Labour Relations Amendment Bill: deliberations on Clauses 1 to 28

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Employment and Labour

06 November 2012
Chairperson: Mr N Nchabaleng (ANC)
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Meeting Summary

The Parliamentary Legal Adviser had prepared a working draft of the Bill incorporating changes to the Bill as recommended by the Committee. Clause 3 had the effect of adding additional responsibilities to the Minister and the time frame was increased from 60 days to 90 days. Clause 5 related to the fees that a bargaining council could charge and Members had felt that this was an unnecessary clause to include. The clause was included for comparative purposes in the event that the CCMA may in future charge fees. There meant to be a cap on what the CCMA could charge. Clause 13 was supposed to bring the LRA in line with the standards of the International Labour Organisation (ILO). Clause 14 related to Parliament’s ability to take a decision on an arbitration based on an essential services dispute. Parliament was assigned this unusual role because of the financial implications such an award could have.

The issue of the administrator’s fees in Clause 17 was discussed in detail. Members asked for clarity on whether an administrator’s role was distinct from that of a liquidator and if a time limit given to the administrator to complete the task. The explanation was that the liquidator would only be appointed if an administrator had failed to turn the organisation around. The Registrar of the Labour Court would recommend an administrator to the court and therefore it was the Registrar who would ensure the process was not prolonged unnecessarily. Clause 19 dealt with the issue of the recent judgement of Northern Province Law Society v Minister of Labour. The case made reference to s115(2A)(k) in the LRA (which was amended by clause 19). In that case it was not the section itself that was challenged but rule 25 set up by the CCMA (in terms of that clause) that restricted access to the CCMA by banning legal representation. Even though Rule 25 was found to be unconstitutional this did not mean that the CCMA had to grant the unrestricted right to representation. The only concern was the constitutionality of the rules themselves and not the clause in the LRA enabling the court to make those rules.

Clauses 27 and 28 sparked some disagreement between the Parliamentary legal advisers and the officials from the Department of Labour. The legal advisers advised the Members to reject the clauses because the mandate to rationalise the courts lay with the Minister of Justice and not the Minister of Labour. The fact that the Superior Courts Bill gave the mandate to rationalise the courts to the Minister of Justice made it unconstitutional for the Committee on Labour to decide on the issue. The Department of Labour disagreed with this and stated that the LRA, despite the amendment, made provision for the employment conditions of judges. It did not matter that the Superior Courts Bill had referred to the same issue. It was not unconstitutional for the Labour Portfolio Committee to pronounce on these matters. The parliamentary legal advisers said it was not the substantive content of the clause that would make it unconstitutional – it was the procedure taken to implement the changes. The changes had to originate from the Minister of Justice and the Superior Courts Bill was already tabled for 2015. The Department of Labour still disagreed and it was confident that an opinion could be sourced that showed that this was not unconstitutional. The Committee concluded that the Department and the Parliamentary legal advisers be given time to iron out their differences.

The Committee made minor changes to its BRRR, inserting time frames into its recommendations.

Meeting report

Labour Relations Amendment Bill: flagged clauses
The Chairperson said the Committee needed to unpack the matters in the LRA that had been parked. The legal team would produce opinions on the issues that had been parked.

Dr Barbara Loots, Parliamentary Legal Advisor, had prepared a working draft of the Bill which she presented. She said the Committee could indicate whether they agreed with a particular clause or not then and there. Otherwise they could wait for the presentation to be completed and then decide?

Mr Manamela said that Members could make notes as the presentation progressed and indicate at the end whether they agreed or not.

The Chairperson said that Dr Loots was trying to chart a way forward.

Mr Manamela reiterated that indication should be given at the end.

Mr Kganare said that the request was a reasonable one. If a person agreed with a clause they could simply indicate this. There was no need to go back to clauses that were agreed upon.

Adv Anthea Gordon, Parliamentary Legal Advisor, pointed out that from today the process would become quite technical. Members would be involved in the deliberation process but the legal team had started to look at the amendments. An indication by the Members of their thoughts would enable the legal team to start drafting because this was a long process. From a legal perspective, an A-list of Portfolio Committee amendments would have to be done drafting the preliminary amendments.

