Employment Services Bill; Employment Equity Amendment Bill: Department response to public submissions

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Employment and Labour

20 August 2013
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Meeting Summary

The Committee was briefed on concerns and proposals raised by the public in their comments on the Employment Services Bill. These included definitions, the purpose of the Bill, public employment services, promotion of employment of youth and vulnerable work-seekers, job retention, foreign nationals, reporting on vacancies, employment information, finances, registration of private employment agencies, confidentiality, cancellation of registration, the composition, constitution and dissolution of the board, the establishment and constitution of the board of Productivity South Africa, functions of protected employment enterprises, offences and penalties and regulations. In most cases the Department of Labour felt that the current Bill was sufficient, but in some cases there was a need for advice from the State Law Advisers. Certain changes would be made to the Bill. For example, DoL agreed a new name was needed for protected employment enterprises that would not carry a stigma. It suggested replacing 'Protected' with 'Supported' in the Bill.

Members raised some queries over persons with disabilities, as there had been some comment urging for more representation for this community. For clarity, some terms defined in other legislation should be defined in this Bill as well.

The Committee was briefed on the Department of Labour's response to public submissions on the Employment Equity Amendment Bill. The Department explained why it would not include a definition on discrimination and the reasoning behind the definition of 'designated groups and citizenship. The reason for including a provision for an arbitrary ground for discrimination was also explained. Income differentials were addressed. The Department emphasised that the Commission for Conciliation, Mediation and Arbitration should remain the first option for dispute resolution rather than the Labour Court. All companies should have a proper employment equity plan and make provision for the development of scarce skills amongst designated groups. DoL said that the reporting process had been facilitated. It said more discretionary powers should be granted to inspectors. DoL said consideration would be given to both regional and national demographics in determining the employment equity plan. DOL noted that the number of objections received from employers about fines based on 2% of turnover confirmed that this sanction would be effective. The law was forcing companies to draft plans. If companies failed to implement their own plans the court should levy penalties. The maximum penalty of 10% would only apply to repeat offenders.

Members hoped that the Department was not interfering with the Labour Court. They were assured that while the Department did consult with the courts on administrative matters, it did not intervene on the merits of any case.

Meeting report

The Chairperson note that the Department of Labour (DoL) response document to the public hearings held the previous week had only been received that morning. This made it very difficult for Members to engage with the document.

Mr K Manamela (ANC) did not think that Members would be taking decisions during the meeting, but would want to be guided on what was said at the hearings.Mr E Nyekemba (ANC) felt that Members could listen to the presentation.

Briefing by Department of Labour: Public Hearings on Employment Services Bill
Mr Thembinkosi Mkalipi, DoL Chief Director: Labour Relations, said that the DoL had held intensive discussion based on the submissions made on the Employment Services (ES) Bill.

Disability Workshop Development Enterprises (DWDE) had argued that the Preamble should be broadened. DoL believed that the Bill referred to all the conventions, especially in clause 3B. He did not think that it was necessary to repeat this in the preamble, but the Department had asked the State Law Advisor (SLA) for advice. There were some serious issues around the concept of protected workplaces, as this could be seen as being synonymous with 'sheltered'.

Clause 1 Definitions
The definitions of 'employment service' had been challenged by various parties as being too open-ended. The definition of 'work opportunity had also been questioned. There had been an agreement at the National Economic Development and Labour Council (Nedlac) on the level of detail that needed to go into the Bill. Some of what was being requested in the Bill should really be captured in the Regulations. The Centre for Constitutional Rights (CFCR) had challenged the definition of 'vulnerable work seekers'. If the concept was used in other legislation it should be adopted in this Bill as well. Most of the proposed definitions were actually contained in other legislation.

Mr Mkalipi said that the DWDE had also raised concerns over the definition of 'disability' The SLA would be asked to help with reconsidering this definition. The University of South Africa (UNISA) had commented that a definition of 'vulnerable workers' should be included. The Construction Engineering Association (CEA) had commented on the definition of 'Temporary Employment Services' (TES). Regulations would be needed in order to ensure good practices were followed, but could not cover every aspect. An agency could be registered before it was compliant with all aspects of the legislation, in which case a temporary certificate could be issued.

