Did parliament intend to introduce a fake minimum wage “exemption”?

Is the exemption from the National Minimum Wage (NMW) provided for in the legislation deliberately and seditiously being torpedoed by bureaucrats, or did government all along intend to be harsh in its approach to low-income individual and small-firm employers? Members of Parliament are either not aware of what is going on, or are playing along with the brutality captured in the NMW Draft Regulations.

Section 15(1) of the NMW Bill says:

“An employer or an employers’ organisation registered in terms of section 96 of the Labour Relations Act, or any other law, acting on behalf of a member, may, in the prescribed form and manner, apply for an exemption from paying the national minimum wage.”

The Concise Oxford Dictionary says the word “exempt” means, “Freed from taxation, liability, risk, duty, control, failings, etc; not subject to risk, etc from; so “exemption” means to be “freed from” some obligation or duty. Not partially freed or freed for a limited period, but totally free.

After the NMW Bill was commented on by interested parties, hearings held, and the Bill approved by Parliament, the Department of Labour issued Draft Regulations that seek to completely negate the “exemption” provided for in the Bill. According to these proposed regulations, the word “exemption” is supplanted by a maximum “10% discount” limited to a period of one year. The pseudo “exemption” is to be available only to applicants who receive approval after submitting their financial information, household income, commercial balance sheet, working hours, and a motivation as to why the “discount” should be approved.

President Cyril Ramaphosa, and other senior members of the ANC, have made statements that indicate that they are unaware that the published draft regulations, intended to guide the implementation of the NMW legislation (not to fundamentally change any of its provisions), have gutted the exemption and turned it into a mere discount, if granted, applicable for a maximum of one year.

The President, in a written response to a Parliamentary question, said that job losses can be avoided if the businesses apply for an exemption. He said, “The mitigation of job losses that may result from the introduction of the national minimum wage is the responsibility of government, business and labour”. Something has obviously gone wrong at the regulation stage, where the promised exemption was changed to a 10% discount! Was this done without the knowledge of the President?

Section 44 of the Constitution empowers Parliament to enact legislation, and section 85 of the Constitution empowers the executive government to implement legislation. The distinction between making law, a power reserved for Parliament, and administering law as it exists through regulation, for which the executive is responsible, is important.

Regulations are intended to determine the administrative rules for the implementation of legislation adopted by Parliament. They are not intended to provide bureaucrats who are dissatisfied with Parliamentary legislation to substantially change its content and impact. Words used in legislation should be read as having their ordinarily accepted meanings. The attempt to change the word “exemption” to mean “discount” is unconstitutional and contrary to the rule of law, in that it is a usurpation by the executive of the law-making role of Parliament.

The consequences for the potential victims of the interpretive leap from “exemption” to “discount” and the addition of a one-year limit, is enormous. The difference for a spaza shop owner in a small low-income rural village could mean the difference between being able to continue to trade and closing the shop. For her staff and their families, it could mean the difference between eating and starving. For a single mother who hires a live-in child-minder so that she can hold down a job that allows her to maintain, clothe and feed her children and the child-minder, the consequences could be dire.

Did the compilers of these atrocious regulations not realise the misery they will inflict on people who are living in a constant state of vulnerability? The Constitution and the rule of law exist precisely to stop this kind of dangerous behaviour on the part of government and its officials.

Eustace Davie is a Director at the Free Market Foundation

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