Labour Relations Amendment Bill: clauses 24 - 38 briefing

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Employment and Labour

23 October 2012
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Portfolio Committee on Labour continued deliberations on the Labour Relations Amendment Bill (the  Bill). Clause 24 stated that the CCMA could assume jurisdiction in all matters where employees earned less than R172 000 per annum as stipulated by the Basic Conditions of Employment Act (BCEA), and despite any dispute resolution mechanisms already in existence. Clause 26 said that if a dispute was in public interest then the CCMA could intervene and call the parties to the negotiating table, and a Commissioner could be appointed. Members asked for clarity as to whether the power to intervene was given to the Commission or to the Director of the Commission how this might impact on the decision to intervene. Clause 27 was a technical amendment. Clause 28 was an important clause that was aimed at changing the employment conditions of judges in the Labour Court, to rationalise them with the conditions of judges in the other courts, who were appointed for life, and the changes were fully in line with the proposed Superior Courts Bill. It was currently difficult for the Labour Court and improved conditions should lead to better uptake and the ability to address the backlogs. Clause 29 was a technical amendment. Clause 30 stated that the CCMA rulings could only be challenged in the Labour Court after a case had been finalised, to avoid in limine challenges, other than in exceptional circumstances. Clause 31 concerned the meeting of the Rules board for the Labour court. The Clause 32 prevented consultants who appeared in the labour court from charging fees for those services to vulnerable workers. Clause 33 and 34 were technical amendments correcting an omission and allowing judges to resign respectively. Clause 35 stated that if an employee who was on a fixed term contract had his contract terminated in the face of a reasonable expectation that that contract would be extended, then this would constitute a dismissal. Furthermore, if a contract was extended on conditions that were less favourable than before, without consultation, then this would also constitute a dismissal. Clause 36 was enacted in order to deal with the decision of the court in Frys Metal where the court allowed employers to dismiss an employee on the basis of their right to lock out, and here Members asked for further clarity on the intention of the lock out, how it differed from a strike, and how the no-work-no-pay principle applied.

Clause 37 dealt with pre-dismissal hearings, which were now renamed inquiries to correct perceptions as to their nature. Pre-dismissal hearings were supposed to replace CCMA hearings in order to provide for a more speedy resolution of disputes. Employers and employees could agree contractually to solve any disputes before an independent arbitrator and split the costs. Clause 38 dealt with a threshold of high earners set by the Minister who would be excluded from unfair dismissal. If an earner earned more than R1 million per annum, that person would not have to be given a golden handshake, but only three months’ notice or pay. ANC Members were vehemently opposed to this provision. They feared that such a provision was open to abuse by employers, undermined the employment security of workers and excluded too many workers from the protection of the LRA, but it was explained that vulnerable workers did not fall into that category. In regulating the threshold, the Minister would also have to consult with parties at Nedlac and this would serve as a form of protection for the high earners.

Meeting report

Labour Relations Amendment Bill: deliberations from clause 24
Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour took the Committee through the proposed amendments to the Labour Relations Amendment Act (LRA).

Clause 25
Section 147 of the Labour Relations Act (LRA) was being amended by this clause. The LRA privatised dispute resolution such as the CCMA and bargaining councils. There were also private agreements between companies and individuals on how to deal with disputes. Often these private agreements referred parties to arbitration. Mr Mkalipi said that if employees earned less than the threshold, which was presently R172 000, the Commission for Conciliation, Mediation and Arbitration (CCMA) could assume jurisdiction in all cases, on two conditions. The first condition was if the employee was required to pay for all the services, for example, during private arbitration. The condition that CCMA could intervene was attempting to protect employees who earned less than the threshold and did not have the money to pay for arbitration, and would ensure that access to justice was not denied to those who could not afford it. The second situation was where the private arbitrator or institution appointed was found not to be independent or if there was an allegation of bias then the CCMA could assume jurisdiction.

Mr S Motau (DA) asked for clarity as to whether the threshold was a moving target, which would be revised from time to time.

