Implementing wage increases

Companies that function within the jurisdiction of a Bargaining Council get into the rhythm of that Council in terms of implementing wage increases.

The Road Freight Industry increases usually happen on the 1st of March each year. The Clothing Manufacturing Bargaining Council’s increases are usually around September each year. Even the Sectoral Determinations for certain sectors get into a cycle. Farm worker wages are usually increased in March, Domestic workers’ wages are usually increased in December.

If you have done our Online Training, you would know that in the first module we explain the functions of a Bargaining Council. One of the things a Bargaining Council does, is to extend its agreement to non-parties. This means that when an agreement has been reached between the parties who negotiated it, the Bargaining Council applies to the Minister of Labour to then take those rules and make them applicable to the rest of the industry. In other words – apply those rules to the ones who were not part of the negotiations.

It sometimes happens – for many different reasons – that such agreements are not extended, or promulgated on time…

The consequence of this is that the Agreement is then not applicable to those who did not sign it.
It is not enforceable under the law and companies who are not party to the agreement do not have to abide by its rules. In the case of the implementation of wage increases it will inevitably cause uncertainty. This puts everyone in an awkward situation. One would think that it will be fine if everyone (for the sake of preventing labour unrest) would give the increases anyway while waiting for the minister to promulgate it.

This is however not the case.

In our experience working with the NBCRFLI (the Road Freight Bargaining Council), we have seen that if you increase an employee’s wages without the increase being promulgated or gazetted, the Council dismisses the increase altogether. Their system will force you to increase your employees’ wages AGAIN once the minister has promulgated the agreement.

So to follow the path of least resistance, we never implement increases to our clients’ payrolls unless the increases have been gazetted.

The Clothing Manufacturing Industry Bargaining Council has recently sent out a circular informing the industry of its new increases. Upon investigation we found that these increases have not been promulgated yet. We therefore refuse to increase the wages until they are published in a gazette.

Unfortunately with South African labour laws, this is often the effect – the rule / system is not flexible enough to adapt to the ever-changing circumstances of business. Until this changes, it is always easier to follow the path of least resistance in order to keep your focus on your business’ core function.

Navigating through the December payouts – (Sick Bonus)

We have touched on the Holiday Bonus as well as the annual leave payout

Now let’s talk about the Sick Bonus.

The NBCRFLI has three main benefit funds namely the Sick Pay Fund, the Leave Pay Fund and the Holiday Bonus Fund.

Every month, employers contribute towards these funds on behalf of their employees (have a look at this youtube video for a quick explanation of all the funds payable each month).

The Sick Pay Fund is used to pay the employee when he / she goes on sick leave, but once every three years, the employee receives a Sick Bonus payout.
This is a great incentive offered by the NBCRFLI for employees to not take unnecessary sick leave. It is important to understand how this works, as most of our clients’ annual queries are about the sick bonus payouts.

An employee is only entitled to a Sick Bonus every THREE years (the employee’s commencement date plays a big role here).

If the employee commenced employment on 1 January 2009, then a payout was due to him in January 2012 as well as during January 2015 and also in January 2018. The cycle date is also the commencement date.

If the employee has used up all of the sick leave available, then there will be no bonus payout

In rare cases, employees do fall very ill and they end up using all of the available funds in their Sick Fund account at the NBCRFLI. The logical effect of this is that there will be no sick bonus payout.
If the employee has used up some of the sick leave funds available, then the sick bonus will just be less than what it could have been.

It is advisable to keep a list of employees whose sick leave cycle is due for a bonus payout for ease of reference.

This helps in answering queries faster and sometimes means that you have queried a non-payment at Council before the employee raised the issue :-). This list is easily generated by using the NBCRFLI’s online system.

If you need assistance with anything related to the NBCRFLI payouts, give us a call 🙂