Labour Relations & Basic Conditions of Employment Amendment Bills; Domestic Workers Convention (ILO 189): briefing

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Employment and Labour

15 May 2012
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Department of Labour’s Deputy Director General for Labour Policy presented an update on the process of ratifying the Domestic Workers’ Convention of the International Labour Organisation (ILO 189) set against the broader context of the nature of ILO Conventions. He began by describing international labour standards and the reporting obligations that come with them at the ILO. He then differentiated the ILO’s Fundamental, Governance and Technical Conventions. An overview was provided of the Conventions that South Africa had ratified, the status of the Conventions South Africa was in the process of ratifying (including ILO 189), the Conventions South Africa was considering ratifying and Conventions South Africa had not ratified. He emphasised the significant burdens upon nations when they ratify Conventions in reformulating legislation and policy and reporting frequently on implementation.

Members asked about the process to be followed when Conventions become obsolete or the context in which they operate changes dramatically, noting especially Conventions passed before 1994. They also asked questions about the implementation of ILO 189 as domestic workers were often not formally employed and registered.

The Department explained in detail the processes in which a nation or the ILO may review, consolidate or discard Conventions. It noted that while detailed plans were being developed to address the challenges in implementing ILO 189, the briefing was primarily an update on the process of ratifying ILO 189 and implementation plans could be discussed at a later date.

The Department of Labour’s Chief Director for Labour Market Policy gave a briefing on the shortly-to-be-introduced Labour Relations and the Basic Conditions of Employment Amendment Bills approved by Cabinet on 20 March 2012. The Employment Equity Amendment Bill and the Employment Services Bill still await approval by Cabinet.

The amendments to the Labour Relations Act sought to balance labour market flexibility with the need to address abuses by temporary employment services (TES) agencies, or labour brokers as they were colloquially known. The amendments addressed five problems with labour brokers: Workers hired by labour brokers become permanent temporary employees, earn less than their counterparts, cannot enforce CCMA decisions, did not have access to social benefits, and find it difficult to join trade unions. The amendments seek to make TES agencies and their clients jointly liable for labour violations. A labour inspector may enforce compliance by TES agencies or their clients in terms of the Basic Conditions of Employment Act. The amendments also ban work conditions that did not meet the requirements of the Basic Conditions of Employment Act or the Labour Relations Act. Bargaining council agreements must be complied with by TES agencies. Contracts between TES agencies and their clients must enable the application of these obligations. The CCMA would also be empowered to force parties into conciliation. These regulations would only apply to workers earning less than R172 000 per annum.

Members challenged the constitutionality of forcing parties into conciliation at the CCMA. They also queried whether the regulations were an attempt to block the increasing informalisation of the global economy. They sought further research into the impact of these new regulations on the labour market, specifically questioning whether these regulations would increase unemployment. They also sought to ensure that the unemployed would have opportunities to comment on the legislation.

The Department responded by emphasising that it was their interpretation that the requirements were constitutional. They argued that the regulation did not seek to block the informalisation of the economy but merely to provide protections to the economy’s most vulnerable workers as was the norm in countries around the world. They argued that the proposed amendments were drafted in response to the regulatory impact assessment on the bills carried out in 2010 and were therefore grounded in solid research. 

Meeting report

Domestic Workers Convention (ILO 189): briefing by Department of Labour (DOL)
Mr Les Kettledas, DOL Deputy Director General for Labour Policy, Industrial Relations, explained that the presentation had four sections. The first was a brief discussion of international labour standards and reporting obligations. The second addressed ILO’s Fundamental and Governance Conventions. The third focused on Technical Conventions. The fourth examined Conventions being considered for ratification and those not yet ratified.

International labour standards were legal instruments adopted by ILO constituents setting out basic principles and rights at work. They were either binding conventions or recommendations and were drawn up by representatives of governments, employers and workers. When standards were adopted by member states, they must then submit them to the competent authority (normally Parliament) for ratification. Members were then required to report implementation of core and governance conventions every three years and every five years on technical conventions.

Mr Kettledas briefly outlined the process of adoption for an international labour standard (see presentation). There were two reporting requirements for ILO members. Under article 22 of the ILO Constitution, each member must make an annual report to the ILO on measures taken to give effect to Conventions of which it was a party. Under this obligation, South Africa would report this year on three conventions. Under article 19 of the ILO Constitution, members had to also report on how they were addressing the concerns of Conventions which members had adopted but not ratified.

