Aurora Grootvlei Mine issues: Department of Labour report

NCOP Public Enterprises and Communication

24 August 2010
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Department of Labour briefed the Committee on the background to and progress of the case arising out of non-payment of wages and salaries at the Aurora Grootvlei Mine in Springs. Pamodzi Groootvlei Mine, the former operators, had gone into liquidation and handed over to Aurora Gold East Rand. A number of the workers were retrenched at this point, but those who were not continued to work for Aurora. From December 2009 there had been problems with payment of the whole or a portion of bonuses, wages and salaries. A Memorandum of Understanding was signed, in terms of which Aurora management agreed to pay by certain dates, but it failed to adhere to this. The Department of Labour had formerly issued a Compliance Notice, which was also ignored. The Department then launched a Labour Court case on behalf of the employees, claiming the wages and salaries outstanding. Aurora indicated that it would oppose the matter, yet in July 2010 requested a meeting, with the Department and unions, which it then failed to attend. The Department had then started to obtain affidavits from every traceable worker, to validate the claims in respect of outstanding wages. Some workers remained untraceable despite efforts by the Department, via the employer, the trade unions and word of mouth, as some were migrant workers, but so far it had obtained about half of the necessary affidavits and was continuing with this task.

Another briefing by the Regional Executive for Gauteng noted that during the taking of the affidavits, the appalling living conditions at the mine had become apparent, which included lack of sanitation, lack of water, no cooking facilities, and health risks. In addition, Aurora management, despite deducting Unemployment Fund contributions, had failed to pay these over, and was also in breach of South African Revenue Services and Occupational Health and Safety requirements. The Department was assisting with prosecution on these issues.

Members were unhappy that the current reports by the Department did not seem to reflect the current situation and asked that an updated written report must be presented. They questioned why the Department appeared to have dragged its feet, why it was concentrating now on UIF issues, why it was apparently having so much difficulty in tracing people, and why the Department had agreed to a meeting with Aurora despite the Court process. Members also questioned the number of employees, how many were affected by retrenchment, what the position of the liquidators was, and whether there had been compliance with the Labour Relations Act on liquidation of the former employer, so that the correct employer was cited. Members noted that this was probably not an isolated incident and that other mines were probably also not compliant. They asked what findings the Minister had reached, why the decision was taken to exclude some employees, and how many would be affected, and questioned why the Department of Mineral Resources was not present at the meeting to address issues around the conditions at the mine. An updated document must be presented to the Committee within a week.

Meeting report

Aurora Grootvlei Mine issues: Department of Labour (DoL) briefing
The Chairperson reminded the delegation that recently the Committee had learned that the mine management at Aurora Grootvlei Mine in Springs (the mine) was alleged to have been neglected to pay salaries or wages to its labourers, and the matter was then taken to the Labour Court. The Department of Labour (DoL or the Department) would now brief the Committee on developments.

Mr Sam Morotoba, Acting Director General, Department of Labour, reported that his team had been working on putting together this presentation, including inviting the trade unions, with whom the Department had been working, also to comment. The DoL had been working with the National Union of Mineworkers of South Africa (NUMSA), the Solidarity Labour Centre and Mr K Fick, a Chief Director in the Department responsible for Aurora mine, who had been working very closely with the inspectors.

Ms Siyanda Zondeki, Deputy Director General, Department of Labour, started by giving some background to the problem of unpaid wages and salaries at the mine. The mine was previously operated by Pamodzi Grootvlei Mine, who went into liquidation. An arrangement with the liquidators resulted in Aurora Gold taking over the operations of Pamodzi.

The Minister visited the Pamodzi Grootvlei Mine in August 2008 because serious problems relating to the employment of illegal immigrants that were raised by the community, as well as issues raised by NUMSA around non-compliance with the Basic Conditions of Employment Act (BCEA), Unemployment Insurance Act (UIA), and Occupational Health and Safety regulations (OHS).

In February 2010 various newspaper articles reported on the non-payment of wages and salaries at the Aurora Mine in Springs, Gauteng, which the Gauteng Province noted and acted upon. The Springs Labour Centre immediately made contact with the NUM Regional Chairperson Mr Frazey Namanyane to discuss the matter and determine what the true position was. The Department of Labour also met with Mr Gideon du Plessis, General Secretary of the Solidarity Union.

Together with NUM and Solidarity, the Labour Department determined that a whole range of wages and salaries were outstanding as 23 March 2010. These included 40% unpaid wages and salaries for December 2009, 75% production bonuses for February 2010, and, although wages for February were paid in full for 2 191 employees, there was 100% of wages for March 2010 (for 2 191 employees) outstanding for March 2010. 100% of salaries for 354 employees were outstanding for both February and March 2010.

