Employment Equity Amendment Bill, Employment Services Bill: Departmental briefings

Meeting report

Department of Labour briefing on Employment Equity Amendment Bill
Mr Tembinkosi Mkalipi, Chief Director, Department of Labour, said that when introducing the Bills, the Department of Labour (the Department or DOL) would focus on the issues where there was not agreement between the parties at the National Economic Development and Labour Council (Nedlac), and summarise briefly those issues where there was agreement.

Ms Ntsoaki Mamashela, Director: Employment Equity, Department of Labour, noted that the objectives of the Employment Equity (EE) amendment were to give effect to fundamental Constitutional rights such as right to equality fair labour practices and protection against unfair discrimination, to update the current Employment Equity Act (the Act), specifically enforcement mechanisms, which had not been updated for several years, and lastly to ensure South Africa’s compliance with international labour standards, and Conventions 100 and 111 to which it was a signatory.

She tabled the definitions set out in clause 1. The definition of “designated groups” had been clarified to ensure that beneficiaries of affirmative action were limited to those who were citizens of South Africa prior to 1994, and their descendants, who had been disadvantaged by apartheid laws. This was now aligned to the definition in the Broad Based Black Economic Empowerment (BBBEE) Amendment Act.

Section 6(1) of the Act, which prohibited unfair discrimination, was amended, to add the phrase “or any arbitrary ground”. This was consistent with section 187(1)(f) of the Labour Relations Act (LRA), which prohibited discriminatory dismissals. This would be further expanded on when dealing with clause 11.

A new section 6(4) was being added, to deal with unfair discrimination by employers in respect of terms and conditions of employment of employees doing the same or similar work, or work of equal value. Unfair discrimination could be claimed, unless the employer could show that differences were fair in relation to experience, skills, responsibility and qualifications. International best practices were used as a guideline, but the South African context was slightly more complex, with discrimination not only being linked to gender, but also to other factors set out in the Bills of Rights. The Department was trying to ensure that all regulations would be in place when the law was promulgated.

Currently, section 8 of the Act allowed for psychometric texts. However, it was specified that only psychometric tests and similar tests certified by the Health Professions Council of South Africa, or another body authorised to certify (to cater for future developments), would be recognised.

Section 10(6) of the Act was to be amended to allow employees to refer unfair discrimination cases to the Commission for Conciliation, Mediation and Arbitration (CCMA) in two circumstances. Currently, the CCMA could conciliate, not arbitrate. However, this was to be changed where there were allegations of sexual harassment by any other employee. In addition, lower paid employees (those below the threshold of R183 000) would be allowed to refer any discrimination claim to the CCMA for arbitration. This would give access to justice to the most vulnerable groups.

Ms Mamashela then moved on to section 11 of the Act, which dealt with onus of proof in discrimination claims. Onus of proof was dealt with differently under Promotion of Equality and Prevention of Unfair Discrimination Act (PEPUDA), and there was a need for alignment.

She expanded on what was mentioned earlier, saying that the effect of the latest amendment in the Bill was that if unfair discrimination was alleged on a prohibited ground (as listed in section 6), the employer had to prove, on a balance of probabilities, that discrimination did not take place. However, if an “arbitrary ground” was relied upon as the basis for the complaint, it was the complainant who would have to prove, on the balance of probabilities, that the conduct was not rational and discrimination was unfair. All parties at Nedlac had agreed on this.

Section 20 was to be amended, to ensure that all designated employers who failed to prepare and implement their EE plan could be referred directly to the Labour Court by the Director General, for imposition of a fine, without first having to go through the steps of getting an undertaking or compliance order. On this point, business had not agreed, and had suggested that the current situation, where the undertaking or compliance order were prerequisites, should remain. The Department, labour and government believed this was unnecessarily cumbersome and felt that since the drawing of an EE plan was so fundamental to achieving EE, there was nothing unreasonable about this new procedure.

Ms Mamashela added that the reference to “occupational categories” was to be removed, in sections 15, 16, 19, 20, 27 and 42 because transformation had to do with decision making powers.

The EE reports, at the moment, only had to be submitted every second year by small employers, although those who employed over 150 staff had to report annually. Small business itself had suggested the amendment of section 21 to require annual reporting by all businesses, as they said it was cumbersome to try to draw the reports after 24 months. If the report was not submitted, the Director-General would again be able to refer the employer directly to the Labour Court, without the necessity of first getting an undertaking.

Section 27 was to be amended, as agreed by all partners, to given effect to the new “equal pay for equal value” work.

