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National Minimum Wage: Exemption requirements
- 17 July 2023
- Accounting
- South African Accounting Academy
This media statement reminds employers of exemption provisions in the National Minimum Wage Act, 2018.
Contrary to a report in Legalbrief Policy Watch, the statement does not announce ‘a major policy development’. Neither does it provide an unexpected ‘lifeline’. Instead, the statement simply draws attention to the procedures to be followed when applying for an exemption.
According to the Act’s sub-section 15(1), ‘An employer or an employers’ organisation registered in terms of section 96 of the Labour Relations Act, or any other law, acting on behalf of a member, may, in the prescribed form and manner, apply for an exemption from paying the national minimum wage’.
The statement outlines what is meant by ‘the prescribed form and manner’ of an exemption application, which in the case of an employer operating a business, includes supplying:
- ‘full financial statements’ for the two years preceding the application
- ‘current year predictions’, and
- ‘such other information that may be needed, as prompted by the exemption system’ (in that regard, the statement expressly refers to ‘depreciation, finance costs, operating expenses, tax and dividends’).
Household employers applying for an exemption are required to provide details of:
- annual household income and expenditure, and
- ‘any other information that may be needed as prompted by the system’ (in which regard the statement expressly refers to ‘education, food and beverages, entertainment, loan repayments and travel costs’).
Link to Act = https://www.gov.za/sites/default/files/gcis_document/201811/42060gon1303act9of2018.pdf
Link to Amendment Act = https://www.gov.za/sites/default/files/gcis_document/202008/43603act3of2020nationalminimumwageamendact.pdf
Click here to download the Media Release:
Relevance to Auditors, Independent Reviewers & Accountants:
- The National Minimum Wage Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- As an employer, you also need to consider compliance with the National Minimum Wage Act in your workplace, and at home – and what the requirements are if you want to apply for exemption.
- As an auditor, accountant and tax practitioner, you may need to advise your clients on National Minimum Wage, and you should therefor be aware of al relevant updates published by the Department of Education and Labour.
Relevance to Your clients:
- An entity (company or close corporation) and individual employers have a duty to comply with the Companies Act.
- It is illegal and unfair labour practice for an employer to unilaterally change working hours or other employment conditions in order to implement the NMW.
- As an employer, your clients also need to consider compliance with the National Minimum Wage Act in their workplace, and at home – and what the requirements are if they want to apply for exemption.
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