Earnings threshold: are you earning too much to be paid overtime?

Never mind working 9am to 5pm; you have diligently committed to 8am – 8pm stints for the past few weeks at work, occasionally extending to Saturdays. In your constant quest to meet company targets, you even worked on Human Rights Day. But what about your right to public holiday pay?

Not so fast. If you’re earning above the increased annual earnings threshold that is above R254 371.67 per annum – around R21K per month – you may be excluded from certain provisions under the Basic Conditions of Employment Act, 1997 (BCEA), such as the right to overtime and public holiday pay. 

Set by the Minister of Employment and Labour, the earnings threshold impacts the application of provisions of the BCEA, the Labour Relations Act, 1995 (LRA) and the Employment Equity Act, 1998 (EEA) and seeks to protect those employees who earn below the threshold, and who are considered most vulnerable to possible exploitation by employers.

How are earnings defined? Sashin Naidoo, Associate at legal firm Cliffe Dekker Hofmeyr (CDH), explains that “earnings” mean an employee’s regular annual remuneration before income tax, pension fund contributions, medical aid contributions and other deductions of the same nature, but that it “excludes similar payments or contributions made by the employer in respect of the employee, such as subsistence and transport allowances, achievement awards and overtime payments.”

As of 1 April 2024, the earnings threshold has increased to R254,371.67 per annum (or R21,198.00 per month) – an increase of R13,261.08 from the previous amount of R241,110.59, which has been in effect since 1 March 2023.

“Employees earning more than this threshold are excluded from certain provisions contained in the BCEA, namely those which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work and pay for work on public holidays”, says Naidoo.

“Thus, unless these provisions are specifically stipulated in your contract, you will not be entitled to overtime pay at 1,5 times your daily rate (twice on Sundays), regardless of whether you are a public or private sector employee, if you earn above the threshold,” he adds.

What about fixed-term or temporary employees? “Those earning below the threshold and working for an employer for longer than three months are legally considered to be employed indefinitely and thus the same protections would apply, while fixed-term, temporary employees or part-time employees earning in excess of the threshold fall outside this scope of these provisions,” explains Naidoo.

Those earning more than R21,198.00 per month are also not permitted to take employer disputes relating to unfair discrimination to the CCMA for arbitration (unless on the grounds of sexual harassment, or the parties all agree to arbitration), and will need to take the matter to the Labour Court. “Again, the intention is to protect those on the lower end of the income scale, as the CCMA tends to be a less formal and a more accessible and affordable avenue of raising employer disputes.”

But if you’re earning just above the threshold and feel that you’re losing out on these protections with all the overtime you’re expected to pull, don’t lose faith, says Naidoo. “Bear in mind that the earnings threshold is reviewed and increased at regular intervals, often to keep pace with inflation and the current economic dynamics.

“Employers who seek to take advantage of this legislation by deliberately paying their employees just over the earnings threshold to avoid remunerating overtime will soon find that they need to keep increasing their employees’ earnings to keep pace.”

And if you suspect that when your prospective new employer talks about going that extra mile, when they really mean that regularly working past 5pm is part and parcel of the job, make sure that you take this into account when negotiating your contract if your earnings are above the threshold.

Naidoo concludes, “Ensure that your remuneration aligns with the expectations of your role. If your proposed salary is above the threshold, but you feel that it is important that overtime and all the other protections as per the BCEA are negotiated, raise this with your prospective employer at the start of your working relationship so that you’re both on the same page.”

Never mind working 9am to 5pm; you have diligently committed to 8am – 8pm stints for the past few weeks at work, occasionally extending to Saturdays. In your constant quest to meet company targets, you even worked on Human Rights Day. But what about your right to public holiday pay?

Not so fast. If you’re earning above the increased annual earnings threshold that is above R254 371.67 per annum – around R21K per month – you may be excluded from certain provisions under the Basic Conditions of Employment Act, 1997 (BCEA), such as the right to overtime and public holiday pay. 

Set by the Minister of Employment and Labour, the earnings threshold impacts the application of provisions of the BCEA, the Labour Relations Act, 1995 (LRA) and the Employment Equity Act, 1998 (EEA) and seeks to protect those employees who earn below the threshold, and who are considered most vulnerable to possible exploitation by employers.

How are earnings defined? Sashin Naidoo, Associate at legal firm Cliffe Dekker Hofmeyr (CDH), explains that “earnings” mean an employee’s regular annual remuneration before income tax, pension fund contributions, medical aid contributions and other deductions of the same nature, but that it “excludes similar payments or contributions made by the employer in respect of the employee, such as subsistence and transport allowances, achievement awards and overtime payments.”

As of 1 April 2024, the earnings threshold has increased to R254,371.67 per annum (or R21,198.00 per month) – an increase of R13,261.08 from the previous amount of R241,110.59, which has been in effect since 1 March 2023.

“Employees earning more than this threshold are excluded from certain provisions contained in the BCEA, namely those which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work and pay for work on public holidays”, says Naidoo.

“Thus, unless these provisions are specifically stipulated in your contract, you will not be entitled to overtime pay at 1,5 times your daily rate (twice on Sundays), regardless of whether you are a public or private sector employee, if you earn above the threshold,” he adds.

What about fixed-term or temporary employees? “Those earning below the threshold and working for an employer for longer than three months are legally considered to be employed indefinitely and thus the same protections would apply, while fixed-term, temporary employees or part-time employees earning in excess of the threshold fall outside this scope of these provisions,” explains Naidoo.

Those earning more than R21,198.00 per month are also not permitted to take employer disputes relating to unfair discrimination to the CCMA for arbitration (unless on the grounds of sexual harassment, or the parties all agree to arbitration), and will need to take the matter to the Labour Court. “Again, the intention is to protect those on the lower end of the income scale, as the CCMA tends to be a less formal and a more accessible and affordable avenue of raising employer disputes.”

But if you’re earning just above the threshold and feel that you’re losing out on these protections with all the overtime you’re expected to pull, don’t lose faith, says Naidoo. “Bear in mind that the earnings threshold is reviewed and increased at regular intervals, often to keep pace with inflation and the current economic dynamics.

“Employers who seek to take advantage of this legislation by deliberately paying their employees just over the earnings threshold to avoid remunerating overtime will soon find that they need to keep increasing their employees’ earnings to keep pace.”

And if you suspect that when your prospective new employer talks about going that extra mile, when they really mean that regularly working past 5pm is part and parcel of the job, make sure that you take this into account when negotiating your contract if your earnings are above the threshold.

Naidoo concludes, “Ensure that your remuneration aligns with the expectations of your role. If your proposed salary is above the threshold, but you feel that it is important that overtime and all the other protections as per the BCEA are negotiated, raise this with your prospective employer at the start of your working relationship so that you’re both on the same page.”