South Africa
Earnings threshold increase
Impact date: Effective 1 May 2026
The earnings threshold under the Labour Relations Act, 1995 (“LRA”) and the Basic Conditions of Employment Act, 1997 (“BCEA”), which provides for certain statutory protections (including Temporary Employment Service (TES) deeming provisions, equal treatment obligations and enhanced termination protections), has been increased with effect from 1 May 2026. The new threshold is ZAR 269,600.90 per annum (previously ZAR 254,371.67 per annum).
Employer implications/action needed Employers and suppliers (including TES providers) should update payroll records, employment contracts and compliance frameworks to reflect the new threshold. Any arrangements structured by reference to the previous threshold should be reviewed.
Employer risk Failure to apply the updated threshold correctly may result in misclassification of workers, exposure to deeming provisions under the LRA, and joint and several liability for non-compliance with applicable labour legislation.
Severance pay (case law)
Impact date: 5 May 2026
The Labour Court refused leave to appeal in a dispute concerning severance pay under section 41(4) of the Basic Conditions of Employment Act 75 of 1997 (BCEA). The court had previously reviewed and set aside an arbitration award in which the commissioner found that employees were not entitled to severance pay because the employer had allegedly secured alternative employment for them.
On the facts, however, the employees had already received offers of employment from a third party before the employer entered into the relevant facilitation arrangement. The court found that there was therefore no factual causal link between the employer’s conduct and the employees obtaining alternative employment. As a result, the commissioner’s conclusion was irrational and reviewable.
The court confirmed that the correct test under section 41(4) is whether the alternative employment was secured “through the efforts of the employer,” which requires a demonstrable causal connection between the employer’s actions and the new employment obtained. Leave to appeal was refused on the basis that there were no reasonable prospects of success.
Employer implications/action needed This judgment reinforces that employers seeking to rely on section 41(4) of the BCEA to avoid liability for severance pay must be able to demonstrate a clear causal connection between their efforts and the employee securing alternative employment. Mere involvement in discussions, facilitation arrangements, or post hoc coordination will not be sufficient where employees had already independently secured alternative employment. Employers should ensure that any redeployment or alternative employment initiatives are proactive, properly documented, and clearly linked to the eventual employment outcome.
Employer risk Where employers cannot establish that alternative employment was obtained through their efforts, severance pay will remain payable in retrenchment situations, potentially increasing dismissal-related costs and litigation risk.
Employment Services Amendment Bill 2026
Impact date: The Bill was tabled on 29 May 2026. It provisions are still under consideration and are not yet in force.
On 29 May 2026, the Employment Services Amendment Bill (“the Bill”) was tabled in the National Assembly (Government Gazette No. 54759).
The Bill proposes amending the Employment Services Act, 2014 (Act No. 4 of 2014) (“the Act”) to, among other things:
- extend the scope of the Act to cover foreign nationals, private employment agencies not operating for gain, and workers
- provide for the powers of the Minister to make regulations in respect of matters related to labour migration
- expand the functions of the Employment Services Board
- provide for the establishment and governance of Supported Employment Enterprises and
- provide for further offences and the improved enforcement of the Act and immigration laws regulating work by foreign nationals
By way of example, if Chapter 3A of the Bill is inserted into the Act, it will increase penalties for non-compliance with specific provisions of the Act. These penalties include, for example, the imposition of a fine of up to R100,000 for a first offence, up to R200,000 for a second offence (if committed within three years of the first offence), and the greater of R1,000,000 or 10% of the employer’s turnover for a third or subsequent offence.
At this stage, the Bill remains a proposal that is under consideration. It is not yet in force.
Employer implications/action needed Employers are encouraged to monitor the progress of the Bill through Parliament, as well as any sector-specific notices published for public comment
Employer risk No risk in terms of the Bill, yet. However, if the Bill is enacted, non-compliance with certain provisions could result in penalties.
Link
Employment Services Amendment Bill, 2026 [B 16—2026], Government Gazette No. 54759 of 29 May 2026
Fair Pay Bill (Employment Equity Amendment Bill)
Impact date: Awaited
On 30 April 2026, the Fair Pay Bill - a Private Members’ Bill introduced by Build One South Africa (BOSA), in partnership with PayMeFairly - was gazetted for public comment. The Bill seeks to amend the Employment Equity Act 55 of 1998 (“EEA”) to address pay transparency and the perpetuation of historical wage inequality. The Bill was first tabled in Parliament in June 2025 and refined through parliamentary legal advisors before being published for comment. Public submissions closed on 30 May 2026.
The Bill introduces three core reforms:
- a prohibition on salary history enquiries - employers will be prohibited from enquiring about or relying on a candidate’s past or current remuneration during recruitment, selection and appointment. The only exception is where, after an offer has been made, the candidate makes a written request for prior remuneration to be disclosed
- pay range disclosure - all job advertisements, transfer or promotion listings must specify the salary or salary band upfront. References to “market-related” remuneration will no longer be permissible and
- a right to discuss remuneration - employees will be entitled to share and compare remuneration details with other employees, and confidentiality clauses preventing such discussions will be unenforceable
Employer implications/action needed Employers should review recruitment processes and application forms to identify any reliance on salary history enquiries. Job advertisements and internal vacancy notices should be assessed for compliance with the proposed pay range disclosure requirements. Employers should also review confidentiality clauses in employment contracts and policies that prohibit employees from discussing remuneration, as such clauses may become unenforceable if the Bill is enacted.
Employer risk If enacted, employers who continue to rely on salary history in recruitment or who fail to disclose pay ranges in job advertisements will face non-compliance with the amended EEA. Employers with confidentiality clauses restricting remuneration discussions risk having those clauses rendered unenforceable, with potential exposure to unfair discrimination claims under the EEA.
Contact
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.