Understanding National Minimum Wage Act Compliance and Penalties

Dr. Pravine Naidoo, from the Inspection and Enforcement Service’s Advocacy & Stakeholder Relations unit, addressed the audience during a recent advocacy seminar to discuss the significance of complying with the National Minimum Wage (NMW) Act. This article covers the penalties and compliance measures applied to employers who do not adhere to the Act’s regulations.

Penalties for Non-Compliance

Employers who fail to comply with the NMW Act will face significant penalties, warns Dr. Pravine Naidoo. First-time violators will receive a fine equal to twice the value of the underpayment or twice their monthly wage, whichever is greater. Repeat offenders face harsher consequences, with sanctions amounting to three times the underpayment value or three times the monthly wage. Additionally, the Department is authorized to publicize non-compliant employers on its official website quarterly, listing all companies issued with compliance orders.

Unfair Labor Practices

Employers are prohibited from unilaterally changing work hours or employment conditions when implementing the NMW. The Department considers such changes to be an unfair labor practice, and in these cases, the inspector advises the affected employee to refer the matter to the Commission for Conciliation, Mediation, and Arbitration (CCMA) under the Labour Relation Act 66 of 1995 (LRA) as amended.

Allowances and Deductions

The NMW does not cover allowances such as transport, tools, food, or accommodation, nor does it include payments in kind, tips, bonuses, or gifts. Employers must obtain written consent from employees or a specified debt in the agreement before making deductions. Deductions must be required or permitted by the law, collective agreement, court order, arbitration award, or reimbursement for loss or damage to the employer.

Exemptions from NMW Payments

Deputy Director Mogodi Masenya presented the regulations for exemptions from NMW payments. Before applying for an exemption, employers must consult with representative trade unions or workers and provide them with a copy of the application downloaded from the system. Applications must also include financial statements and balance sheets for the current year and two previous years, along with finance costs, donations, and operating expenses.

Amendments to COIDA

Advocate Lethabo Shokane from the Compensation Fund highlighted changes to the Compensation for Occupational Injuries and Diseases Act (COIDA). The amendments include the empowerment of the Compensation Commissioner to perform functions previously handled by the Director-General, the introduction of rehabilitation and reintegration programs for occupationally injured and diseased employees, and the regulation of healthcare services. Additionally, new powers granted to the Commissioner include reviewing pension claims or awards, regulating employer compliance and enforcement, and administering penalties.

Employers must adhere to the stipulated regulations, actively engage with employees, and seek the necessary exemptions or adjustments when required to safeguard the rights of workers and ensure fair labor practices. By committing to these measures, a balanced and equitable working environment is fostered, promoting job satisfaction and sustainable economic growth.