Basic Conditions of Employment Amendment Bill [B15-2012]: continuation of deliberations

Meeting report

The Chairperson referred Members to the memorandum issued by the Committee on the need to make technical corrections to the Bills.

Mr S Motau (DA) asked who was responsible for ensuring that the technical corrections to the Bill were made.

Mr A Van der Westhuizen (DA) asked which Rule of Parliament required the memorandum to be issued.

Dr Barbara Loots, Parliamentary Legal Adviser explained that the memorandum was a request from the Committee to the House to effect technical corrections to the Bill. The request would be tabled in the House and would be voted on. Rule 249 was the applicable Rule of Parliament. The Committee had to obtain the permission of the House because the technical corrections went beyond the scope of the Bill introduced by the Department of Labour.

Mr Motau asked that the legal team liaise with the Committee Secretary to ensure that the process was finalised.

Deliberations on the Basic Conditions of Employment Amendment Bill
The Committee had deliberated on clauses 1 to 7 of the Bill on 11 September 2012.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour (DOL) took the Committee through the proposed amendments to the Basic Conditions of Employment Act (BCEA). 

Clause 8
Section 55 of the principal Act was amended. Clause 8 (a) was a technical amendment.  Clause 8 (b) gave the Minister of Labour the power to increase actual wages in terms of a sectoral determination.  Currently, the Minister was only allowed to increase the minimum wage applicable to a particular sector.  The amendment resulted from a policy imperative to allow the wages of workers in a vulnerable sector (e.g. domestic workers) to be increased by a certain percentage (e.g. the inflation rate).  Organised business had not agreed to the amendment at the National Economic Development Labour Advisory Council (NEDLAC).  The issue had also arisen in comments made by the business sector during the public hearings on the Bills.

Clause 8 (c) gave the Minister the authority to regulate and restrict certain types of work in a sector (e.g. task-based work, work for commission only, work done at home and sub-contracting).  The submission from ESKOM commented on this clause.  There had not been agreement on the clause at NEDLAC.

Mr Motau remarked that the restriction on types of work in certain sectors was a problematic issue.  The Act required the Minister to exercise the authority in accordance with the recommendations of the Employment Conditions Commission.  He asked what the powers of the Commission were.

Mr Van der Westhuizen acknowledged that the provision for minimum increases in clause 8 (b) (ii) was intended to ensure that workers were paid a decent wage and were not exploited.  The potential unintended consequence of the provision was the loss of jobs.  Employers were not always able to afford increased wages or were forced to retrench workers due to adverse economic conditions.  Workers could also lose abilities and become less productive.  He suggested that provision was made for the Minister to impose a minimum increase amount rather than a percentage increase.

Mr Mkalipi explained that representatives of organised business and organised labour as well as experts appointed by the Minister served on the Employment Conditions Commission.  A list of experts was compiled by organised business and organised labour and submitted to the Minister for consideration through the NEDLAC processes.  The experts did not represent Government.  The Minister could only introduce a sectoral determination on the recommendation of the Commission.  The Minister had the right to refer the recommendation back to the Commission if she disagreed with it.  The Minister did not have the power to make a unilateral determination.  The legislation did not state that the Minister must increase wages by a percentage or by a fixed amount.  The provision stated that remuneration could be adjusted by minimum rates or minimum increases.  The adverse impact of wage increases on job losses applied to other sectors as well.  The Commission had to consider the impact of the recommendation made to the Minister on poverty alleviation and on the ability of the sector to afford the increased wages.  Application for exemption from the determination could be made to the Minister.  The Minister had granted some applications from the retail and security sectors in the past.  The Department could provide the Committee with further information if required.  The concerns raised were valid but the legislation made provision for remedies if there would a negative impact.

Mr Motau said that the underlying issue was the extent of the powers granted to the Minister in the legislation.  There was potential for disagreement between the Minister and the Commission.  The Committee should avoid passing legislation that could result in untenable unintended consequences.  The Minister was granted the power to restrict certain types of a-typical work when there was a global trend to move away from formal types of employment.  He cautioned against introducing legislation that bucked the international trends towards a-typical work.  He cited the examples of Transnet and ESKOM, who had moved towards sub-contracting rather than direct employment of workers in recent years. He suggested that the proposed amendments accommodated a-typical work.

Mr Mkalipi replied that the legislation empowered the Minister to make sectoral determinations in accordance with the recommendations of the Commission.  The legislation ensured that the ministerial determinations were made only after adequate consultation had taken place.  Any unilateral determination would be an abuse of power and would be successfully challenged in Court.  The Minister must publish notice of the intention to review the wages in a sector in the Government Gazette and invite public comment.  The public comment was submitted to the Commission, not to the Minister.  The policy imperative was to allow the Minister to take action if certain types of work made workers in a sector vulnerable to abuse, subject to consultation with the Commission.  The intention of the proposed amendments was not to grant blanket powers to the Minister and prevent employers from using sub-contractors.

