately R3 500 a month on a 40 hour week. Recommendations and Status STATUS UPDATE There is general consensus on R20 per hour as the National Minimum Wage from 1 May 2018. Negotiations are underway at Nedlac on the detail in this regard Comment That is 1 year 2 month early enforcement 1 May 2018. Why have a panel of experts then?

Where are we in relation to Panel Recommendations on the Amendments 9 PANEL RECOMMENDATION 2. TIMING FOR LEGISLATIVE / INSTITUTIONAL ARRANGEMENTS The panel recommended legislative and institutional arrangements be finalised early in 2017, but by the latest June 2017 and that R20 / hour should be effective at the latest by 1 July 2019. STATUS UPDATE Implementation should be as soon as possible and by no later than 1 May 2018. Comment See legislation prepared and proposed.

Where are we in relation to Panel Recommendations on the Amendments PANEL RECOMMENDATION 10 3. ADJUSTMENT OR TRANSITION PERIOD The panel proposed R20 / hour be introduced over a transition period with 1 July 2017 30 June 2019 being for compliance based on technical assistance and persuasion rather than penalties; and beginning of 1 July 2019 (2020 for small businesses) enforcement of the NMW should be based on financial penalties for non-compliance and the expert panel can consider implementing an adjustment to the level. STATUS UPDATE 1 May 2018 enforcement date.

Where are we in relation to Panel Recommendations on the Amendments 11 PANEL RECOMMENDATION 4. ADJUSTMENT CRITERIA The panel set out a range of factors that are considered by the BCEA and internationally considering social and economic criteria. STATUS UPDATE Criteria to take into account the principles contained in the BCEA as well as international instruments from the ILO.

Where are we in relation to Panel Recommendations on the Amendments? PANEL RECOMMENDATION 12 5. HOURS OF WORK Panel recommended a minimum of 4 hours a day. COSATU want 5 hours. Still under negotiation STATUS UPDATE Further discussions and decisions are required from CoP. Comment Therefore a minimum of R80 a day no matter how many hours worked. COSATU wants at least 6 which is R120 a day.

Exemption Form: Proof of Consultation 13 02 Union Proof of consent by registered trade union Proof of Consent 01 Union letter / sworn statement: Employees do not belong to union. Letter of approval with names and signatures of affected employees. 02 No Consent Reasons for not being able to comply. No consent = Proof of service on registered union and proof of reasonable steps to inform employers about application. Non-Compliance 03

Exemption Form: Financials 14 1 Most recent Income Statements & Balance sheets with comparative figures for 2 years 2 Abridged financial information (Pro-forma) 3 Current Wage register (Seasonal / permanent / contract). 4 Number of hours worked per day / week 5 Project plan / projections to meet the NMW 01 02 03 04 05

Where are we in relation to Panel Recommendations on the Amendments 15 PANEL RECOMMENDATION STATUS UPDATE 7. TIERING FOR VULNERABLE SECTORS The panel recommends a longer phase-in for: FARM WORKERS Yr 1, 90-% with further adjustments done on the basis of evidence. Agreement on the principle of tiering for domestic and agricultural workers. The CoP must still determine the percentage. Legislative proposal is 90% for farmworkers and 80% for domestics. DOMESTIC WORKERS Yr 1, 75%, with further adjustments being done on the basis of evidence. WELFARE SECTOR AND CARE WORK An expert group should consider how to address challenges in this sector.

SO WHERE ARE WE NOW? National Minimum Wage Bill AND Proposed Amendments to BCEA

National Minimum Wage Bill, 2017 Proposed by the Department of Labour. Still at Nedlac. 17 1. Nature of NMW NMW as minimum floor for wages. Workers entitled to at least the minimum wage No variation possible (by contact or collective agreement) Unfair labour practice to unilaterally alter hours or conditions in implementing the minimum wage.

National Minimum Wage Bill, 2017 Proposed by the Department of Labour. Still at Nedlac. 18 2. Calculation of the NMW NMW amount payable for ordinary hours of work. If work is less than 4 hours, worker must be paid for 4 hours. Minimum wage does not include payment of allowances, payments in kind, tips, bonuses, etc. This is different to the current Basic Conditions of Employment Act includes Minister may exclude other forms of payment by regulation.

