Employment Equity Amendment Bill, Employment Services Bill, and Strategic & Annual Performance Plan Erratum: Department of Labour briefing

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Employment and Labour

11 March 2013
Chairperson: Ms L Makhubela-Mashele (ANC)
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Meeting Summary

The Department of Labour (DOL) took the Committee through the Employment Equity Amendment Bill [B31-2012], stating that it would give effect to the rights to equality, fair labour practices and protection against unfair discrimination. Amendments were related to the prohibition of discrimination; equal pay for work of equal value; psychometric testing; arbitration of unfair discrimination claims by the Commission for Conciliation, Mediation and Arbitration (CCMA); employment equity plans for employers; employment equity plan reporting; income differentials; and enforcement mechanisms like discretionary powers to request undertakings from employers. Amendments empowered the Minister to regulate assessment of compliance, and arbitrators to make awards. A section was inserted to empower the Minister to adjust the annual turnover threshold for designated employers. Amendments enabled adjustments to maximum fines for contravention of the Act, to be in line with the current value of money. Total annual rates turnover rates for designated employers could be increased by 200%. Amendments made it possible to refer employers who failed to implement Employment Equity Plans directly to the labour court for a fine.

In discussion, it was asked what had been done to assess resistance to compliance by employers. The legislation wanted to remove arbitrariness, yet it granted discretionary powers to inspectors to get undertakings from employers. DA Members had problems with the notion of work of equal value, saying it was a nebulous concept. There was some concern that the CCMA would be overburdened, and whether there was budgetary provision for its extended role. A DA Member also felt that turnover had been linked to crime, and was not a good indicator. It was asked if work of equal value could be quantified. It was asked how compliance testing could be simplified. There were comments about increasing the competencies of the CCMA. The DOL argued that value of work was not problematic, and had to do with what individuals added to the bottom line. It was an international principle to look at value added. Employers had nothing to fear from turnover, if they complied. All that was expected from them was to have their own employment equity plans, and to report on them.

In its briefing on the Employment Services Bill [B-2012], the Department stated that the Bill repealed provisions in the Skills Development Act related to employment services and productivity. It provided for free employment services, also to foreign nationals. It empowered the Minister to promote employment and minimise retrenchment. It defined prohibited acts by private employment agencies, like the use of information on people that led to human trafficking. The Bill provided for the establishment of the Employment Services Board, an advisory body. It would re-establish Productivity South Africa and Protected Employment Services, and provided for sheltered employment factories.

In discussion, Members asked if non-profit non-governmental organisation (NGO) employment services would have to register. There were reservations about lumping protected employment and productivity together. There was a question about the employment of the disabled in the public service. The DOL was asked about its vision for career paths for those in sheltered employment. There was a question about sheltered employment for former soldiers. The Chairperson asked about the legality of providing employment services to undocumented immigrants. The DOL responded that the legality was based in the Constitution. Members asked whether public and private employment services would be in competition with each other. The DOL did not foresee so. It was asked how corruption in the form of employment for friends and family, would be avoided. The DOL responded that there was a watermark system in place to prevent that.

The DOL in its Strategic and Annual Performance Plan Erratum briefing, indicated that the DOL had published a Strategic Plan for 2012/17, and an Annual Performance Plan for 2012/13, early in 2012. There had been criticism to the effect that SMART principles were not being adhered to. The DOL had called in the help of the Technical Advisory Unit (TAU) of the National Treasury. The Erratum had been approved and tabled in Parliament in February 2013. The DOL had now tabled its Strategic Plan for 2013/18, and its Annual Performance Plan for 2013/14.

In discussion, there was concern about measurable targets. It was remarked that there had been problems with formulation of objectives, which had sent a wrong message to Parliament. The Chairperson remarked that there was a need for standard indicators to measure the DOL. She welcomed the fact that the Technical Advisory Unit of the Nation Treasury had been approached for assistance.

