Labour Relations Amendment Bill [B16-2012] & Basic Conditions of Employment Bill [B15-2012]: Briefing by the Department of Labour on input received during public hearings

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Labour

21 August 2012
Chairperson: Mr M Nchabeleng(ANC)
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Meeting Summary

The Department of Labour briefed the Committee on the response of the Department to the submissions received during the public hearings on the Labour Relations Amendment Bill and the Basic Conditions of Employment Amendment Bill during July 2012.  The Department had formulated its response in terms of the groups of interested parties that had made submissions to the Committee. The main issues raised in the submissions concerned the constitutionality of the amendments; the impact of the amendments on jobs; calls for another Regulatory Impact Assessment to be undertaken; the extension of organisational rights to minority unions; the exclusion of highly paid, senior executives from the Commission for Conciliation, Mediation and Arbitration; issues of compliance and enforcement and labour tenants in the agricultural sector.

The Department was confident that the Bills would pass constitutional muster but conceded that issues might arise from the implementation of the legislation that could result in constitutional challenges.  The Department disputed the assertion made in the submissions from organised business that the amendments would result in job losses and curtail job creation.  The Department disagreed that another Regulatory Impact Assessment was necessary as the current version of the Bills included most of the recommendations of the 2011 assessment.  In general, organised business did not support the granting of organisational rights to minority unions whilst organised labour supported the proposed amendments.  The proposed amendments regarding compliance and enforcement were intended to deal more effectively with those employers who consistently failed to adhere to undertakings given in terms of compliance orders.  The increased fines and penalties were in line with other legislation prohibiting child labour and forced labour.  The Land Reform (Labour Tenants) Act required that the conditions of service of a labour tenant could not be generally less favourable than the conditions applicable to farm workers in terms of the Basic Conditions of Employment Act.  The amendments allowed the Minister to determine the conditions of service of labour tenants.  The matter of whether estate agents were considered to be employees or contractors had been dealt with in previous Labour Court judgments.  The Department had noted the technical corrections to the Bills included in the submissions.  The issue concerning the classification of refuse collection as an essential service should be referred to the Essential Services Committee.

Members asked questions about the potential loss of jobs and the potential for Court challenges; the bargaining council agreements limiting temporary employment services in certain sectors; the unintended consequences of penalty provisions; recognition of minority unions; the agreements reached in NEDLAC and the areas of disagreement; the types of cases referred to the CCMA and challenges to CCMA awards and the provisions limiting access to the CCMA by highly-paid employees.  Members asked the Department to consider re-phrasing the provisions for Ministerial wage determinations, including provisions aimed at preventing violent strike action and making provision for an organisation to appoint an interim replacement for an executive involved in a labour dispute with the company.

The Committee Report on the submissions was adopted, with amendments.

The Committee discussed the attendance of Members at the memorial services arranged for the miners who had died at Marikana.  The Committee planned oversight visits to Marikana

Meeting report

The Chairperson said that Members of the Committee had attended the memorial service for the miners who had lost their lives at Marikana that was held in Parliament the previous day.  The Committee planned to visit the North West Province to hold discussions with the stakeholders and to establish what Government entities were doing to resolve the issues that had led to the tragedy.

Adoption of Committee Report on the submissions received during public hearings on the Labour Relations Amendment Bill and Basic Conditions of Employment Bill
The adoption of the Committee Report was postponed at the previous meeting of the Committee.  The adoption of the report was proceeded with on a page-by page basis.

Mr A Van der Westhuizen (DA) suggested that the comments from ESKOM concerning the impact on reaching black economic empowerment (BEE) targets were included in the report.

Mr E Nyekemba (ANC) observed that the report was not intended to repeat the submissions.  Supporting documentation would be attached to the final report submitted to Parliament.

Mr S Motau (DA) and Mr Van der Westhuizen pointed out grammatical and typographical errors on pages 2, 5, 17, 20, 24, 25, 29, 39 and 42.

The Chairperson confirmed that the errors would be corrected in the final version of the report.

Mr Motau moved for the adoption of the Committee report.  Mr Van der Westhuizen seconded the motion.  The report was adopted, with amendments.

