A new earnings threshold raising the level at which employees qualify for certain protections under the Basic Conditions of Employment Act took effect on May 1. On the surface, the 3% adjustment to R269,601 a year or R22,467 a month appears modest. In practice, it alters how a greater portion of the workforce must be managed.
The new threshold determines which employees are automatically covered by provisions regulating working hours, overtime, rest periods and certain pay conditions. Employees earning below the threshold are automatically entitled to these protections.
The threshold increase has a dual impact. Some employees whose earnings were previously above the threshold may now fall below it and gain additional protections. For employers, these employees’ existing arrangements and employment contracts must become compliant.
The first step for employers is to understand what must be assessed. “Earnings” refer to an employee’s regular annual remuneration before deductions. It includes salary and regular payments but excludes allowances such as transport or subsistence, as well as overtime and performance-related awards. Misinterpreting what qualifies as earnings can result in incorrect classification and unintended noncompliance.
Employers also need to review their workforce against the new threshold. This is not limited to payroll data; it also requires a detailed audit of employment contracts, remuneration structures and job classifications to ensure alignment with how earnings are defined and how protections apply.
Working hours must also be examined. This includes how ordinary hours are structured, how overtime is calculated and authorised and how rest periods are managed. In many organisations these practices have evolved and may not be consistently documented or applied. If more employees now fall within the scope of statutory protections, these gaps become compliance risks.
The complexity increases for businesses that rely on nonstandard employment arrangements. Fixed-term contracts, labour broking and flexible work models require closer attention. For example, employees placed through labour brokers may be deemed employees if they are providing a permanent service. Similarly, some fixed-term contracts may be regarded as indefinite employment. As more employees fall below the threshold these provisions become more relevant and require tighter governance.
The financial implications are not limited to potential penalties. Expanding the pool of employees entitled to overtime and regulated working hours can affect labour costs and operational planning. Budgets may need to be adjusted to account for higher overtime payments or changes in shift structures. Workforce planning becomes more complex as compliance requirements intersect with productivity targets.
This change also presents a practical challenge. Policies must be applied consistently and decision-making must be informed by a clear understanding of where protections apply. Training and communication are essential to ensure those managing teams can implement changes correctly.
The shift directly affects employees. Those who now fall below the threshold gain access to protections that support fair working conditions. These include limits on working hours, entitlement to overtime pay and prescribed rest periods. Failure to grant these protections or to entrench them contractually could lead to disputes.
This places greater importance on how employment agreements are structured. Employers need to ensure contracts become legally compliant while also being clear, fair and aligned with business needs.
Beyond compliance, this is a chance to strengthen workforce planning and improve transparency in pay structures. Clear alignment between remuneration, role expectations and legal requirements supports operational stability and employee trust.
The threshold change has shifted a line within the workforce. It is now up to employers to ensure the line is understood, applied correctly and is reflected in daily practices. Acting now allows businesses to address these risks directly and implement systems that will remain robust.
• Ratcliffe is MD at Quest by Adcorp.
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