Ms Zondeki said that when no firm agreement on the payment of wages and salaries could be reached with Aurora Mine management, the inspectors issued a compliance order to Mr Louis Bezuidenhout, the General Manager of Aurora Gold East Mine, on 31 March 2010. She said that when such a compliance order was issued, it gave the mine management a certain number of days within which to comply. On 8 April 2010, a meeting was held between NUMSA and the Aurora Management, resulting in a Memorandum Of Understanding (MOU) being signed for the payment of outstanding wages and salaries.

The MOU specified that all arrear salaries for February 2010 that were due to the employees of Aurora Gold East Rand would be paid by 9 April 2010. All arrear March salaries and wages must be paid by 29 April 2010. Industrial action by NUMSA members would be halted when the MOU was signed, and NUMSA and Aurora would then discuss the resumption of operations at the Marievale shaft on the East Rand.

On 19 of April, DoL had met with NUMSA and established that Aurora management had not met the commitment under the MOU. Certain payments were paid, but some were still outstanding.

In respect of the February salaries, some employees were paid 20% and others only 5% of these salaries, as opposed to the full amount. The outstanding salaries amounted to R4 963 094.

Nothing had been paid to March salaries, and R6 209 700 was outstanding. Nothing had been paid towards March Wages, of which R4 819 657 was outstanding.

40% of the December bonuses were still outstanding, and the amount for this was still being determined.

Ms Zondeki said that, as a result of Aurora neglecting to adhere to the MOU, the Department took a decision to refer the case to the Court. On 12 May 2010 a Notice of Motion was served on Kaunda Global Resources, trading as Aurora Gold East Rand. In this, the DoL was claiming R16 311 360 plus interest, on behalf of the workers.

Aurora Gold responded that they intended to oppose the matter. The Department’s Legal Advisor had been dealing with the Labour Court Case, and had arranged a meeting with management of Aurora and its legal representatives on 21 July, to discuss the outstanding payments and to determine the intentions and plans by Aurora to pay these outstanding salaries and wages. However, neither Aurora Gold nor its legal representatives turned up for the meeting and tendered no apologies. NUMSA and Solidarity continued with the meeting, in which it was determined that payments were made to some workers, but that details as to who these workers were and how much was paid could not be established. The meeting therefore agreed that the DoL should continue with the Labour Court case, although it must now review the original amounts and make the necessary corrections. In order to determine the amounts now outstanding, and to strengthen the DoL’s case, all workers would be asked to complete affidavits and lodge a formal complaint for unpaid wages and salaries. This would obviate any problems should Aurora’s lawyers request the DoL to quantify exactly how it had arrived at the figures.

Ms Zondeki said that it was also agreed at this meeting that all workers who were earning above the threshold would be excluded from the claim. NUMSA and Solidarity, as well as the representatives of the non-aligned workers, agreed to obtain and submit the necessary information to the DoL. The Department had made its inspectors available to assist workers with the preparation and calculation of the outstanding amounts. Unfortunately, many of the workers had since left the mine and could not be traced. The Department was processing and checking the documents received and hoped that more would be received.

Ms Zondeki said that the Department had also determined that Aurora had not been registered with the Unemployment Insurance Fund (UIF) but the DOL managed to get it registered on 9 April 2010. All information had been forwarded to the UIF to assist it in recovering arrear contributions and penalties from Aurora. However, at this stage none of the workers were eligible for UIF benefits, as they had not been formally retrenched, and the mine management had not provided any clarity regarding termination of services.

Ms Zondeki then tabled another slide which showed the monies now outstanding, as at 18 August 2010. As well as amounts mentioned before, there were also unpaid salaries and wages for May, June and July (see attached presentation for details). DoL had sent a team of inspectors and other officials to take individual complaints and calculate amounts outstanding, including other benefits like leave pay. UIF officials would check whether each worker was now declared on the system and obtain relevant information for UIF applications. All documentation would be checked for correctness and accuracy. Following this, another compliance order would be issued.

Ms Zondeki noted that a meeting had been scheduled between the Department and the liquidators in order to establish liability and to ensure correct references in the court documents. She assured the Committee Members that even though the Department had been criticised of dragging its feet, it would continue to pursue this case vigorously in order to alleviate the suffering of these vulnerable workers.

Mr M Sibande (ANC, Mpumalanga) queried the total number of the laborers affected by this situation. He had heard that the mine employed more than 3500 people. He also questioned why the payment of salaries and wages was staggered, with some receiving the full amount and others receiving only a percentage of wages or salaries.

Mr Sibande queried the ownership and management of the mine, and wondered whether the mine transfer had complied with Section 197A of the Labour Relations Act No 66 of 1995, as proper monitoring would have to take place.

