salaryThe key aspects of the conciliator’s proposal are as follows:

Across the Board Salary Increase

A three year salary and wage agreement which is to be structured as follows:
• Year 1 (2015/2016): A salary increase of 7%.
• Year 2 (2016/2017): A salary increase of CPI plus 1%.
• Year 3 (2017/2018): A salary increase of CPI plus 1%.

Acceleration Clause

The proposal includes an acceleration clause aimed at providing protection against unexpected and significant decreases in inflation in years 2 and 3. Should inflation fall below 5%, it will be automatically adjusted upwards (accelerated) to 5% and a further 1% will be added thereto to determine the salary increases for the 2nd and 3rd year of the agreement.

Therefore, the salary increases for the 2nd and 3rd year of the agreement will never be lower than 6%.

Minimum Wage

The minimum wage is to increase to R6 014-93 as from 1 July 2015 and thereafter by the same percentage as the salary increase in the 2nd and 3rd year.

Medical Aid Subsidy

Separate provision is made for increases to the maximum employer contribution to Medical Aid benefits, or “cap” as it is commonly referred to. This amount is currently R3 618-04.

The “cap” is to increase as follows:

• Year 1 (2015/2016): increase by 7% to R3 871-00.
• Year 2 (2016/2017): increase by 50% of the salary increase (CPI plus 1%).
• Year 3 (2017/2018): increase by 25% of the salary increase (CPI plus 1%).

Employees who are not currently getting medical aid benefits at the maximum rate will not be affected and will continue to receive medical aid benefits at the 60/40 rate, meaning that employers will continue to pay 60% of all medical aid premiums.

The parties must create a special purpose medical aid benefit for low income earners and monitor initiatives by the National Government to introduce a National Health Insurance (NHI) system insofar as it may be beneficial for employees.

Retirement Funds

The proposal makes provision for the pension fund arrangements in the previous wage agreement to continue. In terms thereof, the current employer contribution towards defined contribution pension funds remain capped at 18%, and new employees will only be allowed to join defined contribution pension funds.

The proposal further requires parties to commit themselves to finalising the investigation into pension fund restructuring / rationalisation, which is currently underway in the bargaining council, and to implement the outcome of this process in the current financial year (2015/2016).

Home Owner Allowance

The current home owner allowance of R545-00 is to increase to R700-00 per month. This amount will further increase as follows:
• Year 2 (2016/2017): by the average CPI for 1 February 2016 to 31 January 2017.
• Year 3 (2017/2018): by the average CPI for 1 February 2017 to 31 January 2018.

The parties will moreover establish a process to investigate what should be an appropriate housing allowance for “gap market” employees. These are low income group employees who earn below R8 000-00 and do not currently receive a housing allowance (and who do not own houses). In the meantime, such “gap market” employees will be paid a non-pensionable allowance of R350-00 per month.

Service Charter

It is proposed that the parties commit themselves to concluding a service charter which is aimed at improving service delivery, promoting good governance and fighting corruption in the Local Government sector.

Extensive consultation will be taking place across all membership structures in order to obtain a mandate by Friday, 24 July 2015.