Labour Relations Amendment Bill [B16-2012]: Clause 17 – 38 deliberations

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Employment and Labour

31 October 2012
Chairperson: Mr N Nchabaleng (ANC)
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Meeting Summary

The meeting was a continuation of the deliberations on the Labour Relations Amendment Act. Clause 17 related to the power of the Registrar to appoint office bearers when a trade union or employer organisation was placed under administration. The Democratic Alliance asked if it was fair to the creditors of the union to have the administration costs charged against the assets of the union. The Department of Labour stated that the issue of securing fees was meant to attract qualified administrators who needed to be paid for their services. Clause 18 stated that when the Registrar took a decision confirming the deregistration of a trade union, an appeal against the Registrar’s decision would not suspend the decision as had been the previous case. Clause 19 stated that the CCMA was supposed to assist workers who earned less than the threshold in terms of administrative matters. The clause also made it possible for the CCMA to develop rules to limit representation in the CCMA effectively banning legal representation in the CCMA. Clause 20 and 21 were technical amendments. Clause 22 related to a writ of execution for an award that was not complied with. A decision of the CCMA could automatically be enforced as if it were a decision of the Labour Court. Clause 23 added another ground for rescission of an award and this ground was good cause being shown that an award should be rescinded. Clause 24 required applicants applying for review to ensure that their applications were launched within 6 months as well as provide security. In a case where the award was reinstatement, the employer would have to provide 6 months security. Clause 25 was a technical amendment. According to clause 27 the CCMA could also assume jurisdiction in matters relating to public interest. Clause 27 replaced the Supreme Court with the High Court. Clause 28 dealt with the conditions of employment of judges which were inferior to those of high court judges and had to be improved, particularly their remuneration and tenure of employment. Judges in the Labour Court were remunerated on a lesser basis and appointed for ten year terms while their counterparts in the High Court had lifetime tenure. Clause 28 was a technical amendment. Clause 30 noted that the Labour Court could only intervene after a dispute had been finalised. Disputes on procedural matters such as the jurisdiction of the CCMA would be decided by the court itself. Clause 31 stated that the Labour Court rules had to be reviewed every second year. Clause 32 noted that consultants were not allowed to charge workers a fee for their appearing in the Labour Court on their behalf. Clause 33 was supposed to correct an anomaly that existed which stated that Labour Court judges were not allowed to act in the Labour Appeal court. Clause 34 was a technical amendment. Clause 35 related to dismissals in terms of fixed term contracts. If an employee reasonably expected a fixed term contract to be renewed and it was not renewed this would constitute a dismissal. Clause 36 related to the Fry’s Metals case and was intended to disagree with that case. Employers were barred by the section from dismissing employees based on a lock out. Clause 37 changed the term ‘pre-dismissal hearing’ to an enquiry in order to attract people to this form of dispute resolution as the term pre-dismissal hearing had made people afraid of using that process because it pre-supposed dismissal. Clause 38 was a controversial clause that attracted a lot of concern from the Members. The clause stated that high income earners earning a certain amount designated by the Minister could be dismissed provided they were given three months’ notice or an equivalent in pay. This dismissal would be deemed fair if done in the context of misconduct. Most Members were of the opinion that this was an unfair process because it denied the worker the right to be heard and defend himself. They also noted that this section was prone to abuse and could be used to simply dismiss employee that senior managers did not get along with even if those employees were senior managers themselves. The legal team also expressed reservations about this section. They stated that the constitutionality of the section was uncertain and could result in s23, the right to fair labour practices being violated. The general consensus was that even if an employee was a high income earner, it did not mean that they should be easily dismissed because they could also be unfairly dismissed using this section. The legal advisors asked for time to prepare a detailed brief regarding this matter.

Meeting report

The Committee continued deliberations from the day before, starting with Clause 17.

Deliberations on the Labour Relations Amendment Bill
Clause 17
Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour, noted that in order to assist the administration of trade unions and employer organisations the Registrar was given power to able to appoint new office bearers in the event that a union was nor performing. The Registrar can also appoint an administrator.

Mr A Van der Westhuizen (DA) asked how fair it was to charge the administrators fees against the assets of the trade union and if this was fair to creditors.