Ms Suraya Williams, Principal Legal Adviser, Office of the Chief State Legal Adviser, said that the way forward was supposed to assist them in drawing up the A list to prevent them from going over the same things again and again. She asked the Committee to indicate clause by clause what the Committee agreed upon.

Mr Manamela said that he did not disagree but such indications should be given after the presentation had been done.

Mr Motau said that his understanding of the matter was that the Committee was looking at the legal issue in terms of language and not the clause. There was supposed to be agreement or no agreement on the legal issue only.

Clauses 1 and 2
No legal issues were identified.

Clause 3
This clause contained an explanatory note that said even though the amendment required a policy decision (and not a legal question) it requested an additional amendment. The clause gave the Minister some additional responsibilities therefore the time limit had to be increased from 60 days to 90 days. In the event that the policy issue was accepted then an increase in the timeframe would also have to be implemented.

Clause 4
No legal issue identified.

Clause 5
Members questioned whether this clause was necessary at all and this related to fees charged by bargaining councils. The clause links this with the cap of fees that the CCMA can charge and that of bargaining councils. The LRA gave the CCMA the competency to charge fees in certain circumstances. This clause was merely to align for future practical purposes fees that the CCMA may decide to charge in future with those fees that a bargaining council could charge. It was for comparative information.

Clause 6
Members had requested that the legal team look at the ballot system in the 1956 LRA. The legal team discussed the ballot issue and their concerns were the technicality challenges that were brought. Upon further inspection they decided that the wording in s67 (clause 8) was the decision to curb technicality challenges that may arise and therefore it remained a policy decision.

Clauses 7-12
No legal issues were identified.

Clause 13
The Members requested clarity on public officials exercising authority on behalf of the state. The clause was simply bringing the LRA in line with the International Labour Organisation.

Clause 14
This clause speaks to s72 of the LRA and makes provision for the application of s74 through s72. Members raised concern as to why Parliament as an institution would step in and play a role when an arbitration decision was taken since Parliament had an advisory function. The reason was that decisions on essential services could have financial implications. This was supposed to be a check and balance.

The Chairperson commented that Mr Nyekemba had pointed out that it seemed as if Parliament would not be bound by decisions it expected other people to follow. This was supposed to remind Members of where the issue arose.

Clause 15-16
No legal issue identified.

Clause 17
Adv Gordon dealt with administrator’s fees in s103A(4) and whether they were a first charge against the assets of a trade union. S103 of the LRA dealt with the winding up of a trade union or an employer organisation. The Registrar of the Labour Court had to determine the liquidator’s fees and the Labour Court in chambers could review the fees determined by the Registrar and see if the liquidator’s fees were a first charge against the assets of the trade union. When dealing with administration this was a process within company law which occurred prior to liquidation. The purpose of appointing an administrator was to attempt to revive a trade union or employer organisation. An administrator was not brought in to kill the organisation but was supposed to try and salvage the trade union. If this process was successful, then one could not talk about a first charge but would talk about preferred creditors and concurrent creditors. Essentially what the first charge meant was that a creditor would be preferent. In liquidation, a liquidator would have to do a liquidation and distribution account or a liquidation and contribution account if the estate had no funds. When a first charge would be spoken of then was when a trade union would be under liquidation. In terms of administration, an administrator steps into the shoes of the person ordinarily in charge of the trade union to salvage it. In this instance the fees are paid by the trade union or the employer organisation. She proposed rewording s103A(4)(c) on page 5 of the draft. This would read if the administration of a trade union did not result in winding up as contemplated in s103 then the administrator’s fees would be paid as an expense against the assets of the organisation because it could not be a first charge. If the administration resulted in the winding up then the fees would rank with the claims of the liquidator.

Mr Van der Westhuizen asked whether the words ‘will be paid as expense against the assets’ were necessary if there was still income in the trade union.

Mr Manamela asked for clarity on the issue of an administrator versus a liquidator; whether an administrator became a liquidator in the event that the administration process failed. Was it then necessary to include s103A(4)(d) if this was the case?

Mr Thembinkosi Mkalipi, DOL Chief Director: Labour Relations, noted that the intention of the section was not that clear because a winding up had never happened. Any rescue had to happen before deregistration in order to assist a trade union before winding up. This would assist a trade union to deal with it problems. The intention was to give the Registrar power to assist a struggling trade union by applying to court to appoint an administrator. It was not intended as a first step to liquidation.