Briefing by the Department of Labour (DOL) on input received during the public hearings on the Labour Relations Amendment Bill and Basic Conditions of Employment Bill
Mr Nyekemba said that the DOL was the leading department at the National Economic Development and Labour Council (NEDLAC).  The Committee had received submissions from organisations represented at NEDLAC, which included reference to the NEDLAC process.  He asked for clarity on the role of NEDLAC in the drafting of the Bills.

The Chairperson said that the Committee had the right to request input on the proposed legislation from anybody.  In particular, the Committee wanted to hear from the DOL if the Regulatory Impact Assessment (RIA) that had been undertaken was still valid and if the Bills satisfied Constitutional requirements.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, DOL was accompanied by Mr Xola Mnene (Parliamentary Liaison Officer), Mr H Mkhize (Adviser to the Minister of Labour) and Professor Paul Benjamin (University of Cape Town).  Prof Benjamin was the legal representative of the Government team at NEDLAC and one of the authors of the RIA.

Mr Mkalipi presented the briefing on the Department’s response to the submissions on the Bills to the Committee (see attached document). 

The introduction to the briefing covered the background to the Bills currently before the Committee and summarised the process that was followed in drafting the Bills.  The DOL had commissioned a RIA after the first versions of the Bills were published for public comment in December 2010.  Subsequent NEDLAC negotiations resulted in substantial changes to the 2010 versions of the Bills.  Although agreement was reached in NEDLAC on many issues, certain areas of difference remained.  The main areas of disagreement concerned the provisions relating to labour broking and strike violence.  The NEDLAC protocols allowed member bodies further engagement with Parliament on areas of disagreement but did not allow the parties to criticise agreements that had been reached.  The revised Bills were approved by Cabinet in April 2012 for submission to the National Assembly.

The Department had formulated its response in terms of the groups of interested parties that had made submissions to the Committee, i.e. organised business (Business Unity South Africa (BUSA) and member organisations of BUSA); organised labour; the South African Local Government Association (SALGA); the South African Society for Labour Law (SASLAW) and the American Chamber of Commerce in South Africa (AmCham).

The main issues raised in the submissions concerned the constitutionality of the amendments; the impact of the amendments on jobs (specifically the provisions concerning equal treatment, percentage wage increases and bargaining council extensions); calls for a new RIA to be undertaken; the extension of organisational rights to minority unions; the exclusion of highly paid, senior executives from the Commission for Conciliation, Mediation and Arbitration (CCMA); issues of compliance and enforcement and labour tenants in the agricultural sector.

The Department was confident that the Bills would pass constitutional muster but conceded that issues might arise from the implementation of the legislation that could result in constitutional challenges.  The main objections concerned the exclusion of highly paid employees from the CCMA processes.  The DOL pointed out that a high-earning employee was not precluded from seeking redress for unfair labour practices and that the limitation of rights for such employees was reasonable.

The DOL disputed the assertion made in the submissions from organised business that the amendments would result in job losses and curtail job creation.  Three issues needed to be taken into consideration when assessing the impact on employment, i.e. the need to provide protection for vulnerable workers, the complexity of predicting the impact of legislation on employment and the likelihood that job losses in the short term could be reversed as the temporary employment services sector adjusted to the new regulatory environment over time.  The Department’s response to the comments concerning the provisions dealing with the equal treatment of part-time and temporary workers, the determination of wage increases by the Minister and the extension of bargaining council agreements were provided.

BUSA and some of its member organisations had called for a new RIA to be undertaken.  The recommendations included in the RIA undertaken in 2011 were included in the 2012 versions of the Bills.  The position of the DOL was that there was no need to conduct a RIA on a RIA, which would delay the enactment of labour legislation reform and the results of which were likely to remain contentious.

In general, organised business did not support the granting of organisational rights to minority unions whilst organised labour supported the proposed amendments.  Although relatively few cases involving the dismissal of senior executives were referred to the CCMA, such cases took a long time to be resolved and had a significant negative impact on the organisation.

