Workshop on Labour Laws: Day 3

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Employment and Labour

29 May 2012
Chairperson: Mr E Nchabeleng (ANC)
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Meeting Summary

The Committee continued with the third day of its workshop on the amendments that were being proposed to the labour legislation. Mr Anton Roskam and Mr Chris Todd, attorneys and members of the NEDLAC drafting team, firstly answered questions on the Labour Relations Amendment Bill (LRA Bill). The main concerns were to clarify what constituted  a majority union as opposed to a minority union, and what the changes would mean in practice, both to the unions and the powers of the Commission for Conciliation, Mediation and Arbitration. The second concern examined, in detail, the significance of the six-month period during which an employee would be seen as being employed by a Labour Broker, and the requirement that after this he should be seen as employed by the client company. The comments outlined international practice, and concluded that most other countries had not sought to do away with labour brokers, but to address insidious and harmful practices, whilst retaining their good functions. They also noted that a number of other countries recognised the principle that the longer an employee actually stayed working for the same employer, the greater the benefits to which he should be entitled, and clarified the position that labour brokers did not deduct employees’ wages but actually charged fees to the employer, and were obliged to ensure that minimum wages or sectoral determinations were paid.

The two advisors then discussed, in detail, the Memorandum on the Objects of the Basic Conditions of Employment Amendment Bill. This Bill sought to address government’s commitment to avoid the exploitation of workers, ensure decent work for all workers, protect the employment relationship, bring the provisions regulating child labour in line with international standards, improve the mechanisms for enforcement of basic conditions of employment, prohibit certain abusive practices and effect consequential amendments. Members asked relevant questions under each of the paragraphs.

Members finally were told that the National Economic Development and Labour Council (NEDLAC) was still discussing the Employment Equity Amendment Bill and the Employment Services Bill, and that both these Bills contained issues that could overlap with the Bills currently before Parliament. Members believed that it would make more sense to debate the four Bills together, to ensure that consequential amendments and issues were consistently and properly captured. The Chairperson proposed that the Committee write a letter to the Minister to ask about the progress of the Bills before NEDLAC, and it was confirmed that, if necessary, if the social partners at NEDLAC failed to reach agreement on the Bills, having followed the processes, it would be possible for the Minister to take over the Bills in order to expedite the matter.

Meeting report

Workshop on Labour Laws: day 3
Discussion on the Labour Relations Amendment Bill (LRA Bill)
Mr Anton Roskam and Mr Chris Todd, members of the NEDLAC drafting team, briefed the Committee on the proposed amendments to the Basic Conditions of Employment Act 75 of 1997 (BCEA), and took further question on the proposed amendments to the Labour Relations Act, No 66 of 1995 (LRA), on which they had given a briefing to the Committee, on 23 May 2012.
Majority and Minority Union
Mr A van der Westhuizen (DA) noted that majority status could be awarded to unions that did not have 50%+1 representation at workplaces. He asked what exactly majority rights entailed, and what the difference was between a major and a minor union.

Mr Anton Roskam, Partner, Haffegee, Roskam & Savage Attorneys, Member of the NEDLAC Drafting Team, replied that once a union reached certain levels of representation at a workplace, it could claim majority status at that workplace from the Council for Conciliation, Mediation and Arbitration (CCMA). He asked the Members to pay attention to the difference between making a claim and a demand. Any union, whether a minority or majority, could claim rights from the employer. The employer would not necessarily agree to this, especially if the union did not have an actionable right to be awarded that status by a CCMA commissioner. The union could then use strike action to persuade the employer. The CCMA, however, could award rights to a union whether the employer liked it or not. There were two categories of rights: namely, sufficient representation and majority representation. Sufficient representation was not defined. Commissioners decided what constituted sufficient representation in any particular case, considering the conditions at the workplace, as set out in the Labour Relations Act (the LRA).

Mr Roskam noted that unions with sufficient representation had three basic rights. These were access to the premises for the purpose of organising, the right to effect stop-orders for members to pay their membership fees and to generate income for the union, and to grant leave for trade union representatives or shop stewards to participate in union activities under Section 15 of the Act.

