Rising Wages, Rising Claims: What Contractors Need to Know- Cox Yeats
- Sunil Hansjee and Claudelle Pretorius
- 3 hours ago
- 3 min read
By Sunil Hansjee, partner and Claudelle Pretorius, partner, Cox Yeats
South Africa’s annual increases to the national minimum wage are intended to promote fair pay and reduce inequality. For contractors and project owners, however, these increases can have significant cost implications during the life of construction projects. The National Minimum Wage Act 9 of 2018 (NMWA) came into effect on 1 January 2019 and applies to employees across all sectors. In accordance with section 6 of the NMWA, the national minimum wage is reviewed annually to meet its objective to advance economic development and social justice.
Each annual increase, therefore, has both social and commercial consequences, particularly in labour‑intensive industries such as construction.
In accordance with the annual review, South Africa’s minimum wage has increased again, bringing some relief to construction workers and other low-income employees across the country. From 1 March 2026, the national minimum wage increased from R28.79 to R30.23 per hour, representing roughly a 5% increase. For many workers in the construction sector, particularly general labourers and entry-level or unskilled workers, this new rate sets the legal minimum that must be paid for every ordinary hour worked.
Paying below the national minimum wage is a contravention of the NMWA. Workers earning below the current ministerial threshold of R261 784.45 per annum may refer to a dispute with the CCMA concerning the failure to pay any amount in terms of the NMWA. Claims for the recovery of unpaid amounts are arbitrable in terms of section 73A of the Basic Conditions of Employment Act 75 of 1997 (BCEA). Employers may apply for an exemption from paying the national minimum wage in terms of section 15 of the NMWA.
A contractor may be able to recover additional costs caused by a minimum wage increase after the submission of its tender, but this will depend on the form of contract used and the specific provisions dealing with changes in legislation or statutory costs.
The standard form building contracts used by contractors in South Africa – being the JBCC, GCC, NEC3 and FIDIC suite of contracts generally allow contractors to claim additional costs when there is a change in legislation that affects the cost of the works.
Under the JBCC, a claim for a national wage increase would be made under the expense and loss clause (clause 26.5 and 26.6), with specific reference to the obligation to comply with the law (clause 2.1).
Under the GCC, a claim for a national wage increase will be dealt with as an adjustment to the contract price due to changes in legislation, with specific reference to clauses 4.3.1 and 10.1.
Regarding the NEC3, clauses 16.1 and 60.1 can be invoked to make a compensation event, provided that Secondary Option X2 has been agreed to.
In respect of the FIDIC suite of contracts, the contractor can claim additional costs resulting from new laws or amendments to existing laws by relying on clauses 1.13 and 20.1.
However, to be paid the additional costs, contractors must ensure that they follow the notice and claim procedures in each contract. Failure to do so will most likely result in the claims being time‑barred.
In the construction industry, wages may also be determined through bargaining in collective agreements or sectoral determinations, which, if applicable, set minimum conditions and pay rates for specific job grades or regions. These agreements may require employers to pay higher wages than the national minimum wage, depending on the relevant industry agreement. Workers being paid below these minimums may seek relief in terms of section 73A of the BCEA if they earn below the ministerial threshold.
For contractors, the annual adjustment to the national minimum wage is more than a compliance issue. It can directly affect tender pricing, project budgets and the financial viability of long‑term construction contracts. Contractors should therefore carefully review their contracts, monitor legislative changes and ensure that notice requirements are met when wage increases affect project costs. Failing to do so may mean absorbing labour cost increases that could otherwise have been recovered under the contract.
