Companies can pay below minimum wage with ministry approval

Companies in Namibia can legally pay employees less than the national minimum wage but only if the labour ministry grants them an exemption.

The process allows employers to apply “on good grounds and other requirements", and if approved, companies may bypass statutory wage rules, Ben Nangombe, executive director of the ministry, confirmed recently.

Nangombe explained that while the national minimum wage of N$18 per hour, which came into effect in January, is legally binding, the law provides a mechanism for employers facing financial or operational constraints to apply to pay below the minimum pay threshold.

“In the absence of an approved exemption, all companies are required to comply and pay full remuneration in monetary terms,” he said.

Clients influence pay

Nangombe’s explanation comes amid challenges for some Namibian businesses trying to implement the new minimum wage.

Speaking to Namibian Sun, the owner of a local security company in Rundu, Moyyo Jussi, said compliance is particularly difficult in the security sector, where smaller private clients often operate on tight budgets and can only pay modest rates.

“When we receive government security tenders, we comply with the minimum wage as stipulated in the contract," he said.

"However, with private clients, people pay what they can, which sometimes forces us to compromise and prevents us from paying the minimum wage,” Jussi said.

His comments follow media queries about why some security guards at his company earn N$1 500 per month, well below the legal minimum.

“Pay is per site. If the client pays above the minimum wage bracket, then I compensate my staff accordingly,” he explained.

Jussi also urged unions to consult business owners to understand the broader economic implications.

“Companies in Rundu and other smaller towns are not willing to spend large sums on security compared to Windhoek. Unfortunately, these circumstances contribute to lower payments,” he said.

Balancing act

On enforcement, Nangombe said labour inspectors are empowered to ensure compliance by visiting workplaces proactively or in response to complaints, and employers cannot deny them access. Non-compliance is punishable by law, with penalties determined by the circumstances.

Nangombe urged employees to report underpayment so the ministry can investigate and enforce compliance.

Under the Labour Act No. 11 of 2007, once a compliance order is issued, an employer has 30 days to meet the requirements set by the labour inspector.

If the employer fails to comply within the prescribed period, they may be liable to a fine or face criminal charges. The Act empowers labour inspectors to issue compliance orders to employers who fail to meet their legal obligations.

Non-compliance may result in a fine not exceeding N$10 000 or imprisonment for a period not exceeding two years.

The labour maintains that the exemption mechanism is designed to balance the needs of struggling businesses with the rights of employees, though debate continue over whether it adequately protects workers.

Critics have warned however that the exemption system could be exploited, leaving workers vulnerable.