Mr Motau asked if the DOL was satisfied with the performance of the Commission. He was concerned over the functioning of NEDLAC being stymied by sending junior officials with no authority to make decisions as representatives.  Parliament had oversight responsibilities and had to ensure that all the links in the chain were effective.

Mr Mkalipi advised that the DOL was satisfied with the functioning of the Commission. He conceded that the Bills had been delayed at NEDLAC but the reason was not that junior representatives with no authority to negotiate were sent by the parties.  The shortcomings in the NEDLAC process did not impact on the Bills.  The Department wished to allow social dialogue and did not press NEDLAC to speed up the process.

The Chairperson remarked that the legislative processes had built-in checks and balances.

Advocate Anthea Gordon, Parliamentary Legal Adviser clarified that the proposed amendments did not amend the relationship between the Minister, the Commission and the Director-General of the DOL.  The scope of the sectoral determination was amended and not the process of how the content of the determination was established.  The Minister was empowered to make the sectoral determination but had to adhere to the process or else the determination would be open to legal challenge.

Mr Van der Westhuzen was concerned that the Commission could weaken the negotiating position of labour unions.

Mr Mkalipi pointed out that sectoral determinations generally applied to vulnerable sectors where unions were not active and where no collective bargaining took place, for example the domestic, retail and forestry sectors.  The Minister and the Commission had never interfered in sectors where there was collective bargaining.  For example, only 23% of workers in the security sector were members of unions.  The employers and employees negotiated wage agreements and submitted the agreement to the Commission.  In most cases, the Commission included the agreement in the recommendation to the Minister.

Clause 8 (d) (o) made provision for setting a threshold of representativeness that allowed a trade union to be automatically granted certain organisational rights.  The business sector had expressed concern over the provision and the proposed amendments to sections 12 and 13 of the Labour Relations Act.  The policy imperative was to limit the possibility of strikes because a union wanted organisational rights.  The union should approach the Court, rather than call a strike.  The amendments allowed a minority union to apply for acceptance to the Commission and for the Minister to issue a sectoral determination on the membership threshold applicable to a union in the sector.  The Minister would determine what would be regarded as “sufficiently representative” in a particular sector and needed to consider the reasons for the decision.

Clause 8 (d) (p) made provision for labour tenants on farms, governed by the Land Reform (Labour Tenants) Act.  Labour tenants were technically not workers and were usually ‘paid’ through the granting of grazing rights on a farm.  The Land Reform Act required such benefits not to be less favourable than the benefits in terms of the BCEA.  The difficulty was in determining what was considered to be less favourable benefits.  The proposed amendment allowed the Minister to conduct research that could be used to determine the value of the benefits accruing to a labour tenant.

Mr Motau advised that the Democratic Alliance supported the proposed amendment.  He understood that a union with a membership of 50% plus one was considered to be a majority union.

Clause 8 (e) allowed the Minister to make a sectoral determination for a sector where there was a bargaining council in place but the workers remained vulnerable.  The Minister was previously not allowed to intervene if a bargaining council agreement was in place, regardless of the content of the agreement.  For example, there was a bargaining council for the construction sector in the Eastern Cape but the council had not functioned for a number of years.  The proposed amendment was not agreed to by all parties at NEDLAC.

Clause 9
Clauses 9 to 11 dealt with the enforcement of the BCEA.  Clause 9 amended section 68 of the principal Act.  The current provisions allowed an employer to make a promise to the labour inspectorate to correct any transgression.  Continued failure to comply or a refusal by the employer to comply would result in the labour inspector issuing a compliance notice.  The Labour Court was approached as a last resort.  The proposed amendment no longer forced the labour inspector to accept a promise to comply from the employer and allowed the inspectorate to take the matter to Court if the employer failed to comply with a written undertaking.

Mr Van der Westhuizen had observed during an oversight visit to a farm that the labour inspector had recorded the areas of non-compliance on a form, a copy of which was handed to the employer.  He asked what the status was of that document and how the list of areas of non-compliance differed from a compliance order.

The Chairperson remarked on the differences of the functions of a labour inspector and a traffic officer.

Mr Mkalipi explained that the legislation required a labour inspector to obtain an undertaking from the employer to correct the areas of non-compliance.  Certain employers would agree to correct the transgressions and sign the list.  Other employers would dispute the transgressions and take the matter to Court.  It was costly and time-consuming to deal with disputes in the Labour Court.  Unlike a traffic officer, the labour inspector did not have discretion in the manner in which non-compliance was dealt with.  The amendment allowed the inspector the discretion to refer the matter to the Labour Court in cases where the employer could not be trusted to comply.