The Chairperson mentioned the issue of the spirit and intention of the law.

Adv Gordon indicated that the issue of charging it as an expense in s103A(4)(c) was simply a suggestion in a working document and could be discarded if need be. The liquidator was not necessarily the same person as the administrator. A subsequent application for liquidation would take place in terms of the insolvency Act and this also alluded to the fact that the liquidator and the administrator would not be the same person. The introduction of s103 was a precursor to administration in the draft and this had to come out more clearly.

Mr Kganare said that people had to be encouraged to become administrators by ensuring that they would be paid but they also needed to be kept accountable and be prevented from becoming permanent.

Mr Manamela emphasised that there were cases where administrators became permanent. If the administrator and the liquidator were not the same person and this was determined by s103, was it necessary to have s103A(4)(d) as a proposed amendment because there is another law governing the liquidation process.

Adv Gordon suggested that (d) could be taken out as she had mentioned before. She added that the administrator did not have carte blanche. The court would set parameters for that administration process.

Mr Kganare pointed out that he had a problem with the fact that the court would rely on a recommendation by the administrator to set the time frame as the administrator could have a different agenda. The administrator could prolong the process for own benefit. There needed to be accountability on the part of the administrator.

The Chairperson agreed with Mr Nyekemba that there was a need to make administrators more accountable and if they were not performing, there had to be some way of removing them.

Mr Mkalipi said that the Registrar applied to court to put a union under administration. Instead of allowing the administrator to go to court, it should be the Registrar who went to court to amend the order. The Registrar had to show cause why the period should be extended. The administrator would therefore not have standing to extend the order but it would be the Registrar who sought the order in the first place. If the administrator reported to the Registrar that he needed more time, then the Registrar could go to court.

Mr Kganare indicated that he felt comfortable with this suggestion.

Clause 18
No legal issues had been identified.

Clause 19
Dr Loots noted that in a previous meeting, reference was made to a recent judgement of Northern Province Law Society v Minister of Labour. The case made reference to s115(2A)(k) in the LRA (which was amended by clause 19). In that case it was not the section itself that was attacked but the rules set up by the CCMA (in terms of that clause) that were attacked. It was up to the rules to be amended in line with the Constitution. It was therefore a policy decision to be made by the Members whether the amendment needed to be made. Even though Rule 25 was found to be unconstitutional this did not mean that the CCMA had to grant the unrestricted right to representation.

The Chairperson drew attention back to the matter of the administrator and said that in company law the Companies Act said who could become an administrator. It was an accountant or a lawyer but not all lawyers. In addition there was a stipulation about the time in which the administrator could serve and if this period lapsed, it could be extended. The issue was hanging, in terms of the Act, who qualified and who did not.

Mr Mkalipi said that this issue was not intended to be the same as the Companies Act. A court could appoint a general secretary of another union. It was not wise to tie the court into a specific qualification. There was the precedent of cases where infighting occurred and one party went to the Labour Court to remove the other party. The judge appointed a trade unionist and he might not meet the requirements at that point in time. This depended on the problem within the organisation. In making a decision to appoint an administrator, the court would be guided by the Registrar.

Mr Maserumule asked what factors were taken into account when making rules and regulations.

Mr Nyekemba accepted the explanation from the Department and said that one cannot put everything in the law. There are court rules which will guide the court in appointing an administrator linked to an application.

Mr Mkalipi said that the Registrar would apply for administration according to the mischief in the trade union and an administrator would be appointed on that basis. This would be done based on experience therefore it would not help to decide who should be appointed.

Mr Kganare also added that you cannot compare the two issues since unions hardly applied for liquidation.

Clauses 21 -26
No legal issues were identified.

Clauses 27 and 28 (amending
sections 151 and 154)
These clauses dealt with the Superior Courts Bill. In the Preamble of the Superior Courts Bill it specifically said that the rationalisation of the courts drew in all relevant legislation. The mandate was granted to the Minister of Justice and not the Minister of Labour for appointment of judges to the Labour Court. The legal team was concerned that in allowing the LRA to make the amendment this would affect the mandate that had been given to the Minister of Justice. Reference to the relevant LRA sections was made in the schedule of the Superior Courts Bill. The Justice Committee was sitting with the Superior Courts Bill and this could result in unconstitutional conduct because the mandate was with that Committee and not the Labour Committee. This could result with the National Assembly sitting with two Bills that were inconsistent in terms of the Constitution. It was on this basis that the legal team advised Parliament to reject clauses 27 and 28.