In regard to the amendments on enforcement mechanisms, set out in sections 36 and 37, there was disagreement with organised business at Nedlac. Business believed that the current sections should remain, to give employers a chance to make and implement plans. However, government and labour thought that there was a need to expedite processes and, in respect of both sections, which justified the elimination of certain steps.

Sections 39 and 40 were to be repealed, to simplify and eliminate other steps considered necessary to enforce the Act. Again, business had wanted these to remain.

The amendments to section 42 had been agreed upon by all parties. Technical amendments were being made to give employers the opportunity to raise reasons for non-compliance. The Minister would issue regulations dealing with assessment of compliance by specifying circumstances to be assessed, by reference to the national or regional economically active population. One example of this was the current situation in which the Department of Correctional Services (DCS) employees had claimed that the equity should be measured against the economically active population in the area where they were employed.

Section 45 was being amended to ensure that the Director-General could apply to the Labour Court for an order directing a non-compliant employer to comply with requests, within 90 days in the case of request and 120 days in the case of a recommendation, of failure to comply.

The amendment to section 48(2) gave arbitrators hearing an unfair discrimination claim the power to make an award.

A technical amendment was made to section 50(h), to achieve alignment with the Promotion of Administrative Justice Act (PAJA).

A new section 53(5) was to be inserted, to empower the Minister to draw a code of good practice around the assessment of whether employers were complying with the Act. This particular section had in fact never been promulgated, pending BBBEE legislation, and the new wording would now achieve alignment with other legislation.

Section 55(2) was also being amended, changing a “must” to “may”, so that the Minister now “may” make simplified rules and procedures for small businesses (those employing less than 150 people). This had been agreed to by all parties. It was in line with the general attempts to reduce cumbersome processes. Ms Mamashela noted that other innovations had been introduced, such as allowing on-line form submission.

The delegations of power, in section 56(1) were to be amended, by a technical amendment linked to section 53, which allowed the Minister to delegate powers to the Director General.

Section 57 related to temporary employment services (TES) and it was now being aligned with the approach adopted in the Labour Relations Amendment Bill. Employees placed with a client by a TES, for longer than a certain period (currently reading six months) would be regarded as employees of the client. However, she noted that this may need to be changed, depending on the time period that was eventually agreed upon when Parliament adopted the LRA Bill, as the provisions would have to be brought in line.

Criminal penalties set out in sections 59 and 61 were to be amended, to increase the maximum fines to be imposed for criminal offences, from R10 000 to R30 000. There were provisions that the Minister of Labour would be empowered, in future, to adjust the annual turnover threshold used to determine whether employers were classified as designated.

Schedule 1 was being amended to adjust maximum fines. The employers’ turnover may be taken into account when determining the maximum fine. The Department had been told that some companies were actually budgeting for fines, because they were low. Organised business was not in agreement on the linking of fines to turnover, pointing out that turnover was not the same as profit. However, the Department believed that if the companies were prepared to embrace diversity or reconciliation, they should not fear the fine because they should be doing the right thing and complying with the law.

Ms Mamashela set out a schedule of the maximum permissible fines, noting that there were various categories, relating to no previous contraventions, a previous contravention on the four three previous contraventions in three years. These basically dealt with non-compliance with EE plans and Director General’s recommendations.

Schedule 4 was being amended to increase, by 200%, the total annual turnover that would classify an employer as a “designated employer”.  This had been agreed to. The lowest was found in the agricultural sector, where an employer having a turnover of less than R6 million, was exempt.

A summary of the sections being amended, as agreed to, and those where there was not agreement, was listed (see last slides for detail).

Discussion
Mr A Williams (ANC) said that fundamentally the area of disagreement was not so much on the law itself, but on the results of non-compliance. He asked how business had attempted to justify that; he thought that this was a rather strange approach to accept the law, but argue that enforcement should not be improved.

The Acting Chairperson noted that representatives from business would be appearing before the Committee during the public hearings, and this question could be asked of them directly.

Ms Mamashela said that the Department was shocked that business wanted to protect those who did not want to comply with the law by making EE plans. The Department believed that a more diversified workforce was needed to reflect the demographics of the country.

Mr S Motau (DA) said that he still had problems with the way that Nedlac operated, and at some point, it would be necessary to find a way in which the parties would have to reach agreement. At the moment, when there was disagreement, the parties tended to “kick for touch” and walk out and he believed that this weakened the process. He believed that Nedlac should be resolving the “hard issues”, not leaving it up to the politicians to do so. He cited the German example, where principles had to be agreed upon at a similar forum, leaving only the method of implementation to be debated by politicians.