Mr Mkalipi said that the South African Board for People Practices (SABPP) had commented that by strengthening certain parts of employment services, private agencies might be driven underground. There had been close engagement with two of the biggest agencies, and this had helped to inform the regulations. There was no intention not to work with these private employment agencies. Companies might require the services of highly specialised people who were not found on the database. Employers must realise that placement services would be allowed to charge a commission for their services. DoL was working on a way in which these fees could be waived. Where there was mass recruitment, agencies might refer these to government if there was no profit for them. There could be partnerships between the private and public sectors.

Clause 2 Purpose of Act
On the Purpose of Act, Mr Mkalipi said that Solidarity had made a statement that the ES Bill was unnecessary. He pointed out that employment services were already legislated on. The Skills Development Act (SDA) had repealed previous legislation under the Manpower Development Act. UNISA had also commented on the purpose of the Act, as it seemed that DoL was only talking about practical training for workers. It suggested that tertiary education should be included as an option.

Clause 5
Mr Mkalipi said that SABPP had suggested that clause 5 was poorly worded. This clause covered Public Employment Services (PES). DoL had a number of points of presence. It said 'worker' was not defined. DOL responed that if workers came for advice, there was broad agreement that the Department of Higher Education and Training (DHET) and Department of Basic Education (DBE) should provide vocational guidance.

The Confederation of Associations in the Private Employment Sector (CAPES) had raised the possibility that DoL could not deliver on its mandate given its current resources. The DoL response was that it had capacity at different levels, and this could be improved. The resource implications had to be outlined when the Bill was sent to Cabinet. Germany had changed their approach to having an employment agency rather than unemployment assistance.

DWDE had raised a serious omission on a funding mechanism for persons with disabilities. The DoL response was that provision was already made for this in the SDA. Many people had availed themselves of assistance from DoL. The Skill Development Fund would in future provide this service, and the DoL no longer had the means to play this role. Clause 6(1) of the ES Bill did make provision for work schemes. This made provision for assistance to youth and other vulnerable work seekers. There were 300 organisations that were operating differently to sheltered employment, while 50 continued to be funded by DoL. The compensation fund provided for the rehabilitation of people injured while on duty, and there was a call for this funding to fall under ES. The only problem was that traditional organisations remained the beneficiaries, but there was a need to open up this funding for other organisations dealing with the disabled. This was the last year of the current funding model, and in future advertisements would be placed for applications.

The Ministry of Finance, Economic Development and Tourism of the Western Cape had commented that the role of placing work-seekers was being taken away from the private sector. This put the state into competition with the private sector. There was also a doubt expressed over the capacity of DoL by CEA. DoL disagreed with both these submissions.

Clause 6 Promotion of employment of youth and other vulnerable work-seekers
Training lay-off schemes were good ideas, but had not produced the results expected. The DoL had ceased to finance these schemes in 2009, resulting in a vacuum. DoL provided a response (see document).

Clause 7 Job retention
CAPES opinion was that the lay-off scheme had not been successful, and they doubted the this would be any different. The DoL responded that the Bill provided for a legislative framework to assist with TLS schemes.

Business Unity South Africa (BUSA) felt that the provisions were too limiting. DoL agreed, and clause 7(1) of the Bill referring to Protected Employment Services would be deleted.

The Confederation of South African Trade Unions (COSATU) had called for an amendment to clause 7(1) requiring the Minister to consult with Nedlac. DoL believed that the mandate and relationship issues could be addressed. DoL said it would welcome appropriate wording in this regard. The ES Bill should not set standards that would see existing employees displaced. The Basic Conditions of Employment Act did set standards for vulnerable workers. Matters relating to vulnerable workers would not go to Nedlac.

Clause 8 Employment of foreign nationals
CAPES was concerned that this could drive xenophobia. DoL was satisfied that clause 8(2)(a) and (b) provided for a satisfactory process for recruitment of foreign nationals.

