Workshop on Labour Laws: day 2

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Employment and Labour

22 May 2012
Chairperson: Mr M Nchabeleng (ANC
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Meeting Summary

On the second day of the workshop on labour legislation, members of the NEDLAC drafting team briefed the Committee on the proposed amendments to the Labour Relations Act, 1995.

The Memorandum of Objects on the Labour Relations Amendment Bill included a detailed discussion of the fifty clauses in the Bill.  The proposed amendments included provisions in response to the increased use of informal labour; to ensure that vulnerable categories of workers received adequate protection; adjustments to the law to ensure that international labour standards obligations were met; to ensure that fundamental constitutional rights to fair labour practices were met; to enhance the effectiveness of the Commission for Conciliation, Mediation and Arbitration, the Labour Court, the Essential Services Committee and the labour inspectorate and to rectify anomalies and clarify uncertainties that had arisen from the interpretation and application of the existing labour legislation.

Members asked questions to gain clarity on the proposed amendments.  A further session would be scheduled for the briefing on the proposed amendments to the Basic Conditions of Employment Act, 1997.

Meeting report

Workshop on Labour Laws (Day 2)
The Labour Relations Amendment Bill [B16-2012]
Messrs Anton Roskam and Chris Todd, members of the NEDLAC drafting team, briefed the Committee on the proposed amendments to the Labour Relations Act, No 66 of 1995 (the LRA). A briefing document was not prepared as the Memorandum of Objects on the Labour Relations Amendment Bill explained the amendments in sufficient detail.

Objects of the Bill
The intention of the Amendment Bill was to refine the existing legislation and to address specific problem areas.  The amendments included provisions to ensure that informal and vulnerable categories of workers were protected; that South Africa’s obligations in terms of international labour standards were complied with; that legislation gave effect to fundamental constitutional rights; to enhance the effectiveness of the Labour Court, the Commission for Conciliation, Mediation and Arbitration (CCMA), the essential services committee and the labour inspectorate; to rectify anomalies and to clarify uncertainties in the interpretation and application of the Act.

Clause 1
The amendments to section 21 of the Act made provision for the Commissioner to consider employees assigned by temporary employment services (TES), employees engaged on fixed-term contracts, part-time employees and other non-standard workers when dealing with a dispute about organisational rights.

The Commissioner was empowered to grant organisational rights to a registered trade union that did not meet the agreed threshold of representativeness.  For example, airline pilots comprised only 5% of total employees of the airline but performed an essential function.  A union representing airline pilots would be considered to be a significant minority union and could be granted organisational rights, subject to the approval of the majority union.  If no majority union was in place, shop steward rights could be granted to a bargaining unit.
Mr Todd explained that the amendments made it easier for smaller or minority unions to gain access to organisational rights and to break the stranglehold of a majority union at the workplace.  In any event, unions were not precluded from bargaining with the employer for organisational rights.

Mr E Nyekemba (ANC) asked if the membership threshold requirement would continue to apply.

Mr Roskam confirmed that the membership threshold agreed between the employer and the majority union would remain applicable.  The amendments made allowance for a significant minority union to be granted limited organisational rights, such as wage deductions for trade union subscriptions.

Mr F Maserumule (ANC) asked for more clarity on the legal provisions concerning membership threshold.

Mr Roskam explained that the LRA did not specify that a trade union had to represent a certain percentage of employees or have a specific number of members to be considered a majority union.  The membership threshold was agreed between the employer and the union.  The Act specified the number of shop stewards per number of workers that had to be appointed by a union representing the majority (50% plus 1) of employees.

Mr Todd added that unions representing fewer than 50% of employees would in future be able to approach the Commissioner with requests to relax the ruling and allow the appointment of shop stewards.  Unions were encouraged to negotiate agreements with the employer rather than engaging in strike action in order to gain organisational rights.

Mr Roskam advised that the issue was discussed extensively at NEDLAC and remained a subject for continued debate.  The proposed amendment did not differ too much from current practice.

The Chairperson remarked that practices differed from industry to industry and was dependent on the willingness of the employer to recognise a minority union.  An example was the mining sector’s recognition of the National Union of Mineworkers (NUM) as well as the minority union Solidarity.