The issues raised concerning compliance and enforcement related to the enforcement of compliance orders and the increase in fines and penalties.  The proposed amendments were intended to deal more effectively with those employers who consistently failed to adhere to undertakings given in terms of compliance orders.  The increased fines and penalties were in line with other legislation prohibiting child labour and forced labour.

The Land Reform (Labour Tenants) Act, 1996 required that the conditions of service of a labour tenant could not be generally less favourable than the conditions applicable to farm workers in terms of the Basic Conditions of Employment Act (BCEA).  The proposed amendments were intended to make provision for the Minister to establish a method for determining the conditions of service for labour tenants.

The submission from SASLAW was more technical in nature and did not include comment on policy issues.  The response of the DOL to specific comments and recommendations made by SASLAW and by other contributors were provided.  The Department listed the changes that would be made to certain clauses included in the Bills.

DLA Cliffe Dekker Hoffmeyr made a submission on behalf of the Real Estate Business Owners of South Africa.  The main concern was whether estate agents were regarded as employees or independent contractors.  The Department pointed out that the LRA took precedence over the Estate Agents Act in matters concerning labour relations and that the matter had already been dealt with judgments handed down by the Labour Court.

The submission from SALGA raised the issue of classifying refuse collection as an essential service.  It was not appropriate to make provision for this in the LRA and the Department suggested that the matter was referred to the Essential Services Committee.

The Bills did not include transitional provisions to deal with the implications of the amendments on existing arrangements, for example the effect on existing contracts of employment when the amendments were promulgated.

Prof Paul Benjamin added further comment on the limitation of the right of highly-paid employees to refer disputes with the employer to the CCMA.  Such disputes tended to be of long duration and came at considerable cost to the employer.  In general, highly-paid executives had substantial bargaining power, were already well protected and were unlikely to be exploited by the employer.  In general, senior executives were excluded from labour legislation.  Alternative mechanisms to deal with disputes were available and the State Law Adviser was confident that the proposed amendment would survive a constitutional challenge.

The RIA undertaken in 2011 dealt with very different legislation.  The focus had been on labour broking and fixed term contracts and highlighted the incidences of abuse of vulnerable workers and the need for regulation.  The recommendation was that labour brokers were not banned and that the provisions concerning fixed term contracts made no sense.  The labour broking issue first came to light in 2002 and the Department had subsequently investigated the practice extensively.  The problems identified had been addressed and there was no need for further investigation to be undertaken.

Prof Benjamin pointed out that many of the comments and objections made in the submissions were based on misreading the provisions in the Bills.

Discussion
Mr Van der Westhuizen noted that the DOL had acknowledged that the proposed amendments could result in temporary job losses.  He felt that any potential for job losses was a matter for concern.  He disagreed that labour regulation in China should be considered to be a good example to be emulated.  He asked the DOL to suggest changes to the provisions dealing with wage determination by the Minister.  He asked for confirmation that the technical corrections included in the SASLAW submission had been adopted.  The DOL had argued that bargaining council agreements concerning temporary employment services in the metal industry had not resulted in job losses.  He asked how the provisions in the Bill compared to the restrictions included in the bargaining council agreement.  The purpose of the LRA was to promote good labour relations and avoid the kind of labour unrest the country had experienced in recent years.  The recent incident at Marikana was one example of violent labour protest.  He asked how labour legislation could prevent the need to call in the police to deal with incidents of labour unrest, for example if provision could be made that would compel opposing parties to undergo a process aimed at reaching agreement before violent strike action was embarked on.

Mr Motau recalled that Members of Parliament were recently criticised for making bad laws.  He agreed that regulatory assessments could not be done ad infinitum but the 2011 RIA was done on legislation that differed substantially from the current version of the Bill.  He asked if an impact assessment should not be undertaken on at least the changes that had been made.  It was stated in the presentation that interested parties making submissions had misinterpreted the proposed legislation and that members of NEDLAC had failed to agree on significant parts of the Bill.  He wondered if the DOL had failed to adequately explain the proposed legislation to the business sector.  He asked if the DOL had considered the unintentional consequences of the proposed amendments concerning criminal penalties for what were merely administrative transgressions.