SABPP had proposed an amendment to allow international companies to place foreign workers into South African jobs. DoL felt that the Immigration Act of 2002 provided for this.

CFCR and Vodacom argued that this clause in fact undermined the Immigration Act. The rights of permanent residents were not addressed. DoL responded that the definition of a foreign national excluded those with permanent residence status, and such persons would thus not be discriminated against. CFCR had also felt that strict application of the legislation might lead to disruption. DoL responded that permits for foreign workers were only awarded on the advice of DoL. The issue had been discussed extensively. A workshop would be held later in the week to deal with this problem on a regional basis. There was particularly a concern with poor border control between Mozambique and South Africa. UNISA had raised a similar issue. State Law Advisors would be looking at re-wording Clause 8(1)(b).

Clause 10
Mr Mkalipi said that concerns had been raised about clause 10 by a number of organisations. The DOL response was that the clause made provision for reporting on vacancies and the filling of positions. Employers believed that the system could assist them. A large number of unemployed people were seeking employment. Some of the contractors were outside of the framework, and had not familiarised themselves with the labour relations in the country. This had led to some of the problems at the Medupi power station. There were already measures in the Skills Development Act in this regard.

Clause 11
Mr Mkalipi said that the only issue raised under clause 11 was by SABPP on the intention to improve the quality of data on employment trends. The DoL welcomed this comment.

Clause 12
Mr Mkalipi said that CAPES had objections to clause 12, dealing with the financing of PES. CAPES felt that the monies for the Unemployment Insurance Fund (UIF) should not be used for PES. Small, medium and micro-enterprises not meeting the threshold levels should also be accommodated. DoL responded that both government and organised labour agreed on the need for such funding.

Clause 13 Registration and certification of PES
Mr Mkalipi noted the South African Institute of Race Relations (SAIRR) comment that these strict conditions could be used to ban labour broking even though this was not written into the statute. DoL responded that the intention of government, business, the Federation of Unions of South Africa (FEDUSA) and Nedlac had agreed to regulate rather than prohibit labour broking. UNISA had made a submission that private employment agencies (PEA) were registered in accordance with the Companies Act. DoL responded that the registration of PEA would not affect their registration under the Companies Act.

Clause 17 Confidentiality of information collected
SABPP said that clause 17(2)(b) was loosely framed. If the clause was meant to enable the collection of data for analysis, this should be clearly stated. DoL responded that it had asked the SLA to assist with the drafting of the clause. The SLA would also be asked for advice on the contention of UNISA that the phrase 'or any other relevant information' in clause 17(1)(b) might create uncertainty as to whether a criminal record might be included. Certain offences for which a person might have been convicted might be relevant in an employment relationship, but there should be some limit to the record.

Clause 21
The Cape Chamber of Commerce and Industry commented that the power to cancel the registration of a PEA could be a draconian power and could kill this industry. DoL responded that the wording of the clause would only lead to the cancellation of registration in the event of a failure to comply with regulations.

BUSA and SAIRR appreciated the need for such a provision, but asked that a review process should be in place during which time the PEA could still operate. DoL believed that the problem could be addressed by inserting the words 'Provisional Certificate'. This would allow the company to operate until the review process was complete.

The Cape Chamber of Commerce had doubts over the composition of the Board, as outlined in clause 21. They also proposed that there should be provision for industrial experts to be included on the Board. DoL responded that the Board was an extension of the social partnership. Clause 21(1) did make provision for industry experts.

BUSA wanted Nedlac to appoint the Board - not the Minister. DoL responded that the Bill already provided for Nedlac constituencies to nominate potential Board members. The Minister was the ultimate authority to appoint members, and it would be very rare for the Minister to ignore the advice given by Nedlac. There was provision for a review process, such as in the case of poor gender representation.

DWDE had also raised representation. DoL responded that the Bill did make provision for the participation of the community, and it was up to DWDE to persuade Nedlac to make a nomination from their constituency. When the management committee was established as part of the governance procedure there should be more representation from persons with disability.