Clause 2
Organisational rights might be granted at the site of a TES client where employees assigned by the TES worked.  Where organisational rights could compromise the rights of a third party (for example the owner of a shopping mall where unionised workers were employed) provision was made for the third party to participate in the arbitration process.

Clause 3
Section 32 was amended to improve the efficiency of exemption processes.  Exemption from bargaining council agreements had to be finalised within 30 days.  The exemptions appeal body had to be independent of the trade union and employer parties.  Provision was made for the Minister to consult with the public when considering the extension of bargaining council collective agreements to other parties.

Mr Todd explained that a union representing the majority of workers could set the conditions for employment for the entire industry.  This could be problematic for workers who were not members of the union.  The Minister had the discretion to extend the agreement to other parties who were not represented in the bargaining council.  This system had resulted in numerous legal challenges from parties who objected to being forced to accept wage agreements they were not party to.

Mr A Van der Westhuizen (DA) was aware of complaints from employers that bargaining councils took too long to deal with applications for exemption.  He asked if the requirement to finalise the exemption process within 30 days would be adequately enforced.

Mr D Kganare (COPE) asked if an agreement between an employer and a union that did not comply with an industry agreement was binding.

Mr Maserumule asked what provision was made for workers who did not belong to a union.

The Chairperson remarked that non-unionised workers had to accept what wages the employer was prepared to pay.  Minimum wage agreements were not arbitrary and were derived after much research had been done.  Many workers lacked the knowledge and ability to negotiate wage agreements directly with the employer.  The provision to extend wage agreements to non-unionised parties in the sector prevented workers from being exploited by employers.

Mr Todd agreed that the requirement for exemption procedures to be finalised within 30 days could be phrased more strongly.  The motivation for the amendment was that the Minister needed to be satisfied that a bargaining council agreement should be extended to non-parties.  An industry agreement took preference and applications for exemption had to be made at the plant level.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour explained the prerequisites that had to be in place for the Minister to reach a decision.

Mr Todd added that the labour legislation set the minimum standards that had to be complied with.  Anything more was subject to collective bargaining (if unionised).  Provision was not made in legislation for non-unionised workers but this category was not precluded from approaching the employer and tempting to improve conditions of employment.

Mr Roskam said that the Minister would determine if the bargaining council agreement was sufficient.  The Minister had to take into consideration the representation of the workers before reaching a decision.  Research into bargaining council exemptions conducted by the University of Cape Town (UCT) concluded that 80% to 90% of applications were granted.

Clause 4
Provision was made for a certificate specifying the level of representativeness of a bargaining council to be taken into consideration for any purpose under the Act.

Clause 5
Section 51 of the Act was amended to make provision for the funding of bargaining councils through levies or fees.

Chapter IV of the LRA
This chapter dealt with strikes and lockouts, which generated much controversy during NEDLAC discussions.  The key amendments concerned procedural requirements for protected industrial action and dispute resolution in essential services.  The amendments were in response to escalating levels of unprotected strikes, essential services strikes and incidents of unlawful acts, violence and intimidation during strike action.

Clause 6
Section 64 of the Act was amended to reintroduce the requirement for a ballot before a protected strike or lockout commenced.  Such provisions were included in the 1956 LRA but were excluded in the 1995 Act because balloting was considered to be a union matter and had resulted in technical disputes over compliance.  The intention of the re-introduction of the balloting requirement was to prevent industrial action that was only supported by a minority.  The industrial action would be protected if the majority of members of trade unions or employers’ organisations voted in favour of the strike or lockout.  A compliance certificate would be issued by the CCMS, bargaining council or accredited private agency as evidence that the ballot was conducted in compliance with the statutory requirements.

During the NEDLAC discussions, organised labour objected to the inclusion of the requirement on the basis that no research had been done on the reasons for violent strike action; that there were no evidence that the number of illegal strikes would be reduced; that potential for technical disputes remained and that additional costs would be incurred when an agency was appointed to oversee the balloting process.

Mr A Williams (ANC) asked if the Congress of South African Trade Unions (COSATU) would have to ballot all its member unions before a strike was called.

Mr Kganare asked for clarity on the organisations empowered to oversee the balloting process.