Mr Mkalipi replied that the reason behind the fees was similar to the instances of business rescue and insolvency the liquidators and the business rescue practitioner would be paid first. It would be difficult for anybody to take the risk of doing this job if there was no pay. The fees were supposed to be a form of security.

Mr Van der Westhuizen followed up his question by asking if they could not take into account the argument in the education sector that the administrator’s costs were borne by the Minister and if this could not be implemented in terms of trade unions.

The Chairperson in response argued that this might be a regulation rather than a law and cautioned that different laws should not be dragged into the deliberations as this could explode in their faces. It would be improper to ask the department of Labour to pay the administrator’s costs.

Mr E Nyekemba (ANC) noted that the difference was that in the case of trade unions it was the Labour Court that appointed an administrator but in education it was the Minister that appointed the administrator.

Mr Mkalipi further stated that when the Registrar appeared before the court she had to show good cause why an administrator should be appointed and had to have served papers on affected parties so that they could also come before the court and refute the Registrar’s allegations. It only after a consideration of all the evidence before it; will the court agree to appoint an administrator.

Mr A Nyekemba (ANC) was unclear on what the time limit was for the administrator to perform his functions and asked if it was not necessary to set a time limit in case administrators were tempted to prolong their task because of the money.

Mr Mkalipi responded that the Registrar had no interest in the matter therefore there was no reason for the Registrar to prolong an administration. The time required to turn around a union would vary according to the size of the union.

The Chairperson remarked that administrators of the tribal councils were appointed for a period of six months and they ended up staying for two years. He agreed that there was a need to make a provision dealing with the time limit.

Clause 18
This clause was supposed to deal with bogus trade unions and employer organisations who registered in order to make money. The law provided for the process deregistration of these trade unions and these decisions can be appealed against. There were two different decisions of the Labour Court. One judgement stated that an appeal against deregistration did not suspend the deregistration and the unions and organisations cannot continue to collect money. The other decision stated that the decision of the Registrar to deregister a trade union is affected by the appeal and the union can continue to collect money from its members. The clause was in line with the decision that the decision of the Registrar is not affected by the appeal therefore the trade union cannot continue to collect money.

Mr Kganare asked why the section seemed to be going against the normal practice regarding appeals.

Mr Mkalipi explained that in this case it was not necessarily an appeal but a review of an administrative decision. In practice therefore an administrative decision was only changed if a person went to court and the decision was overturned. Although the LRA spoke about an appeal in reality this was not an appeal.

Adv Anthea Gordon, stated that the legal team needed to look at the matter in a deeper context because throughout the Act the word appeal was used. She explained further and stated that labour court proceedings are different from criminal proceedings where an appeal stays proceedings; that is the appeal suspends any sanction the court might give.

Clause 19
This clause makes sure that the CCMA was supposed to review its rules every two years. The CCMA was also required to assist any employees who earn less than the threshold with administrative matters such as sending a fax or assisting employees who could not read.

The Chairperson asked Mr Mkalipi to explain which threshold he was talking about.

Mr Mkalipi stated that the threshold was the one referred to in s6 (3) of the BCEA and it was R172 000 per annum, if the word threshold was not accompanied by the section then it was a different threshold still to be determined. He later clarified that this threshold had been increased to R183 000 due to inflation.

Still on clause 19 Mr Mkalipi continued by stating that the CCMA was given authority to limit representation in the CCMA. The CCMA could make rules limiting representation. Such rules were challenged by the North-Gauteng Law Society in a High Court case. The high court ruled in favour of the Law society and the Department was given 36 months to rectify the problem. The Department was going to appeal the decision although the court held that the rules were ultra vires. The enabling law gives the CCMA power to stipulate consequences such as fines for parties not attending a CCMA hearing.

Mr Nyekemba commented that the CCMA processes were meant for vulnerable workers and lawyers would fight to represent workers at conciliation level but the system was supposed to simplify the process. An ordinary worker was supposed to be able to go to the CCMA and present the facts of what happened and trade unions could also represent workers. The LRA states that it can be argued that a case needs representation by a lawyer and this defeated the purpose why the processes were simplified. It seems that lawyers would like to represent workers at disciplinary hearings and this defeats why these procedures were simplified.