Most trade unions also wanted an office and access to telephone lines on the premises, but these were not specified in the Act. If a trade union was a majority union, it had the right to shop stewards or trade union representatives, and the right to disclosure of information about the state of the company finances, for the purpose of engaging in consultations and negotiations.

The amendment in the Labour Relations Amendment Bill (the LRA Bill) had changed the requirements for a union to claim majority status, so that it no longer had to be a majority union or have 50% +1 representation. If it had “sufficient representation”, it could claim majority union status, providing that there was no other union at that workplace that already had majority status, and provided that it also already had the three basic rights already described.

Under the current regime, once a union had 50% +1 representation, it could demand that the employer must agree with it on what the threshold representivity had to be at that workplace. For instance, an employer might agree that a union had to have at least 45% representation before it would be granted access to the premises. Majority unions could use this agreement to keep smaller unions out of a workplace. If, for example, a smaller union had 30% representivity and it approached the CCMA to complain about not getting access to the workplace, the CCMA would be bound by the majority union agreement, in terms of Section 18 of the LRA. However, the Bill now said that a CCMA Commissioner could, despite the existence of a majority union agreement setting thresholds, decide to make a decision in conflict with that agreement, and also grant basic rights at a workplace to smaller unions. This, however, could only happen after giving the majority union an opportunity to argue its case at the CCMA.

Mr Roskam said that, in the Implats scenario, a commissioner would be cautious to give organisational status in a workplace to a small union that did not meet the agreed thresholds, because the Act stated that commissioners had to take care to avoid the proliferation of unions in one particular workplace. A commissioner also had to be sensitive to potential workplace conflict, before granting smaller union basic rights at a workplace. Despite the amendment, all of these factors must therefore still be considered.

If the commissioner refused to grant the smaller union basic rights at the workplace, nothing stopped that union from continuing to demand, and continuing to campaign for these rights at the workplace. Inter-union rivalry existed, and it was not created or eliminated by this amendment.

Six-month period
Mr A Williams (ANC) was concerned about the National Economic Development and Labour Council (NEDLAC) process that stipulated a six-month period when the employee would be considered an employee of the Labour Broker (LB), before he became a permanent employee of the client company. He asked whether all parties at NEDLAC had agreed to this period.

Mr Chris Todd, Attorney, Bowman Gilfillan Attorneys, Member (for Business Unity) of the NEDLAC Drafting Committee, replied that there was no agreement to that six-month period at NEDLAC. Labour’s formal position was that Labour Brokers should be banned. Business took the position that the period should be extended.

Mr van der Westhuizen asked whether the period of six months was arrived at by negotiation only, and whether it was backed by international best practice or research.

Mr Williams also asked what the implications were of the period of six months. He wondered whether, if that six months period was reduced to nothing, this would result in labour brokers actually ceasing to exist.

Mr Roskam replied that there were international practices around temporary employment services, but the definition of what “temporary employment services” were differed from country to country. As far as he was aware the six-month suggestion came not from international precedent, but was more of a negotiated position. He needed to consult with Paul Benjamin, who was also on the drafting team who came up with the six month proposal, before giving a definitive answer on that point.

Mr Roskam then noted that LBs performed various functions. The only controversial aspect around LBs was the situation when it was stipulated that the LB remained the employer of the worker during the time that the worker was placed at various places of work. Some LBs attended to placement of workers, but did not remain the employer. Where the LB remained the employer, this was referred to as Temporary Employment Services(TES), and he thought that if the period was to be reduced from six to zero months, it would fundamentally constrain the activities of LBs in this area, and they would in effect be banned. He added that there was substantial debate about the constitutionality of banning LBs. For the purposes of the LRA, the LB would act as the employer for six months, and after that, the client company became the employer. For the purposes of the Unemployment Insurance Fund (UIF) Act and the Skills Development Act, however, the LB remained the employer, even after six months. This arrangement was decided upon owing to the very involved process to change the name of the employer after seven or eight months for all these categories.