Mr Nyekemba asked if the entire bargaining unit had to be balloted, regardless if the members belonged to a union or not.

Mr Roskam replied that that the provision did not apply to a section 77 strike called by COSATU.  The balloting process would be overseen by the CCMA, a bargaining council or an accredited private agency.  The Act drew a distinction between the basic statutory requirements and the internal constitution of the union.  The provision required only members of the union or the employers’ organisation to be balloted and could not be enforced if non-unionised workers went on strike.

Clause 7
Section 65 of the Act was amended to eliminate anomalies between the Act and other employment legislation concerning restrictions on industrial action.

Clause 8
Section 67 of the Act was amended to clarify that conduct in breach of picketing agreements or rules would not be protected from civil legal proceedings.

Clause 9
Section 69 of the Act was amended to make provision for picketing rules to be binding on third parties (such as the owner of premises or the employer), provided that the third party participated in the process of establishing the rules or had consented to the action.  The Labour Court was granted more discretion and additional powers to suspend a picket, strike or lockout and could order an employer to refrain from using scab labour.

Mr Williams asked how the provision affected farm workers going on strike.

Mr Roskam explained that farm workers usually resided on the farm and their rights of residence would not be compromised.

Mr Van der Westhuizen asked if the provisions requiring 48 or 72 hours’ notice of impending industrial action would still apply.

Advocate A Alberts (FF+) was aware of a pending Court decision regarding notice periods.

Mr Todd explained that Labour Court Judges were available at short notice, in particular when industrial action turned violent.  Many strike action commenced with high levels of violence and required a rapid response.  The provisions also applied to incidents where employers took violent action against union officials, for example by engaging bouncers to beat up shop stewards.  He was not aware of the pending matter but there was no controversy about the 48 hour notice period.  There was some controversy about whether or not a fresh notice period was required if a suspended strike was resumed.

Clauses 10 to 16
The proposed amendments addressed numerous problems identified with regard to dispute resolution in essential services, including the scope of essential services determinations, the limited number of ratified minimum service agreements in place ; the high level of strike action by workers in essential services and criticism of the operation and administration of the Essential Services Committee (ESC).  The amendments reflected the policy view of the Supreme Court of Appeal in recent judgements (e.g. in the matter Eskom vs NUM and NUMSA) and promoted interest arbitration.

Clause 10
Provision was made for the revision of the structure and functions of the ESC in order to enhance its efficacy and legitimacy.

Clause 11
Sections 70A to 70F were inserted into the Act.  The provisions dealt with the composition of the ESC; the appointment of an independent chairperson (who may be from the CCMA), a deputy chairperson (who must be a CCMA Commissioner) and six members (from nominations put forward by organised labour, organised business and the government at NEDLAC).  Most essential services were provided by the public sector and the inclusion of a government nominee was important.  The powers and functions of the ESC; the appointment of panels to preside over matters before the committee; the powers and functions of the panels and the jurisdiction of the ESC were provided for.  The ESC would be administered by the CCMA.  The Minister of Labour was empowered to make regulations concerning the ESC and its panels.  The ESC was empowered to determine minimum services if the parties concerned were unable to reach a minimum service agreement.

Mr Williams asked what the point was of essential services personnel going on strike if a minimum services agreement was in place to ensure that services would continue to be provided.

Mr Van der Westhuizen observed that members of the public suffered when essential services workers went on strike.  He asked if provision was made for affected members of the general public to request a determination.

Mr Todd agreed that the power of a strike was the ability to stop services and that a minimum service agreement would lessen the impact of the strike.  The LRA made provision for the appointment of an arbitrator to negotiate the wages of essential services workers (i.e. interest arbitration).  Separate bargaining units for different categories of essential services were necessary.

Mr Roskam added that a minimum service agreement had to be ratified by the ESC before it could come into effect.  Many agreements had not been ratified, mainly because the agreements were not specific enough.  Any interested party could refer a matter to the ESC in terms of section 70B.

Mr Williams remarked that local government authorities usually included both essential and non-essential service personnel.  He asked if the prohibition of industrial action by essential services personnel would result in the splitting of the workforce.