Mr Kettledas outlined the ILO Conventions that South Africa had ratified. South Africa had ratified all eight core Conventions which were considered fundamental principles and rights at work. South Africa had ratified one of the four Governance Conventions. NEDLAC had indicated that social partners had agreed to the ratification of the Labour Inspection Convention. The Labour Inspection (Agriculture) Convention, the Maritime Labour Convention and the Work in Fishing Convention were also being considered by NEDLAC.

On the Domestic Workers Convention (ILO 189), progress was being made in NEDLAC and it would be approved by NEDLAC shortly as both the labour constituency and the business constituency had approved the Convention. Both the Employment Policy Convention and the Social Security (Minimum Standards) Convention were being considered for ratification in the near future. There was a meeting on 16 May with a representative from ILO’s Geneva office to consider South Africa’s standing in considering the Social Security Convention.

Mr Kettledas listed the Conventions that had not been ratified by South Africa and noted the impossibility in ratifying all 189 Conventions. Each Convention brought extensive reporting obligations. He noted the heavy reporting burden that South Africa already shouldered with the Conventions it had already passed and that the reporting burden fell on more departments than Labour. Additionally, all Conventions had to be carefully considered as domestic legislation and policy had to comply with the Convention.

Discussion
The Chairperson noted the difficulty in ratifying ILO 189 as all laws had to be aligned with the Convention’s requirements. He emphasised the difficulty in effectively regulating domestic work.

Mr A van der Westhuizen (DA) asked for a full list of the Conventions ratified by South Africa. In reference to shifts in thinking on labour practices over the years, he noted the Exclusion of Underground Work for Women Convention of 1935 and asked what can be done when a Convention was no longer in accordance with general practices or the Constitution. Could it be revisited?

Mr Nyekemba (ANC) asked why conventions which had already been approved by employers, employees and government at the ILO had to be addressed at NEDLAC when the issues were the same. He also asked for clarification on the discussions around the Social Security Convention (ILO 182) and the relevance of the Unemployment Insurance Fund (UIF) in the debate on the Convention.

Mr Motau (DA) said the presentation felt like it was not seeking approval but rather just updating the Committee and asked if that was the purpose of the meeting.

The Chairperson clarified that the meeting was being held about an update on ILO 189’s status.

Mr Kganare (COPE) asked about the relevance of Conventions adopted between 1930 to 1994 as workers of different races were treated very differently during that time.

A Member asked about the registration of workers for implementing ILO 189. He also asked how the Department would manage enforcement to ensure that employers were forced to abide by the law. He asked for clear plans for publicly enforcing the law against employers.

The Chairperson said that Conventions passed in the 1930s and ratified later were positive for all workers. He noted that Conventions could not be ratified without consequence. States took on obligations when they ratified Conventions.

Mr Kettledas said that the list of ratified Conventions would be made available electronically to the Committee. On Conventions becoming outdated, he noted that Conventions could be revised by the ILO, consolidated or even declared obsolete. On the UIF, there was a meeting the next day to see what the requirements were for passing the Social Security Convention (ILO 182) and to identify the gaps to be addressed before ratification. He noted that at the international level, employers and workers were represented by international groups. When the Conventions were debated for ratification domestically, NEDLAC represented the concerns of South African employers and workers. NEDLAC had to also consider the domestic legislation and policy required to comply with the Convention under consideration.

On the relevance of Conventions ratified before 1994, some Conventions ratified then remained relevant. The Workmen’s Compensation Convention ratified in 1948 had new legislation passed in 1993 to bring South Africa into full compliance. Many of the Conventions provided robust protections to all workers and clearly remained relevant. South Africa had left the ILO in 1966 because of apartheid and was only readmitted in 1994.

On compliance with ILO 182 and UIF, over 500 000 domestic workers were registered for UIF already. UIF even provided for multiple employers to register one employee for UIF.

Mr Mkalipi added that the ILO required reporting on which employer and worker organisations were consulted in the process of ratification of Conventions and in annual reporting on Convention implementation. Also there was a clear process for states to denounce ILO Conventions which removed that state’s obligations.

Mr Nyekemba said he understood why Zimbabwe and Swaziland were questioned by the ILO on whether they were following their obligations. He asked whether South Africa could support the implementation of Conventions in neighbouring states but noted that he did not require a response.

The Chairperson noted that the Department of Labour was supporting Swaziland to develop its capacity to meet its ILO obligations.

