Labour Relations Amendment Bill: deliberations on clauses 6, 43 and 44

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Employment and Labour

10 June 2013
Chairperson: Mr M Nchabaleng (ANC)
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Meeting Summary

Members noted the need to take decisions in principle on clauses 6 (and linked clauses 8 and 20) and clauses 43 and 44 of the Labour Relations Amendment Bill. For clause 6, three options were mooted. The first option, which came from a proposal by the ANC, was that the clause be rejected. The second, following a proposal from COPE, was to retain the clause but omit the reference to people who had “voted in that election”, and the third proposal, from the DA, was to retain the clause as stated in the Bill. Similar positions to those expressed in the last meeting were reiterated. This clause essentially was introducing a third stage before proceeding with a strike. Already, when a dispute was declared, the parties would approach the Commission for Conciliation, Mediation and Arbitration (CCMA) and conciliation attempts would occur for a period of 30 days. If the dispute had not been resolved in 30 days, then the CCMA would, as the second stage, submit a certificate that would give rise to a protected strike. Clause 6 was introducing a third stage where unions must ballot their members on whether they wished to proceed with the strike. COPE stressed that it saw this as a procedural issue and insisted that the right of members on the floor, rather than union bosses, to take the decision must be confirmed by the ballot. The DA saw this as a confirmation of democratic principles, and as a step to curbing violence during protests, and said that essentially Members of Parliament were in their positions because of a ballot by the populace. The ANC countered that, having been elected as representatives, they were not required to seek a ballot for every decision they took as public representatives, and reiterated that it saw the ballot as unnecessary, because the right to strike was in any event constitutionally protected, and as an unnecessary restriction on the process. The matter was put to the vote and the majority decision was to adopt option 1 and reject clause 6, and with it, clauses 8(a) and (b) and the changes being effected by clause 20. It was stressed that this was not yet a formal and final vote on the clause itself, but an “in principle” vote that would allow the drafters to produce a clean version of the A-list for the final vote in the following week.

Members then moved to a discussion on clause 44, which would then affect the way that clause 43 was worded. This clause placed a restriction on the time period that a temporary worker could be regarded as employed by a Temporary Employment Service (TES – also commonly referred to as labour broker) before being deemed to be employed by the TES client, the employer. The clause set out a period of six months, but the ANC had proposed, at the last meeting, that this be reduced to “zero months”. The opposition parties had not agreed on that point. In this meeting, the DA stated that it was clear that there had been exploitation by many TES firms, and circumvention of good labour practice, it was necessary to regulate this problem, rather than impose a restriction of “zero months” that would essentially do away with this kind of service. In principle, DA, COPE and the FF+ believed that there was a place for TES, urged that these services were important in allowing more people to be employed, and were particularly vital in seasonal industries, such as film, conferencing and similar environments. There was some debate over the effect of banning these services, the need for temporary work, the application of the provisions to vulnerable workers earning below the threshold, and discussion over whether further regulation was needed or desirable. All Members were in agreement that this Committee must try to find a way to curb illegal or undesirable practices that were leading to exploitation, and to ensure that those doing the same work were being paid the same wage, as one of the fundamental problems in the past was that the TES would be paid by the employer, but would then deduct a substantial fee before paying the employee. The ANC proposed that instead of pursuing the wording referring to “zero months” as made at the last meeting, it now wished to propose the replacement of the words “six months” in section 198A(1)(a), (b) and (c) with “three months”. This was welcomed by COPE and cautiously recognised by the DA and FF+ as a substantial improvement on the zero months although they reiterated their view that six months was still preferable. The FF+ asked whether it was not possible to deal with the matter specific to certain industries, and there were also questions raised as to other protection offered to vulnerable sectors, which were answered by the Department of Labour. Instructions were given to the drafters to effect the necessary changes to reflect the three month period in clauses 43 and 44, following the acceptance of this by the majority of the Committee, and to make other consequential changes as may be necessary, including those to the Long Title and Memorandum on the Objects of the Bill. The drafters also confirmed that they would check all the transitional periods, although these were slightly different from the position in relation to TES to ensure that they were consistent.  The Committee would vote on the Bill, clause by clause, on 18 June.

Meeting report

Labour Relations Amendment Bill: A-list
The Chairperson announced that this was a continuation of the meeting on 5 June, where the Committee had agreed to some clauses, but there were still some outstanding matters – mainly the balloting clause, clause 6, and clause 44, with linked clauses 8 and 43 respectively.

Ms Suraya Williams, State Law Adviser, Office of the Chief State Law Adviser, noted that her office had prepared three options for clause 6 : to reject, to accept it without making amendments, and a third option to accept the clause, but with amendments; omit “and” and then, in line 36 on page 5, to omit “voted in that election”.