Mr Roskam agreed that the inclusion of essential and non-essential services workers in the same group could be problematic.  Much depended on how the agreements were determined.  One view was that those workers unable to strike should support the striking workers by donating their wages into a fund to assist the strikers.  The union had to decide if it had sufficient power to win its demands by strike action rather than referring the dispute for arbitration.  In his opinion, arbitration should be encouraged much more in South Africa.

Adv Alberts asked for more information on minimum service agreements.

Mr Roskam explained that the agreements had to be detailed and clear on which employees would remain on the job.  The agreements entered into had been at the national level.  Certain agreements specified a percentage of the workforce had to remain on the job.  In his opinion, it was better to negotiate minimum service agreements at the plant level and to specify the number of employees in each category that were not allowed to go on strike.  Many agreements were not ratified by the ESC because it was not clear exactly who could go on strike and who could not.  Trade unions generally found it difficult to negotiate minimum service agreements with the employer.  A no-work-no-pay policy had the potential to create further conflict as minimum service agreement workers would be paid whilst their striking colleagues would not.  This matter should be included in the agreement.

Clause 13
Section 71A was inserted in the Act to make provision for public officials to exercise authority in the name of the State.

Clause 14
Section 72 of the Act was amended to make provision for the negotiation and mediation of minimum service agreements.  The Bill provided that a minimum service designation would not apply if the majority of affected employees voted to be covered by a broader essential service designation.  This would prevent strikes and lockouts in the service concerned and all unresolved disputes would be subject to compulsory arbitration.

Mr Van der Westhuizen asked what recourse was available if an interested party was not satisfied with the ESC’s ruling that a particular service was classified as essential or as non-essential.

Mr Roskam replied that there was no provision for an appeal.  The decision of the ESC could be reviewed and deliberations could be re-opened.

Clause 17
Section 103A was inserted into the Act to make provision for a trade union or employers’ organisation to be placed under administration by the Labour Court in specific circumstances.

Clause 18
Section 111 of the Act was amended to prevent a trade union or employers’ organisation from continuing to function, pending the outcome of an appeal against the decision of the Registrar of Labour Relations to cancel its registration.

Clause 19
Section 115 of the Act was amended to make provision for the CCMA to provide administrative assistance to lower-paid categories of workers.  The CCMA was empowered to make rules concerning the failure of parties to attend conciliation or arbitration proceedings.

Clauses 21, 22 and 23
Arbitration awards had been an area of contention.  In many cases, arbitration awards were ignored by employers.  Cases referred to the Labour Court tended to get lost in the Court processes.  There was a legal lacuna as an award was not a court order and an employer could not be held in contempt when an award was ignored.  The proposed amendments were intended to simplify the process and expedite the enforcement of arbitration awards.

Clause 24
Section 145 of the Act was amended for the purpose of reducing the number of applications to the Labour Court for review of arbitration awards.  In addition, the application should be heard within six months of commencing proceedings and judgements had to be handed down within a reasonable time.  The amendments were intended to avoid the lapsing of an arbitration award before the review process was concluded.

Clause 25
Section 147 of the Act was amended to make provision for the resolution of disputes by the CCMA if a lower paid employee was required to pay any part of the cost of private dispute resolution through an agency or if the agency was not independent of the employer.

Clause 26
Section 150 of the Act was amended to extend the powers of the CCMA to intervene in industrial action in order to obtain speedy resolution.

Clauses 27 and 28
The amendments aligned the LRA with other laws.

Clause 29
Section 157 of the Act was amended to exclude the jurisdiction of the Labour Court to adjudicate disputes that were required to be determined by arbitration.

Clause 30
Section 158 of the Act was amended to limit the involvement of the Labour Court in matters that had not yet been finalised by the CCMA.

Clause 31
Section 159 of the Act was amended to require the Rules Board for the Labour Court to meet at least once in two years.  The Rules Board had not met for a number of years.

Clause 32
Section 161 of the Act was amended to deal with the problem of labour consultants appearing in proceedings under the guise of being members or officials of a trade union or employers’ organisation when they were in fact appearing in their professional capacity and charging a fee for their services.

Clause 33
Section 168 of the Act was amended to allow the appointment of Labour Court judges to the Labour Appeal Court.