A department official noted that the process of denouncing a Convention was not a simple one. The legislation for protecting vulnerable workers sought to create buy-in based on the principle of voluntary compliance. The enforcement of the rights of domestic workers was a long process. The Department was seeking a more streamlined enforcement approach including inspections. The strategic plan included a number of specific activities to entrench the rights of vulnerable workers.

Mr Kganare recognised the high number of registered domestic workers but asked about the high number of domestic workers who were not registered. He noted the difficulties for these workers to access their rights when they were not registered. He asked how the Department could make an example of employers who did not register their domestic workers for UIF, so as to increase the number of registered domestic workers. He said that the proposed inspections did not have specific details on how the visits would be distributed according to industry.

Mr Mkalipi replied that the Department had come prepared to discuss the process of ratifying the Convention rather than specific implementation. He noted that there would be more details as the process continues after ratification. He said that there were many nuances in addressing these challenges and a more reasoned response could be given with preparation.

While there were lingering questions, the Chairperson cited time constraints and asked that further questions be submitted in writing.

Labour Relations Amendment Bill; Basic Conditions of Employment Amendment Bill: briefing
Mr Thembinkosi Mkalipi, DOL Chief Director: Labour Market Policy, explained that the NEDLAC process had commenced in January 2011 and concluded in January 2012. Public comment had been requested in December 2010. The Bills were seeking to address the informalisation of the labour market which was often described as labour broking. They sought to adjust South African labour law to meet international labour standards, the Constitution, to enhance the performance of labour market institutions, and to give clarity on the application of the Labour Relations (LRA) and the Basic Conditions of Employment Act (BCEA).

There were five areas that had to be addressed around labour broking: Workers hired by labour brokers became permanent temporary employees, earned less than their counterparts doing the same or similar work, could not enforce CCMA decisions, did not have access to social benefits, and found it difficult to join trade unions.

The proposed amendments sought to increase protections for workers. The original change would have deleted section 198 of the LRA and redefined the bill’s definition of employers and employees to effectively ban temporary employment services agencies. After the NEDLAC process, the amendments instead increased protection for employees of labour brokers rather than banning labour brokers. He briefly outlined the contention of these amendments. TES agencies and their clients were jointly liable for labour violations. A labour inspector may enforce compliance by TES agencies or their clients in terms of the BCEA. The amendments also banned work conditions that did not meet the requirements of the BCEA or the LRA. Bargaining council agreements must also be complied with by TES agencies. Contracts between TES agencies and their clients must enable the application of these obligations.

Mr Mkalipi clarified that these provisions would only apply to workers earning less than R 172 000 a year under the new section 198(a). Employees of a TES agency must only perform temporary work if they were classified as temporary, after six months they must be treated as an employee of the client. Clients were also not allowed to terminate contracts merely to avoid this obligation. For instance, if an employee was let go after working for six months and immediately replaced by an employee doing the same work, that employee may challenge this as a dismissal at the CCMA. Workers who had worked for more than six months may not be treated less favourably than employees who perform the same or similar work at the client. The amendment defines the workplace as the actual work site regardless of whether a TES agency was paying their salary.

On fixed term contracts for employees earning less than R 172 000 a year, there were now ten justifiable reasons for fixing the terms of a contract to exempt contracts from the following protections. These included seasonal work or projects with definite periods of work beyond six months. If these exemptions were not met, there may not be fixed term contracts that last longer than six months. If employees work for longer than six months, they were deemed to be a full employee and retain full protections guaranteed to employees. Any renewal or extension of a fixed term contract must be in writing and state reasons. This section, section 198(b), did not apply to employers with fewer than 10 employees or employers with fewer than 50 employees in existence for less than two years.

The new section complied with ILO 175 on part-time work. Part-time employees may not be treated less favourably than comparable full-time employees. For instance, hourly rates must be comparable. Part-time workers should also have comparable access to vacancies.

Additionally, temporary employment for those earning less than R172 000 a year would now only include genuine temporary work. Temporary employees must be treated the same as permanent workers unless there were appropriate reasons for differentiated treatment.

On dispute resolution, amendments streamlined the process at the CCMA. The CCMA must support workers to serve notice on their employers if the workers could not afford this. Arbitration awards would become final and binding to speed up enforcement. Reviews must be heard as soon as possible. Applications for reviews did not suspend the operation of awards unless the employer provided security equivalent to 24 months salary. This was because many workers did not have access to legal counsel. The CCMA was also empowered to intervene in disputes to secure resolution in the public interest. This effectively removed the ability of parties to not attend CCMA hearings.

