Labour Legislation and Policies: Workshop with Department

Meeting report

LABOUR PORTFOLIO COMMITTEE
7 August 2007
LABOUR LEGISLATION AND POLICIES: WORKSHOP WITH DEPARTMENT

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
Employment Equity Act No 55 of 1998
Labour Relations Act No 66 of 1995
Employment Equity Act presentation
Labour Relations Act: presentation

Audio recording of meeting [Part1] & [Part2]

SUMMARY
The Department of Labour attended a workshop of the Committee to brief Members on the  scope and content of essential labour legislation. The briefing on the Labour Relations Act covered the definition of employee, the existence and functions and powers of Trade Union and Employers Unions, and the processes for disputes, strikes, collective bargaining and discussions. The function of the Commission for Conciliation, Mediation and Arbitration and the Labour Court were explained. The dismissal process was also covered. Members asked questions on the definition of employee, and asked several questions around the position of casual workers. Problems with employees being scared to approach the CCMA and the functions of trade unions were raised, as also the challenges in unequal relationships between employer and employee. Companies converting themselves to cooperatives, often in name only, accountability of trade unions, bargaining councils, and compulsory arbitration for essential workers were also discussed. The issue of training, and job grading were of concern and the Department agreed there was a necessity for training and education on a continuous basis, although this did not form part of the Act, and that there was the possibility of the Department providing retrenchment response teams.

The Employment Equity Act intended to promote equal opportunity and fair treatment in employment through the elimination of unfair discrimination. It must be read with the Constitution, the EE regulations and the Codes of Good Practice. The ambit of each, and the provisions of the Act, were fully set out. The presentation touched on the designated groups, the ambit of the Act, the steps to be taken by employers, the difference between fair and unfair discrimination, the  requirements for and submission of an Employment Equity plan. The challenges were identified as complex and cumbersome procedures, lack of resources and lack of enforcement powers given to the Department. Members were particularly concerned about the lack of proper implementation and enforcement, as also evidenced by the small number of cases reaching court, the requirements of the plans, racial classification being a contentious issue, whether there was sufficient education on the Act, use of consultants in employment equity, and the necessity for better enforcement.

MINUTES
Labour Relations Act (LRA) Briefing by Department of Labour (DOL)
Mr Les Kettledas, Deputy Director General, Department of Labour, gave a briefing on the scope and function of the Labour Relations Act. He explained that it included almost all employers and employees, job seekers and former employees, but not members of the National Defence Force, the National Intelligence Agency and the South African Secret Service. A precise definition of an employee was given, including factors that defined employee status.

He noted also that the Act supported and protected trade unions and employers’ organisations, which were essential for collective bargaining. It supported freedom of association rights and organisational rights that made it easier for unions to organise employees. The Act also supported the right of employers to join together to form organisations. The requirements and benefits of registration were set out, and it was noted that registration provided some check on abuse, corruption and unconstitutional practices, and some guarantee to members that there would be proper controls over finances. The procedural requirements and the organisational rights awarded by the Commission for Conciliation, Mediation and Arbitration (CCMA) were explained.

Mr Kettledas went on to set out the organisational rights of a trade union. He described the centralised collective bargaining process, and noted that the Act provided for collective agreements, bargaining councils and statutory councils. He drew the distinction between trade unions and workplace forums, which would allow for enhanced efficiency, consultation by the employer and joint decision making, on matters as set out in the presentation.

The matters for which employees could strike were also described. He defined a protected strike, and the circumstances in which the Act's formal requirements need not be followed. Limitations on strikes were also described. Employees could claim compensation from the Labour Court for loss suffered as a result of an unprotected strike or lock out not complying with the Act.

It was noted further that the Constitution allowed the right to picket or demonstrate, provided this was done in a peaceful and unarmed manner. The circumstances and conduct in the picket were set out in the Act.

Mr Kettledas finally described the dispute resolution procedures under the LRA, noting that all disputes should go through a phase of conciliation. Dismissals, disciplinary procedures in the workplace, guidelines for dismissal on misconducts and on incapacity were set out. Poor work performance, ill health or injury, retrenchments and dismissals on operational requirements were also discussed.

