AGREEMENT ON THE INTRODUCTION OF A NATIONAL MINIMUM WAGE

1. Level of the National Minimum Wage (NMW)
There is agreement that at the implementation date (which
should be no later than 1 May 2018) the level of the national
minimum wage will be R20/hour.

2. Implementation of the NMW
2.1. Implementation Date
The NMW should be implemented as soon as possible,
but that this timeframe is contingent on finalisation
of the legislation and setting up the new institution.
Implementation is planned for no later than 1 May 2018.
2.2. Legislative process
Government will work with the social partners on
the process of ensuring the NMW Act and related
legislative amendments is passed by Parliament. All
social partners will work to find ways of giving effect
to this agreement through all the processes that need
to be followed. Government will circulate the relevant
work plan, which will be monitored by the Committee of
Principals (COP).

3. Medium term aspirational target of the NMW
The NMW Commission to be established will, as part of its
mandate, establish a medium term aspirational target for the
NMW and take into account appropriate benchmarks and
International Labour Organization (ILO) guidelines.

4. Adjustment of the national minimum wage
The NMW Commission will adjust the NMW annually. The first
and subsequent adjustment processes by the Commission must
be based on the consideration of a number of factors, including
cost of living and minimum living levels, the alleviation of poverty,
wage differentials and inequality, conditions of employment, the
health and safety and welfare of workers, employment levels,
inflation, GDP growth, productivity, collective bargaining, the
aspirational target, the impact of the adjustment on employment,
in line with the principles in the Basic Conditions of Employment
Act (BCEA) and ILO instruments. It is specifically agreed that
the adjustment should not lead to the erosion of the value
of the NMW taking into account all of the above factors. The
Commission will in considering the first and subsequent
adjustments need to assess the impact of the introduction of the
NMW on employment.

5. Review of the NMW
There will be periodic reviews of the NMW that should take into
account the socio-economic impact on employment, working
poverty and wage inequality.

6. Hours of work
The Advisory Panel will conduct an assessment of the impact
on workers income and job losses of setting the payment for
minimum working hours at 4, 5 or 6 hours a day respectively.
The Panel will also need to take into account the provisions of
the collective and bargaining council agreements and sectoral
determinations on minimum hours. The recommendations of
the assessment by the Advisory Panel must be presented to the
COP as soon as possible to ensure that this matter is resolved
before the legislation for the NMW is processed.

7. Unilateral changes to conditions of employment and
hours of work
No employer may unilaterally alter downwards conditions of
employment and hours of work, including those currently
contained in private contracts, sectoral determinations or
collective agreements, because of the introduction of the NMW.
To do so will constitute non-compliance and/or unfair labour
practice.

8. Coverage of the NMW
8.1. SMMEs and start-up businesses
There is agreement that no businesses will be excluded
from the national minimum wage. Small businesses
and start-ups will need to be assisted to understand the
implementation of the NMW. Should it be unaffordable
for such businesses to pay wages at the level of NMW
they will be provided with the information needed to
enable them to apply for exemptions and on how to
make use of incentive schemes offered.
8.2. Exemptions from the NMW
The exemption process must be as simple and efficient
as possible, particularly for SMMEs. The information
and publicity campaign of the NMW must include
training and education around exemptions and where
businesses can get support. Government must ensure
that departments are fully equipped to provide the
necessary assistance. Exempted businesses will be
required to pay a determined percentage of the NMW.
Such exemptions will only be granted for a maximum
12-month period at a time. A motivation will be required
for any subsequent exemption applications.
The Department of Labour will ensure that labour
inspectors are fully trained and capacitated on the
NMW. A 30-day turn around on exemptions will be
provided for. A detailed plan will be required with
exemptions opening in advance of the implementation
of the NMW in order to provide sufficient time.
Government will explore ways in which exemptions
could provide access to tax incentives.
8.3. Exclusions
The COP will consider the participation of Expanded
Public Works Programme (EPWP) and Community
Works Programme (CWP) in the NMW after examination
and review by the Nedlac Task Team.

9. Socio-Economic Impact Assessments
Government will conduct a Socio-Economic Impact Assessment
(SEIA) as is the practice with all new legislation, considering
existing research on the NMW for South Africa and the report
of the Advisory Panel on the NMW . Government will brief the
social partners on the SEIA so that jointly the parties can look
at creative ways to speed it up and ensure it does not delay
implementation.

10. Tiering
The social partners have agreed that when the NMW is
introduced domestic workers will be paid 75% of the NMW and
agricultural workers will be paid 90% of the NMW. It is proposed
that these sectors will be brought up to 100% of the NMW level
within 2 years pending research by the NMW Commission on
this timeframe.

11. Institutional arrangement
Government will present a proposal on the NMW Commission’s
institutional arrangements (i.e. functions, role, representation,
scope, powers, etc.) at the next COP meeting. There shall be
three representatives from each constituency, that is, Organised
Labour, Organised Business and Community. The COP must
still determine the decision making processes of the NMW
Commission.

12. Enforcement and compliance
Government will circulate a plan on readiness for enforcement,
compliance and processing exemptions. This plan will include
details on the publicity and information campaign, which shall
include the social partners. Once the law comes into effect,
the inspection, enforcement and compliance become effective
immediately. Education is an integral part of enforcement.

13. Wage inequality
A Nedlac Management Committee Task Team will be established
to discuss this matter, reporting to the COP. The task team will
be given a clear time-frame to complete its work. The first step
should be to gather research and evidence on which the social
partners can engage. Furthermore, the social partners commit
to explore, develop and implement solutions on the basis of
evidence to address wage inequality.

14. Comprehensive social security
All social partners are committed at the highest political level
to the adoption of a comprehensive social security system,
including for working age people, through the Nedlac processes.
This work will continue under the Nedlac Manco Task Team that
is established, which will report to the COP.

15. Mitigating steps to prevent job losses
The fragile sectors having difficulty in complying with the NMW
will be considered for assistance within the available means,
including incentives. The social partners commit to make every
effort to avoid job losses that may arise in the short term from the
introduction of the NMW, and further commit to grow employment
in the medium to long term through inclusive growth. Any sectors
wanting to apply for a phase-in to the National Minimum Wage
need to provide compelling evidence as to why this is necessary,
and apply to the COP within timeframes which will enable such
phase-ins to be incorporated in the NMW Act.

16. Relationship of NMW to Sectoral Determinations and
Bargaining Councils
It is agreed that all sectoral determinations, collective
agreements, bargaining council agreements and individual
contracts of employment must comply with the NMW Act at the
time of implementation i.e. their minima must be no lower than
the NMW floor unless exempted, or excluded by way of a phasein
arrangement. Further that no wages or conditions of workers
prescribed by Sectoral Determinations or Bargaining Council
Agreements, or private contracts, which are more favourable
than the NMW, may be unilaterally decreased after introduction
of the NMW. There is agreement that Government will continue
to meet with Bargaining Councils to popularise, align with, and
give effect to the NMW. Public engagements with employers
and employees, particularly in Sectoral Determination sectors,
should be considered as part of the information campaign and
in order to bring certainty to all parties. The COP will be kept
updated on these engagements.