The fact that the LB administered the UIF was less controversial. Farm workers moved from farm to farm while working for the same labour broker. The LB paid and administered UIF. If the client and farm owner had to register the worker for UIF at every farm where he worked for three weeks, it would cause administrative problems, and confusion. This was why government agreed to the LB being the UIF administrator.

The Chairperson asked what would happen if the period was reduced from six months to three months, and whether this would have the same impact, constitutionally speaking. He felt that a six month period was too long, as it essentially led to exploitation of workers for six months.

Mr Todd said that international precedent was quite diverse on this issue, and it would be useful to publish a paper on this subject in the future. Paul Benjamin, in the process of preparing the initial regulatory impact assessment study, had done research that looked at international labour standards and how this issue had been regulated over the years. He had found quite diverse practices of regulation, and had concentrated on regulation in Europe and the UK, whose employment laws were most closely allied with those of South Africa.

The regulation of LBs, or so-called “triangular employment”, had been one of the most controversial issues in the labour market regulation within the European Union (EU). In 2001 a working directive was issued, which was initially opposed by the UK government, but after a while it was agreed that equal treatment would be offered, which seemed to solve the problems. In Germany, a different regulatory system was followed, with all employment leasing agencies, or labour brokers, having to be registered and licenced, failing which all the contracts would be regarded as void. In Germany, employers used to be disallowed from repeatedly entering into fixed term contracts, but the minimum period of 24 months had since been abolished. The principle of equal pay applied, to ensure that employees of LBs received equal pay to permanent employees of client companies. There were two exceptions to this rule.

Other countries had their own rules, suitable to their own economies, to prevent abuse. In Holland, a period of 26 weeks or six months applied, after which the LB had to guarantee the employee permanent employment. The employment was divided into phases, with the first 26 weeks constituting the first phase, and with each successive phases the employee would have more rights.  There was a second and a third phase and with each phase the employee had more rights. Other research comparisons were given to the Czech Republic, Poland, China and Korea. The conclusion was that there was no uniform way of regulating LBs. Despite South Africa’s unique economic and labour history, the issue of LBs was recognised as a problem globally. Internationally, all countries had identified stages at which a worker would gain greater protection, directly tied in to how long that worker was employed. All countries also realised that a certain amount of flexibility was important, and that at the early stages, a worker could not be considered to be as much a part of an enterprise as he was after a longer period. As certain time periods were reached, the worker employed by the LB would acquire the same protection or rights as others employed directly by the enterprise. This was the general theme that ran through all the regulation in all of the countries mentioned. Mr Roskam said that he would ask Paul Benjamin if this still represented the latest research.

Mr Roskam also noted that the questions asked were verging on a policy debate, and he could not engage in that debate, as he and Mr Todd were on the drafting team. However, he could say that there were concerns that LBs created a two-tier labour system at the lower levels, where LB employees were paid less than client employees. However, it did not make any business sense to pay both sets of employees the same rate, when the LB would still have to be paid as well. Another concern was that LB employees currently were regarded as temporary, which had an effect on the labour market, since these workers had no benefits like pension and medical aid, ad were more easily dismissed.

Mr Todd added that the one area on which there was agreement was that workers should not be employed in long term relationships without benefits like pension and medical aid. Business maintained that for the first 18 to 24 months, workers were not entitled to benefits, but everyone agreed that after two years a contract worker had to be entitled to some or all of the benefits that permanent workers had. The real debate was about the run-in period, and consensus had to be reached on this point.

Mr Roskam added that the amendment that applied to all employees (now introducing a new section 4C to the LRA) was that no employee may be employed by a temporary employment service on terms and conditions of employment that were not permitted by the LRA, any other employment law, sectoral determination or collective agreement concluded in a bargaining council agreement. He gave an example of this. If an employer, in the metal sector, outsourced transport to a LB, the employees, despite the fact that they worked in a transport job, would be regarded as metal workers to whom the conditions applicable to the metal sector must apply. This would prevent the two-tier system. A secondary result could be that LBs might question whether it made business sense for them still to operate, as workers doing the same work must be paid the same rate.