Mr Thembinkosi Mkalipi, Chief Director, Department of Labour, reminded Members that this clause introduced a third “loop” in the right to strike. When there was a dispute, the first step was to approach the Commission for Conciliation, Mediation and Arbitration (CCMA) and conciliation attempts would occur for a period of 30 days. If the dispute had not been resolved in 30 days, then the CCMA would, as the second stage, submit a certificate that would give rise to a protected strike. Clause 6 now required the union, as a third stage, to show that it had balloted its Members on whether they wanted to proceed with the strike.

Mr A Williams (ANC) said that this clause had been discussed quite extensively and there was talk of rejecting it. He thought the clause should be removed altogether from the Bill.

Mr D Kganare (COPE) supported the option to accept the clause, but with the amendment that he had proposed. This was a matter of procedure and he saw nothing wrong with requiring workers, who had the right to strike, to have a choice, and to express it, as to whether they wanted to go on strike. If the majority voted to go out on strike, the strike was protected, and if the majority decided not to go on strike it would not be protected. He stressed that it was for the workers on the shop floor, and not the union leaders, to decide whether to go on strike.

Mr S Motau (DA) said his party had made its position clear last work. He said that since 1995 there had been mushrooming of wildcat or unprotected strikes and this clause was attempting to bring order to the process. Once there had been a ballot by the members and the majority wanted to go to strike, this would greatly diminish the chances of violence on the fringes. The legislators had to try to minimise violence, and balloting was one way to do that. He made the point that Members themselves were in fact in Parliament as a result of balloting procedures by the populace, and he strongly supported the retention of the ballots.

Mr A van der Westhuizen (DA) added that the current situation in labour legislation was unacceptable. These situations of unrest were not even usually the results of disputes between employer and employee, but between labour unions themselves. It was impossible to let the current state of affairs continue . He said that he felt strongly that this clause, whereby workers' intention would be expressed through a ballot, should be introduced. He had no problem in principle with the idea to delete the phrase “who voted in that election” but said that he thought it would, from a practical viewpoint, unnecessary complicate matters, by creating the situation where employers might be able to question the numbers of members, to raise points as to whether the ballot was representative, or was supported by the majority of those who had voted. .It was a general rule that those who did not vote could not complain later. He urged the retention of the clause, which, he pointed out, was in the Bill as presented to Parliament, after the processes at the National Economic Development and Labour Council (Nedlac).

Mr E Nyekembe (ANC) noted that this was a constitutional issue. It had been dealt with in detail, and was covered both by the Labour Relations Act (the LRA or the principal Act), as well as the right to strike being entrenched in the Constitution. The LRA set out how the strikes were supposed to happen. The Department of Labour (DoL or the Department) had explained that when there was a deadlock, either party may go to the CCMA, who would try to mediate. In the event that parties did have a dispute, they would be represented at the CCMA – similar to the way that Members today represented their constituents – and, if the dispute was not settled, a certificate would be issued. He pointed out that there would be no unions without members. Wildcat strikes were unprotected strikes and he asked that the distinction between those, and protected strikes, be clearly drawn. The ballot did nothing to legitimise the strike, as it was already legitimised by the CCMA process, so there was no need for the clause.

The Chairperson reminded Members that they had, in the previous week, stated that the right to strike was hard-fought for and there were concerns that business could try to curtail the right to strike, and that a ballot might be another way of doing that.  There were certain unions who, in their own constitutions, required a ballot to make the decision to strike, but others did not have that clause. There was a feeling that the example of one union should not cover every other union.

Mr Kganare said that the intention of this clause was not to take away the right to strike, which would clearly remain. He said that the main issue was how to legitimise the strike. The fact that a union could declare a dispute did not legitimise the strike; instead, the workers' vote to go out on strike was the main point. He fully supported workers' rights to strike, but they must have the right to decide, as a matter of procedure, whether they wished to strike or not, after the certificate from the CCMA was received. He stressed again that the majority of workers must take that decision, for the strike to be legitimate.

Mr Motau said that there was no question of the fact that workers had the right to strike. However, the important point was how to bring order and how to legitimise issues. Experiences in the past showed that certain things did not work; and he stressed that there was a need to bring down levels of aggression, intimidation and violence. Balloting would be one way to do this.

Mr van der Westhuizen said that the fight, prior to 1994, was essentially a fight about the right to vote – or to ballot - not only about the right to strike. He was arguing that this clause would bring democracy back to the workplace. He urged that government be true to its original intention and allow people to express their will through the ballot paper.

Ms L Makhubela-Mashele (ANC) urged her colleagues not to “smell a rat where there isn't one”. Members of the union elected their leadership to act on their behalf, just as MPs were elected by their constituents, and it should be accepted that they had the mandate of the members. It would simply not make sense if every time Parliament had to decide on something, the MPs had to canvass the views of the electorate again. At some point it must be recognised that as the duly authorised representatives they had the right to take decisions.  The notice to strike was sufficient to allow members of the union to embark on a protected demonstration. It made no sense to require them again to be subjected to a different procedure that would again require a full mandate.