Clause 35
Section 186 of the Act was amended to clarify the definition of ‘dismissal’ and its application in cases where fixed-term contracts were not renewed on expiry.  The termination of employment would be regarded as dismissal regardless of whether or not a formal or written employment contract was in place.

Mr Van der Westhuizen asked if the amendments were adequate to address the problem of fixed term contracts being renewed ad infinitum.

Mr Roskam said that a clause in a fixed term employment contract to the effect that the contract would not be automatically renewed did not preclude a reasonable expectation on the part of the employee that it would be renewed.

Mr Todd added that repeated renewal of fixed term contracts tended to create expectations by the employee on the basis of the prior conduct of the employer.

Clause 36
Section 187 of the Act was amended to remove an anomaly in the interpretation of the section by the Supreme Court of Appeal and the Labour Appeal Court.  The intention of the original provision was to preclude the dismissal of employees where the reason for the dismissal was their refusal to accept changes in their conditions of employment.

Mr Todd explained that the cases referred to the Courts concerned the retrenchment of employees after they had refused to accept structural changes to operations by the employers.  The proposed amendments were intended to create certainty and prevent the Courts from handing down judgments based on different interpretations.

Clause 37
Section 188A of the Act was amended to facilitate the use of CCMA Commissioners to conduct disciplinary enquiries.  The intention was to promote enquiries by arbitrators, avoid subsequent disputes and streamline the process.

Clause 38
Section 188B of the Act was amended to allow more flexibility for employers in dealing with dismissals of higher-earning employees.  The amendments made provision for settlements equivalent to three months’ benefits to be considered to be fair but did not preclude negotiations between the parties to increase the settlement.  The Minister would determine the applicable earnings threshold.

Mr Todd explained that the cost of dispute resolution at the higher levels was extremely high.  Higher-earning employees were not considered to be vulnerable and the right to include clauses dealing with termination periods and financial settlements in the event of early termination in employment contracts was not compromised.

Clause 39
Section 189A of the Act was amended to ensure that the substantive fairness tests for dismissals were compatible.

Clauses 40 and 41
Sections 190 and 191 of the Act dealt with dismissals and notice periods.  The proposed amendments made provision for single retrenchments and less onerous adjudication procedures for small businesses.

Mr Van der Westhuizen asked if the amendments made provision for dismissed employees to be refused access to the premises of the employer.

Mr Todd replied that allowance was made in the legislation for the employee to receive payment in lieu of notice under circumstances requiring the employee to immediately vacate the premises of the employer.

Clause 42
Substantive changes were made to Chapter IX of the Act to made provision for non-standard employment.  Provision was made for the protection of three categories of non-standard employees: employees placed by temporary employment services (TES, also known as labour brokers), employees engaged on fixed term contracts and part-time employees.

Labour brokers were banned in Namibia but the banning had been found to be unconstitutional.  The ANC had agreed that the banning of labour broking in South Africa would be unconstitutional as well but that it was necessary to regulate the practice to eliminate undesirable elements.  There was no agreement by government’s social partners on the matter of labour broking.  The proposed amendments introduced more stringent requirements for TES and increased controls for protecting vulnerable employees earning less than R172,000 p.a.

Clause 43
Section 198 of the Act was amended to address certain problems and abusive practices associated with TES.  The amendments ensured that the TES and its client were held jointly and severally liable for contraventions of employment legislation.  TES’s were required to be registered and employees assigned to clients had to be provided with written particulars of employment in accordance with section 29 of the Basic Conditions of Employment Act (BCEA).

Clause 44
Sections 198A to 198D were inserted into the Act.  Section 198A introduced additional protection for employees earning below the threshold prescribed in section 6(3) of the BCEA.  The TES was considered to be the employer for the first six months of employment, thereafter the client was deemed to be the employer of the employee assigned by the TES.  The only exception was an employee working as a substitute for an employee of the client who was on temporary leave of absence (e.g. on pregnancy leave or on a training course).

Provision was made for temporary services to be regulated by collective agreement, a sectoral determination or Ministerial notice.  Measures were introduced to prevent abuse of the six-month period that constituted temporary work but also allowed for justifiable reasons for fixing the term of an employment contract.