Clause 23 Constitution of the ES Board
UNISA had raised an issue about timing. The SLA should look at how the Minister could perhaps publish an interim constitution through regulations. There was a provision that the current legislation should serve as a constitution.

Clause 26
CAPES questioned the power of the Minister to dissolve the Board. DoL responded that the Minister needed to have such powers as provided for in 26(1) and (2).

Clause 33 Establishment and composition of Board of Productivity South Africa (PSA)
DWDE had commented that board membership should include two persons with disabilities. DoL responded that Nedlac had agreed on the current composition and it represented government, business and labour. The representation of the broader community was not appropriate.

Clause 34 Constitution of the Board of PSA
UNISA had commented that it might be problematic if the Board were to adopt its own constitution. They suggested that the Minister address this matter through regulations. DoL believed that this concern would be addressed in the Transitional Arrangements.

Clause 43 Functions of protected employment enterprises
DWDE said the promotion of employment of persons with disabilities should not be assigned to sheltered employment factories. COSATU argued that the spirit should rather be to reintegrate person with disabilities into the mainstream labour market rather than confine them to a dead-end option. DoL agreed that a new name was needed that would not carry any stigma. It suggested replacing 'Protected' with 'Supported' throughout the Bill.

Clause 50 Offences and penalties
The Cape Chamber of Commerce and Industry had said that some of the penalties were draconian. UNISA had similar concerns, feeling that international business might be reluctant to invest in South Africa. In its repose, DoL said the fines were necessary to ensure compliance to labour legislation. It was worried that some employers simply budgeted for fines. This was a concern. The fines were low, up to R50 000. Small companies felt that their bigger competitors were happy to buy their way out of trouble. It would be better for those offences where imprisonment was an option.

Clause 52 Regulations
CAPES and UNISA had commented that the power given to the Minister was too broad as the issues left up to the Minister to regulate were quite pertinent. Parliament should not delegate wide arbitrary powers to the Minister. There were codes of good practice which could be borrowed from other countries. DoL responded that regulations were not developed by the Minister alone. He would be advised by the ES Board. There would be provision for long processes of consultation. The assertion that the Minister would have wide-ranging powers was incorrect.

Schedule 3
BUSA supported schedule 3 but felt that maximum fines should be set for certainty. DoL responded that clause 49(2) did make provision for this. Offences relating to foreign nationals working without a permit fell under the Immigration Act and would be removed from this Bill. The current version had a maximum fine of R50 000.

Mr A Williams (ANC) took issue with the DoL comments about people with disabilities. There was a comment that the disabled community should lobby at Nedlac for their representation. Nedlac had agreed on 2% employment representation for persons with disability, but employers had failed to reach this target.

Mr S Motau (DA) agreed that certain terms were defined in other legislation. While these definitions should not be changed, he felt that they should also be defined in the ES Bill.

Mr Manamela (ANC) said on the issue of people with disability and their representation, this should be dealt with in the Nedlac Act. The constituencies were defined in that Act. If the Minister was responsible for appointing the Board, she should ensure that the disabled were represented. The 2% target was for employment in the public service. The needs of this community were also addressed in the Employment Equity Act. It seemed that employers did not want to make use of lay-off schemes. Employers wanted to retrench workers. What was needed was legislation to force employers to make use of lay-off schemes. Members could now apply their minds to the issues raised.

Department of Labour response on public comments on Employment Equity Amendment Bill
Section 1 Definitions
Mr Ntsoaki Mamashela, DoL Director: Employment Equity, said that HR City and the Centre for Constitutional Rights had commented on the definition of 'citizenship'. DoL responded that citizenship had been denied in the past. Those who had only been granted citizenship after 1994 should not be discriminated against. However, there should also be due care that, for example, a man born in Egypt was not given preference to a white man born in South Africa. The definition that excluded foreigners who came to the country after 1994 had been challenged as unconstitutional. If this was so, and white males were excluded from the definition of designated groups, this would make the Act unconstitutional.