Mr D Kganare (COPE) remarked that the adverse impact on jobs was emphasised whenever labour legislation was amended.  This happened in other countries as well.  Employers should present a better argument for their concerns to be taken seriously.  He suggested that the phrasing of the provisions concerning high earners being prevented from taking their cases to the CCMA was re-worded in order for it to be clear that other avenues for seeking redress were open to this category of employees.  He pointed out that the Employment Equity Act already prohibited unfair discrimination.  The Bills made provision for equal pay for work of equal value but the determination of ‘equal value’ was subjective.  He questioned the provision to grant organisational rights to minority unions.  The employer should be allowed to decide whether it was in its interests to recognise and negotiate a minority union.  He asked for more clarity on which cases could be referred to the CCMA and if a CCMA award could be challenged.

Mr K Manamela (ANC) said that the extent of the membership of the Association of Mineworkers and Construction Union (AMCU) at the Lonmin mine at Marikana had not been determined.  Even if a minority union had only 1% membership in an organisation it could be extremely disruptive, particularly in the mining sector.  The Minister of Mineral Resources had refused to acknowledge the existence of AMCU and employers were generally averse to giving recognition to multiple unions.  There was general agreement that endless regulatory impact assessments should not be undertaken and that the processing of the proposed legislation should not be delayed.  He thought that it was necessary to consider the issues regarding the RIA that were raised in the submissions.  The Committee would like to hear how the 2011 RIA had influenced the changes that had been made to the proposed legislation.  He noted that members of NEDLAC were prevented by protocol from raising issues agreed on in NEDLAC elsewhere.  He asked for more clarity on the sector agreements that had been reached.

Mr Van der Westhuizen was under the impression that the content of the proposed legislation had been agreed in a forum where there were wide differences between the parties.  As a result, the phrasing of the provisions in the Bills was compromising in nature.  He disagreed with such an approach as the wording of legislation should be absolutely clear and that the need to clarify legislation in Court judgments was avoided.  Too many clauses in the Bills were vague and this could not be regarded as good legislation.

The Chairperson said that not all Members of the Committee were legal experts and that it would be useful if examples and suggestions were provided.

Mr Motau observed that Prof Benjamin appeared to anticipate Constitutional Court challenges to the provisions preventing highly-paid employees from taking disputes to the CCMA.  The Committee was not willing to pass legislation that would be vulnerable to Court challenges.

Mr Manamela asked that debate on specific vaguely-phrased clauses was deferred until the Committee embarked on the formal deliberation of the Bills.

Mr Van der Westhuizen agreed that detailed discussion on the clauses would be undertaken at a later stage.  However, the violation of the rights of employees was a serious concern.  The most damage to an organisation occurred when disputes involved senior employees.  Such disputes tended to be lengthy and the organisation was hamstrung until the dispute was resolved.  The dispute usually resulted in a total breakdown of the relationship between the employer and employee, who was unlikely to return once the matter was resolved.  He suggested that consideration was given to making provision that would allow the Board the right to appoint an interim replacement for the senior employee involved in a dispute and allow the organisation to continue to function.

Mr Mkalipi agreed that any job losses were of serious concern but the Department could not guarantee that there would not be any.  He denied that the DOL was copying the labour practices of China but had merely pointed out that temporary employment services were restricted in other countries.  By its nature, labour law restricted the rights of employers and employees but the test was whether or not the law was reasonable in terms of the Constitutional requirements.  There was no guarantee that the legislation would not be challenged in Court.  Currently, labour legislation was regularly being challenged and future challenges were not ruled out.  He undertook to provide the Committee with more information on bargaining council agreements that restricted temporary employment services and labour broking activities, which could be taken into consideration when Members considered the arguments made by the business sector that the Bills would result in job losses.