The process of CCMA hearings were streamlined by blocking appeals of procedural decisions to the Labour Court from occurring during cases. These appeals may be submitted after CCMA rulings (section 158).
Representation in the Labour Court would be tightened to prevent the charging of fees by labour consultants unless authorised by the Labour Court. Section 188B limited access to the CCMA for high earning employees without affecting their rights to protection. When high-income earners applied to the CCMA, the CCMA would consider whether they had received adequate notice and if they did they would not be able to challenge their terminations.

Bargaining councils were required to put in place effective procedures for exemptions. Applications for exemptions must be dealt with within 30 days and appeals against these decisions must be dealt with within 30 days. The appeals body must be independent. Before collective agreements were finalised, there must be an opportunity for public comment. In determining whether negotiating parties were sufficiently representative, the Minister may take into account the extent to which employees in the sector were employed in non-standard forms of employment.

Other significant amendments included empowering the Labour Court to order that an administrator be appointed to administer a trade union or employer’s organisations when they were not functioning according to the LRA. The BCEA would be amended to enable adjustments to sectors’ minimum rates or minimum increases in pay beyond the absolute minimum wage for that sector. Sectoral determinations may be promulgated to cover any workers not covered by other sector determinations or agreements entered into by statutory councils. The Minister may also determine levels of representation for those representing vulnerable workers. This would address the challenges stemming from having union representation at sectoral determinations in sectors where organising was difficult.

On strikes and lock-outs, ballots were re-introduced as a requirement for trade unions prior to strikes. Conduct by workers in breach of picketing rules, would not enjoy protection against civil legal proceedings and breaches by employers may lead to the suspension of use of replacement labour. Picketing rules would be binding on third parties as long as those third parties participated in the making of picketing rules. This was to address situations such as malls where landlords of employers were impacted by strikes.

On essential services, powers were extended to the Essential Service Committee (ESC) to determine minimum services during strikes in absence of an essential services agreement. Government would also be represented in the ESC, which was not currently the case. Amendments also expand access to ESCs for three categories of public service workers including custom officials, immigration officials and employees in the judiciary.

On compliance and enforcement, written undertakings became discretionary and inspectors were no longer required to issue them. Written undertakings would also be as enforceable as compliance orders. Compliance orders may specify dates by which employers must make representations to the Department and to the Labour Court. Penalties were increased by 200% as they had never been adjusted. This amount was comparable to where the penalties would be if they had been adjusted for inflation. Sectoral determinations may regulate or prohibit placement by TES agencies.

Some amendments increased flexibility in the labour market. High income earners were excluded from new regulations on temporary employment and fixed-term contracts. There were now clear guidelines for justifiably different treatment of temporary and fixed-term contract workers. Allowances were made for fixed-term contracts as there was flexibility to have fixed-term contracts up to six months. The exemption application process had been streamlined. There were exemptions for small businesses and start-ups.

Discussion
Mr Kganare asked about the constitutionality of compelling parties to attend conciliation. He asked if adjustments in the process of hearing cases of high earners would not reduce their rights unconstitutionally. On the issue of balloting, there was the possibility of intimidation around these ballots. There should be clarity on the role of employers and unions in this process. On essential services, hospitals required cleaning to function. On the appointment of administrators, it was important that the register maintain updated constitutions of unions and that the appointment of administrators abided by those constitutions.

Mr Van der Westhuizen noted the significance of these changes to labour regulations. On the specific numbers cited in the amendments, how much research went into choosing specific amounts? Why R172 000 instead of another amount? Where could that research be accessed? On the informalisation of the labour market, he noted that there had been shifts from how labour markets used to operate. He said that informalisation was an international trend but many of these regulations seemed to seek to attempt to block informalisation. He asked about the need for labour market flexibility as the South African labour market seemed to have low demand for labour relative to supply which might be worsened by these amendments. Where could information on that be accessed?

Mr Motau noted that a regulatory impact assessment had been done on the legislation in 2010 and asked why there was not another assessment done on the current legislation. He emphasised South Africa’s high unemployment rate and asked that these amendments be considered with this backdrop. Anything that ensured that workers were treated more fairly was welcome but the downside should also be considered. He asked for some form of impact assessment on these amendments on the labour market. He felt that there were contradictions in Mr Mkalipi‘s presentation. He noted Mr Mkalipi’s emphasis on strengthening the CCMA’s powers to act in the national interest and expressed disappointment that NEDLAC had not reached consensus on the proposed amendments as it was clearly in the national interest. He felt that workers, employers and government must work together to address these challenges. The CCMA and Labour Court would need to be strengthened as there would be increased demand for their services. He also felt that it was important for Parliament to have public hearings to ensure that unemployed South African voices were heard to ensure that their interests were represented.