Discussion
The Chairperson stated that the LRA was an important piece of legislation, which had several areas that would require discussion.

Mr Kettledas noted that "consultation:" set out in the Act should be a meaningful engagement. Historically employers would simply state that management had decided that retrenchments must occur and employee suggestions tended to be ignored. The Act specifically now set out that full consultation must take place.

Mr M Mzondeki (ANC) required clarity on whether all the factors set out as considerations for a person to be regarded as an employee must be met, or only some.

Mr T Mkalipi, Senior Executive Manager: Department of Labour, replied that only one of the factors would need to be found, but this in itself would not prove that a person was an employee. In a dispute, the presence of an "employee" factor would shift the onus to the employee to prove that he was not in fact an employee.

Mr Mzondeki required clarification on which International Labour Organisation (ILO) Conventions were used.

Mr Kettledas responded that Convention 87 and 98 were core Conventions of the ILO reflected in the drafting.  There were eight fundamental conventions and these two formed part of them.

Mr Mzondeki noted that dismissal of employees due to poor performance, ill health and retrenchments were common. However, often employees dismissed on these grounds raised objections years later, and perhaps by then had lost the relevant documentation. He asked how best to deal with these difficulties.

The Chairperson asked what would happen if employees were scared to go to the CCMA or any other authority to report their employers.

Mr Mkalipi replied that trade unions should be able to use the law that was provided for them. The DOL could not be present in every establishment. The LRA had set up parameters that were easily accessible and that gave workers rights to state if they had been victimised. The unions' ability to deal with matters was of importance.

Mr E Mtshali (ANC) said that if this argument were valid there would be no casual workers who faced dismissal at any time. The contribution of casual staff was not recognised properly by the employers, and this was a matter that should have been addressed both by government and the unions.

Mr Mkalipi said that the relationship between employees and employers was not equal. Employers, because of their resources, had the upper hand, but unions had a major role to play. He agreed that government also had a role to play as well, but could act only when they were made aware of the problem. The employees had to be able to take up their rights, as already set out, and in view of the fact that the legislation was in place, there was little else that the legislature could actually do to address their fears.

Ms S Rajbally (MF) asked what the Department was doing in with regard to the phenomenon of large companies breaking into smaller companies to avoid their employees joining unions and funds, especially in the textile industry, or even threatening employees if they should join. She mentioned that this was also having an adverse effect on workers' ability to join provident funds.

Mr Mkalipi replied that in terms of the law it did not matter how small the company was and there was nothing to prevent a company changing its composition, provided procedures were followed. The law did, however, deal with companies that tried artificially to change the status of the employee. There was a new development, whereby companies turned into co-ops. This meant that everyone, including the employees, would be seen as "owners" and this would prevent them from joining a union.

Ms Rajbally responded that although some employers might have assured workers that they were part and parcel of the company, they were not sharing the profits. She asked if this had been reported.

Mr Mkalipi replied that DOL had not assessed the issue thoroughly, although it had recently been informed of this. He predicted that it could develop into a major issue. The way to resolve this was that a court application would have to be made, to prove that the name of "co-op" was being used falsely and that there was in fact no proper profit-sharing.

Ms Rajbally asked if the affirmative action and equity campaigns were being properly monitored in their application.

Mr Kettledas replied that DOL would deal with that question when giving an assessment of the Employment Equity Act.

Mr O Mogale (ANC) asked which countries had DOL benchmarked when they took the decision to exclude employees or certain conditions.

Mr Kettledas replied that DOL, in drafting this law, had had a task team that had included all the stakeholders, as well as lawyers who were knowledgeable on labour law. The ILO had a worldwide view of the regulation practices. World-class experts also assisted the team. Workplace relations were drawn from the German experience.

Mr Mogale asked about the role of workplace forums, specifically in relation to job creation. He asked whether the employers would still consult with workplace forums in the event that the employers only employed casual workers who were not part of the grading system.

Mr Mogale also mentioned the compensation for loss attributable to a strike or lockout. He asked what would happen if the trade union had no money to pay whatever amount might be awarded.