Mr Mkalipi replied that the threshold was set in terms of the Basic Conditions of Employment Act (BCEA) by the Minister of Labour. The threshold governed the level at which UIF payments were paid as well, and would be published on a yearly basis, with adjustments for inflation.

Clause 26
This clause dealt with disputes of public interest. Section 150 of the LRA stipulated that the CCMA could call parties to the negotiation table if the strike was likely to affect public interest. The CCMA had authority to call parties even if they were not involved in the beginning - for example even if there was a previous Bargaining Council decision. Parties could previously refuse to go to the CCMA even if they had been called in CCMA, but this was now changed. At National Economic Development and Labour Council (NEDLAC) there was overall consensus on this, apart from two issues. Business was of the view that if a strike was in the public interest, then going to negotiate at the CCMA should have had the effect of stopping the strike. The Department of Labour (DoL or the Department) did not agree to this, because of the potential unconstitutionality of interfering with the right to strike. The second point was that the Federation of Unions of South Africa (FEDUSA) wanted the section to read ‘the Commission’ and not ‘the Director’ of the CCMA.

Mr A Van der Westhuizen (DA) asked whether there would be any improvement in the wording of the section if the word ‘director’ was substituted with ‘commission’, and asked also if this would have any legal effect.

Mr Mkalipi replied that the present law spoke to “the Commission” but that the Department was of the opinion that the Commission was embodied in the Director.

Dr Barbara Loots, Parliamentary Legal Advisor, was of the opinion that the phrasing of the Act was correct. ‘Director’, as defined in the Act, meant a person appointed in terms of section 118 of the principal Act. The functions of the Director were also defined and these included managing and supervising the Commission’s staff. The Director was a senior member of the commission who could appoint Commissioners to deal with the dispute. This was similar to how the Judge President of a court could assign cases to a judge to decide.

Mr D Kganare (COPE) asked whether the Department had considered the effect of parties not co-operating, particularly trade unions that were unorganised and wanted to hide behind other parties.

Mr Mkalipi noted that the section is crafted for “parties“, which could be anybody. Any organisation central to solving a dispute could be compelled to negotiate with the CCMA.

Mr Herbert Mkhize, Adviser to Ministry of Labour, added that solidarity meant that many parties that had their own agendas could become involved. Different organisations could use strike action to further their own means. An example of the church in Marikana was given. The church wanted to sit at the bargaining council and sought to monopolise the report back regarding the negotiations.

Mr Motau asked what remedies the CCMA had if parties still refused to come to the negotiating table.

Mr Mkalipi stated that the LRA was a product of consensus. A strike was also about public support and the Department’s hope was hinged on the fact that no party would desire public discord. The CCMA could also go to the Labour Court to compel parties to come to the negotiating table. The section was therefore not linked to any other punitive measures. The section also heavily relied on public pressure and the parties’ commitment to the law. He also pointed out that the strike in the mining sector was an exception and since 1995 most strikes were organised enough for parties responsible to be identified.

Mr Mkhize commented that the LRA was a blunt instrument that relied entirely on the willingness of the parties to engage. The CCMA could get an order from the Labour court but parties could come and keep quiet. He used the example of the Road Freight strike where parties were compelled to come but refused to say anything. It was the nature of the business that there were limited punitive measures if parties did not toe the line. An option to force parties to talk was not available for it was assumed that parties should want to talk. He also said, in answer to the Chairperson’s question whether it would make any difference if “director” or “Commission” were used, that this was not essential, and this could always be decided upon when passing the final Bill.

Clause 27
This was a technical amendment replacing “Supreme Court” with the “High court”.