Mr Roskam returned to questions about the six-month period, saying that although he was not sure how this period was arrived at, it had been seen as reasonable, and a compromise between Labour, who had wanted a shorter period, and Business, who wanted a longer one. If the period was shortened from six to three months, it could be seen as a limitation of rights. There were various legal opinions as to whether this would be seen as a constitutional limitation. He thought the dominant legal view was that a ban of LB would be unconstitutional. The Constitutional Court in Namibia had said that there were less restrictive means to remedy the problems associated with labour brokers, and it was necessary to find a way to regulate LBs so that the problematic practices in the industry, and not LBs themselves, were done away with.

Considerations around the six-month period would require continued debate. He reminded Members that maternity leave, in terms of the BCEA, was a period of four months but several employees, especially those at more senior levels, took longer maternity leave periods. These types of considerations had to be taken into account. The move from six to three months might not necessarily be a bad or a good thing, but the legal challenges that could arise had to be borne in mind.

Mr Todd agreed with Mr Roskam that this was a contentious issue. The lawmakers had to decide whether they were willing to draw a law that might be subjected to constitutional challenge, or whether to find some other way that would avoid that step. All of the regulating regimes had tried to identify the problems, but none had tried to ban LBs, preferring instead to insist upon equal wages, security against dismissal and so forth. All had tackled the abusive practices without stopping LBs from practising.

The Chairperson asked how much of a worker’s salary a labour broker should be allowed to keep. He said that currently, LBs charged the company R100, but kept R70 for themselves and paid the worker R30.
Mr Todd replied that at the moment there was no regulation on what percentage a labour broker could charge. However, he noted that LBs were not allowed to deduct from an employee’s wage, but in fact charged fees on top of the wage of the employee. He corrected the Chairperson by saying that the LB might charge the company R1000, of which R200 was their own fee, and pay the worker R800. Where sectoral determinations were in place, like the security industry, the worker had to earn the minimum amount stipulated by the sectoral determination, so this meant that the LB would charge its client the minimum amount, plus its own fee, which was not regulated.

Mr Todd noted that the Employment Services Bill, which was currently being developed, would regulate LBs by setting the conditions and requirements for LBs to register and get licences to operate.

The Chairperson said that the reason for this discussion was the abusive practices of the past, which had been made possible by the loopholes in the law. These were to be closed by the new legislation, and this should not be seen as an intellectual discussion, but a real consideration of whether the laws were relevant. The reality was that LBs cheated people out of getting proper wages. He cited an example of an elderly gentleman, who had been a bus driver for ten years, but when he died his widow was paid one month’s salary, since the bus company claimed that he did not work for that company. The Committee would hold public hearings and take its cue from the public’s experiences.

Basic Conditions of Employment Amendment Bill (BCEA Bill): deliberations
Object 3.2 Prohibited conduct by employer
Mr Roskam referred to point 3.2 of the Memorandum of Objects of the Basic Conditions of Employment Amendment Bill, dealing with conduct prohibited. This noted that clause 2 of the BCEA Bill sought to prohibit employers from seeking , requiring or accepting any benefit or payment from an employee or a prospective employee, as a result of the employment of or the allocation of work to that employee. Employers were also prevented from requiring an employee to purchase any goods from a business that the employer operated, or nominated.

He explained that some companies in the past had insisted that an employee buy his uniform from the employer, which was also the supplier, whereupon the employer would deduct the cost of the uniform from the salary. This was a highly exploitative practice that was quite common in the security industry.

He noted that nobody should have a problem with the prohibition in the Bill upon the employer accepting payment from employees for employment, and said that there was consensus at NEDLAC on this issue.

