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EARNINGS THRESHOLD
The Basic Conditions of Employment Act, 1997, provides in section 6(3) for the minister to make a determination that excludes the application of chapter 2 (regarding the regulation of working time, such as ordinary hours of work, overtime, meal intervals, Sunday work, public holidays, night work), or any other provision of it to any category of employees earning in excess of the amount stated in the determination. See hereunder the Notice from the Minister which provides for the remuneration amount which is applicable:
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How to calculate earnings?
Earnings include:
-regular annual remuneration before deductions, i.e. income tax, pension, medical aid and similar payments.
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Earnings exclude:
-similar payments (contributions) made by the employer in respect of the employee: Provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration for the purpose of the notice by the minister.
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Recent caselaw on earnings:
Mondi Packaging (Pty) Ltd v Department of Labour & Others (J1523/05): Earnings threshold does not include overtime pay.
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Steenkamp v Sanlam Ltd (C244/14) [2015] ZALCCT 32 : The applicant was de jure employed (in terms of the two contracts she relies on) at a job grade and with a remuneration package above the threshold provided for in section 10 and 17 of the BCEA. The fact that she takes home remuneration below that threshold had come about at her own instance.
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Remuneration as opposed to earnings:
The BCEA also allows for the method of calculating an employee's remuneration for the purpose of annual leave, payment instead of notice and severance pay. It should not be confused for the above provision of a definition of earnings for the purpose to determine the Earnings Threshold in terms of section 6(3) of the BCEA.
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Section 35(5) of the BCEA provides for a notice which applies from 1 July 2003 (GN 691 IN GG 24889 of 23 May 2003) on how to calculate an employee's remuneration for the purpose of calculating pay for annual leave (section 21), payment instead of notice (section 38), and severance pay (section 41).
These items are included in remuneration:
Housing or accommodation allowance or study or housing or accommodation received as a benefit in kind;
Car allowance of provision of a car, except in the extent that the car is provided to enable the employee to work;
Any cash payments made to an employee, except those listed as exclusions in terms of the schedule;
Any other payments received in kind except as excluded in terms if this schedule;
Employee's contribution to medical aid, pension, provident fund or similar schemes;
Employee's contribution to funeral or death benefit schemes.
The following items are excluded from remuneration:
Cash payment or payment in kind provided to enable the employee to work (an equipment, tool or similar allowance for the provision of transport or the payment of transport allowance to allow the employee to travel to and from work);
Relocation allowance;
Gratitudes (tips received from customers and giftes received from the employer);
Share incentive schemes;
Discretionary payments not related to the employee's hours of work or performance (a discretionary profit-sharing scheme);
Education and schooling allowance.
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Recent caselaw on remuneration:
Sibanye Gold Limited v Commission for Conciliation, Mediation and Arbitration and Others (JR1380/19) [2021] ZALCJHB 254; [2021] 11 BLLR 1153 (LC); (2021) 42 ILJ 2467 (LC) (23 August 2021) : acting allowance should have formed part of his remuneration for the purposes of calculating his severance and notice pay.
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Chimphondah v Housing Investment Partners (Pty) Ltd and Others (JR1195/19) [2021] ZALCJHB 83 (31 May 2021) : contractual claim for performance incentive bonus not remuneration as defined in the BCEA. [12] The core of Mr Chimphondahs submissions is that the definition of remuneration is wide enough to include salaries and all extras or benefits, per the decision of the LAC in Apollo Tyres South Africa (Pty) Ltd v CCMA,[[2013] 5 BLLR 434 (LAC) (Apollo Tyres) at para 25.] [35] Revelas J in Schoeman & Another v Samsung Electronics SA (Pty) Ltd, held, in distinguishing a 'benefit' from 'remuneration', that commission is encapsulated by the notion of remuneration:Commission payable by the employer forms part of the employee's salary. It is a quid pro quo for services rendered, just as much as a salary or a wage. It is therefore part of the basic terms and conditions of employment. (Emphasis added and footnotes omitted). [19] In the present instance, as correctly contended by HiP, it is easily discernible from the clause 6.1.2 of Mr Chimphondahs employment contract and his letter of appointment that the performance incentive bonus is a benefit payable over and above the guaranteed remuneration, which is a quid pro quo for services rendered. It is obviously payable at the discretion of the employer if certain requirements have been fulfilled per the inventive scheme policy and eligibility is not automatic.