Mr Van der Westhuizen asked whether the legal team spoke to their colleagues dealing with the Superior Courts Bill so that in the event that the Labour Committee dropped the matter it would not fall between the cracks.

The Chairperson asked how sure they were that the Justice Committee would complete the Bill before the Labour Committee since they had been sitting with the Bill for seven years.

Mr Manamela proposed that no deliberation on the issue take place now and the issue should be flagged.

Ms Williams drew attention to the fact that clause 27 was simply about changes to the names of the courts and did not necessarily relate to the rationalisation of the courts per se.

Mr Mkalipi said there was a need to look at these sections. Section 151 (as amended by Clause 27) was in the LRA already and the implications of what the legal team was saying was that the LRA was unconstitutional and DOL did not agree. Section 154 (as amended by Clause 28) in the Act dealt with the tenure of Labour Court judges. DOL did not think there was anything unconstitutional about the changes that were going to be made and written opinion could be provided on this issue. The original Superior Courts Bill had amendments related to the specialist courts but at the moment the Labour Relations Amendment Bill did not touch on those issues.

Adv Gordon wished to clear up a misconception. The parliamentary law advisors team was not saying that the clauses themselves were unconstitutional but the fact that the clauses were in the Labour Relations Amendment Bill was unconstitutional. The same clauses would be constitutional if they were housed in the Superior Courts Bill. The conduct being used to enact the clauses was unconstitutional. S2 of the Constitution said that law or conduct inconsistent with the Constitution was invalid. These clauses belonged in the Superior Courts Bill. She further explained that because the Superior Courts Bill was before Parliament until 2015, the Minister could not interject in that process. The competent person to introduce the Bill would be the Minister of Justice. The substantive content was correct but the process was not. The LRA was also enacted before the Constitution therefore there was a need to clean up the Act and make it consistent with the Constitution.

The Chairperson said that it was becoming clearer that a commitment had already been made in the Department of Justice to promulgate that Bill and the Labour Committee could not interfere.

Mr Kganare asked what would happen to the sections as they stood. Did they have to leave them as they were although they were not allowed to amend them?

Mr Mkalipi said that the Department wanted to look into it some more and get their own opinion.

Ms Williams said that they would reflect on what the parliamentary law advisors had said. Clause 27 did not fall within the ambit of schedule 6 and the Committee could vote on clause 27.

Dr Loots said that the issue had been flagged because of its inclusion in the Superior Courts Bill.

Mr Mkalipi clarified that the issue was that the legal team was saying the clause was unconstitutional on the basis that the Minister of Labour did not have a mandate to issue bills dealing with the courts. The issue that had to be reflected on was the constitutionality of the clause the Minister’s power to make law on the courts. He was of the opinion that this had nothing to do with the fact that there was another Bill. If the Superior Courts Bill was passed before the LRA Amendment Bill then the LRA Bill would fall away and if the LRA Bill was passed first then the Superior Courts Bill would simply mirror what was in the LRA Bill.

The Chairperson said that they had agreed to park the clauses.

Mr Maserumule suggested that the technical inquiry had to be suspended for the lawyers.

Mr Mcunango agreed and stated that the Department and the legal team should be given a chance to sort out their disagreement. They were supposed to be advising the Committee but could not do so properly because they did not agree.

Mr Manamela said the Committee must decide whether deliberations were going to be done now or whether they would do so later. A decision had to be taken on whether a debate was to be had or not.

The Chairperson said that the decision was parked and they would move on. The meeting then turned to administrative issues.

Advertisements for calls for comment
The Committee secretary had been asked to get quotations from newspapers. One advert in five languages in one newspaper amounted to R75 000. The agreed languages were English, Afrikaans, Sotho, Zulu and Xhosa.

Ms Makhubela-Mashele wanted to know how much the budget was.

The Committee secretary said that the budget was about R400 000. The advice from the agencies was that newspapers had to be selected according to the target audience. A request had also been made to the translating unit to translate the Bills but there was a long queue so there could be a delay. He also noted that an advertisement on the radio would be too expensive.