Mr K Manamela (ANC) remarked that currently legal representation was allowed if both parties agreed to legal representation. The intention should be to maintain legal representation upon agreement or upon agreement.

Mr Mkalipi replied that they wanted to maintain the status quo that legal representation was not allowed at conciliation and arbitration. In a case where legal representation was applied for the Commissioner would apply a test to test if legal representation was required. The factors to be considered would be the complexity of the case and the comparability of the parties.

Ms Suraya Williams, Principal Adviser, Office of the Chief State Legal Adviser, stated that Rule 25 (1) allowed for legal representation in all other matters except in matters relating to dismissal for misconduct and incapacity. This was not a blanket prohibition on legal representation.

Clause 20
A concessional amendment related to the requirement of a ballot for a strike to be protected.

Mr Nyekemba remarked that the committee had not agreed on the issue of making a ballot a prerequisite for a protected strike.

Clause 21
There was a technical amendment in this clause.

Clause 22
This clause would make it easy to enforce a writ of execution for awards not complied with. In that present moment the employee would have to go to the Labour Court and get the writ issued by the court. The writ would as a result of the clause be able to be taken straight to the Sheriff and be enforced. The scale of fees was also adjusted to match the Magistrates’ court fees which would make it cheaper.

Mr Nyekemba emphasized that arbitration awards were extremely important in light of what Mr Mkalipi had stated about the awards.

Mr Kganare agreed with Mr Nyekemba’s comment.

Clause 23
This clause was adding another ground for the rescission of an award. The three existing grounds were in the case of an obvious error, the wrong issue of an award or a mistake. The fourth ground that was to be added was good cause, this meant that if there was any good cause shown for rescinding an award then the court would do so.

Clause 24
This clause related to the operational requirements of the Labour Court. Parties applying to the Labour Court for review had to make sure that such an application was made within 6 months. This clause was in response to employers lodging notices that they were reviewing a decision just to frustrate employees. The effect of the clause was that the instituting of an action for review did not suspend an award. The clause also required that if an application for review was instituted then security had to be furnished. In this case of an award for reinstatement then 24 months annual salary would have to be provided.

The Chairperson stated that he agreed with the issuing of security because in certain instance during the delay in proceedings people would die without receiving their award. The issue could not be looked at intellectually and theoretically because the issue was dealing with the livelihoods of people.

Mr Manamela gave an example of situations where employers deliberately did not pitch up and then later took the matter to the Labour Court. The purpose would simply be to delay the entire matter until workers gave in. This had to be taken into account and recourse should still be guaranteed in the LRA.

Mr Mkalipi stated that the amendments went to the heart of the issues raised by the Members. The simplification of enforcement procedures, the furnishing of proceedings and introducing consequences for not pitching were all aimed at resolving the issues mentioned by the Members. He also highlighted that the Sheriff would also require security and workers would not have the money to furnish such security and in many instances the employee would not have been earning a salary. The Department wanted to set up a fund that could assist workers by providing them with money to pay security.

Mr Nyekemba stated that although judgements had to be handed down as soon as possible the committee could not become sensitive to interference with the judiciary when dealing with matters that affected vulnerable workers. He argued that the judiciary would not be required to issue a decision within 6 months in each situation but situations concerning vulnerable workers had to take priority.

Ms Williams urged the Members to take comfort in the fact that the Judicial Service commission was looking into judges who took an unreasonably long time to issue judgements.

Mr Nyekemba stated that when a person cannot do something in time then good cause must be shown. Likewise good cause had to be shown for not handing down a judgement. He also stated that the JSC itself took time to respond when someone had applied.

Clause 25
An obvious error where ‘more than’ was replaced by ‘less than’.

This clause deals with the CCMA assuming jurisdiction in situations where workers have to pay half of the arbitration costs as stipulated in private arbitration agreements. The clause stated that if an employee earns less than the BCEA threshold and the agreement required the employee to pay arbitration costs then the CCMA could assume jurisdiction. The arbitration costs could deny access to justice particularly when an expensive private arbitrator was appointed. If the arbitrator was not independent then the CCMA could also assume jurisdiction.

