Quantum Foods (Pty) Ltd v Commissioner H Jacobs N.O. and Others (JA85/2022) [2023] ZALAC 27; [2024] 1 BLLR 32 (LAC); (2024) 45 ILJ 71 (LAC) (18 October 2023)
We have been receiving queries regarding some of the prescribed minimum wages in the Main Collective Agreement being lower than National Minimum Wages and wish to clarify how this is calculated.
Prior to the Quantum Foods decision there was a lot of uncertainty about exactly gets included in the calculation of wages. The confusion stems from whether or not a contractual bonus and provident/pension fund contributions would be considered gratuities or “payable in money for ordinary hours of work” in calculating an employee's wages.
Section 5(1) of the National Minimum Wage Act (NMWA), which defines how minimum wages should be calculated specifically excludes “gratuities, including bonuses, tips, or gifts” from the calculation..”
Quantum Foods attempted to ensure compliance with the NMWA by attempting to align the wages of its staff by amending their respective payslips to include a contractual bonus and the provident fund. The union representing the employees referred a matter to the CCMA wherein the Commissioner came to the conclusion that it would not fall within section 5 of the NMWA as it was an additional payment. The matter made its way to the Labour Court which confirmed the decision of the CCMA.
The National Bargaining Council complied with these judgments and ensured that all of their prescribed hourly rates were above the National Minimum Wages hourly rate.
The matter then went to the Labour Appeal Court and the Labour Appeal Court provided some much-needed guidance on the issue in Quantum Foods (Pty) Ltd v Commissioner H Jacobs N.O. and Others (JA85/2022) [2023] ZALAC who ultimately ruled that Quantum Foods can include the contractual bonus and provident fund contributions in the calculation of employees’ wages to meet the National Minimum Wage Act requirements. They stated in the judgment that a reasonable construction of the term ‘payable’ can only mean “that which is required to be paid in money to an employee” and it would accordingly include any payment to be made on his or her behalf.
The National Minimum Wage increased on 1 March 2024 to R27.58 per hour and you may note on the HCSBC salary schedules published on the 1st of March 2024 that some job categories fall below R27.58 per hour. These categories were deliberately highlighted in red on the salary schedules and a footnote was included to explain that the Employers Pension Fund contribution was factored in.
The calculations were made in line with the Quantum Foods decision which affirms that the employer’s pension fund contributions (as a payment made on the employee's behalf) can be included in minimum wage calculations, provided they meet the NMWA requirements.
We hope this will provide clarity as to why the hourly rates highlighted in red on the wage schedules may appear to be below the National Minimum Wage but are indeed in line with the National Minimum Wage.
Ultimately, a commitment to compliance fosters a culture of accountability and respect, encouraging clients to make informed choices while ensuring that salon services are delivered safely and effectively. By prioritizing legislative compliance, salon owners can contribute to the overall integrity and sustainability of the hair and beauty industry in South Africa.