Mr M Nchabaleng (ANC) answered Mr Motau by pointing out that most of the disagreements at Nedlac had to do with vested interests. South Africa had a history of focusing on profit, without protecting workers sufficiently, and employers were reluctant to concede to anything that might affect their profit, such as introducing more safety measures that would be costly to implement, although this in itself was a contradiction because, to make a profit, business relied heavily on having workers. He believed that it would take a long time to reverse the trend of focusing more on profit than “life and limb”. It would never be easy to put workers and employers at the same table, and people would always try to defend their own positions. He did not believe there was anything wrong with Nedlac referring some matters to Parliament. Even those issues where “agreement” was noted were not necessarily 100% agreement, but sufficient consensus. That was in the nature of negotiation. Sometimes the politicians made unpopular, but good decisions, to try to create a society where business and workers could thrive.

Mr Nchabaleng asked if there were clashes between the Basic Conditions of Employment Act and this Bill.

Mr Mkalipi said that the only overlap was in relation to temporary employment services (TES), where this Bill still spoke to six months, and the LRA amendment spoke to three. That would have to be brought in line.

Ms Mamashela added that the only area that was linked in the BCEA was unlikely to cause any problem, since it related to bringing the thresholds in line. Everyone earning at the level of the threshold or below would be allowed to take any cases to the CCMA for arbitration, not only for conciliation. Currently, the law required the CCMA to conciliate only, and many people dropped their cases because they had no means to take them further to the Labour Court. It was hoped that this amendment would allow more people more opportunity to exercise their rights.

Mr A van der Westhuizen (DA) asked for more clarity on the term “equal value”. He gave the example of education, where there were primary, secondary, language and science teachers. For many years, it had been said that all teachers performed the same important work and therefore there should not be discrimination in favour of those offering scarce skills. Their progression depended on numbers of years service, and was also linked to number of years of formal study, and this was regarded as acceptable discrimination. He wondered if the move to “equal value” would not ignore matters such as market forces – for instance that teachers getting good results should be able to claim more, or lower salaries might be offered in subjects where there was more supply than demand. He would like to avoid court challenges on this point.

The Acting Chairperson said that the context for “value” could also be philosophical.

Mr Mkalipi said that Convention 100 spoke of “equal pay for equal value” and that was an accepted concept already. He said that basically, Mr van der Westhuizen’s question related to the same work. If there were two people doing the same work, but in one month one employee might do five times more work, the value-add to the organization was obviously different, and that would justify a differentiation. The same applied to education. If one teacher’s performance was such that his students attained better standards, it would be justifiable to pay this person more than another teacher whose students did not pass. Certain skills were required to do certain jobs, but consideration would have to be given to whether, in each case, the skills were actually relevant to the job. For instance, a person hired to be a driver of an ordinary car could not claim more if he also had a heavy-duty licence that would not be required for the job. A doctor applying for a driving job could not claim more because of his medical qualification. He reiterated that there were a number of factors to be taken into account, but they must be relevant.

The Acting Chairperson noted that some of the questions would still be canvassed with those making submissions. He noted that he had received the summary of the submissions, and this was helpful. He accepted the explanation on the Conventions, as an expression of the law. However, he maintained that the question of value was very philosophical, and many anecdotes could be given. He noted the example given of higher performing teachers, but pointed out that where classes were “streamed” according to ability, it was expected that the higher levels would perform better, and in fact the teacher of the lower levels was probably putting in more work to get his students to pass.

Department of Labour briefing on Employment Services Bill
Mr Sam Morotoba, Deputy Director General, Department of Labour, said that he would concentrate on outlining the areas of disagreement, in relation to the discussions at Nedlac on the Employment Services Bill (the ES Bill). He started his presentation by referring directly to slides on clauses 6 and 7, but after he had given a briefing on those, the Acting Chairperson requested that he rather should return to the beginning of the presentation to give context to the debate. 

Mr Morotoba noted that the ES Bill itself set out its objectives, and summarised that this Bill was to repeal provisions in the Skills Development Act (SDA) relating to employment services and Productivity SA, and to provide a legal basis for establishment and functioning of Productivity SA and Protected Employment Enterprises, including the Sheltered Employment Factories (SEF) set up in the past.

He explained that it had fairly recently been decided that instead of all skills development (including Sector Education and Training Authorities) being with the Department of Labour, these should move to the Department of Higher Education and Training (DHET), whilst employment services (ES) functions were to remain with the DOL. The Skills Development Act had incorporated some aspects of employment law as well as skills development services, and lacunae had become apparent with the shift in functions because the DOL did not appear to have jurisdiction in relation to employment services. The ES Bill would also now incorporate all the wording that had been in the Skills Development Act in relation to Productivity SA, so that there would be consolidated legislation. In addition, although the SEFs had been operating under a Cabinet decision dating back to 1948, there was no legal framework for them, and so this was also being set up under the ES Bill. 

