Legislative update


04 JUNE 2019


The Labour Law in South Africa – Important Changes in 2019

Important changes have been made that affect the labour law in South Africa. It is important to take note of these changes. Two of the most prominent issues that affect labour law and employment relations in 2019 will be discussed below.

The first issue which is relevant to labour law in South Africa for 2019 is the National Health Insurance (NHI) Bill. The second and equally important change is the National Minimum Wage Act that came into effect on the 1st of January 2019. The new minimum wage legislation will significantly affect the labour law issues in South Africa.

The NHI Bill and How It Affects Labour Law in South Africa in 2019

The NHI Bill is said to ensure more access to high-quality healthcare for everyone. The aim is to ensure that such access is free through the creation of one national health insurance fund. Once promulgated, the legislation will provide the centralisation of state-sponsored medical supply procurement. The NHI Bill is important for employees because it affects how they access medical aid benefits and healthcare.

What is significant about the bill is that all South African citizens must become members of the National Health Insurance Fund. What is not clear is how membership contributions will work. However, every person that is able to contribute will be expected to do so. There will be no choice here.

What seems to be problematic is the fact that if members opt to stay members of private medical aids, they will still be obliged to contribute to the NHI Fund. This will mean additional expenses for employees who wish to keep their private medical aid benefits.

The emphasis of the NHI Bill is that everyone will have access to high-quality and free healthcare. How the NHI will be funded is not yet clear. As for the start of 2019, it is certainly something that can cause some employees to have more deductions on their payslips than others. How it will affect labour law in South Africa is yet to be seen.

There have been suggestions about funding the NHI that include tax deductions and payments similar to the tax deductions for PAYE, which would then be paid to the NHI Fund.  If this method is implemented, then employers are also in for payroll expense increases, as they then have to contribute to the NHI Fund. The good news for employers is that it seems as if they will not be required to make contributions to private medical aids on behalf of employees. However, they can choose to do so as long as they also contribute to the NHI Fund.

Where employers opt to discontinue their contributions to private medical aid schemes on behalf of employees, the terms and conditions of employment contracts will change. As such, the bill will affect labour law regulations in South Africa as well. The employer’s actions can potentially lead to unfair labour practice issues in 2019, especially if the terms and conditions of employment are not changed correctly.

National Minimum Wage Act for South Africa

The act, together with changes in the Labour Relations Act and the Basic Conditions of Employment Act, became effective from the start of 2019. Employers must now pay the national minimum wage, which has been set at a minimum of R20 per hour for all citizens in South Africa.

The forestry and farming sectors, in addition to employers of domestic workers, have been exempted from the R20 per hour. Accordingly, the farming and forestry sectors can pay 90% of the national minimum wage per hour and employers of domestic workers can pay 75% of the national minimum wage per hour. These sectors are exempted for two years, after which the new minimum wage law applies to all employers in South Africa.

Call our labour law attorneys on 011 234 2125 for assistance in understanding the implications of the 2018 and 2019 changes in legislation