These prohibitions should not interfere with legitimate schemes where employees received financial benefits through the purchase of goods, products or services at a fair and reasonable price, from the employer, such as funeral schemes, pension, provident and medical aid schemes.
The intention behind the prohibition was clearly to prevent unacceptable practices, and it would be a criminal offence to breach the provisions. This was quite significant, because, in 1995, there had been moves to remove all criminal sanctions from labour legislation. However, all social partners at NEDLAC had agreed that it was acceptable to re-introduce a criminal sanction in this instance because the practices had become so problematic.

Adv A Alberts (FF+) asked what the situation was with car guards. He would have thought they might be regarded as permanent employees, because they sometimes stayed at a venue for a long time, sometimes had to pay rent for the ability to work in that area, and some had to buy uniforms. He wondered if there were similar practices in other sectors.

Mr Todd replied that if those guards were employed, they would be covered, but if they were independent contractors they would not be covered by the BCEA. This had been described by some as a “cruel hoax” played out on workers.

Mr Williams asked how the legislation affected farm workers who had to buy uniforms and had to pay rent for the houses in which they lived on the farms.

Mr van der Westhuizen added that sometimes, in remote areas, people were far from shops and were effectively forced to buy produce from shops belonging to the employer or company.

Mr Todd replied that the BCEA Bill precluded the employer from requiring anyone to purchase any goods, products or services from the employer or anybody nominated by the employer.

Mr Roskam used the example of a uniform, saying that some work did require a uniform. According to this arrangement, the employer now had to provide the uniform. The question then was who must take responsibility for the uniform, which was a cost to employer, and who was to replace it if the employee damaged or lost it. This could be solved with a reasonable uniform allowance added on top of a minimum wage, but there were still some risks.

Mr Roskam said that another area of contention was what was permitted by the amendments. If the workplace had a scheme that the employee was obliged to join, such as a medical aid and provident fund, this would be permitted, as the employee was receiving a financial benefit from belonging to that scheme. However, there was a debate as to whether employees received financial benefits from belonging to medical aid schemes, because they could opt to go to state hospitals. The price of the medical scheme had to be reasonable. Many of these schemes would only work if they were made compulsory, and received enough instalments to cross-subsidise. However, he reiterated that this amendment would prevent workers having to pay for jobs or purchase from the company store.

Mr S Motau (DA) asked what option an employee had other than buying at the company store, in remote areas.

Mr Todd replied that the employee could still buy from the employer out of free will, but the employer could not force the employee to buy from him only.

The Chairperson said that most farm shops were not helping workers, were regarded as profit-making enterprises, often run by the farmer’s wife, to try to ensure that money stayed on the farm, and in some cases farmers would not allow goods bought from other shops on to their farms. These kinds of coercive practices made it necessary to amend the law. People often simply had to pay the prices charged at the farm shops, but whether they were satisfied with that was another story. He noted that the legislation should prevent abuse.

Mr Williams asked how an employee could report breaches to the police.

Mr Todd replied that the worker should go to the Department of Labour (DoL), who would prosecute. An individual worker could, of course, lay a charge with the police station, but most police stations may not be aware of the legislation and follow this through. Previously, the onus was now placed, through this Bill, on the DoL inspectorate to enforce regulations, but the DoL, recognising that it did not have sufficient resources to enforce the law, had decided to return to criminalising some offences. There was a debate whether the employer was more likely to comply if s/he faced a criminal sanction, and some thought that the Inspectorate had to be fully resourced to enforce labour laws more effectively.

Object 3.3 Prohibition of work by children
Mr Roskam moved on to discuss object 3.3, which dealt with prohibition of work by children. He noted that there had been consensus on this at NEDLAC between the social partners. These provisions broadened the legislation and brought South Africa into line with the International Labour Organisation (ILO) provisions. The legislation now prohibited children working, as opposed to children being employed.

The Chairperson asked what the implications were for children who were used in the media and communication sector, like children and babies in advertisements.

Mr Roskam replied that there were specific clauses that regulated work by children in the entertainment and communication industry, so there were exceptions to this prohibition.