Prof Darcy du Toit had concerns about the definition of 'discrimination'. DoL responded that there had been a long debate at Nedlac on this issue. After long deliberations, Nedlac parties agreed that a definition would turn to narrow the scope of discrimination and therefore should not be included. Definitions sometimes had unintended consequences. DWDE and National Council of the Blind had a concern about the definition of 'disability'. DoL responded that the code of good practice was needed to deal with this issue. If the code was not wide enough, then Members could make changes. Nedlac did not want a narrow definition, and felt that the current code was satisfactory. The input of Prof du Toit did not actually question the definition. The definition of 'disability' was seen in a similar fashion. DoL wanted a wide interpretation here as well. Things might change in the labour market, and people should not be disadvantaged if the definition was not wide enough.

Section 6(1) Prohibition of unfair discrimination
The Clicks Group, HR City and Solidarity had raised concerns over the proposal that an arbitrary category should be included. The three submissions requested that this inclusion should be reversed as this would increase uncertainty and lead to widespread litigation. DoL and Nedlac felt that, for example, a white female might feel that she had been discriminated against in favour of another white female. The arbitrary ground would allow for this case to be pursued. The Constitution did not prevent further grounds being added to the definition. There were two elements in proving discrimination. In terms of the listed ground, the onus of proof was on the employer; in the case of the arbitrary ground it would be on the applicant. Nedlac had agreed on as wide a form of interpretation as possible.

Section 6(4)&(5) prohibiting unfair discrimination: equal pay for equal work
HR City, Clicks, Vodacom, SAIRR and Solidarity had argued that this section was not necessary as it would impact on employment numbers. DoL responded that in Mangena and others vs Fila SA & Others, the judge had referred to the difficulty brought about by the lack of such a clause. The submissions did not disagree with the need for such a provision, but felt that it was already included in other legislation. The other area of disagreement was on how the Minister would assess the anomalies in income differentials. It was acceptable if one person was rewarded more for performing better than a colleague doing the some work. The Minister had to publish regulations and guidelines through Nedlac. The submissions claimed that this would be too much work for the Minister. DoL had already started the discussion at Nedlac, and the Minister would publish the guidelines for comment.

Section 8 Psychological testing and similar assessments
Mr Mamashela said that section 8 had drawn concerns from a number of parties. Any test done should be scientific and objective. DoL was often requested to certify that psychometric tests were scientific. Only the Health Professionals Council of South Africa (HPCSA) was competent to perform this function. DoL felt that if HPCSA was reformed by law, then this Act would have to amended accordingly. DoL felt that this issue did not warrant discussion. The law gave the authority to HPCSA to conduct the testing or to delegate the responsibility. Some bodies felt that HPCSA was incompetent and should not be entrusted with this responsibility. DoL responded that if HPCSA was found to be incompetent then this should be dealt with on the merits of the case. He did not think a job interview could be construed as a test in terms of the legislation. This was why the law did not define a test.

Section 10 unfair discrimination claims
Many bodies were concerned and felt that matters in this regard should go to the Labour Court rather than the Commission for Conciliation, Mediation and Arbitration (CCMA). DoL disagreed. The CCMA had many offices around the country and there was no constitutional obligation to send matters to the Labour Court. The Constitutional Court had overruled a decision made at the Labour Court in favour of the original CCMA ruling. The definition of 'person' had been challenged, but DoL felt that the definition was broad enough to cover both natural and juristic persons. Another concern was that there was a salary threshold for cases going to the CCMA, but cases involving sexual harassment were excluded from this provision. DoL felt that with the number of cases of abuse of children and sexual harassment, especially where the alleged abuser was still in the work environment, it was desirable to take the case to the CCMA.

Section 11
Mr Mamashela said that Prof du Toit had proposed an amendment to Section 11(1)(b), regarding the burden of proof. DoL said that the intention of Section 6(2) was to expand on the listed grounds. Mr Mamashela believed that the suggestion made was already covered. This proposal might in fact dilute the legislation.

