Department of Labour nabs a cheating employer on National Minimum Wage exemption system

The Department of Labour intends opening a fraud case with the South Africa Police Services (SAPS) against an employer that misrepresented the company to obtain exemption from paying the National Minimum Wage (NMW).

The Department wishes to inform the public that it was in the process of imposing punitive measures. The Department is initiating a process towards withdrawing the granted exemption as per Section 5 of the NMW Regulations.

Section 15 of the National Minimum Wage (NMW) Act makes a provision for an employer that cannot afford to pay the NMW to apply for an exemption. The Labour Minister, Mildred Oliphant has published regulations in this regard relating to the form and manner in which exemptions must be made.

Applications for exemptions from paying the NMW are submitted through a NMW online system accessible from the Department’s website.

The office of the Director General, Thobile Lamati received an e-mail on the 19th January 2019 from an employee at Fleeceytex Knitting Company based in Alberton, Johannesburg. The employee wanted to confirm the authenticity of an exemption notice displayed at the workplace. The employee indicated that the exemption notice displayed showed a rate of R16.00 per hour effective from the 17th January 2019 which the employees were subsequently paid on the 18th January 2019.

Upon investigation, the Department found out that the employer indeed applied for an exemption from paying the legislated R20.00 per on the 17th January 2019 and was granted an exemption based on the fact that he cannot afford due to insufficient profitability and assets. The rate to which the exemption was granted for, however was R18.00 per hour and not the R16.00 per hour displayed by the employer which the Department has copy of as furnished by the complainant.

Section 5 of the NMW Regulations provides that an exemption notice may be withdrawn if:

The employer has provided false or incorrect information that has led to the granting in its application for an exemption; or

The employer is not complying with the exemption notice; or

The employer’s financial position has improved to the extent that the employer is able to pay the NMW

There are other justifiable grounds for withdrawing the exemption notice

Section 5(3) further provides that before making a decision to withdraw an exemption notice, the delegated authority must be satisfied that in addition to the grounds mentioned above, that the employer has been consulted.

The Chief Director: Labour Relations then scheduled a meeting with the employer on the 22nd January 2019 at the workplace in order to ascertain his version of what transpired in this case.

At the meeting, the employer confirmed that he applied for an exemption on the 17th January 2019 and was granted an exemption at a rate of R18.00. He also confirmed that an exemption notice showing a rate of R16.00 was erroneously displayed at the workplace and used to calculate employee’s wages which they were subsequently paid on the 18th January 2019.

When questioned further about the details of the case, he indicated that they are currently investigating the case and will send the report as soon as the investigation is finalised. The employer indicated that they have since rectified the misrepresentation and that the correct exemption notice is now displayed at the workplace.

Considering the facts presented to us by the complainant and the employer, we have come to the conclusion that this is a case of fraud and addressing it.

The Department of Labour is intent on naming and shaming employers who are engaging in fraudulent activities.

Source: Department of Labour