Understanding Namibian Labour Law
Namibia’s labour law framework is primarily governed by the Labour Act of 2007, which establishes the rights and responsibilities of both employers and employees. This legislation aims to promote fair labour practices, protect workers’ rights, and ensure a balanced relationship between employers and employees. Below, we will explore some key aspects of Namibia’s labour law, including minimum wage regulations, remuneration structures, and compliance mechanisms.
Minimum Wage Regulations
For the first time in Namibia the Minister of Labour, Industrial relations and Employment creation have, following recommendations of the Wage Commission, issued a wage order setting the national minimum wage for all employees.
With the exception of certain groups of employees, the national minimum wage is set at N$18.00 per hour, effective 1 January 2025.
For further information please contact our offices for assistance or have a look at Government Notice No. 218 of 7 August 2024.
Deductions and other acts concerning remuneration.
In terms of section 12, an employer must not make any deductions from an employee’s remuneration unless the employee agrees to the deduction in writing and the subtraction does not in aggregate exceed more than one-third of the employee’s remuneration. Cumulative subtractions, however, performed in terms of any law or court order, are not subject to the one-third limitation and are calculated separately. These deductions include tax, social security, fines, garnishee orders etc.
An employer must also not:
Levy a fine on an employee, unless such a fine is authorised by statute or collective agreement
Accept repayment of any remuneration paid to an employee
Allow an employee to acknowledge receipt for more pay than he / she actually received
Require an employee to buy goods from a shop owned or managed on behalf of the employer, or to utilize the services of the employer in lieu of remuneration
Require an employee to pay more for any goods supplied by the employer than the price paid by the employer plus reasonable overheads
Deductions that are allowed:
Permitted deductions, authorised by the employee, up to a total of one-third of the employee’s remuneration are limited to:
Rent for accommodation provided by the employer
Goods sold by the employer
Money loaned by the employer
Contributions to employee benefit funds
Trade union fees
Deductions may also be made by the employer if required or permitted under collective agreement or arbitration award, these may however, together with all other deductions authorised by the employee, not exceed one-third of the employee’s remuneration.
It is also worth noting that in the absence of a statutory provision governing deductions in respect of; negligence and / or intentional damage to the employer’s property, and payments made in error or overpayments resulting from administrative mistakes, employer’s often find themselves in a precarious situation.
Employers can however feel assured to know that deductions in relation to the aforementioned can be made provided the deduction, and in particular the deduction relating to recovery of compensation for loss or damage, complies with the following requirements:
The loss or damage occurred during the course of employment and was due to the fault of the employee
The amount of the deduction does not exceed the actual amount of damage or loss
The employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deduction should not be made
The total deduction does not exceed the one-third limitation
The deduction must be consented to by the employee
On this note, “fair procedure” does not necessarily mean there has to be a formal hearing. A minuted discussion with the employee will suffice.
Reduced working hours or “Short-time”
An employer may for operational reasons or any other reason recognised by law, and unless there is a contractual or collective agreement stating the contrary, give written notice to an employee of the employer’s intention to require the employee to work fewer hours than initially agreed to for a period not exceeding 3 (three) months. Correspondingly the employer is entitled to reduce the employee’s remuneration by up to one half of the employee’s basic wage during this period.
In the event where the reduction of working hours will be extended for an additional period exceeding the 3 (three) months, a written agreement entered into between the employer and employee or the employee’s registered trade union, in the case of an exclusive bargaining agent, is required.
It should be noted that an employer’s intention to reduce an employee’s working hours is a temporary measure which is usually resorted to, for example, when there is a lack of material available for production purposes, unforeseen breakdowns etc. It therefore follows that the measure cannot simply be implemented as and when an employer chooses. Good reason must exist.
It should also be noted, that the provision does not require the employer to obtain any prior authorization from the employees or from anybody else before reduced hours are initiated. However, it should be kept in mind that it is sound business practice to give reasonable notice and to consult the employees and or their union beforehand. And as mentioned, should the reduced hours be extended beyond the 3 (three) months, consultation / negotiation becomes obligatory.
Payment of Severance
Employers often have difficulty understanding section 35 of the Labour Act. The wisest approach to interpret this section would be to opt for a direct / literal interpretation.
Severance pay consists of an amount equal to at least 1 (one) week’s remuneration for each year of continuous service with the employer, calculated on the employee’s present earnings.