Meeting report

Department of Labour Employment Equity Amendment Bill [B31-2012] presentation
Ms Ntsoaki Mamashela, DOL Director: Employment Equity, stated the objectives of the Employment Equity Amendment Bill [B31-2012] (EEA Bill) to be giving effect to the rights to equality, fair labour practices and protection against unfair discrimination. Amendments were related to the prohibition of discrimination; equal pay for work of equal value; psychometric testing; arbitration of unfair discrimination claims by the Commission for Conciliation, Mediation and Arbitration (CCMA); and onus of proof in discrimination claims. Section 20, that dealt with employment equity plans, was amended to ensure that employers who failed to prepare and implement an Employment Equity Plan could be referred directly to the Labour Court by the Director-General for a fine. Section 21, that dealt with employment equity reporting, was amended to ensure that all designated employers  had to submit an Employment Equity Plan progress report on an annual basis. Failure to submit an Employment Equity (EE) report could also be referred directly to the Labour Court for a fine.

Other amendments dealt with income differentials, and enforcement mechanisms. Sections 36 and 37 were amended to make the power to request employers to make undertakings discretionary, and to eliminate the step of objections to a compliance order by employers. Section 42 was amended to empower the Minister to make regulations dealing with the assessment of compliance. Amendments dealing with arbitrations included Section 48(2), which empowered an arbitrator hearing an unfair discrimination claim to make an award. There were amendments related to the code of good practice; delegations, and criminal penalties. Section 64A was inserted to empower the Minister to adjust the annual turnover threshold used to determine whether employers were classified as designated employers, in line with inflation.

There were amendments related to increase in fines, and annual turnover. Maximum fines for contravention of the Act had to be adjusted to reflect change in the value of money. The total annual turnover that an employer had to exceed to be classified a designated employer, would be increased by 200%.

Discussion

Mr S Motau (DA) remarked that the found the Employment Equity Act (No. 55 of 1998) disturbing. Equity in the labour market was desirable, but in the Act people were classified as white, black, indian or coloured.

Mr Motau noted that resistance to compliance was taken as a given. He asked what work had been done to ascertain the extent of that.

Mr Motau remarked that the legislation aimed to remove arbitrariness, yet discretionary powers were granted to inspectors to secure undertakings. Sometimes the inspectors knew beforehand who such employers were, which could lead to prejudice. Care had to be taken when discretionary powers were granted to those in authority. One could not assume that people would always act in good faith.

Mr Thembinkosi Mkalipi, DOL Chief Director: Labour Relations, responded that proceedings in law made it impossible for inspectors to do their job. They could not collect statistics. He conceded that granting of discretionary powers had to be handled carefully. But the law regulated that a report had to be made on 1 October. The regulations preceded the undertaking. Inspectors were in fact securing an undertaking to adhere to the law, when a report had not been submitted.

Mr Motau said that “value” was a nebulous concept. The question was how to determine if work was of equal value.

Mr Mkalipi replied that companies wanted workers to add value. It was value that was added to the bottom line. It was an international principle to look at added value.

Mr Motau asked about the possibility that much would be dumped on the CCMA. He asked if provision for extra burdens had been made in the CCMA budget.

Mr Mkalipi responded that one had to consider the vulnerable worker. They had to go to the CCMA. Courts were not friendly to the poor and the vulnerable.

Mr Motau expressed concern about the fact that turnover had been linked to crime. The Department had surprised employers. It was not a reliable indicator, and people could be bankrupted. In South Africa there was a lack of jobs, it would be good to be circumspect about it. It had to be made sure that the punishment matched the crime.

Mr Mkalipi replied that he was not surprised by objections to turnover. But if companies complied, they had nothing to fear. The law was simple. All that was required was that companies produce their own EE plan, and report on it.

Mr A van der Westhuizen (DA) asked if there had been impact assessments about the Act. It had been around for 15 years and could be said to have had a positive effect, but the question was whether it could be quantified.