Mr Mkalipi said that this was an old issue, and that a decision to sue must take into account the risk that the organisation being sued might not have money to compensate,or even go into liquidation. There was no reason why one could not receive stipulated compensation over a period of time; the effect would still be felt by the union. There were options available to ensure that the trade unions were made accountable for their actions.

Ms A Dreyer (DA) asked what remedy would the DOL recommend to as a member of public who had their car destroyed during a strike.

Mr Kettledas replied that Court action could be taken against the union.

Ms M Twala (ANC) required clarity on the issue of workplace forums. She asked if the work place forums and shop stewards could perform their duties in the same company, or who would take precedence.

Ms Twala further asked about the bargaining council, asking for further clarity on representation in the sector.

Mr Kettledas replied that the degree of union representation in a bargaining council would depend on how representative was the union in the area where establishment of a bargaining council was sought. A bargaining council must be established where both sides of the industry were represented. The unions had to represent more than 50% of the workers.

Ms Rajbally asked why were employees of the National Defence Force, National Intelligence Agency and the South African Secret Service not under the LRA.

Ms Twala asked about essential workers and how they would be affected by not having the right to strike.

Mr Kettledas responded the essential workers had a compulsory arbitration process in order to resolve their disputes, which in essence replaced the right to strike.

Mr T Anthony (ANC) commented that he had a problem with the implementation of the LRA and other labour legislation, as it had been reported that 75% of workers did not enjoy the benefits of the law. He noted that many employers would never tell the employees what the law actually meant. There was no provision for accreditation of courses for shop stewards, many of whom were not sufficiently schooled to seek university enrolment. This should be seen against the qualifications held by most managers.

Mr Mkalipi replied that there were avenues open for funding of training, as well as training being offered. Whether it was sufficient was a different question. The unions should also be putting their money into training. Trade unions should be part of the Sector Education Training Authority, because they were also part of the service industry.

Mr Anthony commented on job grading in the work place. Some employers had grading systems that were heavily in favour of those with formal qualifications. Such systems did not sufficiently remunerate those who had gained experience or who could do the job as efficiently as those with qualifications. He suggested that the Department of Labour look into the matter as job grading systems were not progressive.

Mr Anthony also remarked that occupational health could be considered as a grey area because the shop stewards were not knowledgeable enough to represent the employees properly, putting employees at a disadvantage.

Mr Kettledas replied that the law stated that there should be shop stewards specifically for health and safety. Health and safety inspectors had the power to stop work in the work place if it was deemed to dangerous.

Mr Maduma (ANC) said that challenges from the pre-apartheid era were still being carried over, and cited an example in illustration of his point.

Mr Maduma then raised a question on disciplinary issues and who should take on the role of building the capacity, as trade unions often themselves did not have the necessary knowledge to deal with matters, let alone those non -union workers, who relied on the Department.

Mr Kettledas said that there was an overall necessity for education and training for workers and employers on a continuous basis. The LRA did not deal with this issue specifically, but focused on managing labour relations.

Mr Maduma mentioned that when relocating, companies were often unfair to their employees, sometimes making unacceptable offers that employees could not accept, making it easier for these companies to get rid of the workers.

Mr Maduma made the observation that the plight of workers, who were forced to take action because of non-compliance with the LRA, affected and created tension between the workers and the public.

Mr Mkalipi said that there was a challenge for trade unions to understand that their strikes were also about garnering public support. As soon as public support shifted against the union, they would lose the battle. When there was violence, it was destructive, and this was simply not in the interest of the trade union that this be allowed to happen.

Mr Maduma asked if re-training was ever offered by employers, and, if so, where the funding emanated.

Mr Kettledas responded that DOL had mechanisms, in the case of large scale retrenchment, to send in retrenchment response teams, which could provide assistance and support. This included identifying retraining opportunities. There was a process in the Education and Labour Council NEDLAC to review the social plan.

The Chairperson reiterated that this was an important piece of legislation that should be understood by employers and employees.  She also mentioned the importance of accreditation and qualification.