Mr Todd added that this prohibition would also not apply to children washing somebody’s car for pocket money, but it became harder to draw the line when children might work, over the weekend, in a family business like a farm shop. He also pointed out that the prohibition referred to work, rather than contributing by doing chores.

Mr Williams said that Sections 28 of the Constitution catered for children doing chores.

The Chairperson agreed that children, as part of their obligations, could be expected to do house chores.

Mr Motau said that the law had to be careful not to create an untenable situation. Children sometimes worked for pocket money to buy themselves things they needed for school.

The Chairperson said that, from his own experience, a farm school might only offer schooling up to grade 6, and the parents, not wishing to send their children several kilometres away to another school, were asked to justify why that child was still on the farm, and in some cases put that child to work.

Mr Motau cautioned that using the word ‘work’ could undermine the good intentions of the amendments, and result in children being prohibited by the law from being able to do chores.

Mr Roskam said the point about Section 28 of the Constitution was important. He pointed out that the wording of the BCEA Bill stated that “No person may employ a child to perform any work or provide any services that are inappropriate for a person of that age, that places at risk the child’s well-being, education, physical or mental health, or spiritual, moral or social development”. This, to his mind, would not include something such as cleaning his father’s shoes in return for pocket money. However, it would prevent seven year-old children being put to work in sweatshops. The Minister could make regulations.

Object 3.4 Sectoral Determination
Mr Roskam said that South Africa did not have a set minimum wage, such as that applying in America, across all sectors. Instead, it used sectoral determinations, which were published by the Minister, and which set minimum terms and conditions of employment for that particular sector. Examples were domestic workers and the security industry. Sectoral determinations were applied in sectors where there was no collective bargaining taking place, or where the collective bargaining that might take place was not sufficiently representative of the sector.

He noted that sectoral determination did not cover each and every sector. In areas where there were no sectoral determinations set, the Minister would be empowered to create an umbrella sectoral determination, covering employers and employees that were not covered by any other sectoral determination or bargaining council collective agreement. This could, for example, cover car guards who were employees, or scooter drivers doing deliveries for businesses. The Minister would have increased powers, being able to set minimum conditions for those sectors, and the power to regulate or prohibit the sub-contracting of work. The Minister could also regulate organisational rights in a sectoral determination. In the agricultural sectoral determination the Minster could specify methods for determining a labour tenant’s right to occupy or use part of a farm for the purpose of land reform or labour tenancy.

A controversial power, that was opposed by Business, was the Minister’s power to determine minimum increases in remuneration. Usually, sectoral determinations determined the minimum wage – such as R700 per month for domestic workers – but it was such a low minimum wage that most employers already paid in excess of this. Instead of increasing the minimum wage, for instance, from R700 to R800, the Minister could announce an overall 5% increase, making both a prescribed minimum wage and prescribed minimum increase.

Mr van der Westhuizen asked what would happen when two companies merged, and it was found that secretaries or cleaners had been paid different rates in the different companies. In the past, the higher salary could be fixed for a few years until the other had caught up, and he wondered if this would still be possible.

Mr van der Westhuizen asked what would happen if a person was performing work that was no longer in demand, so that the rate of pay for that skill devalued, and how the prescribed minimum increase might be balanced against that.

Mr Williams asked why the prescribed minimum increase was controversial, and whether it had caused controversy only for sectors that fell in the gaps. He pointed out that this already applied in the farming sector, where there was a prescribed 2% annual increase.

Mr Todd replied to the question about matching salaries by saying that Labour would demand that everybody had to be paid at the highest level, whereas Business would want to find the mean salary. He noted that the minimum wage increase meant that, in a category with sectoral determination, the highest and lowest paid workers all had to get an increase. The only way to close the gap would be for the lower-paid worker to get a bigger increase, and Labour would be happy with this position. However, in practice, this was the kind of demand that would lead to bargaining, and in some cases even a strike.  

Business held the view that the legislation and sectoral determination should not regulate that kind of thing, if it happened above a minimum level, and sectoral determination should instead be used as the acceptable entry level for that sector.