Clauses 2 and 3 dealt with public employment services, and their repositioning, to improve access to the labour market, to provide opportunities to new work seekers and to promote partnerships between government and the private sector, as promoted in the International Labour Organisation (ILO). There was agreement on that between the social partners.

The Department had considered examples of wording from about seven Conventions to guide the drafting of the legislation on private employment agencies, minimum standards, people with disability, and the like. The social partners used those to check whether the principles had been properly embraced. The Department believed that this Bill would pave the way to enforce the Conventions in national law.

Chapter 2 outlined the functions that were, around the world, usually performed by ministries of labour, employment and social development, with some differences around training components. The World Association of Public Employment Services (WAPES) governed standards of public employment services (PES), and the core functions had been covered in this Bill. The DOL could have gone beyond what was set out in this Bill, but was concerned about the costs. Other countries who were better resourced were able, for instance, to offer critical support to work seekers for entering employment – such as start-up capital, relocation costs, transport, or housing subsidies - but this was not possible in South Africa at the moment.

Clause 6(1) related to promotion of employment of youth and other vulnerable work seekers. This was a principle adopted in many countries, and usually, those with lower levels of skills would be targeted. There was agreement that during economic downturns, and where there was lack of formal employment, it was desirable to set up schemes to assist. In South Africa there was already some assistance such as the Expanded Public Works Programme (EPWP). On this clause, although there was not disagreement on the principle of offering assistance, there was disagreement as to who should take the policy decisions such as selecting people to participate and whether the scheme might have disadvantages. Business believed that the Employment Services Board (the Board) being set up by the ES Bill should take these decisions, but government and labour believed that the decision fell to the Labour Market Chamber, located in the Nedlac structure.

Some other examples were also cited. Under the Basic Conditions of Employment Act (BCEA), the Minister of Labour was given the power to determine conditions of learnerships, such as minimum allowances, and once again there was a question whether this should become the responsibility of the Board. In relation to employment conditions, the Employment Conditions Commission had a role already, so it was not really a question of Nedlac or the Board taking responsibilities on those, but there might be other matters to be discussed at Board level.

The next area of disagreement at Nedlac related to job retention and enterprises in distress, set out in clause 7(1). All the parties agreed on the importance of having a provision to intervene into companies in distress, an initiative first set up in response to the global recession of 2008. In Productivity SA, there was a programme funded out of the Unemployment Insurance Fund (UIF) and a workplace programme funded by the Department of Trade and Industry (dti). However, the disagreement between the partners at Nedlac related to who would decide whether the company was indeed “in distress”. The unions had raised the point that companies, whilst awarding huge bonuses to their directors, could still claim to be “in distress”. Government and labour believed that decisions on enterprise schemes and job retention should be elevated to Nedlac, whilst business thought it was appropriate for the Board to deal with them.

Clause 8 dealt with employment of foreign nationals. Migration was becoming more of a labour issue. However, there was a difference between people with high levels of skills entering the country, and those who, like most migrants to South Africa, had lower levels. There was an agreement that migration policies had to be managed properly to ensure matching of skills to demands without draining the country’s resources.

Clause 10 related to reporting on vacancies and filling positions. Some countries compelled companies to report on their vacancies to allow for matching processes, and the original formulation of this clause had said that “companies must report”. However, the point was made that if companies were compelled to register, there may be court challenges and administrative glitches. A compromise was proposed, to change the “must” to “may”, and then the Minister would have the right, where there was no change in matching, to specify categories within which companies must report vacancies. Business remained, however, of the view that administrative procedures in relation to that section had to be further considered.

Clause 11 related to employment information systems, for monitoring, evaluation research and analysis of trends, and all parties agreed on the need to avoid possible abuse of that information. There was unanimous agreement on certain standards to be observed in relation to handling and management of information of individuals.

In relation to financing of PES, in clause 12, there was also agreement. The clause made reference to allocations from the State, UIF and Compensation Fund.

Business wanted to introduce a provision for registration and licensing of private employment agencies, in recognition of the fact that many private employment agencies were damaging the good work of properly registered public employment agencies. There was a list of prohibited acts, outlined in Schedule 3 and whilst there was broad agreement on that, there was disagreement on how the inspectors should enforce. Compliance would be enforced under the BCEA.

There was agreement on clause 15, relating to charging of fees by private employment agencies. Business, however, had wanted clarity on services. The ILO Convention stated that a person could not charge, but business suggested that perhaps the categories of work seekers had to be clarified, for instance to distinguish special classes, such as sports players or actors, for whom the agent was actually negotiating the contract on behalf of the clients.

