Cheating national minimum wage gets employer a fraud charge

The Department of Labour said in a statement released on Thursday that it would pursue fraud charges against Fleeceytex Knitting Company that tried to misrepresent the details of its exemption from the national minimum wage in order to pay employees even less.

President Cyril Ramaphosa signed the National Minimum Wage bill into law in November, after Parliament held hearings into the draft legislation. The law stipulates that the national minimum wage currently sits at R20 per hour, or R3 500 per month.

The legislation allows for a R20 compulsory hourly rate, which will be phased in at R18 an hour for farm workers and R15 an hour for domestic workers.

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Provisions have been made for employers that cannot afford to pay employees the rate to apply for an exemption. The department said in the statement that it intended to open a fraud case with the South Africa Police Service against the employer.

The department’s statement said Director General Thobile Lamati received an e-mail from an employee at the Alberton-based company looking 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 17 January 2019, which the employees were subsequently paid on 18 January 2019," the statement said.

The statement said the department investigated the matter and discovered the employer applied for an exemption from paying from the national minimum wage and was granted one due to insufficient profitability and assets.

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However, the department said, the employer proceeded to aim much lower in employee compensation than the exemption granted allowed.

"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 a copy of as furnished by the complainant," the statement said.

The department said the chief director of labour relations met with the employer to establish the facts.

The employer confirmed the exemption notice and figure, but said it was displayed in the work place in error. The department concluded that a case of fraud must be investigated.