The economy is under severe financial pressure since the President’s enforcement of the National State of Disaster and lockdown in light of the COVID-19 pandemic. As a result, many businesses which have survived the lockdown are slowly returning to work under Level 4 Regulations. However, the financial strain is evident, and some Employers may have to consider possibilities such as layoffs or retrenchment in order to survive.

 

There is an alternative avenue for Employers who suffered financial losses as a result of the lockdown – exemption application from either provisions of the National Minimum wage or exemption from various Bargaining Council fees and expenses.

 

  • Exemption in terms of the National Minimum Wage:

Section 2 of the Government Gazette No.42124 s 16 of the Minimum Wage Act 9 of 2018, regulates that an Employer may apply for exemption from paying the national minimum wage.

 

An application for exemption must be lodged electronically through the National Minimum Wage online system via www.labour.gov.za by clicking the National Minimum Wage (NMW) link and following the steps.

 

Importantly, exemption applications must be fully motivated before they will be considered. The Employer must prove the inability to pay in terms of the Minimum Wage Act. Before the Department of Labour will grant an exemption, the online system will subject an Employer to an affordability analysis, focusing on liquidity status, profitability and solvency of the company.

 

It must be noted that the system will not grant exemption applications which require immunity above the ten percent (10%) threshold of the national minimum wage. The outcome of the exemption application is thereafter forwarded electronically to the Employer.

 

  • Exemptions in Bargaining Councils

Exemption applications available at Bargaining Councils range from levy fees, wages, pension, and provident fees to name a few. As a result, the exemption application process varies from Council to Council.

 

Exemption application forms can, therefore, be downloaded directly from the relevant Bargaining Council website, which further stipulates the individual requirements of that particular Council. It is recommended that Employers supplement the exemption application form with a supporting affidavit and further provide the Council with the following:

  • detailed reasons for the exemption application, supporting financial statements of the company;
  • proof of good standing with the Council, proof of compliance of previous Council payments;
  • a comprehensive plan of action on how the exemption will allow the company to recover financially;
  • an action plan to avoid any further exemption applications;
  • minutes of consultations held with affected employees and recognised trade unions in the workplace;
  • any other avenue the Employer has taken to save costs for the company before applying for the exemption.

 

Since the enforcement of the lockdown, numerous Councils have taken a discretional waiver on Council levies for their members for the period of the lockdown and Level 4 regulations for the month of May 2020.

 

Despite the levy waiver, exemption appointed panellists will also stringently scrutinise whether or not Employers have utilised the Temporary Employment Relief Scheme (TERS) providing financial relief for Employers as result of the Covid-19 pandemic.

 

Employers who have failed to make use of the TERS financial support system will be less likely to succeed in exemption applications, than those who have exhausted all available avenues to save costs of the company before applying for exemption.

 

Remember, an exemption from paying the national minimum wage or relief from paying a Council fee will only apply from the date of the exemption award which will specify the duration for which the exemption will remain valid for, not exceeding a period of 12 months. Should an Employer’s financial situation improve, the Department of Labour or Council may withdraw the exemption, provided that reasonable notice is given to the parties.