Mr Nyekembe said that Mr Kganare was suggesting that nothing should happen without a ballot, but if this was to be taken consistently, then workers should surely have a ballot to decide to negotiate, and then another to declare a dispute, and then again after the certificate was issues. The trade unions existed as a result of the Constitution, and the principal LRA detailed how they would exist. They must register with the Department of Labour, and there were various requirements before they, and the strike, would be legitimised. It was not possible for this Committee to re-write the constitutions of the trade unions. Wildcat strikes were not new (although they were then called illegal strikes),and would or would not take place, irrespective of a ballot procedure. The LRA had come about as a result of deliberations between government, labour and business and represented their will.

The Chairperson noted that it was clear there were divisions on the issue. There were equally strong feelings that a ballot was necessary , and that insisting on a ballot would affect the right to strike, and he did not see that the two views would be reconciled. He suggested that the clause be put to a vote.

Mr Kganare reminded the Committee that there were three views and three options.

The Chairperson thought that Members must vote in principle on the options, to allow the State Law Advisers then to make the necessary consequential changes. However, the Bill would be voted on finally in the next week.

Ms Makhubela-Mashele asked the State Law Advisors why the options still had to remain and said it was clear that the majority was in favour of rejecting the clause outright.

Mr Motau quipped that this was making an assumption that all her colleagues would vote to accept Option 1.

Ms Makhubela-Mashele suggested that it be verified by a show of hands.

The Chairperson asked those who were in favour of each of the options to vote.

Adv Anthea Gordon, Parliamentary Legal Adviser, agreed that positions were needed, and there were clearly opposing views. She suggested that it was possible to vote finally on some of the clauses today, and then simply to record, next week, that a final vote had already been recorded on clause 6.

The Chairperson asked what would happen if Members changed their minds before next week.

Adv Gordon said that a final vote could not be changed and suggested that an “in principle” vote could still be taken, which would allow the drafters to attend to their work and produce a new A-list, as well as allow Members to change their minds before next week.

Mr Kganare thought that no voting should be done on the clause today.

Adv Gordon asked Members to appreciate that when the drafters left this meeting today, they had a lot of background work to do and needed some finality on the options. If the options remained, there would still not be a final version of the Bill before Members next week.

Ms Makhubela-Mashele said that it was necessary to have a clean version before next week.

The Chairperson then asked for a vote on the three options. For Option 1, to reject the clause, seven votes (ANC) were recorded in favour. For option 2, to accept the clause, but with an amendment, one vote (COPE) in favour was recorded, with the rest in opposition. For Option 3, the retention of the clause as presently worded, two votes (DA) were recorded in favour and the remainder opposed.

The Chairperson therefore recorded that Option 1 had been chosen, by the majority of Members.

Mr van der Westhuizen reminded Members that Cabinet had supported the inclusion of that clause in the last year, and the DA shared that view.

Clause 8 and clause 20
Adv Gordon confirmed that the rejection of clause 6 would have consequences upon clauses 8 and 20.

Ms Suraya Williams noted that currently the proposed A-list contained sub-clauses (a) and (b) and (c) of clause 8. Clause 8(b) had already been rejected by the Committee, and 8(a) was now rejected as a consequential amendment to clause 6. However, paragraph 8(c) would still stand.

She also confirmed that clause 20 would be rejected in line with the decision on clause 6.
Clauses 43 and 44
Ms Williams pointed out that in clause 43, on page 21, after line 4, there was a time period noted of six months after the date of commencement of the Act.

Adv Gordon interrupted and suggested that Members should firstly deal with clause 44, not clause 43, as whatever decision was taken on clause 44 would have a consequential effect on clause 43.

Ms Williams then said that in clause 44, from line 31, on page 21, the reference to “six months” would be omitted. The Committee needed to decide whether to substitute this with the words “zero months, “?months,” or “xx months”, all of which had been suggested at some point.

Mr van der Westhuizen reiterated that the main concern was around the practices that had happened in relation to section 198A of the LRA. There was no doubt that temporary employment services (TES) had no doubt been used in the past to circumvent good labour practices. Whilst the DA believed that something should be done, and welcomed the regulation of TES to bring them back into line with the original intention, it did not support any proposal to amend this clause to read “to a period not exceeding zero months”. He thought, firstly, that this would be poor drafting, and if this was the intention, then a complete rewrite of the clause was needed.