Mr Van der Westhuizen remarked with regard to work of equal value, that working conditions were sometimes hard. There was work for which people received danger pay. People’s cost of living differed. He found work of equal value a nebulous concept.

Mr Van der Westhuizen asked about pre-employment testing similar to psychometric testing. Recently people were assessed for traffic police posts by a local authority, and a number of people died.

Mr Van der Westhuizen asked what could be done to make compliance testing easier. He asked if it was in fact better to do such testing annually than bi-annually.

Mr Mkalipi answered that the Minister of Labour published a report every year, based on information gathered from employers. Reporting had been made easy, simple and user friendly. Forms would be reduced even further.

Mr Van der Westhuizen remarked that while the objective was to put more money in employee pockets, the cost of employing people was going up. It was becoming more difficult to employ people.

Mr E Nyekemba (ANC) noted that there had been agreement among all parties in 2010 about the Bill, as a result of public hearings. The ANC, DA and the IFP especially, had been in agreement. The Department were not there for a debate. The process had to be taken forward. The real question was what the next step was going to be. The Minister of Finance had referred to the CCMA in the budget speech. The CCMA had to develop new competencies. Employers used money to justify making the lives of workers miserable. Fines had to be seen against that background. Employers took awards against them on review.

The Chairperson commented on equal work for equal pay. It could be difficult to determine the value of work. She had employed workers for R200 per day. She gave a young boy who was with them R50, and he was disappointed. Afterwards she reflected that, although the boy was too young for adult work, he had been at the side of the adults all the time, and had run errands for them, and so on.

Mr Van der Westhuizen remarked that under the Basic Conditions of Employment Act (No. 75 of 1997), a child was not allowed to work.

The remark caused prolonged and uproarious laughter.

Department of Labour Employment Services Bill [B-2012] presentation

Mr Sam Morotoba, DDG: Public Employment Services, noted that the National Economic Development and Labour Council (NEDLAC) process for the Bill commenced in January 2011, and was concluded in July 2012.

The Bill sought to repeal provisions in the Skills Development Act (No. 97 of 1998) relating to employment services and productivity in South Africa. It provided a legal framework for the functioning of a repositioned public employment service. It provided for free services, including employment of foreign nationals. The Minister was empowered to establish schemes to promote employment and minimise retrenchment.

The Bill defined prohibited acts by Private Employment Agencies (PEAs), and clarified the charging of fees by them. It also provided for their registration. It also provided for the establishment of the Employment Services Board, and outlined its functions and compositions. The Board would be advisory.

Productivity South Africa (PSA) and Protected Employment Services were re-established by the Bill, and fully provided for in law. The Bill provided for the re-establishment of sheltered employment factories, and for their mandate to be clarified.

Discussion

Mr Van der Westhuizen referred to the fact that the Department of Labour would like placement services people to be registered. Training institutions had to assist in placing people for work. He asked if non-profit associations that provided free services, would also be required to register.

Mr Morotoba replied that NGOs which provided employment services, had to be subjected to scrutiny. There had to be compliance to minimum standards. NGOs could get into trouble if they for instance provided details that could be used for human trafficking.

Mr Motau referred to the decision to include productivity in protected employment. Productivity could attain a negative connotation.

Mr Morotoba replied that the Constitution had not taken away the role of productivity. Productivity had to be encouraged for employment.

Mr Nyekemba remarked that the aim of the Bill was to coordinate employment trends, and to make sure that everyone who provided employment services were registered.

Mr Nyekemba referred to employment services for the disabled. The Committee would meet with Productivity South Africa on the following day to ask about progress with the employment of the disabled in the Public Service. Sheltered employment did not as yet provide a career path. He asked about the vision of the Department with regard to that.

The Department replied that Disability South Africa worked with the factories. There was a turnaround strategy, a component of which instructed that an advice team from the disability sector advise on issues. The disability sector played a role in the turnaround for factories.

