Meeting with Department of Labour on amendments to the Employment Equity Act

NCOP Public Enterprises and Communication

01 March 2011
Chairperson: Mr R Tau (ANC, Northern Cape) (Acting)
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Meeting Summary

The Department of Labour presented the Committee with proposed amendments to the Employment Equity Act giving explanations that justified the changes. The Chairperson encouraged Members not to engage the Department on the proposed amendments as the intention of the presentation was to inform Members on the overall thrust of the Bill and to get them on board.  The Committee was not formally considering the proposed amendments. It would only do so once the Bill was formally submitted to parliament for consideration.  The amendments affecting section 42 of the Employment Equity Act concerning demographic profiles was explained and clarified by the Department. The provision in the Act currently was that the Director-General in considering whether an employer was implementing employment equity had to take into consideration the demographic profile of the ‘national’ and ‘regionally’ active population. The proposed amendment deleted the reference to both national and regional demographic profiles and the Director General had to only consider the demographic profile of the ‘economically active’ population. Recent statements made by the trade union Solidarity that the proposed amendment to the section was giving preference to national demographic profiles over that of regional demographic profiles was widely reported on by the media and had caused a stir. The Committee expressed its disappointment with the irresponsible reporting by the media over the issue given that the statements by Solidarity were incorrect.

Meeting report

In the absence of the Chairperson Ms M Themba, Mr R Tau was elected as acting Chairperson. He stated that there was a need to lay the basis to understand where the processes regarding the amendments were. The Committee was not formally considering the amendments. The amendments had to still go through the National Economic and Development Labour Council (NEDLAC) processes. Stakeholders’ inputs had to be considered given the nature of the legislation at hand. The meeting was scheduled to be an information gathering session for the Committee. The Department would speak on the broad areas that the proposed amendments would affect. After NEDLAC processes had been concluded and major amendments incorporated, the proposed legislation would be referred to Cabinet. Thereafter it would be formally placed before Parliament for consideration.

Mr Z Mlenzana (COPE, Eastern Cape) asked if the Department was ready to present, if they were not they did not have to. He further asked if Members inputs had been addressed in the presentation document.

The Chairperson suggested that Members not engage with the Department on the proposed amendments. Once the proposed amendments were officially introduced to Parliament, Members could engage and check on whether the issues raised by Members were reflected. The Committee needed to be informed on the overall thrust of the Bill and to be brought on board.

Department of Labour: Amendments to the Employment Equity Act
The Department was represented by Mr Thembinkosa Mkalipi Chief Director and Ms Ntsoaki Mamashela Director. Mr Mkalipi proceeded with a presentation explaining the proposed amendments.

Objectives of the EEA Amendments
•To ensure compliance on SA’s obligations in terms of international labour standards in terms of Conventions 100 and 111.
•To give effect to fundamental Constitutional rights, for example the right to equality, fair labour practices and protection against unfair discrimination; and
•To strengthen the implementation and enforcement mechanisms of the Act, for example increased fines for non-compliance

Employment Equity Amendments:
Equal pay for work of equal value (Principle ratified by Convention100)
At present the law did not speak to this principle. A new clause was proposed to deal with unfair discrimination by employers in respect of terms and conditions of employment of employees performing the same work, similar work or work of equal value; and

Differences in pay and conditions of work between employees performing the same or substantially the same work or work of equal value would amount to unfair discrimination unless the employer could show that differences were fair in relation to experience, skill, responsibility and qualifications.

Disputes concerning discrimination
An amendment was proposed to provide for lower paid employees to refer a dispute concerning discrimination (including equal pay claims) to the CCMA for arbitration. At present arbitration was only done in the Labour Court after conciliation had taken place at the CCMA. Another problem was that employers were approaching the CCMA concerning difficulties with employment equity issues. At present discrimination was only based on differences in race or gender, it did not cover discrimination of persons of the same race or gender. The proposed amendment would fill that gap.

Reporting
It was proposed that all designated employers be required to report on progress in implementing their Employment Equity Plan on an annual basis. Reports would be due on 1 October each year and could be submitted online. At present there were different forms that had to be submitted by small and large firms with also different due dates for submission for each. The idea was to have a uniform, simple, uncomplicated form that needed to be submitted by a due date by all employers. 

Enforcement of fines
Amendments to a number of sections were proposed with the aim to promote more effective compliance and enforcement. For example the issuing of a compliance order by an inspector may be done if a number of requirements had not been met by an employer.
The assessment of compliance by the Department was also made less onerous, and where relevant assessment of equitable representation would be in relation to occupational levels and not categories.

