CALCULATION OF EMPLOYEE’S REMUNERATION

GN 691 OF 23 MAY 2003:  CALCULATION OF EMPLOYEE’S REMUNERATION IN TERMS OF SECTION 35 (5) OF THE ACT (BCEA)

With compliments from the Department of Labour…

The Minister of Labour has determined, in Government Notice 691 dated 23rd May 2003, that the following method of calculating employee’s remuneration for the purposes of annual leave in section 21, payment instead of notice in terms of section 38 and severance pay in terms of section 41 of The Basic Conditions of Employment Act shall be effective from 1st July 2003:

1. The following payments are included in an employee’s remuneration:

1. Housing or accommodation allowance or subsidy; or housing or accommodation received as a benefit in kind (any housing or accommodation allowance or subsidy paid in cash, or the value thereof if paid in kind, is deemed to be part of remuneration).

1. Car allowance or the value of provision of a company car (This does not apply in those instances where the employer provides a vehicle to the employee solely to allow the employee to travel to and from work, with no other private use of the vehicle by the employee.

(c) Any cash payments made to an employee, except those listed as exclusions in 2. below.

(d) Employer’s contributions to medical aid, pension, provident or similar funds or schemes, must be considered as part of the employee’s remuneration and must be included when making calculations in terms of this Notice.

(e) Employer’s contributions to funeral or death benefit schemes.

2. The following items do not form part of the employee’s remuneration for the purpose of these calculations:

(a) Any cash payment or payment in kind that is provided in order to enable the employee to work (for example, equipment, tools or a similar allowance or the provision of transport or the payment of a transport allowance to enable the employee to travel to and from work only.)

(b) A relocation allowance.

(c) Gratuities (for example tips received from customers) and gifts received from the employer.

(d) Share incentive schemes.

(e) Discretionary payments not related to the employee’s hours of work or performance (for example a discretionary profit-sharing scheme).

(f) An entertainment allowance.

(g) An education or schooling allowance.

3. The value of payments in kind must be determined as follows:

(a) A value agreed to in either a contract of employment or collective agreement, provided that the agreed value may not be less than the cost to the employer of providing the payment in kind; or (Employers who provide accommodation to their employees, or any other benefits in kind,  are advised to enter into a written agreement regarding the value of the accommodation or other benefits immediately if not already done.)

(b) the cost to the employer of providing the payment in kind.

4. An employee is not entitled to a payment or the cash value of a payment in kind as part of   remuneration if:

(c) the employee received the payment or enjoyed, or was entitled to enjoy, the payment in kind during the relevant period

(d) in the case of a contribution to a fund or scheme that forms part of remuneration, the employer paid the contribution in respect of the relevant period.

5. This schedule only applies to pay for annual leave accrued from the date of operation of this schedule.

6. If a payment fluctuates, it must be calculated over a period of 13 weeks or if the employee has been   in employment for a shorter period, that period. 

7. A payment received in a particular period in respect of a longer period (e.g. a thirteenth cheque) must be calculated pro-rata. 

8. This schedule only applies to the minimum payments that an employer is required to make in terms of the Basic Conditions of Employment Act, 1977.