Mr Van der Westhuizen asked if the clause applied to cases where registered nurses were available to provide services at a number of different medical facilities only on weekends.  Such arrangements could be of long duration but he thought that the legislation was not intended to stop such practices.

Mr Roskam explained the relationship between the TES, its client and the employee to illustrate the need to make use of the services of a TES for short periods of time.

Mr Todd added that the six month period was a calendar period.

Mr Williams asked if any provision was made to prevent the employer from dismissing an employee after six months to avoid the roll-over.  He asked what the loopholes in the legislation were.

Mr Roskam referred to section 194 of the Act, which dealt with such cases.  The LRA attempted to prevent employers from dismissing workers for ‘operational requirement’ reasons that were inherently unfair.  A reasonable period needed to elapse after the Bill was enacted before any loopholes could be identified and addressed by subsequent amendments.

Mr Todd remarked that organised labour and organised business differed widely on the issue of allowable temporary employment periods.  Labour demanded that there should be no distinction at all but business considered eighteen-month employment contracts to be reasonable.  The proposed amendments were a trade-off between creating more meaningful jobs and losing more jobs.  It was recognised that the provision of secure employment was a substantial cost to business, that labour brokers delivered a useful service and that there would be a long-term impact if labour broking was banned.  Organised business wanted more research to be done into the impact before regulations were introduced.  Temporary workers generally earned less than full-time staff.  Organised labour objected to the use of temporary workers as wage negotiations could be undermined when the employer could bring in cheaper, temporary workers.  It was less onerous to dismiss temporary workers than permanently employed staff.  An extension of the six-month period was desirable, for example when a car maker had a manufacturing contract for twelve months and there would be significant cost implications if temporary workers engaged to complete the contract had to be paid full-time wages after six months.

Mr Roskam added that the equal-pay-for-equal-work principle would apply after the six-month period.  There was clearly a trade-off between providing job security, decent employment and the cost of employment.  The labour broking industry had burgeoned since 1995.  Effectively, a two-tier employment scenario was created, whereby one part of the labour force fell outside the collective bargaining process.

Mr Nyekemba observed that the LRA covered a wide range of issues.  The Act did not preclude trade unions and the employer from reaching agreement on the use of temporary workers.

Mr Todd advised that certain industries had collective bargaining agreements in place whereby a specified percentage of temporary workers were employed through labour brokers.  The LRA set minimum standards and better conditions could be negotiated through the collective bargaining process.  Unions could demand that all workers (temporary or permanent) in an enterprise earned the same wage for the same work.

Mr Mkalipi added that bargaining councils could negotiate variances on the six-month rule.

Mr Roskam went over the provisions in clause 44 concerning fixed term contracts, the exemptions available to small businesses (less than 10 employees) and start-up enterprises, the list of justifiable reasons for fixed term contracts, the equal-pay-for-equal-work provision, severance packages and the protection of part-time employees.  Section 198D made provision for disputes in the interpretation of sections 198A to 198C to be referred to the CCMA.

Mr Williams asked if the amendments clarified that probation periods could not be extended indefinitely.

Mr Todd advised that a six-month temporary employment contract could be used instead of a probation period clause in an employment contract.  Probation periods could not be longer than six months.

Clause 45
Section 200A of the Act was amended to prevent businesses from being closed down to avoid being prosecuted for contraventions of the LRA.

Clause 46
Provision was made for sub-contractors of the employer to be held liable in terms of the Act.

Clause 47
Section 203 of the Act was amended to allow the Minister to issue a code of good practice where parties to NEDLAC had failed to reach agreement on the code.

Clauses 48 and 49
Technical amendments were made to correct references and typographical errors.

Clause 50 provided for the short title of the Bill.

Mr Van der Westhuizen thanked the presenters for the informative briefing on the Bill.

The Chairperson advised that another session would be scheduled for the Committee to be briefed on the Basic Conditions of Employment Amendment Bill.  He thanked the presenters and those Members of the Committee who had participated in the workshop.  He advised that the Committee had been invited by the Department of mineral Resources to participate in a meeting on 30 May 2012 to discuss the Aurora Mine matter.

The meeting was adjourned.

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