Mr Nyekemba said that the Department had been engaging in a long process of consultation, including public hearings. It was now the responsibility of Parliament to hold further public hearings and that no one would be left unrepresented, including the unemployed. He also sought clarity on whether employees would be protected under the Bill during their initial six months of employment under this legislation. On the liability of clients, he asked how joint liability proposed by the amendments differed from the current situation as the current legislation did enable joint liability. Finally, on contracts between a TES agencies and clients, these contracts were generally not publicly available. Would employers be able to access these contracts?

The Chairperson noted that records from the public hearings in 2009 and the regulatory impact assessment of 2010 should be made available to new Committee members.

Mr Mkalipi responded to the constitutionality of whether parties to a dispute might be compelled by the CCMA to attend hearings in the public interest feeling that it was constitutional. It did not remove parties’ rights to strike or force parties to agree but merely expedites conciliation. He noted that during a strike before the World Cup negotiations had continued through the night to ensure projects were completed on time.

He disagreed that high earners would lose constitutional rights as they would continue to have access to the CCMA. He noted that the proposed amendments would merely first confirm whether the employer received notice from their employer and if they did their termination could not be challenged.

On minimum service levels, he said that cleaners could be considered essential and addressed in essential services agreements or by the ESC.

On union administrators, he noted that the challenge was generally not with union federations, these were generally challenges faced by independent unions. The amendments sought to add clarity in cases where it was not clear who represented a union.

On the selection of R172 000 as a figure, the BCEA currently distinguished the rights of those earning more than R172 000 annually and that was the basis for using the figure on amendments rather than new research.

On informalisation, he said that countries around the world had passed legislation to protect vulnerable workers in informal employment contracts. These amendments did not seek to block informalisation, they merely seek to regulate the conditions for vulnerable workers.

He noted that the amendments were proposed in accordance with the regulatory impact assessment conducted in 2010 and that demanding another regulatory impact assessment was not necessary.

He said that there was sufficient consensus in NEDLAC on the bill to move forward. He noted that some of the disagreements were intractable but that there was agreement on 90% of issues considered.

The courts had interpreted joint and several liability in current law to mean that all processes against the labour broker must be exhausted before a client may be challenged by an employee.

In terms of service contracts, there was no new provision for workers to access contracts between labour brokers and clients. They may be challenged if they were presented in court.

He noted that the 2010 regulatory impact assessment would be shared with Committee members and that Parliamentary Committee hearings were not the Department’s responsibility.

Mr Kganare felt that his question had not been answered and again asked if the amendment to compel a party to participate in conciliation was constitutional in that parties should be allowed to not negotiate. On high earners, the amendments seem to address procedural irregularities but not substantive issues.

Mr Mkalipi said that the law currently forced parties to go to the CCMA and this had not been found to be unconstitutional therefore the amendment was also not unconstitutional.

Mr Kganare responded that the amendment made attendance compulsory and said that this was a significant difference from current law. He asked what would happen to parties who refuse to attend. He again asked about the options for high earners to challenge substantive unfairness at the CCMA. If substantive issues were not addressed in the CCMA, could the Labour Court be approached?

The Chairperson said that these questions could be addressed in the next meeting.

Mr Mkalipi emphasised that the Department did not believe that the section was unconstitutional. On high earners, the CCMA would first consider whether the employee received three months’ notice. If they wanted to challenge their employer further, they may base those challenges on pre-dismissal agreements.

The Chairperson noted that this was merely the beginning of a lengthy discussion. The current copies of the bills were still in draft form and the tabled version would be opened for consideration in a few weeks and there would be ample time to continue discussions at a later date.

Mr Van der Westhuizen said that the copies of bills that members had received were those signed off by Cabinet. He asked whether there would be further changes to these copies and if those changes stemmed from meetings with COSATU.

The Chairperson stated that regular procedures were being used in finalising the draft Bills. The presentation had merely explained the changes made by the Amendment Bills. The tabled version would not deviate greatly from the comments of the Department. He thanked social partners for their attendance at the meeting and said that their presence was good for democracy.

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