When calculating a wage for the purpose of the National Minimum Wage Act 9 of 2018 (NMWA), in terms of s5(1)(c), the following is to be excluded: ‘gratuities, including bonuses, tips or gifts’.
In Quantum Foods (Pty) Ltd v Jacobs NO and Others (2024) 35 SALLR 118 (LAC); [2024] 1 BLLR 32 (LAC), the employer embarked on a process restructuring its payslips – before the restructuring exercise, an employee’s bonus had been reflected on the payslip when it was paid out; after the restructuring exercise, the bonus was reflected as a cash amount and monthly pro rata bonuses were reflected as deferred payments.
On what basis did the LAC, in the aforesaid matter, determine that a bonus to which an employee is contractually entitled is not to be excluded ito s5(1)(c) of the NMWA, but, indeed, is to be taken into account in the calculation of wages for the purposes of such Act?
_____________________________________
The LAC (per Smith AJA, with Waglay JP and Malindi AJA concurring) adopted the following approach:
- s5(1) of the NMWA reads as follows:
- Despite any contract or law to the contrary, the calculation of a wage for the purposes of this Act is the amount payable in money for ordinary hours of work excluding –
- any payment made to enable a worker to work including any transport, equipment, tool, food or accommodation allowance, unless specified otherwise in a [sectoral] determination;
- any payment in kind including board or accommodation, unless specified otherwise in a sectoral determination;
- gratuities including bonuses, tips or gifts; and
- any other prescribed category of payment.’ (underlining provided)
- Despite any contract or law to the contrary, the calculation of a wage for the purposes of this Act is the amount payable in money for ordinary hours of work excluding –
- This provision and the relevant contractual clause must be construed in terms of the accepted canons of construction, which means that regard must be had to the language used, the context in which the provision appears, its apparent purpose and the material known to those who drafted it (University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (6) SA 1 (CC)).
- Gratuity, in s5(1)(c) of the NMWA denotes discretion on the part of the giver (without creating any legal or contractual entitlement) – the term ‘gratuitous’ has been authoritatively interpreted by the SCA in Estate Welch v Commissioner for SARS [2004] 2 All SA 586 (SCA), at paragraph [31], as meaning something ‘motivated by pure liberality and not in expectation of any quid pro quo’ and without any obligation to pay.
- In applying the eiusdem generis rule, the other payments referred to in s5(1)(c) of the NMWA (i e bonuses, tips or gifts) must be restricted to the same generic meaning of gratuity.
- Therefore, the meaning of ‘bonus’ in the said s5(1)(c) is a gratuitous or voluntary payment – on the other hand, the nature of the bonus that Quantum Foods paid was very different, seeing that the employer was contractually obliged to pay this to its workers.
- Thus, the employer was entitled to restructure its payslips and include in the monthly remuneration the bonus that it was contractually obliged to pay.
- And what about provident fund contributions? – seeing that s5(1) does not expressly exclude or include such payments, the employer was entitled to restructure its payslips to factor this into the calculation of the employee’s hourly rate.