Employment Equity Act briefing by Department of Labour
Mr Kettledas said that the presentation would assist Members in better understanding the scope and processes of the Employment Equity (EE) legislation. The purpose of the Act was to promote equal opportunity and fair treatment in employment through the elimination of unfair discrimination. The implementation of affirmative action measures was intended to redress the disadvantages in employment experienced by designated groups in the past, and to ensure their equitable representation in the workplace. It must be read with the Constitution, the EE regulations and the Codes of Good Practice. The ambit of each was set out in the presentation (see attached document).

Mr Kettledas said that the EE Act worked positively for the designated groups, who had been marginalised in the past, and who included Africans, Coloured and Indians, women and people with disabilities. The Act applied to individuals who were citizens of RSA by birth or descent or citizens by naturalisation prior to commencement of the Constitution.

He pointed out that employers had to take proactive steps to eliminate and prohibit unfair discrimination. He explained the difference between fair and unfair discrimination, and noted that discrimination could also be direct or indirect. Designated employers were those who either had more than 50 employees, or had a certain turnover specified in Schedule 4 of the Act. They had to assign senior managers to take responsibility for employment equity. They must also consult with employees and prepare and implement an EE plan and submit it to the DOL.

Mr Kettledas tabled the requirements of an EE Plan, and set out how and when it must be submitted.

He reported that there had been a Commission for Employment Equity (CEE) established, and he set out and explained the monitoring, enforcement and legal proceedings.

Mr Kettledas said that the procedures created challenges in enforcement. If an employer had not complied with the requirements of the Act, a Labour inspector first had to secure a written undertaking, followed by a Compliance Order, before referring this to the Labour Court. Even if there had been non compliance over a number of years, the Director General, during the review process, had first to make recommendations, before being able to refer to the Labour Court. Employers were in general not taking advantage of the Skills Development possibilities to reach out proactively to develop employees from the designated groups.

Discussion
The Chairperson asked for a definition of small businesses, who did not comply with these principles. She wondered if inspectors from DOL were doing enough. She criticised the influx of and take over of retail sectors by foreigners, who in turn were often exploiting local youth.

Mr Mkalipi conceded that DOL was struggling with the EE Act, which was difficult and controversial law, and noted that the Department had only scratched the surface of its implementation, as it did not have the necessary resources.
 
Ms Dreyer asked how the legislation defined affirmative action and equity, as she understood equity to mean fairness.

Mr Mkalipi responded that the EE Act required employers to take measures on affirmative action, as set out in the Act. If the requirements of the Act were followed, there should not be unfairness. Fair discrimination was allowed by the Constitution, but it was set out that when the affirmative action processes were implemented, there was a need to consult all relevant parties to address imbalances and prevent unfairness.

Ms Dreyer asked what criteria were used to decide whether an EE Plan was acceptable.

Mr Mkalipi replied there was no requirement by law that the plan must be submitted to the DOL for review automatically. When the Director General conducted a review, he would assess the plan.

Ms Dreyer noted that certain forms had to be completed fully. However, racial classification remained a contentious issue, with people stating that they did not know how to or did not want to classify themselves.

Mr Mkalipi responded that the DOL had not experienced a problem with the race classification part not being filled in, but rather a problem with the wage declaration parts not completed.

Ms Dreyer asked what race classification did the Department use.

Ms Rajbally made the point that she would have regarded all the designated groups as "African".

Mr Mkalipi responded that the DOL would look at the report provided by the employer, and that if there was any problem with that race classification, the employer would fill in a declaration form.

Ms Rajbally asked for clarification on the statement that the DOL had no jurisdiction if there was unfair discrimination.

Mr Mkalipi replied that the DOL could only try to bring the two parties together. If an allegation was made about a company, the inspectors were limited to taking an undertaking from the employer, but could not issue a compliance order nor force compliance.

Ms Rajbally felt that the worker representatives should be specifically educated on the EE Act, and check if employers were implementing the legislation, otherwise the workers would clearly not benefit.

Mr Mkalipi responded that the DOL acknowledged that there were challenges in training, and that both organised and non-organised labour did not know of or understand the law. There were very few cases on Employment Equity, affirmative action or discrimination reaching the court. The main challenges arose from those claiming that the legislation was unfairly discriminatory to the non-designated groups. As yet there was no certainty why so few cases were being heard. It was possible that it was not easy for those discriminated against to approach the Court, and if this was so, then DOL would have to look at the possibility of giving the CCMA authority to deal with the matters. He agreed that it was necessary to ensure that trade unions, at the least, understood the law.