Mr D Feldman (ANC, Gauteng ) questioned whether the employees signed the contract with Pamodzi or with Aurora, and whether Aurora had automatically taken on responsibility for all the workers. Mr Feldman said that he did not remember the money issue as being the only issue under scrutiny in this case, but also requested clarity on the major issue of safety.

Mr M Jacobs (ANC, Free State) stated that the argument that the Department had been dragging its feet was to some extent valid. This situation started in 2009, and it still had not gone to Court. He did not understand why the Department decided to call for talks with Aurora management, after it was told by Aurora’s legal advisors that Aurora would oppose legal action if it were to be sued. This had delayed the situation.

Mr Jacobs also questioned what penalties would apply to companies who had not registered for UIF.

Mr Z De Beer (COPE, Western Cape) said the problem of companies deducting monies for pension and or UIF from employees, but not paying those contributions over, was not unique to Aurora, and in fact it was happening in many sectors. He said there was a flaw in the system and a way to identify non-compliance and foul play must be found. Mr De Beer queried whether there was a mechanism to prevent owners of a liquidated company from starting another company, as this would prevent the same people from repeating the same offences under different company names.

Mr Z Mlenzana (COPE) asked what the Minister had found on the oversight visit, as no reports had been tabled on the findings, nor on the action that it was suggested should be taken. He also asked whether the Committee Members could not take the issue any further by discussions in the constituencies.

Mr Sibande questioned why the Department was apparently so eager to assist Aurora in registering for UIF, whilst it had not shown any such eagerness to help the needy labourers.

The Chairperson said she did not understand how it was justifiable to fail to pay people salaries or wages because they were unable to be traced. She asked whether it was beyond the ability of the DoL to trace these individuals.

The Chairperson also commented that it was unacceptable that the Department should present a document that was not paginated.

Ms Zondeki apologised for the lack of numbering.

Mr Feldman was not happy with this issue. It seemed that there was some political fuel behind it.

The Chairperson referred to the statement that all workers earning above the threshold would be excluded from the claim. She queried how many employees would be excluded and why this advice was given.

The Chairperson also asked that NUMSA advise the Committee what it had done on the issue.

Mr N Nodani, representative for NUMSA, wanted to give the Committee some background to the issue before responding directly as to what NUMSA had done about the monies owed. He said that the state of the hostel in Grootvlei was very poor, with no water for cooking or for sanitary purposes, which meant that people would relieve themselves in the veldt, leading to contamination and illnesses throughout the hostel. A major problem was access to food, which had led to criminal activity including illegal mining. Mr Nodani said that children no longer attended school, due to lack of funds. NUMSA had approached companies and organisations to assist with food donations, which had helped, but had not entirely relieved the problem. In addition, NUMSA had spoken to the Springs Municipality, which had placed pipes two kilometres from the mine, to provide access to water. Because the mine grounds were private property, the municipality was unable to provide water in there. Only people in the slum areas thus had direct access to water.

Mr Nodani added that the mine was flooding and although NUMSA was trying to engage Aurora management, it would invariably promise to meet, or to pay the employees, then fail to attend the meetings and would not pay outstanding salaries, without informing NUMSA. Mr Nodani said Aurora seemed “untouchable” by any form of authority..

Mr Morotoba said the situation was very complex and the more the Department worked on the matter the more it realised it could not do this alone. This was the reason for the DoL approaching NUMSA and Solidarity. The Department would also require the assistance of the Courts, the liquidators, employers’ and police. The Committee could also assist.  The Chairperson of this Committee could summon the liquidators to appear before the Committee. The DoL was unable to extract information from them as to the exact  ownership of the mine and who was in charge of what, which would have helped the Department to clarify the legal position.

Ms Zondeki agreed that it was not acceptable to say that a person was “untraceable” but this situation had arisen because the employer claimed to be unable, or was unwilling, to provide the Department with employee details. For this reason the trade unions had been asked to assist. Most employees were traced, but there remained a small number who could not be traced, even with the interventions by both the Department and trade union.

Mr Jacobs said that Ms Zondeki’s responses indicated that this presentation was not up to date. He requested that an updated document be presented. The Committee had already heard much of what she had said today.

Ms Zondeki asked Mr Kenny Fick, Executive Manager, Gauteng Provincial DoL, to give an update.

Ms L Mabija (ANC, Limpopo) said that she was frustrated by this suggestion. It made no sense to present a written presentation and then update it verbally. The Members were wanting an extensively updated document, accompanied by a brief presentation giving a synopsis of the written document, not the other way around. Ms Mabija queried why important information had not been added into the document already. She did not feel that the preparation or presentation were of good enough quality.

Mr De Beer said that the liquidators had appointed Aurora to manage the operations at Grootvlei Mines on behalf of the Department of Minerals and Resources, and that officials from that Department should have been present at the Committee meeting.

