Minimum Wage Compliance Alert: Employers Must Reassess Payment Structures
- John Botha
- Feb 24
- 2 min read
Recent developments in South African labour law require urgent attention from employers operating under the National Minimum Wage (NMW) framework. The Labour Appeal Court's decision in Quantum Foods (Pty) Ltd v Commissioner H Jacobs N.O. and Others has significant implications for how employers calculate minimum wage compliance.
Key Rulings on Minimum Wage Calculations
The court's ruling clarified two critical aspects of minimum wage calculations that employers could leverage to restructure their compensation systems:
1. Contractual Bonuses
The court established that contractually guaranteed bonuses can be included in minimum wage calculations, provided they meet the following conditions:
Guaranteed by contract (not discretionary)
Not subject to employer discretion
Not dependent on additional performance criteria
Available to all employees
2. Provident Fund Contributions
The ruling also found that employer contributions to provident funds may be included in minimum wage calculations, as these payments are not explicitly excluded under Section 5(1) of the National Minimum Wage Act.
Potential Legislative Changes on the Horizon
However, these provisions may change in the coming months as a NEDLAC Report—which includes a recommendation by Government and Labour to exclude these components from NMW calculations—moves through Parliamentary processes.
Immediate Actions for Employers
Employers should proactively prepare by:
Reviewing all bonus structures to clearly distinguish between discretionary and contractual payments.
Assessing current wage structures, including provident fund contributions.
Preparing for potential legislative amendments that may override this ruling.
Documenting compliance with the current minimum wage rate of ZAR 28.79 per hour.
Future-Proofing Compliance Strategies
While the Quantum Foods ruling currently allows for the inclusion of certain payments in minimum wage calculations, employers should anticipate legislative amendments. The Department of Employment and Labour may introduce changes to the National Minimum Wage Act to address the implications of this ruling.
Employers are advised to stay informed on regulatory updates and ensure proactive compliance to avoid potential risks in wage structuring.
Subjects like the National Minimum Wage framework, will be on the agenda at our must-attend Annual Employment Conference (#AEC25) on the 19th of March 2025. Join John Botha, Johnny Goldberg, Craig Kirchmann, Dr. Mark Bussin, and many more speakers at the conference. Set your organisation up for success in 2025 and register today! (Register here: https://globalretailoutlet.co.za/showevent/73)
