Labour Relations Amendment Bill [B16-2012]: clauses 39-52 deliberations

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Employment and Labour

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

The Department of Labour presented New Clause 188B amending Section 193 dealing with senior managerial staff and their proposed exclusion from the ambit of the LRA on dismissal. The various Options were discussed.

The Parliamentary Legal Advisers continued working through the Working Draft 1 of legal issues and proposals for changes that they had picked up on. Clause 40 dealt with the date of dismissal of employees who were working during their notice period. The legal team suggested that the date of dismissal should be the date on which an employee was paid their wages even if this date was after the expiration of the notice period. The Department disagreed with this and explained that the intention of the legislature was to speed up the dispute resolution procedure. If an employee was paid their wages before the notice expired then the date on which they were paid would serve as the dismissal date and the employee did not have to wait for the notice to expire before challenging the dismissal. Clause 43 dealt with temporary employment and held that both the temporary employer and the client were jointly and severally liable. Joint and several liability was a legal concept that allowed more than one person to be held liable for damage. The legal team also recommended replacing the word ‘must’ with ‘may’ to reflect that this was a permission-seeking clause and not a closed prohibition. This was in relation to temporary employers who had to be registered. The Department disagreed and stated that the word ‘must’ would make more sense to the people to whom the clause would apply. The other amendments to section 43 were technical. Clause 44 related to temporary work for a client by an employee. This distinguished between the services provided by a temporary employment agency and the actual work performed by the employees of the temporary employment agency. Clause 46 highlighted the joint and several liability of any party related to or associated with the employer. Cause 50 to 52 dealt with technical amendments.

Meeting report

New clause 188B Amending Section 193
Senior managerial staff and their proposed exclusion from the ambit of the LRA on dismissal
Mr Thembinkosi Mkalipi, Chief Director; Labour Relations, Department of Labour, stated that in previous meeting there had been a long debate about senior managerial staff and their proposed exclusion from the ambit of the LRA surrounding the issue of dismissal. A proposal had been drafted to capture the concerns of the Members with two options. The Department indicated that they were in favour of Option 2 because it seemed to capture the concerns of the Members. The concerns were related to the fairness of the process. It appeared that a senior employee could simply be dismissed upon three months’ notice and not given a chance to argue his/her case. A proposal was put in that did not change the principle of the law as it was; reinstatement was limited in two ways, because the employee did not want to be reinstated as the dispute was one of procedure and not substance, it had been limited. The Department was proposing some limitations as well in order to make it unattractive for senior managers to seek reinstatement. The Department wanted senior managers to opt for negotiation and financial compensation instead of reinstatement and this financial compensation was capped. In addition to the grounds that already existed for an employee not being reinstated, the Department wanted to add subsection (cA) which stated that an employee did not have to be reinstated if the employee was a senior managerial employee in the organisation. Subsection (cB) was another addition which would state the employer’s rate of remuneration on the date of dismissal was more than six times the amount prescribed by the Minister in terms of section 6(3) of the BCEA. The Department was still debating whether these subsections would be combined into one. This was being debated because a senior manager might not earn six times the amount prescribed by the Minister. The compensation to be given was capped to R800 000. This compensation would change as the threshold changed. All other provisions of the law would still apply because the issue of an automatically unfair dismissal would still be dealt with.

Mr A Williams (ANC) asked for clarity on subsection (cA) concerning senior managerial employees who earned a little bit above the threshold. Would they be treated the same as those earning high above the threshold?

Mr Mkalipi replied that that was one of the reasons they wanted to combine the subsections. If the two subsections were combined then this section would only apply to senior managers who earned six times above the threshold and the managers who earned less than six times the threshold would be excluded. This would not be a problem because the section was aimed at high income earners.

Ms Suraya Williams, Principal Legal Adviser, Office of the Chief State Legal Adviser, added that the section could easily be redrafted and then the second section would fall away.

Mr Mkalipi stated that Option 2 covered all the concerns that the Members had.

Ms Williams added that the section also addressed the concerns that the Parliamentary Law Advisers had considering procedural and substantive fairness. Senior managers were being integrated into existing provisions. No new provisions were being added for them.

Mr Mkalipi repeated that the intention of the legislation was to make it unattractive to go and contest these matters in the CCMA. The costs of pursuing the matter through the courts would outweigh the compensation awarded and this was supposed to encourage senior managers to settle through negotiation.

Mr E Nyekemba (ANC) asked the Parliamentary Legal Advisers to comment on the proposals before them especially in terms of any possible limitation to rights.

Dr Barbara Loots, Parliamentary Legal Adviser, requested time to look at the wording to see if it would result in any limitations, although they understood the rationale behind the addition of the section.

