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.

5 Things you need to remember when starting your own company (In South Africa)

Mediant Solutions TrainingHow exciting! Starting your own company is a lot like having a new baby! Everything is fresh and new. Suddenly you can  work for days on end and you LOVE it! But then reality kicks. The list of obligations on business owners is quite the rude awakening. Sleepless nights trade places with excitement…

Here are a few things you need to remember when starting out:

  1. Remember to register with SARS

The South African Revenue Service is our country’s tax collector. When you were an employee, your employer deducted PAYE from your salary and paid it over every month on your behalf. Hopefully you then remembered to submit your earnings to SARS annually on your income tax return. And this is possibly where your relationship level with SARS reached.

Now that you own a company (irrespective of the entity you chose to register as), SARS will start to move a little closer to you. You need to register for (at least) Income Tax, PAYE and possibly VAT.

  • Income Tax – This would be tax payable to the SARS on your taxable income.
  • PAYE – Pay As You Go refers to payroll taxes. This needs to be deducted from your employees’salaries and paid over to the SARS. When this is submitted, UIF & SDL is also paid over.
  • VAT – When your company’s turnover is more than a 1.2 million Rands per year, you have to register for VAT.

It is important that you get acquainted with these taxes and not just leave it in you accountant’s capable hands. YOU are held liable as the owner of the company for these taxes and you need to own up to your responsibility by at least understanding what your obligations are.

Register for a basic bookkeeping course, contact UNISA or the Tax Faculty so that you can learn about the basics of keeping a good set of books. Which brings us to

2. Keep a good set of books

I do understand that this is a challenge for the typical entrepreneur, especially the creative type. “Admin is not my strong point” is something I hear over and over again. My personal strong point is admin, but I cannot help you PROPERLY if you do not understand what I am doing for you. Like Tom Cruise’s character Jerry Mcguire said “Help me help you” 🙂 … So, I would strongly advise you to at least learn the basics of proper bookkeeping. If you appoint someone to do the task and you are unable to read the financial statements, you might be getting yourself into deep trouble. You will grow your company much better when you know whether you are making money or not 🙂

3. Make sure you know what your responsibility is as an EMPLOYER

Employing people is as liberating (now I have time to focus on BUILDING my company) as it is binding (think Labour Law, contracts, record keeping, employee complaints, discipline issues etc.). Get to know the BCEA (Basic Conditions of Employment Act), and join groups on LinkedIn that discuss labour issues. There are many things that you would think are quite logical ,but then your employee might think differently. COMMUNICATION is key here. And keeping a proper paper trail. Here I would advise you to get someone as a mentor / HR consultant to help you through the process. Get your employment contracts, your work policies and rules all in order and ensure that the tedious task of “HR” is done properly.

4. Register with the Workmans Compensation Fund AND the UIF

By law your company is required to register with the Workmans Compensation Fund.

There is also then the additional responsibility of paying fees to them annually. This fund is used for employment related injuries, and the penalties payable if you are not registered are really not worth your non-compliance.

You also need to register at the Unemployment Insurance Fund.

UIF is paid over for each employee (including for yourself) on amonthly basis. It is the fund that will pay out funds to you or your staff in the case of illness or unemployment. It also covers women for maternity leave. You need to submit a return to the fund on a monthly basis to show what was deducted and paid over for each employee. When you are registered for PAYE with SARS, the UIF money is paid over to SARS together with your employees’ tax & skills development levies.

4. Find out if the industry you function in is governed by a BARGAINING COUNCIL

There are various Bargaining Councils in South Africa. A Bargaining Council governs specific industries’ terms and conditions of employment as well as the minimum wages for the categories of employees. It is VERY beneficial to understand the Bargaining Council system and to become involved in it. You have to register with the Bargaining Council if you fall under its jurisdiction, but you participate in the system by joining one of the parties.

This all sounds overwhelming, and it could very easily become chaotic if not managed properly from the start.

You can easily outsource all of the functions listed above (and you have possibly already done so). What is important  is that you need to understand what you are outsourcing. This will also help you to pay your Accountant / Payroll Bureau / HR consultant’s bill with a smile 🙂

Bargaining Council Agents – Their Powers & Functions

Collective Agreement Enforcers

If you have ever worked with a Bargaining Council agent, you might be wondering where their levels of authority start and end.

In this video, we aim to clarify it for you.

BCEA or Bargaining Council Collective Agreement?

If you work in HR or payroll, you probably know most clauses in the BCEA. It almost becomes part of your natural instinct.

This becomes dangerous if you happen to work in an industry that is governed by a Bargaining Council. The rules of a Bargaining Council’s Collective Agreement supersedes the BCEA every time.

If you work in the Transport and logistics industry (freight), you will definitely benefit from purchasing our second module in our course “Understanding the NBCRFLI”. In this module we work through the entire Collective Agreement. Every. single. clause.

Go on – buy it. You know you want to.

Buy Module 2