However, he also wanted to speak to the principle. If the function of TES (also referred to as labour brokers) was no longer to be included in the South African labour market legislation, and only placement agencies were to be allowed, they were dealt with under a different piece of legislation. It was vital to note that South Africa was part of the global economy and had to compete with the rest of the world, and its practices were also being compared against others. The lack of labour flexibility in South Africa was one of the reasons for its low ranking (140 out of 144) in comparative labour studies. He believed that the flexibility would be diminished even further by the changing of the section  to read “zero months”. He argued that the more flexible the regime, the higher the chances of reducing unemployment. He was concerned that any amendment to curb this practice would lead to higher levels of unemployment. This was, to his mind, one of the most pressing problems in South Africa, for it carried social risks for the country.

He asked that those who proposed the “zero months” therefore, firstly, should reconsider their position, but if they did not want to do that, then the legislation must be referred back for redrafting. To have several sections reflecting “zero” was sloppy drafting. However, this was not his main concern; he reiterated that he was concerned about the damaging effect that this would have upon the situation in South Africa.

Mr Motau repeated the point that he had also made during the State of the Nation deliberations, that there was a dire situation in unemployment already in the country. The labour broking industry catered for around 1 million employees, and the knock-on effect was that those employed by labour brokers probably in turn supported another one to two million people. Any legislation that would have the effect of banning labour broking would be a “monumental blunder” and he doubted, in addition, that it would stand up to Constitutional scrutiny. He said that last week he had stressed that the world of work had changed. More people were in temporary employment – many because they wished to be. An article in Business Day had carried examples of people choosing to work as waitrons, which was work typically organised by a labour broking firm. If any law banning labour broking was passed, they probably would not get work at all, and he did not think that anyone should consciously take a decision to put South Africans out of jobs by passing bad legislation. If there were rotten apples in the labour broking industry, they clearly must be found and their practices curbed, but that was the job of labour inspectors. In his view, nothing should be done that would have the effect of shutting down the whole industry. He appealed to his colleagues to look closely at this point. He also said that it was quite ironic that the opposition party was essentially defending the position of the Department of Labour, whereas the ruling party was opposed to it. However, he asked Members to apply their minds diligently and facilitate employment opportunities, whether permanent or temporary.

Mr A Williams (ANC) said that the reason this clause was so controversial was that labour brokers were fundamentally exploiting workers in South Africa over many years. That was the whole reason why this discussion was taking place. He said that whilst the opposition may be defending the position of the Ministry, he was defending the position of the people of South Africa.  He noted the example given of a waitron but reminded Mr Motau that the fact that the labour broker might be closed down did not mean that the demand for labour would also disappear. He felt that there was a need for more discussion, and Members needed not be emotional. The Members wanted legislation that directly addressed the needs of the workers on the ground, and ensured they were not exploited.

Mr Nyekembe said that this was not a new section being proposed for insertion into the principal LRA, as it was essentially an amendment. TES, not labour brokers, were in issue and discussion. It was necessary to ensure, through this Bill, that section 198 would not be used to exploit anyone. The Bill needed to ensure that TES would come to an end at some point. Members fully understood that there would be employment positions of a temporary nature, and there was no intention to do away with that. He wanted to confine his discussions to clause 44 only. Members should, in his view, re-arrange the wording to ensure that whilst temporary employment was possible, it should not be allowed to continue for an indefinite period.

Mr Kganare quipped that the ANC Members deserved praise for, for the first time, opposing something placed before the Committee by the Minister.

Mr Kganare said that it was clear that people should not be placed in jobs that were “permanently temporary” or the reverse.. The point was that if the term “zero” was used, there would not be any TES services. He agreed with the DA’s point that the real issue must be addressed and that Members needed to look at the issues of exploitation and ensure that in future workers placed by TES would not be exploited. Once they were placed in a job, they must be treated the same as other employees of the client company.

He said that the new section 198A(5) should be amended to contain a reference to both subsections (3)(a) and (b), and to see it explicitly stated that no employee, no matter how employed, should be treated differently from another in the same position. He would also like to see the insertion of a time period (which he was prepared to discuss further, although he would suggest between three and six months) that would specify that after that time, a person who had been employed temporarily in position X should be regarded as a permanent employee of the firm, if it was clear that position X was still to be kept. He did not have a draft to propose up front, but hoped that people understood the principle of what he was saying.

Mr F Maserumule (ANC) said that in the South African economy, there had been a deliberate and brutal exploitation of vulnerable workers. This Bill was trying to protect the most vulnerable workers, particularly on the mines and farms. It was not possible to leave matters unchanged. People continued to remain poor, even if employed, because of the inherent exploitation.

Ms Makhubela-Mashele said that the Committee was trying to correct the abuses of the past system, where an employer would have jobs at the plant, but the TES would source labour. Remuneration would be passed from employer to TES, and it was up to the TES to decide how much would then be passed on to the employee. She suggested that if the legislation could be crafted to allow all employees to be paid directly by the employer, this would cut out many of the exploitative practices that had given rise to the problems. She noted that not all TES could be accused of exploiting, but experience had shown that many were not giving the employees what was properly due to them. She proposed that there may not be a need to argue the time periods, if another way could be found to change the way they were paid and treated.