Clause 28
The clause was intending to improve conditions for judges of the Labour Court. At the moment, the judges of the Labour Court were appointed on a ten-year basis, as opposed to judges in other superior courts, who held life tenure. Their conditions of work and remuneration were not the same. As a result many experienced practitioners opted to seek appointment to the High Court as opposed to the Labour Court. The Superior Courts Bill contained the same provisions as were now stated in this Bill. The former also stated that different legislation should deal with the matters as set out in this the Bill. If the Superior Courts Bill came into force before the LRA Bill did, then there would be no need for the Committee to insert the section. It was however, unlikely, but would not be a problem since the issue was merely duplicated in both Bills and there was no contradiction.

The Chairperson highlighted that the Superior Courts Bill had been with Department of Justice for more than eight years. He suggested that the clause be kept in this Bill.

Ms L Makhubela-Mashele (ANC) asked how the Committee would deal with a contradiction, in the event that the changes made to the Superior Courts Bill were different from those adopted by the Labour Portfolio Committee.

The Chairperson asked whether the Superior Courts Bill would affect the LRA in any other way, apart from the remuneration of judges and their conditions of employment.

Ms Suraya Williams, Principal Legal Advisor, Office of the Chief State Legal Advisor, noted that the Superior Courts Bill was meant, amongst other matters, to align the Labour Court with the other Superior Courts. The Superior Courts Bill was not introducing new legislation but, in clause 2, that Bill dealt with the Labour court, and it was worded in exactly the same way as in this Bill. Any changes would be relayed, and she reiterated that it would be far easier to accept the changes in this Bill, and if necessary amend them later, than leaver them out.

The Chairperson remarked that the changes in the Labour Court conditions should result in more judges being willing to be appointed, which would reduce the case load of the Labour Court and address staff shortages.

Mr Mkalipi assured the Committee again that any changes proposed by the Portfolio Committee on Justice, when it considered the Superior Courts Bill, would be relayed to this Committee.

Clause 29
This was a technical amendment adding the phrase ‘any other employment law’ , which would, for example, be the BCEA and the UIF. The Labour Court did not have jurisdiction regarding unresolved disputes that should first be dealt with at the CCMA.

Clause 30
The present law stated that the CCMA’s ruling on a point in limine could be taken on review to the Labour Court. If the Labour Court found in favour of the Commissioner, the matter could be taken to the Labour Appeal Court. Clause 30 changed that and stated that only in exceptional cases should the Labour Court deal with points in limine, as the Court should only hear finalised cases. The CCMA had to deal with matters until they were finalised. This was agreed to by NEDLAC, but the legal advisors were unhappy with the point, saying that it would be a waste of time and money should it later be discovered that the CCMA had no jurisdiction. The Department was of the opinion that it was in the interests of fairness and justice for the Commissioner to hear a matter until it was finalised. The Department made a policy decision that took into account the workers who would have to wait for long periods of time before points in limine were discussed. The clause now gave the Court the discrimination to disregard the current restriction if it was in the interests of fairness and justice.

Mr Kganare asked whether the Department had thought about the constitutionality of the notion of fairness.

Mr Mkalipi responded that the Department was confident about the constitutionality of the restriction.

Dr Loots agreed that constitutionality was not an issue, because the Court still had discretion, therefore fairness was maintained.

Clause 31
At present the Rules Board meetings were entirely dependent on the Judge President. Previously, the Rules Board met once in 10 years. Parties at NEDLAC believed that there should be time limits on when the Board should meet.

Mr van der Westhuizen reverted back to clause 30, which noted that a court should deal with matters “as soon as reasonably possible”  and asked if the public submissions calling for this section to be made less vague were taken into account.

Mr Mkalipi replied that this amendment was in line with the separation of powers doctrine and the issue had been exhausted in a previous meeting.

Clause 32
This clause dealt with consultants who represented people in the Labour Court, charging fees, and was intended to prevent consultants from exploiting vulnerable workers.

Clause 33
This was described as a technical amendment correcting an omission of the words ‘Supreme Court’.

Clause 34
Mr Mkalipi noted that again this was a technical amendment, that judges could resign from office.