Briefing on Working draft of Bill: Clauses 40 to 58

Clause 40
Adv Anthea Gordon, Parliamentary Legal Adviser, noted that no legal issue had been identified in this clause. However, the drafting was not clear and for this purpose a restyling was necessary to make the intention of the legislature clear. The section needed to be rearranged in order to reflect that if an employer had not paid an employee on the date that the employee’s notice period expired then the date of dismissal would be the date that the employee was paid. A second issue was the use of the word ‘salary’ a narrow concept which was not normally used in the LRA and the definitions section referred to ‘remuneration’. They suggested the replacement of the word ‘salary’ with ‘remuneration’.

Mr Mkalipi replied that he was not sure whether the redrafted word captured the intention of the section. The proposal was that if an employee received notice the date of dismissal would be the date given in the notice but if an employee received all their money before the notice date expired then the employee could immediately on that date approach the CCMA and challenge the dismissal.

Adv Gordon then said the rewrite would instead state: if the employee was paid prior to the expiration of the notice. The section would be redrafted the other way round.

Mr Mkalipi added that the word earlier referred to the notice date and that was the operative date. The rewrite had to capture the fact that the dismissal date was the date in the notice. If the employee got paid before the date in the notice, then that date would be the dismissal date.

The Chairperson asked what would happen if the employers took more than three months to pay an employee.

Mr Mkalipi replied that this would be a different case because the worker would have been dismissed and this is not a case of notice being given. When the employer gives a month’s notice in terms of the Basic Conditions of Employment Act (BCEA), then the provision would apply.

Adv Gordon agreed with the Department and her mind was asking the question: what if an employer is given a notice period but on the date of the notice expiration, the employer does not have the remuneration. The employer can pay the employee before the notice expires or the employer might not pay until after the notice had expired. Both situations had to be looked at.

Mr Mkalipi stated that the BCEA dealt with how an employee who had not been paid would deal with an issue of not being paid. Even though an employee would have been given notice, he still would have to be paid in the same way and therefore the BCEA dealt with non-payment of wages. He explained that the section related to challenges that could be brought against a dismissal. The rationale was that an employee could challenge a dismissal even before the expiration date of the notice and the employee did not have to wait for the notice date provided his wages had been paid before the date in the notice.

Adv Gordon stated that if this is the policy decision that DOL wanted to make then the section would be redrafted to make that intention clear. She noted however that the BCEA would not apply to a person whose employment had been terminated on notice because that person would no longer be employed; instead it would become an unfair dismissal and not an unfair labour practice.

Mr A Van der Westhuizen (DA) asked whether the fact that an employee had been paid earlier meant that the employee was not expected to work the last few weeks of the notice.

Mr Mkalipi replied that this section did not affect how or when an employer had to pay the employee. The employee still had an obligation to work the notice period even if they had been paid earlier. The section simply related to the fact that the date of dismissal is the date that an employee was paid. The section was simply meant to fast track dispute resolution.

Mr F Maserumule (ANC) asked how long the officials would take to reword the section because he was finding it difficult to follow.

Mr Mkalipi stated that there was no problem with the BCEA. A dismissed employee could always claim their unpaid wages at the Department of Labour. If unpaid wages were linked to an unfair dismissal an employee did not have to go to the CCMA to challenge the unfair dismissal but could go to the Department of Labour. The LRA also stated that the CCMA could deal with the issue in its totality.

Mr Van der Westhuizen gave an example of employees who were paid before the expiration of the notice period and stayed on as a favour to their employee. Perhaps a redraft was needed to state that ‘in terms of exercising your legal rights the date of dismissal would be deemed to be the last day on which an employee was paid’.

Mr Mkalipi asked for time to consider the unintended consequences of the section.

Ms Williams’s noted that the intention of the section was to provide certainty regarding the date of dismissal. If the section wanted to provide certainty for labour law across the board then it was better to leave it open. However, if it was supposed to be simply in relation to matters to be taken to the CCMA then it was better to narrow it down. An employee who was dismissed had to be protected and given certainty.

Clause 41
No legal issue was identified. A note was inserted to highlight the consequence of the draft; the section could result in a delay of the resolution of the disputes at the CCMA.

Clause 42
No legal issue was identified in terms of non-standard employment.