Mr Motau said that the DA was not defending an open-ended clause. The clause before the Committee spoke of six months, which the DA thought was the maximum time that should be stated. He wanted to clarify that when he had given his earlier example of a waitron, he was not speaking of a waitress working full-time for a particular restaurant, but one who might take piecemeal work for different catering companies or functions, working one day in one place and one day in another. He also said that whatever name was used, it should be clear to all that the labour brokers were being referred to. The DA believed that the industry should be regulated; although it had concerns that the labour environment was already over-regulated, it believed that regulating the brokers was a necessary step to avoid exploitation. Every law that was passed protecting vulnerable workers had the potential to create even more hurdles to employment, and as much as the laws were necessary, it should be recognised that they would keep some people in and others out. However, this clause would give the industry a six-month window period to regulate the position, after which the temporary employee must be placed permanently, and it would afford at least that protection. The Basic Conditions of Employment Act (BCEA) could cover terms and conditions.

The Chairperson asked Members to remember that about a month ago, it had ratified some international labour conventions, which meant that South Africa also had to remain true to international standards. There was one convention that emphasised equal pay for equal work, and this aspect was at the centre of some of the problems being discussed today.

Mr Nyekembe noted that Ms Makhubela-Mashele had questioned whether it was possible to tighten the amendments, and dealing essentially with the administrative requirements, whatever time period was fixed. He thought that the sub-sections of section 198A of the LRA should be read individually, despite Mr Kganare’s plea that some be read together with others. He agreed that if possible, it would be useful to try to close administrative loopholes and curb exploitation.

The Chairperson reminded Members also that they should reflect upon the BCEA provisions.

Ms H Line (ANC) said that it was more likely that employees would be placed through TES, and she agreed that it was necessary to look at transition periods – whatever they were stated to be – and to examine how to address the exploitation.

Mr K Manamela (ANC) said that Members appeared to be agreed on certain aspects. TES had brought about instances of super-exploitation, and some providers of temporary employment had stretched labour laws to be abusive to workers. It was also necessary to deal with the notion that labour brokers came into the labour market because of high unemployment, and he argued that this was not correct and they had not  entered the market in the interests of the workers. He also thought that it was incorrect to suggest that if labour broking was done away with, unemployment would result. Over the last week, labour brokers had attracted substantial media interest, and they had suggested that they had been responsible for creating employment, presumably to try to sway this Committee. However, the Members represented the interests of every South African, not just the labour brokers. There was a need to deal with the exploitative nature of labour broking. Nobody was suggested that temporary employment be done away with, and no ANC member was opposed, in principle, to people being employed for a short term, a temporary period or on a fixed term contract. He believed that the proposals, as they stood, sought to protect workers who were in these contracts. It was interesting, from today's discussion, to note that there was willingness to engage on what the period should be (between zero and six months) and to safeguard the transitional phase, so that those employees who were currently in the employ of a TES would be protected and transferred in a proper employment relationship to the employer client of the TES.

He noted the suggestion of over-regulation in the South African labour market, and that was something that had to be dealt with. Labour disputes and strikes were either a reflection of insufficient protection, or of employers ignoring the law, to ensure that their businesses attained maximum profits. Always, the profitability of business came at the expense of workers and their wages. Leaving aside, for the moment, other laws intended to protect workers' rights, the major reason for strikes was usually a wage dispute. He did not agree that the problem arose from lack of flexibility.

Mr Manamela also wished to speak to he suggestion that to do away with labour brokers would result in jobs being lost. He disagreed and said that as long as certain services were needed, there would always be jobs. Companies were using labour brokers to avert certain costs, and some labour brokers took their fee from the workers' wages. The issue of jobs was thrown into the mix, but it was an emotive issue that was not actually related to the problem.

Mr Williams noted that, fundamentally, the Committee was trying to achieve a compromise between a person getting employment and the quality of the employment. He proposed, as a compromise, that Section 109A(a), which was, in the original Bill, worded as “six months” should be changed to read “for a period not exceeding three months”.

Mr Kganare recorded his support for that proposal.

Mr van der Westhuizen expressed gratitude to the ANC Members for now proposing this amendment, instead of pursuing their original suggestion to use “zero months” and recognised that this proposal had come after vigorous and intensive debate within the ANC. He also recorded his gratitude that the ANC was putting the interests of all South Africans who would have been adversely affected by a “zero months” change before their other interests.

