Are you paying your employees what they are worth? Do they have a right to a salary increase? Sean Snyman, a founder member of LabourNet Holdings, says it’s important for employers and employees to be realistic and objective.
In South Africa there is no legal right to an annual salary increase. We have a free market economy, so salaries are determined by negotiation, not legislation. In a small-to-medium business, however, salary increases are usually entirely at the discretion of the owners.
There are two exceptions to this:
- A statutory minimum wage may be declared by the Minister of Labour. This is known as a sectoral determination in terms of the Labour Relations Act. One example is the Labour Ministry’s announcement of wage increases for farm workers in January 2006, which also regulated future annual wage increases until 31 January 2010.
- Bargaining councils, formed by trade union members and employers’ organisations, deal with collective agreements, labour disputes, and schemes and proposals – they may collectively agree on an industry sector percentage increase, which has to be adhered to by all members.
Employees who believe they are due a salary increase and that they are being treated unfairly have little recourse in terms of the law, although they are entitled to strike. A more positive option would be for the employee to motivate for an increase in a mature fashion, taking into account their performance, ways of addressing objections, industry norms and their own market value. Both sides need to remember that salary levels are largely dictated by market forces, including the cost of replacing the employee and the contribution that the employee makes to organisational performance.
Sean Snyman, director, LabourNet Tel: +27 11 532 8801, www.labournet.co.za