Clause 35
This amendment made changes to section 186, linked to changes that were being made in section 198 around fixed term contracts. The existing section 186 (b) dealt with the termination of a contract. This clause now introduced the notion that if an employee on a fixed term contract reasonably expected an employer to extend a contract, and that contract was not extended, this would constitute a dismissal. The employer could show that the expectation was not reasonable. Indefinite contracts that were extended upon less favourable conditions could also constitute a dismissal.  This was influenced by the fact that the LRA, in section 198, prescribed the proper channels that could be followed by a company if it needed to alter the conditions of a contract.

Clause 36
This clause was introduced in order to deal with the situation that arose in the case of Frys Metal. In that case, the Court decided that a dismissal was allowed, because of the way in which the section was worded.  The intention of the Act was that employers should be able to lock-out employees to force employees to agree to something. The wording of the section was changed from ‘to compel an employee’ to ‘accept a particular offer’ to, upon ‘the refusal of an employee to accept an offer.’ There was disagreement on the issue. Business preferred the interpretation of the Courts on the issue but all labour organisations did not agree with that interpretation.  The amendment was supposed to clearly state the original intention, that no employee could be dismissed on the basis that s/he had refused to accept an offer. In Frys Metal, even after the issue had been resolved, employees were dismissed on the basis of a lock out.

Mr Mkhize noted that in South African law workers had a right to strike and the quid pro quo for the employer was the right to a lock out. The two rights stood side by side. The lock out was an instrument designed for employers to use in the event of a strike. These instruments were meant to complement each other although they moved in different directions. The amendment was meant to ensure that a lock out was not to be abused, or used as a means of dismissing employees.

Mr Motau thanked the Department for the clarification on the purpose of a lock out and the differences between a lock out and a strike.

Ms Makhubela-Mashele asked for clarity on the issue of intimidation of workers in unprotected and protected strikes and whether the no-work-no-pay principle would apply in a lock out

The Chairperson asked for clarity of the terms legal and illegal strike, saying that this posed contradictions, and whether this was different from protected and unprotected strikes.

Mr Mkalipi replied that technically the concept of an illegal strike did not exist. A strike was a Constitutional right, therefore it could not be illegal. The law made a distinction between procedural and unprocedural strikes. The consequences of a procedural strike were protection from dismissal. Lay people would call a ‘protected’ strike a ‘legal strike’. An unprocedural strike was an unprotected strike. A lock out, on the other hand, had to take place before a strike, to be effective. The 1995 amendments were intended to introduce a lock out and a strike. The employer could give a 48 hour notice of lock out and it was intended to be a pre-emptive measure to prevent a strike.

Ms Makhubela-Mashele reiterated that she wanted clarity on the procedure of payment, and asked if employees would still be earning a salary during the lock-out.

Mr Mkalipi stated that the no-work-no-pay principle would apply during a lock out. He added that lock-outs had taken place but they were very rare because they were only effective before a strike.

The Chairperson asked whether it was possible to have a wild cat lock out.

Mr Mkalipi noted that it was possible for employers to engage in a wild cat lock out. This could occur if a lock out happened without conciliation or consultation.

Mr F Maserumule (ANC) gave an example of the Gold Fields wildcat strike, where workers went on strike and they were then locked out of their hostels by the company, as a counter-measure to their strike action.

Mr Mkalipi stated that, in law, if the reaction was against an unlawful action, then this would not qualify as a lock out. For example, with a sudden change in employment conditions, the due processes would have to be followed. In the Gold Fields case the workers were already on strike. Employers had various means of forcing workers to come back to work, but these were not necessarily lock outs.

Mr van der Westhuizen asked what other remedies an employer would have, in the event that workers refused to accept demands by an employer

Mr Mkalipi replied that the major remedy for an employer was the lock out. The employer was allowed to lock the employees out, but not to dismiss them. The other option that an employer had would relate to consultation, retrenchment and perhaps any other changing conditions. The employer was not allowed to dismiss employees because they refused to accept an offer made by the employer. In terms of the law, the employer does not have a wide range of options other than a lock out.