Mr Kettledas added that government, employers and trade union representatives had been involved in drawing up the legislation, and everyone had an equal and collective responsibility to ensure that the law was implemented. After DOL conducted road shows it had seen an increase in reporting, but there must also be an increase in implementation.

The Chairperson asked that the DOL must act on their training initiatives.

Mr Maduna noted that a company might have employed a senior manager but there was no capacity building. he asked if there was a concerted effort in implementing the capacity building provisions from employers’ organisations.

Mr Mkalipi said that sometimes assigned managers might earn large salaries yet lack the authority to make decisions on behalf of the company. If there was an issue of capacity the DOL was available to interact with them.

Mr Maduma asked to what extent the DOL was able to deploy people to visit companies and ensure there was no discrimination.

Mr Mogale asked if the DOL, over the past eight years, had evaluated the objectives of the Act and its impact. He commented that many jobs advertised in the media did not mention the Act. He was not seeing that affirmative action was fully implemented.

Mr Mkalipi said that DOL had started a process to evaluate the impact. The Department was aware without conducting research that there had been insufficient movement on affirmative action. The DOL was partly to blame for that, and believed that there should be amendments to the Act to make it easier and quicker to implement. There should be stronger consequences for non compliance, and a shorter time to measure that compliance. The major problem was that the Director General had no real enforcement powers.

Mr Mogale noted that many companies, and even state departments, were using consultants to handle the EE provisions, and he did not consider this desirable.

The Chairperson asked whether the state public service entities were expected to submit their EE reports.

Mr Mkalipi noted that the law applied to all public entities and departments.

Mr Anthony asked in principle what was the purpose of the employment equity and affirmative action.

Mr Kettledas responded by reading from slide 4 that it was “To achieve equity in the workplace by- Promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination; and implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups, to ensure their equitable representation in the workplace.” This meant that measures had to be taken  to accommodate those who were historically being discriminated against.

Mr Mzondeki asked if affirmative action would still be applied to a company that had already met the EE requirements.

Mr Mkalipi replied that a company that had met the requirements of the Act would only be reporting on the status of the company.

Mr Mzondeki asked if there was anything discriminatory in affirmative action.

Ms Dreyer believed that this law was unenforceable law because it was dishonest. The government was scared to go through the process of racial reclassification, but without it it was impossible to enforce the law. She felt that the government was trying to manipulate the outcome, when they should be addressing issues of employment, lack of proper education and poverty. Their priority should be to uplift people, rather than enforce racial quotas.

Mr Mogale responded that it was a political statement from the Democratic Alliance. The issue of inequality was long-standing, and had even been actively legislated for. This law was trying to redress past inequities. The Black Economic Empowerment (BEE) Act had not covered a number of issues. The working group on the BEE had found that there was 72% non-compliance. He felt that there must be further research into non-compliance,and that active steps should be taken to force compliance. The ANC had been voted into power by 70% of the population because of their manifesto, and he would not allow those voters to be disappointed by the manifesto not being carried out. 22 000 learnership posts had been previously reserved for certain groups, and this too should not go unchallenged. This was progressive legislation and he objected to it being labelled as a racial law.

Mr Mzondeki replied the Act was very simple to understand, against the background of the number of companies that had a majority of white male leadership. It was not correct that the Act was trying to bring back racial discrimination.

Ms Rajbally asked who was monitoring the implementation, noting that a number of large companies did not appear to have effected any transformation.

Mr Maduma said that the Department needed to do something to ensure that the transformation was effective. The Department should also be addressing the issue where companies, particularly in the Western Cape, would inform their coloured staff that they must give up their jobs to new African employees.

Mr Kettledas replied that DOL had mechanisms to enforce the law, and were already working with their social partners because they also had a role to play. DOL would also conduct annual road shows to explain the law and ensure that employers and employees understood what to do.

The Chairperson commented that this workshop had been helpful in preparing for the forthcoming public hearings on workplace discrimination. She concurred that this was a difficult and controversial, yet useful law.

The meeting was adjourned.