Clause 43
The current section held the temporary employer and the client jointly and severally liable. Section 198(4A) gave impetus as to how parties were to be cited in litigation and set out the citation. The concept of joint and several liability was not a new insertion it was already in the Act in s198. This section in the Bill just gave clarity to Section 198. A recommendation was given to keep the wording of the Section 198(4B) to maintain clarity that the role of the employment service was to provide for or procure. Section 198(4C) uses the word ‘service’ instead of ‘services’, a technical amendment. Section 198(4F) was not a closed prohibition but a permission-seeking clause so one should remove ‘must’ and replace it with ‘may’.

Mr Williams asked whether the use of the word ‘may’ would create loopholes.

Adv Gordon replied that in the context ‘may’ was not essentially incorrect. In that context a person may not perform a function until they were registered – there was a qualification. It was a preference on the part of the legal advisors but the Committee was welcome to keep ‘must’. Either word did not detract from the effect of the clause.

Ms Williams suggested the addition of the word ‘shall’ instead of ‘must’ which had been previously used but was changed.

Mr Mkalipi noted that it was important for the people to whom the section was directed at to understand it. These people would relate better to ‘must’ because of the clarity it gave to stakeholders.

Mr S Motau (DA) the word ‘must’ closed the door to any other behaviour and if this was the intention then the word ‘must’ would remain but if there were options then ‘must’ had to be reconsidered.

Mr Mkalipi stated that although the word ‘must’ closed the door there was no problem because anything more would open the door.

Mr Nyekemba indicated that he was happy with ‘must’.

Adv Gordon asked for confirmation that the recommendations for section 4B and C were accepted and 4F was rejected.

Clause 44 Insertion of sections 198A to 198D
Section 198A
This gave the ambit of what temporary employment services were. This clause was describing what temporary work was. The first issue was a style issue and was reconciliation between s198A and s198 as it stood in the Act. S198 spoke about temporary services but for clarity it could be confusing to read the two sections because it would seem as if they were referring to the same thing. The recommendation was to add ‘a temporary service’ to distinguish it from the agency. The next issue was to ‘substitute for an employee or a category of work’.

Members could decide which scenario of Section 198A(1) to have – whether to reject the month scenario or choose how many months would be the cap for temporary work. This would be a policy decision. S198A(1)(a) was taking away ‘services’ and inserting ‘a service’ moving away from the plural to a singular form. The reference in subsection 3 to subsection 2 was incorrect. S198A(2) stated that the section did not apply to employees earning in excess of the threshold prescribed by the Minister. Section 198A(3)(a) and (b) the plural from of “temporary services” should be changed to the singular from for drafting style. The law advisers recommended changing the word ‘assignment’ to ‘service’ so as to be in line with the principal Act.

Mr Williams stated that the change from services to service should be accepted and the only issue left would be the decision on 6 months and 12 months.

Ms Williams noted that ‘temporary employment service’ was used in the LRA and BCEA and therefore the term ‘temporary employment service’ was used for consistency.

Adv Gordon highlighted that Section198A(4)(a) was relating to the work and s198 was referring to the agency. The proposal was that in order to clearly show that s198 did not refer to the work but referred the agency and s198A referred to the work. The singular form was being proposed because it was dealing with work and was not inconsistent with the Act.

Mr Mkalipi added that the present law used ‘service’ and ‘services’ interchangeably.

Ms Williams agreed that perhaps the singular should be allowed.

Adv Gordon asked for confirmation that there was agreement on all sections except s198A(1)(a) which would be decided on at a later stage.

Section198B
Adv Gordon said this spoke to fixed term contracts in terms of employees earning below the threshold. The first change was a technical one from ‘for the purposes of the section’ to ‘for the purpose of the section’. The ‘purposes’ of the Act were vast but the ‘purpose’ of the section was limited and related to fixed term contracts. This was up to the Committee to decide.

In S198B(2)(c) it was proposed to change ‘engaged’ which ran commonly through the clause to ‘employed/employs/employ’ as the context required. It would be difficult to define engaged in the context of employment law. An employer could employ an employee on a fixed term contract or successive fixed term contracts for more than 12 months but this was a policy decision still to be made by the Committee. S198B(3)(a) referred to ‘engaged’ and ‘employed’ was recommended instead. S198B(4)(e) referred to an employee engaged in a trial period not longer than 12 months for the purpose of determining the employee’s suitability for employment. ‘suitability for employment’ could be changed to ‘probation’. She urged members to consider the fact that probation was not to be used to deprive an employee of permanent employment as noted during their deliberations.

Ms Williams stated that when drafting the legislation the word ‘purposes’ was a drafting style adopted from the Constitution for example s25 of the Constitution which referred to the ‘purposes’ of the section.

Mr Van der Westhuizen brought the Members’ attention to S198B(4)(e), and stated that it was illogical to ‘employ’ an employee to determine the ‘suitability for employment’. Can an employer employ to determine whether to employ?

