New BCEA Earnings Threshold 2026: What It Means for Overtime Pay
This article will count 0.25 units (15 minutes) of unverifiable CPD. Remember to log these units under your membership profile.
From 1 May 2026, South Africa's earnings threshold went up. The new figure is R269,600.90 a year, or R22,466.74 a month. This one number decides which employees automatically get overtime pay, Sunday pay, and other protections under the law. If your clients have not checked their payroll against this new figure, some of their staff may now be entitled to money they are not getting.
This article explains what the threshold is, what changed, and what to check.
WHAT IS THE EARNINGS THRESHOLD
The earnings threshold comes from the Basic Conditions of Employment Act, known as the BCEA. This law sets basic rules for South African workplaces, including working hours, overtime, and rest time.
Not every rule in the BCEA applies to every employee. The law draws a line based on how much someone earns in a year. Employees who earn below the line get full protection. This includes paid overtime, extra pay for working on a Sunday, extra pay for night work, and payment for working on a public holiday that falls on a day they would not normally work.
Employees who earn above the line do not get these protections automatically. Their employer can ask them to work extra hours without paying overtime for it, unless their employment contract says otherwise.
The Minister of Employment and Labour reviews this earnings line from time to time and adjusts it. That is exactly what happened on 1 May 2026.
WHAT CHANGED
The threshold moved from R261,748.45 a year to R269,600.90 a year. In monthly terms, that is a move from about R21,812 a month to about R22,466 a month. This is roughly a three percent increase.
It does not sound like a big jump. But it matters a lot for anyone whose salary sits between the old figure and the new one. Before 1 May, an employee earning R262,000 a year was above the threshold and had no automatic right to overtime pay. After 1 May, that same employee earns below the new threshold. They are now entitled to overtime pay, Sunday pay, and the other protections, even though their salary has not changed at all.
WHAT COUNTS AS "EARNINGS"
This is where many employers get it wrong. "Earnings," for the purpose of this threshold, has a specific legal meaning. It is not the same as gross salary, and it is not the same as take-home pay.
Earnings means the employee's regular yearly pay before deductions like income tax, pension, and medical aid. But it does not include money the employer contributes on the employee's behalf. It also leaves out certain items completely, even if they are paid to the employee. These excluded items are:
Subsistence and transport allowances.
Achievement awards or bonuses.
Any payment for overtime already worked.
If a business includes these items when working out whether someone is above or below the threshold, they will get the wrong answer. Someone might look like they earn above the line, when their real "earnings" figure actually sits below it.
WHY THIS MATTERS BEYOND THE BCEA
The same threshold number is used in two other important laws.
Under the Labour Relations Act, a fixed-term contract worker who earns below the threshold and has worked for the same employer for more than three months is treated as a permanent employee, unless there is a good reason for the fixed term. The same rule applies to workers placed by a labour broker, known as a temporary employment service. If they earn below the threshold and work for the same client for more than three months, they are treated as an employee of that client.
The threshold also decides where certain unpaid-wage disputes must go. Employees earning below the threshold can take their case to the CCMA for arbitration. Employees earning above it must go to the Labour Court instead, which is a longer and more expensive process.
So this single number affects overtime pay, permanent employment status, and even which court a dispute lands in.
WHY THIS MATTERS TO YOUR CLIENTS
Businesses that rely heavily on overtime, shift work, or weekend work feel this change the most. This includes logistics companies, warehouses, retail stores open on Sundays, and manufacturing plants running extra shifts.
Here is the problem. Payroll software does not update itself. Unless someone manually changes the threshold figure in the system, it will keep using the old number. This means staff who should now qualify for overtime pay may simply not be getting it, because the system still thinks they earn above the line.
Employees do eventually notice. When they do, they ask why they were not paid overtime, and some go back and ask for money owed from 1 May onward. A business with several affected staff can be looking at a real, ongoing cost increase, plus a possible back-pay claim if nobody caught the change in time.
WHAT ACCOUNTANTS AND BOOKKEEPERS SHOULD CHECK
If you manage payroll or advise SME clients, run through this list for each one:
First, pull a list of every employee's annual earnings, using the correct legal definition above. Do not use gross salary as a shortcut.
Second, flag anyone within about ten to fifteen percent of R269,600.90. These are the employees most likely to have moved across the line.
Third, for anyone who has moved below the threshold, check whether their overtime, Sunday pay, and night work pay are now being calculated and paid correctly.
Fourth, check the payroll system settings. Confirm someone has actually updated the threshold figure used by the software, rather than assuming it updates on its own.
Fifth, check fixed-term contracts and labour broker placements against the new figure, since the same threshold decides whether these workers must now be treated as permanent staff.
Sixth, write a short summary for the client showing which staff are affected and what it means for their monthly payroll cost. A one-page memo is worth more than a verbal warning, and it shows the client exactly what you checked.
A SIMPLE EXAMPLE
Consider a warehouse business with forty staff. A packing supervisor earns R263,000 a year. Before 1 May 2026, this salary sat above the old threshold of R261,748.45, so the supervisor had no automatic right to overtime pay. After 1 May, the new threshold of R269,600.90 is higher than the supervisor's salary. The same person, on the same salary, is now entitled to overtime pay for any extra hours worked. If the payroll system was not updated, the business may already owe this person money for hours worked since 1 May.
THE BOTTOM LINE
This is not a small technical adjustment. It is a legal trigger that changes who must be paid overtime, who counts as a permanent employee, and where a dispute gets heard. Every SME client with hourly or shift-based staff should have this checked now, not at year-end.
For accountants and bookkeepers, this kind of review is real, billable work. It protects the client from unexpected back-pay claims, and it shows a level of attention that goes beyond simply processing numbers each month.
Trending
