In 2024, the issue of wage relativity adjustment emerged for the very first time as a direct consequence of the ever-increasing cost of living of Mauritians. This article examines the perceived legal and procedural missteps in the wage adjustment process, the implications for employers and employees, and the broader economic consequences of these decisions. Most of all, the question will be asked as to whether it was the business of the government to interfere in the operation of contracts of employees in the private sector and by-pass the application of the Pay Research Bureau (PRB) in allocating increases of salaries in the public sector.
At the base of the problem was the introduction of a new minimum wage, which made it necessary to adjust the salaries of existing employees to ensure the maintenance of wage relativity. Such relativity would have direct consequences on factors such as years of service and the grades of existing employees.
In what is perceived as a series of hasty half-baked decisions taken by a government at the end of its parliamentary mandate and an impossible balancing exercise by a new government to pacify expectations created by the exiting regime, two approaches were adopted for the adjustment of salaries following the introduction of a minimum wage in January 2024. The first involved the National Wage Consultative Council making recommendations to the Minister of Labour and Industrial Relations, a responsibility explicitly outlined in Sections 5(b)(v) and 5(b)(vi) of the National Wage Consultative Council Act of 2016 (the “Act”) and the second involved a referral to the National Remuneration Board (“NRB”) to propose recommendations for a revised salary structure.
The Act stipulates, among other objectives, that the Council is tasked with making recommendations on the approach to address wage relativity issues in the private sector arising from the implementation of the National Minimum Wage through remuneration regulations under the Employment Relations Act 2008. It also mandates the development of a master conversion table as a mechanism to resolve wage relativity concerns in the private sector. However, under the previous government, no formal consultations were held with the trade union movement to discuss or address these critical issues of wage relativity.
Rather than entrusting the National Wage Consultative Council or the National Remuneration Board with the responsibility of proposing wage adjustments, a ministerial committee led by the then Prime Minister decided on 03rd July 2024, to create a Technical Committee headed by the Acting Financial Secretary.
Within just two days, on 05th July 2024, the committee put forward a recommendation for a salary increase of Rs 4,925 compared to 2023. The formula for the wage relativity adjustment was as follows:
Employees earning less than Rs 20,000
Employees should receive a wage adjustment equivalent to the difference between:
(a) their monthly basic wage or salary as at December 2023, increased by 4,925 rupees; and
(b) their monthly basic wage or salary as at January 2024, inclusive of the additional remuneration payable under the Workers’ Rights (Additional Remuneration) (2024) Regulations 2024.
Employees earning between Rs 20,000 and Rs 50,000
Employees whose monthly basic wage or salary in December 2023 falls in the range of Rs 20,000 and Rs 50,000, shall be granted a monthly wage adjustment of Rs 2,925 exclusive of the additional remuneration payable under the Workers’ Rights (Additional Remuneration) (2024) Regulations 2024
This decision was made without the development of a salary scale, any thorough analysis, or consultation with worker and employer representatives. The lack of deliberation and transparency in such a critical process was highly concerning – not to say reckless.
The government, through the Government Information Service (GIS), initially published unofficial remuneration orders to address wage relativity adjustments. Shortly thereafter, on 13th September 2024, 32 remuneration regulations were officially enacted under Section 99 of the Employment Relations Act.
However, the manner in which these regulations were made prompted widespread public outcry from workers, trade unions, and opposition parties. In response to this backlash, the government moved swiftly to revoke the original regulations. Just over a week later, on 24th September 2024, a revised set of 32 remuneration regulations was gazetted, this time enacted under Sections 94 and 106 of the Employment Relations Act.
This rapid change of course raised concerns about the previous government’s handling of the issue, particularly regarding the lack of adequate consultation in accordance with the law.
It was later discovered, with the coming into office of the new government, that the then government proceeded contrary to the advice provided by the Office of the Solicitor General in its legal opinion dated 02nd September 2024, just around ten days before the Minister introduced the remuneration regulations.
The opinion clearly stated that there was no legal basis expressly provided for the enactment of regulations to reflect wage relativity adjustments following the review of the National Minimum Wage.
It also highlighted that no legal foundation existed for regulations to be made concerning employees not governed by any remuneration regulations, nor for the establishment of national minimum wages for positions requiring a diploma or degree as entry requirements. All this information was culled from the intervention of the Minister of Labour and Industrial Relations, Mr R. Uteem in the National Assembly, as reflected in the following excerpt from the parliamentary debates (Hansard) dated 17th December 2024:
Je me suis entretenu avec les représentants du State Law Office et à mon grand étonnement, Madame la présidente, j’ai pris connaissance d’un avis légal du bureau du Solicitor General en date du 2 septembre 2024. Le 2 septembre 2024, c’était une dizaine de jours avant que le ministre vienne de l’avant avec ces remuneration regulations et que dit cet avis légal ? Je cite un extrait –
“Accordingly it seems that there is at present no legal basis expressly provided for the enactment of regulation to reflect wage relativity adjustment following the review of the National Minimum Wage.”