Mr van der Westhuizen wanted to respond on some of the issues. He stressed that it was not the DA who was saying that there was over-regulation, but this was apparent from the world ranking on South Africa’s labour flexibility. The comment that this would lead to jobs losses was also not a DA assumption but was based on a risk impact report assessment, when the legislation was introduced, with the six month provision included. In relation to the international treaties, he referred to section 44(1) of the LRA and pointed out that this said already that an employee under TES must be treated the same as one employed by the company directly, unless there was a reason for differential treatment. Many of the concerns were already addressed. Originally, the DA had requested a 12-month period, and would still be asking for the six months to be retained, but was grateful for the proposal to change “zero months” to “three months”.

Mr Motau recognised the concessions made by the ANC. He still had concerns with the practicality of what was informing the three months. He knew that a lot of work had gone into the decision to name a six month period. He would like to make the concession, but said that this must deliver the desired result, and he was not sure how the three months would impact upon the Bill. He hoped that perhaps some insight could be given on how that would work in practice.

Mr Nyekembe said that the three months was equivalent to 90 days, and time frames around the CCMA and Bargaining Council processes varied between 30 and 90 days. The issue here was the relationship between TES and client, and identification whether the position in which the employee was being placed was in reality permanent or temporary post. He said that, equally, questions could be asked about the rationale behind the Department’s suggestion for six months, and the DA suggestion for twelve.

Adv A Alberts (FF+) said that the position of his party had always been that this should never be seen as a strict legislative rule applying to all industries. Instead, it would prefer to see an industry-based decision. There were some industries where labour brokers worked well and efficiently. He agreed that it was most useful that the proposal now was to replace the previous suggestion for “zero months” with “three months”. He thought that the Members needed to look at industries where there was substantial movement of temporary workers. A prime example would be the film industry, where people were always employed by labour brokers. They would have no access to this kind of work if labour brokers did not exist. Some of the major block-buster films ran for six or twelve months. Some of the people working on film crews did not want to be permanent, because that was the nature of the industry and they would prefer to be freelancers, getting their work through brokers. His party still would prefer to see a period of six months in the Bill (or even, ideally, twelve). He noted that in Namibia, where labour brokers were banned, there had been no upturn in employment since the banning. He thought that government needed to monitor the situation very closely and if the proposals now being made were put into effect, but failed to achieve the desired effect, then the legislation must be changed again – either by including more months, or changing to industry-specific regulation. He was sure that industry regulation would be apt for the mining sector, particularly given the problems and exploitation and he urged for more flexibility in this regard.

Mr Manamela commented that he was not sure whether the Minister would be so happy to have her position supported by the DA, in view of the argument that they had advanced in support of their position to retain the six months. However, he also wanted to emphasise that this Committee, as legislators, were a separate entity from the Executive and had to retain the right to differ from and engage with the Executive. Where there was an opportunity presented for Members to agree, he urged that it should be taken.

Mr Manamela noted that section 198A(2)(vi) basically covered Adv Albert's concern around regulation of industries and to whom the provisions should apply. He also emphasised that there was a need to recognise the distinction between a fixed term contract, short-term, and long-term employment. The ANC was fully aware that the needs for all of these existed. He agreed that situations such as social or catering functions were providing employment to temporary or seasonal workers. However, he would not like to see the situation where the TES could, at will, simply hire or fire these workers. He was not sure how many people really took a conscious “choice” to do this type of work and he was sure that many people engaging in such very flexible employment would have preferred to be in more secure jobs, particularly if they were vulnerable workers with lower skills. He agreed that those with skills, such as actors, musicians and soccer players may wish to retain flexibility, and he could not fault that, but he pointed out that in this situation the power relations were very different to the situation where seasonal workers such as farm workers or miners were employed. He emphasised that sometimes a decision on work in fact amounted to lack of choice.

Mr Manamela agreed with the conclusions on the regulatory assessment, but said that was made on the basis of different conditions and proposals, at that time.

Mr Manamela thought that Mr Williams’ proposal to change the wording in section 198A(a) to three months was a good step forward, and hoped that Members would collectively agreed on this. He believed that other concerns had been covered. However, he would like the DoL to comment or clarify whether there were other steps that could be used to ensure that workers would not be able to lose their jobs easily, no matter what time provision was fixed in the proposals. There were workers who had been working for a substantial period of time on “temporary” contracts and it was necessary to ensure that they were protected.

Mr Kganare said that it was necessary to be very clear that, when making his points earlier, he was speaking of vulnerable workers who needed to be protected against super-exploitation. He believed that there should be allowance made for a temporary position to be filled, but after a certain time an assessment had to be done as to whether that position was in fact a permanent position. He thought that three months was reasonable to make that assessment, for that would allow the employer to know whether after that, the position did need filling permanently. He commented, in relation to the three months, that most probationary periods were three months.

Mr Williams said that clause 44 referred to people earning below the threshhold. These would essentially be those with low or limited skills, and would not include experts in their field in the film industry. It was emphasised already that the clause was intended to apply to vulnerable workers.