Mr Morotoba added that there was a human rights concern about the mainstreaming of the disabled. The PSA monitored the employment of the disabled within government. It was currently broader. There were new factories in Mpumalanga, among others.

Mr M Nchabeleng (ANC) asked about sheltered employment for former soldiers.

The Department replied that there was a turnaround strategy to stabilise their situation, in organisational and administrative terms. Employment opportunities would be created. There would be training for accreditation in factories. Existing entities would be stabilised.

Mr Morotoba added that the Military Veterans Act (No. 18 of 2011) provided a dispensation for them, which would remove them from factories. Those severely affected would be confined to factories.

The Chairperson asked how documented immigrants were to be distinguished from undocumented ones. It was said that even undocumented ones would receive services from the Department. She asked about the legality of that. The DOL had to give a future briefing about human resources (HR) capacity to roll out the legislation.

Mr Mkalipi replied that the rights of workers in the country were constitutional. The Constitution guaranteed the right to fair labour practice, whether workers were documented or not. The Constitutional Court had pronounced that no worker could be disadvantaged by being illegal. Legality came from the Constitution.

Mr Morotoba added that the Bill promoted internal migration between provinces. Movement had to be facilitated.

The Chairperson noted that, in Germany, delegated people looked for work for people registered with the employment service. She asked about the possibility of competition between public and private employment services.

Mr Morotoba replied that the Public Service required people. Private employment services mostly placed professionals and CEOs. There was no contest. The Conventions regulated the interaction between public and private, also to avoid corruption and favouritism.

Mr Nchabeleng asked about the DOL and Public Service role in preventing corruption through employment favours for friends and relatives. He asked how sure one could be that the service would not be abused.

Ms Zodwa Mabaso, DOL Chief Director: Employment Services and Work-Sector Placement, replied that there were watermarks that avoided the placement of friends and relatives. The system registered already registered people who met criteria for a job. Supervisors checked why names had been sent.

Mr Nchabeleng asked if the employment service system would be able to inform people why they did not get a job.

Mr Nchabeleng asked with reference to migrant workers, how it would be ensured that the Department of Home Affairs and the DOL did not work at cross purposes. Agriculture was also involved in a process to stop consultants abusing people.

Mr Morotoba answered that the DOL and Home Affairs co-operated around retrenchment issues. There were employers who brought in mostly unskilled workers, and there was the possibility that they could be subjected to lower standards. Employing them kept South Africans unemployed. People often justified the employment of immigrants by saying that locals were drunk or lazy, with such claims remaining unverified.

Mr Morotoba concluded that a code of conduct was being developed, which included criteria to assess an individual. It had been negotiated with the unions. The DOL had embarked on a process to get the Treasury to understand investment in infrastructure. Employment had to work with the DOL to succeed.

DOL Strategic and Annual Performance Plan Erratum briefing

Mr Morotoba indicated that the DOL had published a Strategic Plan for 2012-2017 and an Annual Performance Plan for 2012-2013; early in 2012.

The Strategic Plan and the APP had been criticised for not conforming to SMART principles. The DOL had called on the Technical Advisory Unit (TAU) of the Treasury to assist them. The Erratum was approved and published in Parliament on 15 February 2013. The DOL had published its Strategic Plan for 2013-2018 and its Annual Performance Plan for 2013-2014.


Discussion

Mr Van der Westhuizen expressed concern about measurable targets, and a minimum performance agreement with the President.

Mr Nchabeleng remarked that there were problems with issues related to the formulation of objectives. It was a case of a cut and paste effort that had sent a wrong message to Parliament.

The Chairperson commented that the Committee wanted standard indicators to measure the DOL. It was a challenge to the Committee that those who evaluated contradicted each other, notably the National Treasury and the Auditor-General of South Africa. Varying indicators had been used. It was welcomed that the DOL had called in the assistance of the Technical Advisory Unit (TAU) of the Treasury.

Committee minutes: adoption

The minutes for 5 March 2013 were adopted.

The Chairperson adjourned the meeting.

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