Mr Maserumule asked for an explanation of the probation period.

The Chairperson stated that probation referred to assessing the ability of the person to perform a function.

Mr Williams proposed that except for S198B(3) dealing with the period of 6, 3 or 12 months and S198B(4)(e), they accept all the grammatical changes.

Mr Van der Westhuizen suggested alternative wording for S198B(4)(e): “the suitability of a particular post” because this is what probation was trying to assess.

Mr Mkalipi stated that the Department could easily read into the statement “for the purpose of probation” instead of “for the suitability of employment”.

Mr Nyekemba noted that on page 17 there was reference to Item 8(1)(c) of Schedule 8 to the LRA i.e. the Code of Good Practice which stated that-
“Probation should not be used for purposes not contemplated by this Code to deprive employees of the status of permanent employment. Item 8(1)(d) states that probation should be determined with regard to the nature of the job.

Adv Gordon said the period of probation had to be determined between the employer and the employee taking into account the needs of particular workplace. S198B(4)(e) was proposing a time period for probation and did not deal with the other relevant factors. The law advisers proposed that S198B(4)(e) be rejected.

Mr Mkalipi replied that the section related to the Code of Good Practice and in any situation when the law was amended it had to be done in line with the Code of Good Practice.

Ms Williams stated that the Code referred to suitability for continued employment and this could be included in the redraft.

Mr Williams asked whether in light of the code of good practice it would not be better to remove S198B(4)(e) completely because setting a time limit would limit employers that needed a longer period of probation and the Code of Good Practice would apply and cover the problem.

The Chairperson suggested that the legal team redraft the section.

Mr Motau recommended that the members reject the section. As an aside he added that even when employees were on probation they were employed. Probation was intended to determine suitability and to make employment permanent.

The Chairperson stated that the intention of the period was to check if a person was suitable to do the job.

Mr Mkalipi stated that if the Members were in agreement that the section was to be deleted there was nothing to amend.

Adv Gordon then recapped the issues for clarity. For 198B all the recommended changes in respect of technical amendments were accepted. For Section 198B(4)(e), the recommendation was accepted to a degree. The latter part of s198B(8) the Department was lobbying that ‘must’ remain and not become ‘may’. For S198C there were no proposed amendments and there were no legal issues. The only proposed change was to change ‘purposes’ to ‘purpose’.

Clause 45
No legal issues were identified.

Clause 46
No legal issue was identified except for the issue of joint and several liability between a party associated or related to the business of the employer. The only issue was to highlight that joint and several liability is not a new concept in the LRA. The aim was to draw in anybody who had caused any damage and makes the liability wider than just the employer. Under general law, joint and several liability for fault or negligence would be dealt with by the Apportionment of Damages Act in the law of delict. Liability was now a given in terms of the LRA.

Clause 47, 48 and 49
No legal issues were identified.

Clause 50
This related to the short title which indicates how and when a Bill will come into force. The proposal was for this clause to be split into two subsections. Subsection 1 would read the Act is called the Labour Relations Act and will come into operation by proclamation on a date fixed by the President in the Government Gazette. Subsection 2 will read notwithstanding subsection 1 the coming into operation of s198(4)F was suspended until the applicable legislation contemplated in terms of that section came into force. This legislation dealt with the registration of a temporary employment service.

Ms Williams asked the Committee to go through the clause that had been deliberated upon and indicate the clauses they agreed with. This was so that the A list could be drawn up with certainty.

Adv Gordon stated that the legal team was not double presenting Clause 50 but there were issues that they had requested permission to go and look into. These were dealt with up to page 21 and as at page 22 these were proposed new amendments that could be added.

Clause 51
What they were proposing was the deletion of s27 and substituting it with s23 of the Constitution in the Long Title of the Bill.

Clause 52
A technical amendment that the Department also commented on. The issue was heightened because of clause 27 which was also in the Superior Courts Bill and it might be beneficial to confer with the Portfolio Committee on Justice because they were dealing with similar changes. There were also outdated provisions referring to the provincial division and the Supreme Court which needed to be changed to the High Court.

Ms Williams asked the Committee to show which clauses they agreed upon and which ones they did not agree with. This would enable her to prepare an A list of Committee proposed amendments.

The Committee decided to do that first thing at the next meeting.

The Committee agreed to move to and fro between the Basic Conditions of Employment Amendment Bill and the LRA Bill. While awaiting legal advice on some of the contentious clauses in the LRA Bill, they would work on the new Working Draft of the BCEA Bill on 13 November. They would decide on the contentious clauses when they had received legal feedback.

The meeting was adjourned.

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