Mar 29,2013 / News / Legal Brief

Certain parts of the Western Cape’s farming industry have been adversely impacted by a number of strikes during the latter portion of 2012 and the early part of 2013. The strikes and protest actions were ostensibly in support of a demand for an increase in the daily wage of farming employees, from R69 a day to R150 a day.

A new minimum wage of R105 per day was introduced in the Government Gazette No 36115 on 5 February 2013 (“the new minimum wage”). The Gazette also amended the minimum wage provisions contained within Sectoral Determination 13, Farm Workers Sector, South Africa (“the sectoral determination”) of the Basic Conditions of Employment Act 75 of 1997 (as amended) (“the BCEA”).

The new minimum wage will be effective from 1 March 2013 until 28 February 2014. It is subject to a further annual increase of CPI (consumer price index) + 1.5% in the two years subsequent to the period ending 28 February 2014. In addition, this increase formula will apply to any wage which is already over the minimum rate.

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EXEMPTIONS

Section 50 of the BCEA makes provision for exemptions from Ministerial determinations such as the new minimum wage determination. Having regard to section 50 of the BCEA:

  • The employer must complete a BCEA Form 6 (application for ministerial determination) (“the application”);
  • The employer must determine whether there are any trade unions representing its employees. If it is the case, the employer must approach the trade unions and attempt to obtain their consent to the application. In the instance that their consent is obtained proof of such consent must be attached to the exemption application;
  • If they do not consent then the employer must, nonetheless, serve a copy of the exemption application on the trade union(s) notifying them that they can make representations to the Minister of Labour;
  • If there are no trade unions, the employer must attempt to obtain the consent of the employees affected by the application. In addition, the employer must depose to an affidavit which states inter alia that “none of the employees affected by the application are unionized”. If they consent, then proof of such consent must be attached to the exemption application;
  • If they do not consent, the employer must nonetheless, provide proof of the reasonable steps taken by it to bring the application to the notice of the employees, such as posting a copy of the notice on the employees’ notice board or at the entrances to their homes. These steps should also be recorded in the employer’s affidavit.
  • The employer must also furnish copies of the it’s “project plan”, a strategy document which sets out the employer’s plans and projections for meeting the prescribed minimum wage, a list of current employees and their wages and a copy of the employees’ shift roster (if applicable).
  • The application must contain copies of the employer’s financial statements – specifically its balance sheet and cash flow statement for the last financial year, and a summary of its financial position in a prescribed form. The prescribed form requires additional financial break downs, specifically the gross farming income for the previous financial year and an estimate for the current financial year less the expenditures (again for the previous and current financial years) such as rent, interest payments, levies (e.g. RSC, SETA), seed and fertiliser, fodder irrigation, cash remunerations (details of each worker must be provided separately), value of payment in kind to farm workers, maintenance, fuel and chemicals (e.g. dips and sprays) and any other expenses. Given the above requirements, it is clear that a pivotal factor in deciding whether or not to grant an exemption will be the financial viability or otherwise of the employer and what effect the increased minimum wage will have on that financial status.

TIME PERIODS

Although there is no deadline by which exemption applications must be received, it is nonetheless advisable to lodge the application with the DOL as soon as possible. Should the application for exemption be granted it will only be granted from the date it is received by the DOL’s head office.

In the instance that an application is instituted before 1 March 2013, the employer will not be obliged to increase the wages until such time as the exemption application has been considered. However, should it subsequently transpire that the application for exemption has been denied by the DOL, the employer will be obliged to back pay its employees accordingly.

Should an application be lodged after 1 March 2013 the employer must comply with the increase to the minimum wage from 1 March 2013. Any decrease to the wage prior to receiving the outcome of the exemption application would be ill advised.

Should the exemption subsequently be granted it will be unlikely that it will have retrospective effect. An employer will not be entitled to recover the difference between the minimum wage and the subsequent amount payable under the terms of the exemption from the employees for the period between 1 March 2013 and the approval of such exemption.

CONCLUSION

Although it is possible to apply for an exemption it will only be granted if the employer can give adequate reasons justifying why it should be exempt from the prescribed minimum wage.

Having regard to the requirement to provide a variety of financial documents it is clear that the financial viability of the employer will be a key factor in determining whether or not to grant an exemption.