Mr Manamela proposed that the same process as before be used unless there were certain special circumstances that needed deliberation.

The Chairperson agreed.

Labour Budget Review and Recommendation Report (BRRR)
The Chairperson stated that the BRRR had been brought back to make minor changes and to rearrange certain items. Where it was possible the Committee was to put time frames to its recommendations. The Chairperson gave the Committee five minutes to look at the recommendations.

The Committee agreed that, starting immediately, quarterly performance reports had to be submitted by the DOL and its entities.
Public-private partnership contracts were discussed in clause 8.3. They needed to be monitored now that they were coming to an end and to ensure that there was a smooth handover from Siemens to the Department. The contract with Siemens ended on 30 November, the report should be delivered in February 2014 to give them a chance to wind up. It was suggested to require a progress report on the contract of Accenture because Accenture was brought in as a part of the deliberations. Accenture was paid heavily and a report was needed on the utilisation of funds.

Performance agreements by senior managers should be signed within the allocated time because these agreements had cut-off dates as opposed to simply being signed timeously. At times these agreements were being signed timeously but not within the allocated time. The Public Service Commission did the annual review and indicated which departments had signed and which ones had not.
The monitoring of the use of consultants and ensured that comprehensive programmes were entered into and the transferring of skills to permanent staff happened. It was suggested that this had to be reported on to the Committee once every six months.
The Chairperson stated that Committee had to lead by example and place adverts through the Public Employment Services system from the next batch of adverts onwards.
Vacancies should be filled within six months from the date of adoption of the BRRR.
▪ Recommendation 8.8 needed to have a time frame and the Committee stated that quarterly reports starting from January should be given.
▪ Recommendation 8.9 dealt with the decline in UIF claims and the study needed a time limit. A time frame of 6 to 9 months was suggested.

The Chairperson noted that the reason for the reduction in claims was because of the system being used. There were fraudulent claims and non-compliance by employers in certain instances. In the Northern Cape certain doctors did not want to deal with some COIDA (
Compensation for Occupational Injuries and Diseases Act) claims because payment was not forthcoming. The issue was much deeper than a superficial reduction in claims. Quarterly briefings were necessary but the process had to be completed within a year. It was agreed to request quarterly reports from January 2013 and then the process had to be completed by the 31 December 2013.

The Chairperson added that perhaps the COIDA issue had to be a standing item at all meetings with the Department starting from January. This would also include the public-private contract briefings.

Mr D Kganare proposed not a report at each meeting but a deadline given for a report on the study.

Ms Makhubela-Mashele said the study should include the model used by companies such as Medscheme which paid out the claims on behalf of medical-aid schemes. These are efficient and no money is lost along the way for example through double claims. This study would enable the Committee to decide on a model to administer the Fund.

The Chairperson commented on the cases in the newspaper where doctors were taking COIDA to court. Many cases were being brought against the department and the Department was ordered to pay. It was suggested that a briefing on these cases was necessary. Perhaps the Department had to do this.

Mr Nyekemba stated that the time frame suggested by Mr Kganare should not be complicated.

Mr Motau asked whether any work had been done previously on the studies mentioned above and if so then there was a need to pick up where this was left off and not leave anything behind.

Ms Makhubela-Mashele said the study was to look at models that could assist the Committee because the Compensation Fund was struggling with the same things over and over. The Committee had previously looked into a study on models that could make the Fund more effective and efficient. Systems administrated by efficient companies could be tapped into.

The Chairperson stated that Ms Makhubela-Mashele had hit the nail on the head. Doctors did not claim directly because it took too long and therefore there were institutions that claimed on behalf of the doctors. He suggested that they should come up with a date to get this information. A year or six months?

Ms Makhubela-Mashele agreed with a year to conduct the study. But a progress report was needed mid-2013.

The Chairperson commented that it was necessary to put COIDA on the spot.

Mr Kganare asked what informed the Committee in deciding on a year to conduct the study, why not six months? What the Committee needed was results and if it took six months, then that should be the period.

▪ Recommendation 8.10 related to the need to ensure that the inspection and enforcement services branch reported on the challenges they met when implementing the new structure. A quarterly report would be prepared starting from January 2013.

The Committee thus concluded the BRRR report which was adopted two weeks before.

The meeting was adjourned.


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