An employee who has completed 12 (twelve) months of continuous service with his / her employer will be entitled to Severance pay if;
The employee is dismissed;
The employee dies while employed, or;
The employee resigns or retires on reaching the age of 65 years.
Employees will not qualify for Severance pay if;
The employee is dismissed on grounds of misconduct or poor work performance;
The employee unreasonably refuses reinstatement;
The employee resigns or retires before reaching the age of 65 years;
The employee unreasonably refuses to accept employment on terms no less favourable than those applicable, immediately before the termination of employment with; the surviving spouse, heir, or dependent of a deceased employer within one month of the death of the employer; or one or more of the former partners within one month of the dissolution of the partnership, if the employer was a partnership.
The calculation of the length of an employee’s service is subject to the following rules;
if upon the death of an employer the employee is employed by the surviving spouse, heir or dependent, the employee retains the length of service acquired before the employer’s death.
In the event where a partnership has been dissolved and the employee is employed by a former partner, the employee retains the years of service acquired prior to the dissolution.
Where the employer’s business has been transferred to another person and the employee continuous in the service of that business after transfer, the employee retains his / her years of service acquired prior to transfer.
In case of a seasonal worker who has worked for the employer for 2 (two) or more successive seasons, the service is regarded as continuous provided the service is made up of periods actually worked.
Where employment is terminated by death in the absence of a will, the employee’s surviving spouse, or if there is no spouse, the employee’s children, must receive the severance pay. If there is no spouse, or children, the money should be paid into the estate of the employee.
On that note, it is further worth mentioning that the prescribed amount of 1 (one) week, and by the wording of “at least”, is meant to refer to a basic / minimum amount. With the result that an employer and employee can agree to a more beneficial payment, and similarly where an employee resigns or retires before reaching the age of 65 years, the employer may voluntarily agree to pay severance to the employee, but is not obligated to do so.
The term “dismiss” also often causes confusion. For clarity the term means termination of employment by an employer for whatever reason. The only exceptions being dismissal for misconduct or poor work performance.
In addition when a person has been appointed on a temporary / fixed term contract, severance pay is not applicable since the contract terminates through the lapse of time and not through dismissal or resignation.
Lastly severance is calculated on remuneration, meaning that employers must base their calculations on the total value of all payments in money and in kind relating to the employee’s current earnings, which includes any monthly allowances.
Unfair dismissal
Irrespective of whether notice has been given or not, an employer may not dismiss an employee without a valid and fair reason and without following a fair procedure, the latter being subject to any code of good practice issued by the Minister of Labour, or the procedures set out in terms of section 34 (in case of retrenchments).
A dismissal will automatically be unfair if an employee is dismissed because the employee;
Disclosed information which the employee is entitled or required to disclose
Fails or refuses to do anything that an employer must not lawfully permit or require the employee to do
Exercises any right conferred by the Labour Act or in terms of an employment contract or collective agreement
Belongs, or has belonged to a trade union
Takes part in the formation of a trade union
Participates in the lawful activities of a trade union outside working hours, or within working hours, with the consent of the employer or in the circumstances contemplated in section 67(4), which refers to the performance of the functions of internal workplace representatives.
It is also considered unfair to dismiss an employee because of the employee’s sex, race, colour, ethnic origin, religion, creed, social or economic status, political opinion or marital status.
In the absence of statutory provisions, employers generally fail to understand what is meant by; 1. valid and fair reason and; 2. a fair procedure. Briefly, the two pillars, which is also often referred to as substantive and procedural fairness, entail that an employer must have a valid and fair reason to terminate the employment of the employee and must, before doing so, follow a fair procedure. For assistance, it has been held in numerous Labour Court judgments that employers are not expected to handle disciplinary proceedings according to the rigorous standards applied in courts of law. Instead natural justice require no more that employers use their commonsense percepts of fairness.
This entails that a fair procedure is one that requires at the least;
An investigation into the misconduct.
That notice of the allegations is served on the employee.
That the employee is given reasonable time to prepare.
That the employee is allowed the opportunity to respond to allegations.
That the employee is allowed to be represented either by a fellow employee, shop steward or trade union official, subject to employer policies and procedures.
After the inquiry the employee is given notice of the decision in writing.
Understanding Namibia’s labour law is crucial for both employers and employees alike. The framework established by the Labour Act promotes fair treatment in workplaces across various sectors while providing mechanisms for addressing grievances and ensuring compliance with regulations.
By staying informed about these laws, stakeholders can contribute to a more equitable work environment that respects workers’ rights while fostering economic growth in Namibia.