The 2026 earnings threshold increase: What employers and employees need to know

The 2026 Earnings Threshold: Key Insights for employers and employees 

On 17 April 2026, the Minister of Employment and Labour announced an update to the annual earnings threshold under the Basic Conditions of Employment Act, 1997 (“BCEA”). Effective 1 May 2026, the threshold will increase to R269,600.90 per annum (approximately R22,466.74 per month). This 3% adjustment aligns with the March 2026 CPI inflation data, ensuring the threshold keeps pace with the current economic climate.

The earnings threshold determines which employees automatically qualify for certain statutory protections. The adjustment affects obligations under three pieces of legislation, namely, the BCEA, the Labour Relations Act, 1995 ("LRA"), and the Employment Equity Act, 1998 ("EEA").

For the purposes of this threshold, "earnings" refer to an employee’ regular gross remuneration before deductions, such as income tax, pension fund and medical aid contributions. This is subject to the proviso that subsistence and transport allowances received, achievement awards and payments for overtime worked do not fall within the scope of remuneration.

IMPLICATIONS UNDER THE BCEA

The effect of the earnings threshold is that employees who earn above the new threshold will be excluded from certain provisions of the BCEA. These provisions are ordinary hours of work (section 9), overtime (section 10), compressed working weeks (section 11), averaging of hours of work (section 12), meal intervals (section 14), daily and weekly rest periods (section 15), pay for work on Sundays (section 16), night work (section 17(2)) as well as pay for work on public holidays (section 18(3)). 

For employees earning below the threshold, these protections apply in full by operation of law. For those above it, working time arrangements must be expressly agreed upon and set out in the employment contracts. In this regard, any existing contractual arrangements that are more favourable to the employee remain valid and enforceable and cannot be unilaterally removed by the employer.

IMPLICATIONS UNDER THE LRA

For atypical employment, the earnings threshold is a critical protection for lower income earners under the LRA.
Section 198A: Labour Brokers and Temporary Employment Services
Employees earning below the threshold who are placed by a broker with a client for more than three months are "deemed" to be employees of that client for purposes of the LRA. This entitles them to the same rights and benefits as the client's permanent staff. Employees above the threshold, on the other hand, do not benefit from this deeming provision.

Section 198B: The Fixed-Term Contract

Employees earning below the threshold who are engaged on a fixed-term contract for longer than three months are deemed to be employed indefinitely, unless the employer can demonstrate a justifiable reason for the fixed term (such as a project-specific role or substituting for an absent employee). 
Once an employee's remuneration exceeds R22 466.74 per month, this automatic protection falls away and as a result their employment contract will not be converted to permanent employment by operation of law.

IMPLICATIONS UNDER THE EEA

The earnings threshold also affects the forum on which unfair discrimination disputes are handled under the EEA.
Employees earning at or below the threshold may elect to refer such disputes to the Commission for Conciliation, Mediation and Arbitration (“CCMA”) for arbitration. On the other hand, employees earning above the threshold must refer their disputes to the Labour Court for adjudication as the CCMA will not have jurisdiction to arbitrate, unless the dispute concerns unfair discrimination based on an alleged ground of sexual harassment or all parties agree to the CCMA’s jurisdiction.

WHAT DOES THIS MEAN FOR EMPLOYERS?

Employers are therefore encouraged to act immediately by:

1. Auditing current payroll schedules to identify employees who move above or below the new threshold from 1 May 2026;
2. Reviewing and where necessary, updating employment contracts for employees now falling above the threshold, ensuring working time arrangements are clearly documented and contractually agreed; and
3. Reviewing arrangements with labour brokers to confirm compliance with the revised threshold.

Contributors:

Bronwyn Kodisang

Legal Advisor: Legal, RSM Johannesburg

Marc Humphries

Director: Legal, RSM Johannesburg