The Chairperson asked, in the event of a procedural strike, whether the situation might not turn into an endless cycle.

Mr Mkalipi replied that section 150 could apply and the CCMA could also become involved. A strike was intended to hurt a company. Workers also had to bear in mind that they should not hurt a company to the extent that the company ceased to exist.

Clause 37
Mr Mkalipi noted that this clause dealt with the changing of the term ‘pre-dismissal hearing’ to ‘inquiry’. in an attempt to encourage the parties to use dispute resolution processes outside the CCMA. Section 188 dealt with pre-dismissal hearings, where, if an employer was intending to dismiss, an independent arbitrator could come in to hear the case. If the arbitrator dismissed the employee, the employee would not go to the CCMA because essentially the independent arbitration would have replaced the CCMA proceedings. The process was introduced to enable employers and employees to decide quickly on their cases. The decision would have the same effect as a CCMA decision. However, this was rarely used, because the term had suggested that a dismissal would automatically follow.

Mr Kganare asked whether, because of the emphasis on the word ‘employee’, there was a danger that the process would not proceed if the employee did not co-operate.

Mr Mkalipi replied that at most times the contract of employment could include a clause dealing with dispute resolution, as this was far more difficult to deal with after a dispute arose.

Clause 38
The clause dealt with employees of a certain pay grade, which was set by the Minister in the regulations. If an employee earned above this amount, and was dismissed, then that employee only had to be given three months’ notice or be paid off for those three months. The section was relevant to misconduct issues and not general unfair dismissals. Essentially, it was abolishing the “golden handshake”. The three month notice period could be extended if, for example, a contract prescribed a year’s notice. It was intended to address conflicts that may be harmful to a company.

The Chairperson asked whether it was possible to combine a notice period and a paying off option.

Mr Mkalipi replied that, in terms of the law, it was permissible to combine notice and payment, or payment in lieu of notice.

Mr Motau asked whether the option of payment or notice would be by mutual consent.

Mr A Williams (ANC)thought this was undermining the fundamental rights of workers.

Ms Makhubela-Mashele was concerned that this section would reverse the gains that employees had been given, and that the law was trying to protect. Workers who fell within the threshold might find themselves in a position where they were unable to protect themselves.

The Chairperson asked the Department to explain further.

Mr Mkalipi explained that whenever the law was referring to the “threshold” it meant the amount prescribed by the Minister in terms of the BCEA, which was presently set at R172 000 per annum. Any other “threshold” without a section 63 citation was not referring to that. In this particular case, on page 33 of the Bill, it was noted that the threshold in this case was  in excess of R1 million. The threshold mentioned in clause 37 was also not the same as that stated by the National Planning Commission (NPC) which had stated that “high earners” were those earning in excess of R300 000. The Department disagreed with the NPC on this figure, because it would take thousands of workers outside the scope of protection.

Mr Mkhize stated that the fundamental principle of labour law was to protect workers in general ,but more importantly vulnerable workers. Those earning above R1 million were not regarded as vulnerable.

Mr Mkalipi added that inflation would have to be taken into account on this figure.

Mr van der Westhuizen asked for clarification on whether the section could constitute unfair discrimination and not pass Constitutional muster, as had been suggested in public hearings.

Mr Mkalipi noted that the Department was convinced that the section would pass the test of Constitutionality. The Bill did take into account an employee’s level of skill and bargaining power, amongst other issues. This threshold would affect people who had enough power to negotiate their contracts. These contracts may have favourable conditions and the law would not interfere with those conditions. The section was supposed to protect organisations from internal conflicts within senior management, and would in fact also protect the interests of the workers lower down, by ensuring that there was stability at top management.

Dr Loots stated that the discrimination clauses were covered, and if unfair discrimination occurred then the clause would not apply. The intention was not to blindly take constitutional rights away. However, the Parliamentary Legal Advisors would furnish the Committee with an opinion.