No legal basis.
“Additionally, it also appears that there is no legal basis for regulation to be made in respect of employees who are not governed by any remuneration regulation nor for the making of regulation to provide for national minimum wages for jobs warranting the possession of a diploma or degree as entry requirements.”
Despite this legal guidance, the then government moved forward with the remuneration regulations, disregarding the State Law Office’s recommendations. It is against this backdrop that Business Mauritius entered an action before the Supreme Court of Mauritius to contest the legality of the Remuneration Regulations on 09th October 2024 by way of Judicial Review.
The previous government’s irresponsible handling of the wage relativity adjustment payment, reducing it to a mere electoral tool, did not only jeopardise the very payment of the salary readjustment but also overstepped its bounds by intervening in how employers should manage their businesses by unilaterally imposing such a decision without prior consultation with all the stakeholders.
It is important to note that on 15th December 2017, the Honourable Minister of Labour, Industrial Relations, Employment and Training, acting under Section 91 of the Employment Relations Act 2008, referred to the NRB the review of wages in the Remuneration Regulations to bring necessary wage-relativity adjustments following disruption which arose with the application of the National Minimum Wage Regulations 2017. Interested parties were invited to submit written representations.
The recommendations of the NRB brought about the revoking of 30 Remuneration Orders as from 24 October 2019 and the introduction of the Remuneration Regulations 2019.
The situation with the Remuneration Regulations 2024 created a snowball effect, particularly for sectors not covered by the remuneration regulations. When the current government assumed power, it was presented with a fait accompli regarding the salary increase of Rs 4,925. The amount had already been promised to workers, leaving the government with little room for flexibility. Faced with this commitment, the government’s only option was to ensure that the regulations were enacted in conformity with the law, without the possibility of revisiting the amount or conducting fresh consultations to alter it. The decision had already been made, and the government was bound to fulfil the promise, regardless of the lack of prior consultation or alternative approaches. This led to the situation where the Employment Relations Amendment Act 2024 was legislated. With this amendment, however, the Minister was granted with the power to provide salary adjustments for employees in the private sector who are not covered by these existing remuneration regulations.
Subsection (2)(a) of clause 3 grants the Minister explicit powers to establish regulations concerning wage adjustments aimed at addressing wage relativity. This applies not only to regulations under section 93 of the Employment Relations Act but also extends to industries or sectors that fall outside the scope of those remuneration regulations.
Although the regulations for sectors not covered by remuneration regulations had yet to be finalised, the government, in its commitment to ensuring transparency and fairness, found itself obligated to adopt the same formula as for those employees covered by remuneration regulations and extend the same Rs 4,925 salary increase to all employees earning up to Rs 50,000 working in sectors and/or engaged in activities not covered by any Remuneration Regulations. The NRB in its recommendations dated 18th December 2024 deemed this approach as necessary to maintain consistency, fairness and equity across the board as highlighted below:
In view of the foregoing, and to ensure fairness and transparency, the Board recommends that workers not covered by any Remuneration Regulations be granted an aggregate increase in their monthly basic wages equivalent to at least the increase in National Minimum Wage, as is the case for those covered under the Remuneration Regulations. This approach mirrors the treatment of workers covered under the Remuneration Regulations and preserves the existing wage structure, adjusting it upward solely by the change in the National Minimum Wage.
The above recommendations from the NRB served merely as a smokescreen, offering the appearance of due process. In reality, the decision to grant the Rs 4,925 increase had already been made prior to the Board’s recommendations as can be gleaned from an extract of the communique from the Ministry of Labour and Industrial relations dated 27th September 2024 reproduced hereunder:
« Pour les secteurs pas couvert par les 32 Regulations, il est recommandé aux employeurs de faire les ajustements en attendant que le National Remuneration Board (NRB) soumette ses recommandations. Pour ce faire, ils doivent utiliser la même méthodologie de calcul : – Pour ceux touchant moins de Rs20,000 (le salaire de Décembre 2023 + Rs4925 – le salaire de Janvier 2024 incluant la compensation salariale) – Pour ceux touchant entre Rs20,000 et Rs50,000… une augmentation de Rs2925 par mois. »
Had employers implemented wage adjustments solely based on the communiqué issued by the Ministry of Labour and Industrial Relations, in the absence of recommendations from the NRB the situation could have precipitated significant inconsistencies. If the NRB’s eventual recommendations diverged from the Ministry’s communiqué, such discrepancies would likely have led to confusion and disputes between employers and employees, adversely impacting labour relations.
