Exploring the Impact of South Africa's Updated Earnings Threshold on Employee Rights and Protections

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 Understanding South Africa's New Earnings Threshold: Implications for Employee Protections



On 7 March 2025, the South African Department of Employment and Labour announced an increase in the annual earnings threshold from R254,371.67 to R261,748.45, effective from 1 April 2025.

Financial Institutions Legal Snapshot
This adjustment, amounting to a 2.9% increase, has significant implications for both employers and employees, particularly concerning the protections afforded under South African labour legislation.

What is the Earnings Threshold?

The earnings threshold is a pivotal figure in South African labour law, determining which employees are entitled to specific protections under the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA), and the Employment Equity Act (EEA). Employees earning below this threshold are granted certain rights and protections, while those earning above may not automatically benefit from these provisions.

Key Provisions Affected by the Earnings Threshold

  1. Basic Conditions of Employment Act (BCEA):

    • Working Hours and Overtime: Employees earning below the threshold are entitled to limitations on working hours and are eligible for overtime pay.
    • Meal and Rest Periods: The BCEA mandates specific meal intervals and daily/weekly rest periods for qualifying employees.
    • Special Day Payments: Provisions for additional pay for work on Sundays, night shifts, and public holidays apply to those earning below the threshold.

  2. Labour Relations Act (LRA):

    • Fixed-Term Contracts: Employees earning below the threshold and employed on fixed-term contracts exceeding three months may be deemed permanent employees if no justifiable reason for the contract's duration exists.
    • Temporary Employment Services (TES): Protections concerning TES arrangements apply to employees earning below the threshold.

  3. Employment Equity Act (EEA):

    • Dispute Resolution: Employees earning below the threshold can refer unfair discrimination disputes to the Commission for Conciliation, Mediation, and Arbitration (CCMA) for arbitration.

Impact of the 2025 Threshold Adjustment

The increase in the earnings threshold means that employees who previously earned slightly above the former threshold may now fall below the new limit, thereby gaining access to additional protections under the BCEA, LRA, and EEA. Conversely, employees who were previously below the threshold and are now above it may lose certain protections.

Practical Implications for Employees

  • Enhanced Protections: Employees whose earnings are now below the threshold may benefit from protections such as regulated working hours, overtime compensation, and additional pay for work on special days.
  • Employment Security: Those transitioning below the threshold may also gain job security benefits associated with fixed-term contracts and TES arrangements.
  • Dispute Resolution: Employees now below the threshold have the right to refer unfair discrimination disputes to the CCMA for arbitration, providing a more accessible avenue for dispute resolution.

Considerations for Employers

  • Review Compensation Structures: Employers should assess their remuneration practices to identify employees affected by the threshold change and adjust policies accordingly.
  • Compliance with Labour Laws: Ensuring adherence to the BCEA, LRA, and EEA is crucial, especially with the potential shift in employee classifications resulting from the earnings threshold adjustment.
  • Training and Awareness: Educating HR personnel and management about the implications of the earnings threshold change will aid in effective policy implementation and communication with employees.

Conclusion

The adjustment of South Africa's earnings threshold is a significant development with far-reaching implications for employee protections and employer obligations. Both parties must stay informed and proactive in understanding and implementing the changes to ensure compliance and uphold fair labour practices.




Sources:

  • Labourwise. (2025). New earnings threshold as from 1 April 2025.
    LabourWise
  • Financial Institutions Legal Snapshot. (2025). Employment law earnings threshold increase from 1 April 2025.
    Financial Institutions Legal Snapshot
  • BusinessTech. (2025). Big change for employees in South Africa next month.
    BusinessTech

Disclaimer: This article provides general information and should not be construed as legal advice. For specific concerns, consult a legal professional.

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