Section 42(a)(i) of the EEA
In determining whether a designated employer is implementing employment equity in compliance with this Act, the Director General or any person or body applying this Act must, in addition to the factors stated in section 15, take into account all of the following:

Current provision:
“demographic profile of the national and regionally active population;”

Proposed change:
“demographic profile of the economically active population;”

Mr Mkalipi stated that the provision had elicited much discussion in the labour market. He hoped that the explanation given would close the debate for once and for all. As the current provision stood the Director General had to decide on which demographic profile to follow. It was either the national or the regional. For example in the Western Cape, for coloureds the regional demographic profile was 51.8% and the national was 11.3%. Which one must the Director General consider? Employers themselves were confused as to which demographic profile they should consider. As a result the Department proposed the deletion of the terms “national” and “regional” from the provision. Hence the proposed change reflected above. Nowhere in the proposed change was it suggesting that national demographics would remain and regional demographics would be removed. Both terms were deleted. He stated that the aversions made by the trade union Solidarity were incorrect that national demographic profiles would be taken into consideration over and above regional demographic profiles. The proposed change provided flexibility to employers. Employers could choose which demographic to use as long as they could justify its use. He hoped that the matter was cleared up once and for all and that the media would communicate the explanation given to all. The media had reported extensively on the aversions made by Solidarity and it was only the Cape Times that had published a correction stating the true state of affairs.  Nowhere in the provision was national demographic profiles given preference over regional demographic profiles.

The current schedule setting out fines for contraventions was being replaced with a schedule that introduced a percentage of turnover as a basis for determining fines. The current schedule set the maximum limit of fines to be R900 000. For small businesses the fine amounts were too huge but for large businesses affordability was not a problem. To be fair to small businesses the Department decided that fines should rather be based on a percentage of turnover. Fines would be calculated as a percentage of annual turnover, 2% of turnover for first contraventions, escalating to a maximum of 10% of turnover for repeated contraventions. The provision providing for fines to be a percentage of
turnover was already included in the Competition Act. The Department was merely following in the
footsteps of that Act. It was proposed that the failure to submit a statement of income differentials as
required by section 27 also became a contravention that may result in a fine.

Discussion
Mr Sibande felt the presentation to be useful in that it cleared up the issue regarding national and regional demographic profiles. The media articles that had surfaced recently over the issue had for the most part been negative. The proposed amendments were only in its beginning stages and had to still go through the NEDLAC and other processes. He added that South Africa might have different political parties but when put together as a Committee they worked together as a team.

Mr Mlenzana noted that Members had in the past raised concerns about the plight of lowly paid workers. There had been a problem with enforcement which he felt the proposed amendments addressed adequately. The explanation on the issue of demographic profiles was very clear and self explanatory. The application of demographics depended upon the jurisdiction of the company. If it was a regional company it would apply regional demographic profiles. If it was a national company it would apply national demographic profiles. He suggested that the process on the proposed amendments be allowed to unfold. The Committee would formally consider the proposed amendments when the time came.

Mr H Groenewald (DA, North West) felt that the proposed amendment to section 42 covering demographic profiles was fair as stated. He could live with the proposed amendment and was satisfied with the explanation given. The Department was asked in the future to rather explain to the media any amendments that were being proposed by it in order to prevent confusion.

Prince M Zulu (IFP, KZN) thanked the Department for the presentation and the clarification that was given over the issue of demographic profiles.

The Chairperson was disappointed in the manner in which the media had reported on the demographic profile issue without finding out what the true state of affairs was. It was irresponsible reporting. It was unfortunate that newspaper sales were what mattered in a capitalistic environment. The comments by the trade union Solidarity was also irresponsible especially since Solidarity formed part of the constituency of labour in NEDLAC. It was easy for organisations to make statements in the public arena; the problem was that Members had to face questions posed by its constituents. He stated that Parliament would continue to build a non racist non sexist South Africa. Once the Bill had gone through the required processes and reached Parliament, the Committee would engage with it thoroughly.

The Chairperson, speaking on a non related matter, stated that the Auditor General categorised Members of Parliament as employees and as such members had to make payments towards the Unemployment Insurance Fund (UIF). If Members had to make UIF payments, who was considered the employer of members of parliament? He asked the Department to look into the matter.

The meeting was adjourned.



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