National Minimum Wage Bill, 2017 Proposed by the Department of Labour. Still at Nedlac. 19 3. Annual adjustment of the NMW NMW must be reviewed annually by the Commission and recommendation made to Minister of Labour. Ten factors listed that must be considered by Commission when reviewing the NMW. Any reason for disagreement with the recommendations must be included in the report of the Commission. Lesson: Employee must ensure that they prove the case that they have referred

NMW Bill, 2017 Cont. 20 4. NMW Commission Establishment, functions and composition of Commission provided for Commission will take over many functions of repealed ECC Primary function of Commission is to review the NMW and to make recommendations annually for its adjustment Commission appointed by Minister from members nominated by business, labour.

Enforcement Process 21 Inspector secures undertaking from employer willing to comply (14 days) Non-compliance with award = applicant to apply to CCMA to certify award Non-willing employers issued with compliance order (14 days) Non-compliance = CCMA referral for compliance order to be made arbitration award. Arbitration award includes: Monies owed to employee / penalties for not paying NMW / CCMA costs for taking case. Receipt of an arbitration award from the CCMA ordering any party to pay the other sum of money Employee claimed permanent employment with client in terms of section 198A

Penalties & Scale of Fees 22 CCMA to publish scale of fees The cost of CCMA to hear the case The cost of the Sherriff enforcing the award Penalties and interest Penalties Penalties for not paying the NMW and for overtime worked: An employer who fails to pay the NMW and for overtime worked must pay an employee: 2 months wage; or If it greater, double the hourly wage for time and overtime worked. Non-compliance with the NMW = Prohibition to conduct business with any Government department for a period of at least 12 months. 01 03 02 Enforcement Enforcement by the sheriff; attachment and auction of goods to the monetary value of the award.

Summary 3. NMW Adjustment will be driven by a commission composed of experts on the labour market and representatives of organized business and labour, which would consider various factors before making a proposal to Government on any adjustments that might be needed, with that recommendation being implemented only after the commission has had an opportunity to consider any comments from Government and make adjustments to is, if needed. 23 2. That the NMW will remain at R3,500pm from 1 May 2018 until 2019, and that failure to comply with it will be met with sanctions. 1. The new NMW will govern the employment of all workers, replacing all sectoral determinations and any collective bargaining agreement that sets minimum wages below this figure. 4. 4.6 million people (35% of all employed people) earn less than R2,000pm; 5.5 million (42%) earn less than R3,000: 6.2 million (47%) earn less than R3,500 and 6.7 million (51%) earn less than R4,000.00 5. The industries in which the largest proportions of all workers earn low salaries are, domestic work (where 91% of employees reportedly earn less than R3,500pm), agriculture (85%), construction (55%), and trade (48%). At the other end of the scale, it is only in utilities (24%) and mining (18%) that fewer than one in four workers earn less than R3,500pm.

Summary 24 6.2 million people or 47% of all workers currently earn less than R3,500pm Nearly 50% of employed people currently earn less than R3,500pm with the figure rising to over 85% in both agriculture and domestic labour.

Summary 25 Worker category sectoral determination Lowest sectoral determination wage (rands) Highest sectoral determination wage (rands) Mean wage (rands) Median wage (rands) Number of Workers % of Total Employees Agriculture 2607 2607 2414 2175 668048 5.1 Forestry 2607 2607 2231 1585 38710 0.3 Domestic Workers 1813 2065 1671 1359 1131424 8.6 Private Security 2067 6155 3995 3137 523870 4.0 Wholesale and Retail 2154 6506 4558 3171 1382320 10.5 Taxi 2113 3021 3796 2823 253358 1.9 Hospitality 2761 3077 3935 2719 333656 2.5 Contract Cleaners 2844 3122 2938 2196 743723 5.7 Average / Total 2522 3624 3192 2396 2075109 38.6

Proposed Content in Brief 26 With the impending implementation of Minimum Wage in May 2018, there are still many questions on how this will really impact business. Questions such as: Does the hourly / monthly value include benefits? What happens with commission only employees? How will employees who work longer than 40 hours a week be affected? How will this compress our existing pay scale?

THE END Thank YOU Questions Answers

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