Mr Roskam agreed with Mr Todd, but thought that in practice there was unlikely to be a problem, because sectoral determination occurred in specific sectors where government’s assistance was needed in determining minimum terms and conditions. There were scenarios in which there could be difficulties. This amendment was an attempt to empower government further in relation to vulnerable workers and to workers in difficult situations, rather than an attempt to create difficulties for ordinary employers, such as those in the manufacturing sector.

Mr Motau said that many employers complained that sectoral determinations were unaffordable to them. He asked if certain smaller companies could be exempted or excluded from certain requirements.

Mr Todd replied that there were no exemptions from sectoral determination agreements. The Minister had to set sectoral determination, after consulting with the Employers’ Conditions Commission, and employers could not ask to pay less than what the sectoral determination prescribed.

Mr Motau said some employers could say that they would have to lay off workers in order to be able to comply with sectoral determinations, which was clearly undesirable.

Mr Roskam replied that sectoral determination minimum wages were purposely set very low so that exemptions could not be requested. However, exemptions might be required if there was a collective agreement, agreed upon by some employers only, that was later extended.

He added, in respect of minimum increases and minimum wages, that the motivation from Government, which was supported by Labour, was that differences had been created. The difficult examples that Business had cited would always be subject to review, so that the Minister had to ensure that a reasonable and administratively sound decision had been made.  

Mr van der Westhuizen asked whether the minimum increase was stated as a fixed amount or a percentage. A fixed amount would close the gap between the higher paid and lower paid workers, whereas percentages widened the gap.

Mr Todd replied that it could be stated either way, as this was not specified. If the Minister said that the increase in the security sector would be 5%, everybody, including the managing director was entitled to the 5% increase, unless the Minister specified that this was meant for the lower levels of staff.

Mr Todd referred to Mr Roskam’s earlier statement that South Africa did not have an overall minimum wage, and reminded Members that minimum wages in specific sectors could have been set in terms of an industry bargaining agreement or a sectoral determination. This applied to a large proportion of workers in the country. An umbrella determination, set by the Minister, applied to everybody not covered by either of these agreements. Nobody objected to that principle, and in effect there was a safety net, or minimum standard, below which nobody was allowed to employ. If portions of the economy, such as shop assistants or scooter drivers were not covered by any other bargaining agreement or sectoral determination, they would be covered by the umbrella determination agreement.

He noted that there was some controversy around setting an increase in monetary rather than minimum-plus-percentage terms. The Minister, through the umbrella sectoral determination, set the lowest amount that an employer could pay. However, businesses and unions could bargain that their specific workers should receive more. If an employer had been paying its workers 50% or 100% more than the prescribed sectoral determination, it might claim that a certain increase would make the business uncompetitive, because the competitors were still paying the industry’s minimum determination. There was a view that prescribing the minimum increase also was running counter to the general principle of setting thresholds, and then allowing bargaining to determine higher rates above that.

Objects 3.5 Functions of Labour Inspectors and 3.6 Repeal of section 71 and 72
Mr Roskam then dealt with the enforcement of sectoral determination and the BCEA. From government’s viewpoint, the amendment would make enforcement easier, since at the moment the DoL had to go through an elaborate process to enforce compliance. An Inspector currently had to be issue a compliance order to an employer who was found to be in breach of the BCEA, but the employer could then appeal to the Director General. If the latter upheld the compliance order, the Inspector then applied to the Labour Court to enforce the compliance order. However, the effect of the Bill would mean that the appeal process to the Director-General would fall away.

Concerns had been expressed that if companies no longer had the option of using the administrative process of appealing to the Director-General, they would have to incur legal costs. On the other hand, the current practice of a written undertaking to comply, plus the Director-General’s appeal, made the process lengthy, and resulted, in practice, with a lack of enforcement of the BCEA and sectoral determinations.

Mr Motau said that this, and the shift towards criminalising certain offences, would place a lot more demands on the labour Inspectorate, who would be given more powers. The question was who would monitor the Inspectorate and ensure its integrity.

Mr Williams asked what would, in practice, change once the amendment was in force.