The Chairperson reminded Members that this was not a merely academic discussion. The whole issue around labour brokers had been sparked by the global economic crisis of 2008, when there was a need to cater for those losing their jobs, and labour brokers were originally trying to manage placements. Despite the good intentions, there had been bad results, and workers ended up being exploited and poorly treated. For example, in the retail industry, 100 tellers might be needed, and the TES would then source people, but the salaries they received, via the TES, were not the same as their colleagues, who were employed directly by the company. That was essentially an unfair labour practice. In addition, the tellers would be “owned” by the labour broker. He said that ideally, once a TES had sourced and placed people, there should no longer be an employment relationship between employee and TES. Equal recognition had to be given for equal work. The  number of complaints reported to this Committee was evidence of substantial malpractice in the past. This Committee had been accused, both in the past and recently, of “dancing to the tune” of the executive, but on the other hand if it questioned the executive it was also accused of being defiant. He said that the Committee would not make its decisions to keep the executive happy, but would act responsibly in line with what had been raised at the public hearings and on the basis of input and discussion. He knew that exploitation was inherent in the economic system, but said that at least the Committee must do away with the super-exploitation and abuse of workers. If the labour brokers had shown good ethics and care, this situation would not have arisen. He to emphasised that not all TES service providers were the same, but it was necessary to look at and curb the worst practices, and at least reach the situation where all workers in the same position were being paid equally. The Committee could not hope to change the whole labour system, but would try to operate within the given system to protect the most vulnerable workers. Without the workers, the economic system was doomed.

Mr Mkalipi responded, at the Chairperson’s request, to some of the points raised. Firstly, he referred to the points raised by Adv Alberts about the need for individual industry considerations, and said that section 198A(8) said that any agreement reached in a collective bargaining agreement by a bargaining council would take precedence over general considerations.

Secondly, he addressed the questions in relation to subparagraphs198(3)(a) and (b), and said that the reason for having two separate subclauses was that they recognised that two entities were being created – namely, the employer, and TES. All workers working at a firm of employers for less than six months were deemed to be employed by the TES. However, subsection (5) was then saying that after that period had passed, an employee continuing to work in that post would be deemed the employee of the employer directly. If Mr Kganare’s suggestion to both (a) and (b) together was incorporated, then this was moving away from the distinction between the position of the employee in month 1 and in month 7 (if the period named was six months). In month 7, every worker must be placed on an exactly equal footing. If there was acceptance, in principle, of the TES services, there should also be acceptance of their right to employ.

Thirdly, he noted that the DoL, when drafting the legislation, had considered what mischief it needed to correct. The first issue was that there had to be equal pay for equal work and he agreed that in most cases, those employed by TES employed less than those employed directly by the employer firm. This Bill required them, to be treated the same after a certain period of time (still under debate by the Committee). Secondly, the DoL as concerned to correct the situation that workers employed by labour brokers could more easily be dismissed and it was difficult for them to get recourse through the CCMA. The Bill therefore was saying that if an employee in these circumstances was unfairly dismissed, s/he could opt to take action either against the TES or the employer firm. The third issue related to payment. It made little difference to an employee who paid the salary, as long as it was paid, and in a situation where the employee was not paid, s/he would be able to claim from either the TES or the employer firm, to ensure that at least payment was made, and it was then up to the TES and its client to sort out between themselves who was ultimately responsible. He added that there were two other amendments that sought to give protection to these vulnerable workers. An employee who was victimised as a result of making a complaint or going to the CCMA would be regarded as having been constructively dismissed. In addition, if employment was terminated without just cause, the employee would be able to claim illegal termination from either TES or the employer firm. Both of these clauses gave further protection.

Mr Mkalipi then spoke to the rationale behind the period of six months that was originally inserted in the Bill. There had been a study on the effect of regulation. The DoL had noted that probation periods in the private sector ranged between three and six months, and in the public sector were up to one year. Other considerations had been aired in the media in the last week in relation to the labour brokers’ point of view. There had been no specific study done as to the effect should the period be six or twelve months, but the same points now raised in this Committee had also been raised and debated at Nedlac. It was felt that six months was a fair compromise. In addition, it was similar to the terms for fixed term contracts, as the DoL had been trying, as far as possible, to let time periods coincide, rather than having a plethora of different months cited in the Bill.

Adv Gordon said that she did not wish to be associated with any remarks about particular labour brokers.

Adv Gordon noted, in relation to clause 44, that it was necessary to bear in mind the provisions of section 198A(6). The TES would be regulated within a sector. The current wording referred to “at least three months prior to the coming into effect of this legislation”, during which the Minister would have to draw lists. She said that this seemed to impact upon when the Bill could come into operation and suggested that it might require section 198A(1)(c) to be suspended for three or four months, or until a date determined by the Minister, after the rest of the legislation came into force, until an approach was made to the Minister and she had had time to comply. The alternative was to amend the clause to remove the reference to the three months.