The Chairperson asked for clarity on the right of access to the CCMA and the fact that high earners were not qualified to access the CCMA. He asked if this threshold was the same as the R1 million amount.

Ms Makhubela-Mashele also questioned the Constitutionality of the clause, saying that it distinguished between workers and could then result in high earners being employed under less favourable conditions. She also asked whether this section would not reverse the gains made by women in terms of trying to achieve a gender balance in the high-earning brackets.

Mr Mkalipi stated that the proposal that high earners were people earning above R300 000 was made by the NPC and not the Department. The section was also aimed at addressing misconduct and people could not hide behind gender regarding issues of misconduct. This section would not apply if a person was unfairly dismissed, for s/he retained the right to take the case further.

Mr Williams remarked that the law should not respond in a reactionary way to current situations, since it would have future results too. He wondered what there was to stop the Minister, in future, from lowering this threshold; that could undermine a vulnerable worker’s security of employment.

Mr Mkalipi replied that the examples he gave were simply meant as an illustration of how the law would operate. It was an internationally recognised principle that the ambit of protection would not extend in the same way to high-earning workers. The issue was how far a country should go in the exclusion of a certain category of workers. Exclusion itself was a generally accepted international principle. The people to whom this applied did not have issues around security of employment. The essence of the amendment was to deal with disputes at the top that could have an adverse impact on workers at the bottom levels. Security of employment would have been an issue had the threshold been lower.

Mr M Manamela (ANC) asked to what extent consultation would take place when determining the threshold. He remarked that a change in employment relationships had taken place at the higher level and certain other issues should be considered, such as the fact that certain employees were not allowed to join trade unions. He asked whether there would be a unilateral implementation of the section. He added that the section should take into account more than just the amount earned, but also had to consider the responsibilities of the worker.

Mr Mkalipi said if the Minister did not consult, then this was a political issue, and it could not be legislated for. He reminded Members that the Act required the Minister to consult at Nedlac before any regulations were made, including the setting of the threshold and all information related to the figures would be put to Nedlac, including inflation. He stressed that recourse when high earners were involved in disputes was not in terms of the LRA, but in terms of their contracts, which set out dispute resolution methods. The LRA stated that trade unions must be independent of employers, and employers must be independent of trade unions. The International Labour Organisation (ILO) Convention contained the same requirement. If senior management were to join trade unions, it would run counter to the principle of independence. However, there was provision for a separate trade union for the representation of senior managers.

Mr Mkhize added that the system at the CCMA had ended up being clogged by non-vulnerable workers. The CCMA had been subsidised in order to cater for vulnerable workers, which was why they did not have to pay to access the CCMA. A situation where even non-vulnerable workers were also subsidised would not be ideal. This clause had provided a way of unclogging the system, and again, he stressed that high earners had alternative protection measures, but these offered similar protection to CCMA. The law also allowed instances of progressive discrimination, and this was one of those instances.

Ms Williams noted that the decision by the Minister could not be arbitrary and the concerns were taken care of in sub-section 4. The Minister was required to act in consultation with Nedlac and did not have a lot of discretion. He was happier on this point.

Ms Makhubela-Mashele asked whether the law could then not be used as an instrument to purge each other.

Mr Manamela explained that his point was that the value of R1 million in the future could be lower or higher than it was today. He was satisfied that there was recourse in instances where employees felt they were correct, and where their employment contracts had been violated. However, they still had to look into the changes in the employment relationships. Those regarded as employees were people who took responsibilities on behalf of an employer. As a result of their role and responsibilities they might not necessarily be employers.

Mr Maserumule asked whether it was possible to get a different definition of ‘high earners’, and wondered if they could include owners of means of production, not necessarily workers.

Mr Mkalipi replied that this was a difficult question but using ‘high earners’ made it easy to differentiate between workers, as opposed to using means of production as a definition.

The Chairperson added that it must be borne in mind also that people who were formerly in the ‘worker’ category could also ascend to higher ranks and be trusted by owners of the means of production to safeguard their interests.

The meeting was adjourned


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