Mr Todd replied that labour Inspectors, once they had identified non-compliance, would no longer have to get a written undertaking from the employer that in future the latter would comply, although the Inspectors may opt to do this. Instead, the Inspector could immediately issue a compliance order and take the employer directly to court. Business had a problem with taking away the step of requiring the written undertaking, since an employer would have to appear in court once a compliance order was issued, taking away the current right of the employer to object to the Inspector’s finding and to appeal to the Director-General. Business had submitted that many instances of non-compliance were due to misunderstandings, rather than wilful failure to comply, and that this amendment would cause unnecessary costs and litigation, including, in some cases, costs orders being made against the DoL.

Mr Todd noted that the ILO, through its Country Programme for Decent Work, had stressed the need to resource labour Inspectorates properly, in order to enforce workers’ rights. The DoL agreed with this, but in practice struggled to retain trained staff. Business claimed that the DoL was using this to short-circuiting the process, instead of setting proper steps to solve the problems. There had been a suggestion, which was seen in the Memorandum on the Objects of the Bill, but was not in the Bill itself, that the CCMA could be used as an alternative route of enforcement, in order to address misunderstandings, rather than the court becoming involved immediately. There was no consensus on this at the moment. It could have resource implications for the CCMA, which would experience an increase in its case load, but equally the current wording would increase the Labour Court’s workload, and it would have to set aside a number of scheduled cases just to deal with compliance issues. Government had also suggested, in response to Business’s concerns, that there might be another process whereby representations could be made to the DoL, although this was not currently stipulated.

Object 3.7 Jurisdiction of Labour Court
Mr Roskam said the jurisdiction of the Labour Court had been clarified in the BCEA Bill. It would be possible to obtain a civil solution or remedy like an interdict, even if there was a criminal penalty, and this was an important technical amendment.

Object 3.8 Penalties
Mr Roskam said the Bill had amended the penalties, as set out on page 7. A new section 33A had been added in to the BCEA, and some fines had been increased.

New Bills still under debate at NEDLAC
Mr Roskam said there were still two other Bills still being debated at NEDLAC. Employment Equity Amendment Bill Act may result in further amendments to the LRA, because there were employment equity provisions in relation to LBs’ fixed term and part time clauses. The Employment Services Bill was also still under debate, and this could also have an impact on the current legislation, because it also dealt with issues like the registration of labour brokers.

Mr Williams asked when NEDLAC would finish its discussions on these two Bills, and said that all Bills should be reviewed together, since they influenced each other.

Mr Roskam said that he was not sure, but the DoL might have a more accurate time line on this. He did not anticipate changes immediately, and agreed that the Bills had to be seen as a package.

The Chairperson said that the Committee should write to the Minister, and made the point that it would not make sense to try to discuss the Bills separately of each other. He wondered if the Minister could not take over the Bills from NEDLAC if it could not reach consensus.

Mr Todd said that this was what had happened with the LRA and BCEA Amendment Bills that were presently under discussion, and the Minister indeed had the prerogative to take over the two currently with NEDLAC. He agreed that it would be useful for the Committee to ask the Minister how long this was likely to take. NEDLAC was a statutory body and it had to follow its own procedures, but the Minister could take over if the social partners failed to reach agreement.

He noted that one of the issues being discussed at NEDLAC at the moment, in its debates on the two Bills, was equal treatment in the context of employment equity. This was related to debates on LB and their fixed term or part–time contracts, so there could be an overlap in the debate, or equally it was possible to come up with something unrelated to this discussion.

The Chairperson reiterated that the Committee would express its concerns to the Minister.

Mr Todd said that it appeared that there was agreement at NEDLAC on problems of vulnerable workers being excluded from full protection. Business and Labour differed, however, on whether the draft proposals were the best way to cure the problems. The best remedy would be the one that had the fewest side effects and was the least invasive. Policy debates were still ongoing.

The Chairperson thanked Mr Todd and Mr Roskam for a job well done.

The meeting was adjourned.


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