Section 150 of the LRA attempted to avoid labour disputes that resulted in violent strike action.  The Department attempted to strengthen the provision allowing for the parties involved in the dispute to negotiate a resolution.  He conceded that the DOL could have done more to explain the proposed amendments to the business sector.  With regard to the increased penalties, he assumed that the Magistrate would take into consideration what the consequences would be if the employer was imprisoned.  The current legislation already made provision for imprisonment penalties.   He agreed that disputes with senior employees had an adverse impact on the organisation and the economy and that there was a need to make provision for simpler avenues to resolve conflict between the employer and senior employees.  The intention of the proposed amendments concerning organisational rights for minority unions was to allow for mechanisms that prevented unnecessary industrial action, strikes and demands for recognition and rights.

Prof Benjamin explained that the provision for the Minister to increase the minimum wage was only applied in the most informal sectors of employment, for example domestic work.  The provision was not useful in other, more organised sectors.  The Department was not averse to considering a provision that would limit the increase to a cost of living increase.  To date, he was aware of only two instances where employers were fined for contravening the legislation.  There was no record of anyone being jailed for contraventions.  Agri SA had clearly misread the prohibited conduct clause, which did not prevent farmers from operating a farm shop.  The clause was carefully crafted and allowed for both civil and criminal penalties.  The provision was aimed at preventing abusive practices, for example where car guards had to pay a fee to the company providing parking services.  The penalty for employing child labour was aligned with the penalties in other legislation dealing with children’s rights.  Compliance with the labour legislation would be improved if bad employers were sent to jail for breaking the law.

Previously, the CCMA had jurisdiction after notice to strike was issued and the matter was referred to the Commission.  Currently, the CCMA became involved at an earlier stage and assisted with the negotiation process.  This practice had been successful but it was necessary to ensure that the CCMA had the necessary skilled resources.  In his opinion, the concerns regarding recognition of minority unions were over-stated and it was not necessarily the case that the business sector rejected the proposed provisions.  Currently, the employer was the key player in accepting bargaining council agreements.  A minority union was only allowed to go to arbitration if the employer did not terminate a collective agreement.  It was preferable if the CCMA was involved in the process.  Provision was made that the union with the largest percentage membership could be granted the right to negotiate with the employer if there was no single majority union (50% plus 1 member).  In future, disputes over recognition could be referred to the CCMA for arbitration.  In some cases, disputes involving minority unions had resulted in better agreements being reached subsequently.

Prof Benjamin was not convinced that some of the arguments put forward in the submissions would stand up in Court.  The LRA and BCEA were considered to be well-crafted legislation but it was not possible to prevent legal challenges.  The 2011 RIA had recommended that labour broking was not banned but had recommended certain specific restrictions, for example the provision for joint and several liability and the shifting of protection against unfair dismissal.  He pointed out that the National Planning Commission document included reference to the issue of inequality in the workplace and the declining capacity within unions.

Mr Mkalipi added that Labour Court judges were currently not appointed on a permanent basis and did not enjoy the same rights as judges in other Courts.  There was currently a Bill to deal with this situation before the Portfolio Committee on Justice and Constitutional Development.  However, the processing of that Bill was taking too long and the provision in the amendments to the labour legislation was not contradictory.  The proposed amendment had been agreed at NEDLAC.

The Chairperson recalled that the submission from BUSA had made reference to the International Labour Organisation (ILO).  South Africa was a signatory to the ILO conventions and international agreements should not be challenged during the legislative process.

Committee oversight visit to Marikana
The Chairperson advised that the Committee would be represented at the memorial services arranged for those who had died at Marikana.

Mr Manamela suggested that the Chairperson attended the memorial service at Marikana.  Members would represent the Committee at the other memorial services.  He asked the Committee Secretary to find out where the memorial services would be held.  The Committee would join the Portfolio Committee on Mineral Resources in conducting oversight visits to the area, to investigate Government interventions to deal with the crisis; to consider the work done by the Ministerial Committee that had been established and to interact with the Ministers of Labour and Mineral Resources, the unions and the employer.  Issues might arise that could have an impact on the Committee’s deliberations on the Bills.

Mr Motau advised that the Democratic Alliance agreed with the proposals.

The Chairperson thanked the Department and Prof Benjamin for the briefing.  The Committee would proceed with the processing of the Bills by deliberating on a clause-by-clause basis.

T
he meeting was adjourned.

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