Clause 26
In terms of clause 26 if disputes were in the public interest then discretion was taken away from the parties. An example was the Road freight Strike which was solved through the discretion granted to the CCMA in s150. There was no controversy except in two areas. Business wanted the declaration of the CCMA to stop the strike which it did not do and FEDUSA had a problem with the word Director being used in the section as opposed to the Commission.

Clause 27
This was a technical amendment that replaced Supreme court with High Court; there were also other places in the act where this was not changed and the committee had to look into this.

Clause 28
This section dealt with the powers of the Labour Court, tenure of Labour Court judges, remuneration and terms and conditions of judges. This also dealt with the appointment of judges. This was meant to rectify the inferiority of Labour Court judges.

Clause 29
A technical amendment adding the words ‘any other employment law’.

Clause 30
This clause dealt with the limitation placed on the courts regarding decisions and rulings of the CCMA. The Labour Court could only intervene after a dispute had been heard and finalised and this was supposed to ensure speedy dispute resolution. The Labour Court could no longer hear disputes on points in limine. If good cause was shown for the Labour Court to intervene then it could do so. This was supposed to help the speedy resolution of disputes

Clause 31
The rules of the Labour Court had to be reviewed every second year.

Clause 32
This clause dealt with the problem of consultants who appeared in the Labour Court under the guise that they were members of a trade union or an employer organisation. The consultants charged a fee and no one was allowed to charge a fee for this. The rules of the court were that a person could only appear before the Labour Court if they were a lawyer or an organisation representing workers. Consultants were abusing this provision and were charging fees and then appearing on behalf of workers.

Clause 33

This dealt with who could act as a Labour Appeal court judge. It was correcting an anomaly that stated that Labour Court judges were not allowed to act as Labour Appeal court judges.

Clause 34
There was a technical amendment in this clause.

Clause 35
This clause dealt with dismissal and termination. The term ‘employee under a fixed term contract of employment. If there was a reasonable expectation that a fixed term contract was to be renewed then this would constitute a dismissal. This was the current state of the law and it was merely restated to avoid confusion and to ensure certainty.

Clause 36
A small and important amendment dealt with anomalies in the Fry’s Metals case. The section changed the section from ‘to compel an employee’ to ‘a refusal by employees’. The section read that a dismissal was automatically unfair if it was supposed to compel an employee to accept certain terms and conditions. The intention of the Act was if employees had a demand, workers could embark on a protected strike and they could not be dismissed for striking. At the same time if an employer had a demand and the workers were refusing to accept a demand, an employer had a right to lock out the workers. Fry’s Metals however allowed a dismissal for refusing to accept a company’s demand. The law was meant to rectify this and state clearly that the intention of the law was not to allow dismissals on the basis of a lock out.

Dr Barbara Loots, Parliamentary Legal Adviser stated that it was Judge President Zondo gave the judgement in the Fry’s Metals case.

Mr Manamela stated that the committee perhaps had to look at the implications of the section as it stood.

Mr Nyekemba asked if the committee could go into the Fry’s Metals case in order to understand the current law, case law and the amendment itself.

The Chairperson stated that a review of the case might make the committee lose focus. An amendment had to lead to relief that was for the better and not affect people negatively. At times certain changes could affect people negatively.

Mr Kganare commented that his understanding was that an employer could not dismiss a worker that the employer himself had locked out. Locking out a worker the employer was already punishing an employer and to give the employer the right to dismiss the worker as well would be to grant the employer too much power.

Clause 37
This clause dealt with pre-dismissal hearings, the term was held to presuppose dismissal. The process was now called an enquiry. It was only the decision of the arbitrator that could be taken to court. The process of this hearing was meant to speed up dispute resolution as well as to bypass the CCMA. Such hearings could be provided for in the employment contract.

Mr Nyekemba asked if there was any difference between the terms pre-dismissal hearing and inquiry.

The Chairperson replied that this was simply a change in wording and the content was still the same.

Mr Herbert Mkhize, Adviser, Department of Labour emphasized that this was an option that could be used or not used. The change in terms was meant to create an appetite or people to use the instrument because the term was acting as a deterrent.