Clauses 16 and 17, dealing with retention and confidentiality of information, were agreed to. There was also agreement on clauses 18 and 19, relating to withdrawal of licences and appeal processes.

All parties agreed to the establishment of the ES Board, in clause 20. The composition of the Board would be determined at Nedlac, and the challenge with all constituencies was seen as ensuring the competency and commitment of those on the Board. The functions were agreed upon. The same pertained to clauses 21 to 25.

Clauses 26 to 31 related to Employment Growth and Productivity and were basically re-stating the position of Productivity SA. Mr Morotoba reminded Members that the wording was being moved from the Skills Development Act to this Bill. A legal framework, which had been agreed upon by all Nedlac partners, was set up under clauses 33 to 39. There was agreement on the jurisdiction of the Labour Court, as set out in clause 35. There was agreement on monitoring and enforcement (clause 36) and offences (clause 37) and the review of findings (clause 38). Clause 39 set out delegation provisions.

The regulations were set out initially in clause 40. Initially, there had not been alignment between clauses 10 and 40. The latter would now focus purely on regulations. The drafters and State Law Advisers had addressed the lack of synergy and corrected it.

Mr Morotoba then tabled a slide summarising the areas of overall agreement, and those where there was still disagreement.

Discussion
Mr Williams questioned the last slides, saying that the summary listed the areas of disagreement as including clauses 13 and 19, but the main body of the presentation mentioned that there was agreement. He asked if the report from Nedlac could be made available.

Mr Morotoba noted that the original report from Nedlac noted that clauses 13(1) to (8) were agreed. He apologised for the inclusion of clause 13 in the last slides, saying that this was a mistake, and withdrew that comment. He also noted that there had been some changes in clause numbers, during the drafting of the different versions of the Bill. The clause relating to cancellation and registration of private employment agencies had been mentioned earlier because government, labour and business agreed in principle, but the drafters still had to deal with the legal components.

Mr Mkalipi said that business had also raised a concern that when companies were de-registered they could not operate. If they applied for a review of the decision, the decision not to register should stand, so the concern was really around the effect of the review application. The LRA dealt with de-registration. If a company that was de-registered was allowed to operate, it could affect the workers’ rights. This was also linked to the question that labour brokers had to be registered under “applicable legislation”.

Mr E Nyekemba (ANC) said that he was concerned that drafters of legislation tended to deal with issues relating to those with disabilities only at the end of bills, almost as an “add-on” and this implied that those with disabilities were not regarded in the same light and importance as those who were able-bodied.

Mr Morotoba said that there was no disrespect intended by allocating this chapter at the end. It was clear throughout the ES Bill that it was focusing on the vulnerable. The provisions to set up a legal framework for SEFs were at the end of the Bill, but this was not suggesting that people with disabilities were regarded any less seriously. When discussing both Productivity SA and PES, the legal advisers had said that it made sense to synchronise them in this way.

Mr Mkalipi added that the establishment of SEF in legislation was being done to enable the DOL to campaign for funding from National Treasury. It was possible to switch around Productivity SA and SEF clauses, although the slides actually referred to “disability”.

Mr Mongameli Kweta, State Law Adviser, Office of the Chief State Law Adviser, said that the legal effect of the provisions would be the same, wherever they were placed in the Bill.

The Acting Chairperson said that this begged the question of why to put some aspects at clause 1 and some at clause 40, and why clauses should even be numbered. He was not sure that this was sufficient explanation and said that he regarded the answer as arrogant.

Mr Motau said that essentially Mr Nyekemba was concerned that people with disabilities were often treated as an “afterthought”. He firmly believed, and thought that this should be the focus of the legislation, that people with disabilities should be assisted to become fully and productively employed, despite their disabilities.

Mr Nyekemba said he understood how legislative drafters operated. Members of Parliament were dealing with a number of associations, including Disabled People South Africa, who had raised this point. He stressed that Members represented voters.

Mr Morotoba said that he would welcome guidance from Parliament and the State Law Advisers in terms of sequencing. The main point was to have the provisions included.

Mr Nyekemba asked if, during the Nedlac processes, there had been full consideration of the implications of other legislation, in relation to private employment services.

Mr Mkalipi assured Members that the negotiators at Nedlac took the LRA provisions into consideration when they dealt with this Bill. This Bill dealt with requirements to register, but the LRA dealt with everything else. If the time periods in the LRA were amended, then there would have to be further alignment also in this Bill.

The meeting was adjourned.