Mr Mkalipi said that he did not see any particular problem. The Minister must simply publish a written notice. There was nothing to suggest that the legislation could not come into force before that was done, and he thought that there was no reason why the list could not come later. He noted that lists would be published when market conditions changed, and there would be a need, over time, for several lists and publications. He reminded Members also that there would be liaison between Ministry and Department of Labour when the legislation was about to come into operation.

Mr van der Westhuizen wanted clarity on whether, in relation to section 198A(1), the subclauses (a), (b) and (c) were linked.

Adv Gordon replied that each of these subclauses stood on its own.

Adv Gordon said that, having heard Mr Mkalipi and thought further, she thought that the best solution for subclause (6) was simply to remove the phrase referring to the three months, so that the Minister must simply invite representations.

The Chairperson asked when it was intended that the Bill, once passed, should become effective.

Adv Gordon said that it would come into effect by the President’s proclamation in the Government Gazette.

Mr Nyekembe agreed on this point, and agreed with the suggestion to remove the three month period from this subclause.

Members noted that it was necessary to make a formal decision on the period in relation to TES services.

Adv Gordon wanted to add that once Members had made their decision in principle, it would not yet be “cast in stone” but the A list would be amended in line with the indications. The Long Title would have to change and there would be other consequential changes needing to be made, including an amendment of the Memorandum on the Objects of the Bill.

Ms Suraya Williams added that her office would base the Memorandum on the wording as proposed now. She asked for confirmation from the Committee, in principle, for all the time periods set out in the Bill.

Mr Mkalipi asked if the Committee wanted 198A(1) (b) and (c), which, respectively, referred to fixed term and part time employment, also to reflect a time period of three months.

The Chairperson confirmed this and formally noted the proposal to change section 198A(1) (a), (b) and (c) to refer to “three months”. When it was voted on, in principle, the ANC Members all indicated their agreement. The DA Members recorded their preference for six months.

The Chairperson noted that since the majority had agreed to three months, this would be reflected in the next A-list, and the necessary consequential changes must also be made.

Ms Williams then confirmed that clause 44 and clause 43 would reflect three months.

Mr van der Westhuizen said that there were other transitional periods mentioned in the Bill and asked what time periods would apply. He argued that because these were transitional arrangements, it was necessary to allow time for those affected to adapt, and he believed that six months time periods were reasonable.  The last thing this Committee wanted to see was unnecessary job losses. The six months of transitional was a very different issue. He stressed that the Act should be implemented immediately but that the transition should be regularised within a maximum of six months.

The Chairperson asked what would be the point in making the law, if people did not have to comply with it for months.

Mr van der Westhuizen said that once the law was passed, there would have to be compliance for the future, but that some clauses allowed the Minister to give notice, or employers were given time t adapt, and he was suggesting that those time periods remain as stated in the Bill. If it was possible for something to be implemented immediately, it must be done. However, he was concerned that some employers might not be able to put everything in place immediately, and he wanted to avoid the situation where either breaches of the legislation ended up being litigated, or employers would choose to retrench rather than to adapt.

Mr Mkalipi said that the transitional arrangements were in principle accepted already. It was necessary to make transitional arrangements for the employees who were, on the date that the law came into operation in the employ of labour brokers, as their contracts could not simply come to an end. The A-list before Members set out the arrangements as to how section 198A(1) would be implemented. The question was about readiness of employers to comply. The proposals around the transitional periods were linked to the length of time that people were able to be employed by labour brokers, and those already in employment would have the terms of their original contracts respected, whereas those to be employed in future would be employed in line with the Bill.

Adv Gordon agreed, and said that the three months agreed upon was linked to transitional arrangements for the TES.  All other categories were chosen for specific reasons. However, the drafters would check those time periods carefully and speak to them, if necessary, when the final A-list was drawn.

The Chairperson noted that this would be checked in the following week.

Mr Nyekembe questioned what would happen when a fixed term contract was terminated for operational reasons.

Mr Kganare said that the distinction had to be drawn between the ending of a fixed term contract, which had no implications on compensation, and retrenchments.

Adv Gordon said that the position was explained on page 13 of the A-list following earlier discussions by the Committee.

The Chairperson noted that the Committee would be voting on the Bill, in the meeting scheduled for Tuesday 18 June, commencing at 10:00.

Adoption of Committee Minutes
Members considered, and resolved to adopt, without amendments, the Minutes of 14 May and 15 May 2013.

The Minutes of 17 May were tabled. Adv Alberts commented that he had given an apology, but it was not recorded. He would confirm with the Committee Secretary that it was sent. Subject to this, the Minutes were approved.

The Minutes of 21 May 2013 were also tabled and adopted.

The meeting was adjourned.


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