The Chairperson said that it is was clear that the presenters was not adequately prepared to answer the questions, and requested that the Department must provide the Committee with an updated document before the end of the week. Mr Fick’s written report should have been added to the Director-General’s report. She asked Mr Fick to answer the Committee’s questions.

Mr Kenny Fick confirmed that the number of people employed at the mine was over 3 000,but the number that his team had managed to confirm was 2 545 workers. His team had only managed to take individual written statements from 1 100 workers out of the 2545. The team would remain at the mine until they had managed to take every single statement.

Mr Fick said perhaps the information about tracing the workers had not been properly articulated in the presentation. At the beginning of the whole process, many of the former workers returned to their homes in Mozambique or Lesotho, and were originally recorded as “untraceable”, although, with assistance from trade unions and by word of mouth some had now been reached. The unions gave the DoL monthly updates on the payroll of the mine, so that information was reaching the DoL despite the fact that Aurora management was not assisting. The province had dedicated a team to getting information from the miners and had also dedicated a team to work with the DoL’s legal division, to ensure that all calculations and documents were correct and that these issues were not used to delay the case any further.

Mr Fick agreed that the Department of Mineral Resources (DMR) should have been present at this meeting. The DoL could not get involved in mining issues around flooding, for instance, as it had no jurisdiction. He agreed that there were appalling living conditions at the mine, confirmed by personal visits. The DoL could only try to support the unions and representatives of the workers in alleviating the suffering of the miners. At Provincial level, the focus was on sorting out the wages and salaries issues, and ensuring compliance with the labour legislation. Social issues that became apparent along the way could not be ignored, but he reiterated that at the moment the main focus lay in getting as much information as possible on the wages and salaries issue, in order to assist with taking swift legal action.

Mr Fick pointed out that the DoL had ensured that Aurora was registered for UIF to assist the workers, since the DoL was assisting both UIF and South African Revenue Services to prosecute Aurora for non-compliance with UIF, and to obtain the outstanding contributions, so that, should the workers need to claim UIF, at least they would be on the database. Aurora would be dealt with separately. The aim was to ensure that the workers would not be compromised.

Mr Fick acknowledged the criticism that this process had been slow, but said that the DoL had initially trusted and hoped that Aurora would have complied with the MOU and conditions and cooperate in sorting out the situation. However, it was now clear that the trust had been broken by Aurora. The DoL was proceeding with litigation, irrespective of what Aurora may now say.

Adv Z Bastile, Legal Advisor, Department of Labour, said that the case was already proceeding through the Labour Court. The employer was confirmed as Aurora Gold Mines. The attorneys for Aurora were the ones who had requested to meet the DoL on 21 July, but did not honour the meeting. There was confirmation of an employer and employee relationship, and the issue of Judicial Management in terms of Section 197 of the Labour Relations Act had been explored. He noted that it was not possible simply to refer the case to the Labour Court, but there was a legislative process to be followed. The DoL had done all it could do so far and would continue to try to resolve the matter as swiftly as possible.

Ms S Ceasar, Regional Manager: Springs Mines, Department of Labour, said that tracing this employer was close to being impossible. Her team had a letterhead with phone numbers, but all of them proved to be incorrect. She was in constant communication with the unions. There seemed to be reluctance to tell her exactly who the employer was, and how it could be contacted. However, she had managed to find out that the employer would be speaking at a meeting, had attended the meeting herself and had by this means managed to contact the employer. She noted that when Pamodzi went into liquidation, not all staff were taken over by Aurora. Those who were retrenched were paid out, since Pamodzi had registered for UIF and was fully paid up. If any individuals were retrenched at the time of takeover and were not paid out, then they must take this up with the liquidator, who was now the employer, rather than Aurora.

Mr Morotoba said that he acknowledged the comments that the Department’s document must be updated. This matter changed from day to day, and the Court documents reflected a claim as at a certain date. However, the reports that would be updated would state the position more clearly.

Mr Morotoba also wanted to comment on the UIF issues. The failure by Aurora to pay over UIF deductions was only one of a long series of tax and fraud offences. That was why the DoL had sought the help of SARS and the Companies and Intellectual Property Registration Office in bringing Aurora to book. There was a need to reach some way of ensuring security for workers’ insurance. He said that the DoL had tried to meet with the liquidators, but was unable to.

Mr H Groenewald, (DA, North West) said that this particular case was not unique, and the Committee should be aware that similar problems were ongoing in other mines.

The Chairperson noted that the Committee must formulate a plan to assist. The DoL must provide the Committee with a tangible, updated and extensive report on the matter. The DoL must also do something, urgently, to address the water supply for those living at the Mine, and she also requested a status report on this at the next meeting. She requested Mr Morotoba to work also on the question of security of workers’ insurance. Each Member had a duty to try to improve the lives of the less fortunate in this country.

The meeting was adjourned.


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