Mr D Kganare (COPE) was concerned that the wording of clause 9 (a) “a labour inspector … may endevour to secure a written undertaking” was too weak.  He felt that labour inspectors had to have more authority.  He suggested that the phrase “issue a notice compelling the employer to provide a written undertaking” was inserted instead.  Clause 9 (b) would apply if the employer continued to fail to comply.

Mr Van der Westhuizen wondered if the provision created the opportunity for bribing the inspector to overlook areas of non-compliance.  The labour inspectorate needed to be efficient and ensure that workers were protected.  He asked if the DOL had the power to investigate complaints of inspectors failing to carry out their duties and to discipline the inspector.

Mr Motau said that the resources and skills of the labour inspectorate would have to be increased.  He asked who oversaw the labour inspectors.  If the inspectors were allowed discretion, it was necessary to ensure that the necessary capacity was in place.

Mr Mkalipi said that the only change in clause 9 (a) was the substitution of the word “must” with the word “may”.  The labour inspector was no longer forced to accept an insincere promise from an untrustworthy employer and could issue a compliance order without further delay.  Bribery of a labour inspector contravened the laws applicable to the public sector and the code of conduct of labour inspectors.  The Committee conducted oversight over the DOL and would hold the Department accountable for the conduct of its officials and for the action taken when allegations of corruption were made.  In his opinion, the amendments did not make it easier for officials to accept a bribe.

Mr Mkalipi explained that section 68 made provision for labour inspectors to attempt to resolve areas of non-compliance amicably.  The current legislation assumed that the relationship between the inspectorate and the employer had a basis of trust.  Clause 9 (a) allowed for the employer to provide a written undertaking.  Clause 9 (b) allowed the employer to be taken to Court if he continued to fail to comply.  The Department wanted most cases to be resolved by mutual agreement and only a small percentage to be settled in Court.

Mr Kganare suggested that the provisions allowed for an employer to be provided with a list of the areas of non-conformance and that the employer was allowed an opportunity to correct the transgressions before the matter was referred to the Labour Court.

The Chairperson remarked that employers often claimed ignorance of the requirements for compliance.  Once the employer gave a written undertaking to correct the violations, corrective action was generally taken within 21 days.  The proposed amendments allowed the inspectorate to refer the matter to Court if necessary.

Mr Mkalipi explained that the inspectorate was not required to produce a written list of transgressions.  The employer could be verbally informed of violations.  The only document required was the written undertaking by the employer to correct the violations.  An employer could refuse to give a written undertaking, in which case a compliance order was issued.  Section 69 of the Act dealt with compliance orders.

Mr Les Kettledas, Deputy Director-General, DOL explained that the Occupational Health and Safety Act required a prohibition notice to be issued in duplicate.  The notice had to be signed by the employer.  The notice was issued when the inspector found unsafe working conditions.  Work was suspended until the employer had rectified the working conditions.  The employer was allowed a specified period to correct the situation and the premises was inspected again before work was allowed to resume.  The BCEA dealt with matters concerning wages, overtime, etcetera.

Mr Mkalipi added that the legislation did not prescribe that the list of violations had to be in writing.  The violations could be listed and agreed to by the employer during the inspection as a matter of practicality.

Mr Motau referred to the comment in the public hearings that the right of the employer to object had been taken away and that the employer was denied an opportunity to take corrective action before the matter was taken to Court.

Clause 10
The amendment to section 69 required a compliance order to include a date by which corrective action had to be taken.  The matter was referred to the Labour Court when the compliance order was not adhered to.  Much engagement with the employer took place before a compliance order was issued and there was no reason to allow for the order to be disputed.  The employer could not claim ignorance either.

Mr Motau remarked on the current heavy workload of the Labour Court.  He asked if the Court would not be further over-burdened.

Mr Mkalipi agreed that the Labour Court was already over-burdened.  There were not enough Labour Court judges and the Court suffered from inadequate funding.  The intention of the amendments was to speed up the compliance process, preferably out of Court.  The DOL was attempting to persuade the Court to set aside one day a week to deal with compliance orders.  The labour inspectors would take such weekly hearings into consideration when issuing compliance orders.  This arrangement had worked well in the Western Cape.

Clause 11
The amendments to section 70 of the principal Act were made to improve readability.

Clause 12
Sections 71 and 72 of the principal Act were repealed.

The Chairperson thanked the participants for their contribution to the proceedings.  Members would be informed of the date when deliberations would be resumed.

The meeting was adjourned.