The timing and nature of the recommendations suggest that they were a mere formality, as the outcome was predetermined thus undermining the credibility of the NRB’s role in the decision-making process.
In addition to the above, as rightly pointed out at the very outset by the representative of Business Mauritius during its submissions to the NRB, the referral made by the Minister was not in accordance with the provisions of the Employment Relations Act and should have been addressed by the National Minimum Wage Consultative Council, as outlined in Sections 5(b)(v) and 5(b)(vi) of the National Minimum Wage Consultative Council Act.
The referral contradicted Section 91 of the Employment Relations Act in several ways: (a) it overstepped sectoral boundaries; and (b) it ignored existing mechanisms for regulating terms and conditions of employment, such as enterprise-level review policies and collective agreements. This, they contended, rendered the Minister’s referral legally and procedurally flawed.
With the implementation of the Wage Adjustment Regulations 2024 gazetted on 27th December 2024, which are deemed to have come into operation retroactively on 01st July 2024, employers will be required to pay wage adjustments for a period of at least eight months.
This includes arrears from July 2024 to December 2024. Furthermore, since the wage adjustment directly increases the basic salary of employees, it will have repercussions on additional benefits, such as the end-of-year bonus for 2024 and the Special Allowance 2024. These adjustments represent a considerable financial burden for employers, who will be required to absorb these increased costs. The financial strain on businesses could also have broader economic consequences, affecting overall employment stability and business sustainability.
Secondly, the enactment of the Special Allowance Act 2024 in Mauritius stirred significant discourse among policymakers, employers, and employees. The legislation, promising a 14th-month basic salary to employees drawing a monthly basic salary of Rs 50,000, was a pivotal election pledge fulfilled without interested parties being afforded the opportunity to submit their representations.
While this move has been lauded by many employees as a much-needed financial boost, its broader implications for the economy, businesses, and labour market warrant a closer examination.
Employers may perceive this as an unwarranted intervention into their financial autonomy, potentially souring industrial relations. This sentiment could lead to resistance or reduced collaboration in future labour reforms.
In contrast to Mauritius’s interventionist approach, many countries adopt a more liberal framework for wage determination, relying on market dynamics and employer-employee negotiations rather than statutory mandates. In the UK, wage determination is largely market-driven, with minimal state intervention. The National Minimum Wage and National Living Wage set baseline standards, but beyond these, wages are determined through collective bargaining, individual negotiations, and company policies. End-of-year bonuses, for example, are discretionary and often tied to company performance or individual achievements. This system allows employers to balance employee compensation with operational sustainability. Australia’s industrial relations system emphasises enterprise-level bargaining, allowing employers and employees to negotiate wages and conditions tailored to their specific circumstances. The Fair Work Commission sets minimum wages, but beyond this, wage increases are driven by productivity gains and market forces.
The decision by the previous government to implement wage relativity adjustments was fundamentally flawed, both legally and procedurally, at every stage. From the lack of consultation with relevant stakeholders to the dismissal of expert legal advice provided by the State Law Office, the process was marred by significant legal oversights and a failure to comply with established laws.
As a result, when the current government assumed power, it was forced to enact the Employment Relations Amendment Act 2024 to rectify these issues and ensure that the wage relativity adjustments were legally sound.
Employers are now faced with the rising burden of labour costs, which may result in job cuts and business closures, while employees risk losing their jobs due to the financial strain imposed on businesses.
Moving forward, the State should steer clear of direct interventionism and aim rather at facilitating dialogue among stakeholders. This shift would ensure that wage adjustments are economically viable, legally sound, and reflective of the needs of both employers and employees.
Temple Journal Article by Urmila Boolell SC & Zakariyya Seekdaur
[This article is republished from the Temple Journal Second Edition.]
About the authors:
URMILA BOOLELL SC
Founder & Group Head – Temple
Head of Chambers, Temple Law
Urmila Boolell SC is a barrister with nearly 40 years of experience and the founding member of Temple Group. She became Senior Counsel in 2016 and is the most senior woman at the Mauritian bar. Recognised as a ‘Leading Lawyer’ by international rankings, she specialises in civil and commercial litigation.
ZAKARIYYA SEEKDAUR
Barrister at Temple Law
Zakariyya joined Temple Law as a Barrister in November 2023. He advises and represents clients in civil and employment matters, appearing regularly before the District and Intermediate Courts of Mauritius and the Supreme Court. Zakariyya assists in employment matters, representing employers in labour disputes, and conducting disciplinary hearings.