Clause 38
This section dealt with the dismissal earning above the threshold. This section dealt with senior employees who may have fall outs that affect the organisation. The clause dealt with the issues of misconduct. The dismissal could still be challenged but in considering fairness the judge would look at if notice was given unless there was an agreement on how disputes were supposed to be handled.

Mr Kganare commented that irrespective of a person’s position, people were not to be dismissed in an unfair manner. A person could be a Director General and this was the only skill that person had and that was that person’s passion it would be unfair for a person to simply be dismissed because another person did not like them. This section could be easily abused. Fairness had to be exercised in exercising the power to dismiss.

Dr Loots said that their office had reservations from a constitutional level. S23 of the Constitution conferred the right to fair labour practices on all employees and not certain employees. The section was changing the balance of power between the parties. The section seemed to shift the onus onto the employee to show that the employer’s conduct was unfair. This tension was being addressed in s23 of the Constitution. Labour law was supposed to be fair because it was dealing with people’s bread and butter likewise labour law contracts had to be fair. A full brief on the constitutionality of the clause was also going to be prepared.

Advocate Gordon explained further by stating the difference between illegal conduct, lawful or unlawful conduct and fair or unfair conduct. These were the different standards in law. Illegal conduct was conduct that had a criminal sanction to it such as speeding. In civil matters, the matters did not attract criminal sanction and were not provided for in law but were unlawful. In labour the standard was fairness and this was a subjective standard of law.

Miss Williams stated that in order for fairness to happen the audi alteram partem rule was important. This rule refers to both sides of a story being heard.

Mr S Motau (DA) asked why it seemed easier to fire people in the private sector than in the public sector. In the public sector a person was either guilty or not guilty. To illustrate his point he gave an example of an ex colleague of his who was found guilty of stealing and then given an option to resign or to get fired. He wanted clarity on if this was a fair or unfair dismissal.

The Chairperson asked for the answer to Mr Motau’s question to include an answer regarding unfair dismissal.

Mr Mkalipi emphasised that the purpose of the section was to make it easy for senior managers to deal with other senior managers. His form of dispute resolution in senior management was a worldwide phenomenon and this section would stand the test of time. It was supposed to introduce flexibility at the higher end in companies to enable them to run well. A case raised in public hearings that merited attention was the fact that in the exclusion on automatically unfair dismissal would operational reasons be included.

Advocate Gordon commented that she could not comment with certainty on the perceived difficulty of dismissing people in the public sector as opposed to the public sector. She stated in the private sector perhaps there were quicker responses because of the obligations owed to shareholders.

Mr Manamela stated that there was transformation in the labour regime; the traditional definition of an employee was redefined. It was important to look at the responsibility of a person in a company, to treat senior managers as employees would be to fool themselves. Income should be considered in conjunction with other factors. Was recourse provided for in other laws?

Mr Motau added that the colleague who was dismissed was a white person.

Ms William remarked that in term of labour law, the colour a collar is what is looked at.

Dr Loots also stated that Judge Zondo stated that the onus to prove fairness was on the employer. The employer was allowed to employ flexibility in procedure as long as it was fair.

Mr Kganare stated that a person still had to be compensated fairly not matter what level they were. There had to be a process followed to prove that something went wrong because losing one job affected that person’s prospects of getting anther job.

Mr Manamela went back to the issue of onus and said arrangements where an owner had the onus already exist. People were given golden handshakes and in turn overcompensation.

Mr Van der Westhuizen commented that ultimately labour law was trying to maintain jobs. Sometimes organisations suffer as a result of long protracted disputes at management level. This balance had to be achieved and perhaps alternative ways could be found.

Mr Mkalipi remarked that the issues raised were genuine concerns. The court would not look only at the salary but would look at the responsibilities as well. The period of 3 months was a decision for Members to take. The crux of the matter was that the section was making it easy for organisations to end contracts with senior management

Mr Van der Westhuizen noted that courts often gave two years compensation and maybe two years compensation in this case could be given.

Mr Mkalipi remarked that it was rare to get even 6 months compensation in the case of an unfair dismissal.

Miss Williams added that in terms of subsection 4 had to in consultation with NEDLAC set the threshold. This curtailed the Minister’s discretion.

The Committee took a lunch break.

The meeting was adjourned.


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