Section 16 & 17 Consultation and the process for consultation
BUSA had raised concerns about duplication of fines for non-compliance. DOL disagreed and said the two sections should be read together, so there was no duplication of funds. There would be no double penalty.

Section 20 Employment Equity Plan
BUSA and other organisations felt that a company should only be referred to the Labour Court if there was no EE plan in place. DoL said that many companies had only the flimsiest of plans. The court should pronounce on whether the plan was compliant. The argument that even if the plan only covered certain issues it was acceptable, was not shared by DoL. The law already said that a plan must be compliant. This would fast track enforcement.

Section 21
Mr Mamashela said that ABSA and others had proposed that the reports should be on a two year basis. DoL opposed this. In order to do business with government, a black economic empowerment (BEE) certificate was needed. Reports were submitted annually. When employment equity reporting had started, the report had been about 26 pages in length. This had now been reduced to twelve pages, and would be reduced further still. Companies would only have to update a pre-populated form. The submissions said that the reporting was an administrative burden on small businesses. DoL disagreed, as it created opportunities for small business. The DoL report must cover all companies, but accepted that reporting should be facilitated. DoL was conducting road shows, and could develop a presentation for online reporting.

Section 36 & 37 Undertaking to comply
The concern was that Section 36(1) replaces 'must' with 'may'. The DoL responded that this allows for flexibility to give inspectors some discretion in performing their duties. An undertaking was an agreement that the company had contravened the law, but undertook to remedy the errors. Inspectors reacted to complaints. In most cases people acted on their promises. If not, then the courts would take action.

Section 39 & 40 Removal of objections and appeals
HR City was concerned that employers were being deprived of their right of appeal. DoL said that the Labour Court was already a channel of appeal. The court would make an order based on the compliance order. A cumbersome appeal process was not needed. The Minister and Director-General (DG) received thousands of letters from companies that felt the inspector has misinterpreted the law. DoL would follow up on this. Cases might be withdrawn at the last minute if corrective action was taken or if the Department felt that the wrong decision had been made. Speedy resolutions were needed for these disputes.

Section 42 Assessment of compliance
Many submissions expressed concern about the use of national rather than regional demographics. They law said that employment equity figures should take both regional and national demographics into account. DoL did not know how this could be done. The amendment would charge the Minister with assisting all parties in the labour market by publishing regulations to advise employers on when to use regional and when to use national demographics. These would have to be debated at Nedlac. He suggested that a company with a national footprint should use national demographics, as an example of how the two concepts could be reconciled. The opposing view from the organisations was that there would be confusion in the labour market. Business was not happy with the controversial changes being put forward by DoL. At present, section 42 compelled the DG to take various factors into account before instituting legal proceedings, such as the national and regional demographics and the pool of suitably qualified persons from the designated groups. Employers should be motivating why they could not comply. Simply identifying a lack of skills was not a sufficient argument. Plans should address creating skills where they were currently lacking. There was the proposal that the economic and financial conditions of companies had to be taken into account. DoL felt that this placed an undue burden on inspectors. The inspector must consider the number of vacancies and how these were to be filled. Inspectors could not be expected to be economists. Companies could argue these matters at the court, but too much was being expected of the inspectors. Companies were using these areas to slow the pace of transformation.

Schedule 1 Turnover (penalties)
SABPP, HR City, Centre for Constitutional Rights, Vodacom, CAPES and BUSA had argued that using turnover as the basis for fines would bankrupt companies. DOL responded that the number of objections received from employers on this area, confirmed that the fines on turnover would be effective. The law was not creating quotas, but was forcing companies to draft plans. If companies failed to implement their own plans the court should levy penalties. The law should be effective to prevent stagnation. The fines would start at 2% of turnover. The maximum penalty of 10% would only apply to repeat offenders. The courts, and not the inspectors, would enforce these penalties.

The Chairperson thanked the DoL delegation. He felt as if he had attended the public hearings himself.

Mr D Kganare (COPE) said that the definitions should bring certainty. The courts should be independent. He asked how DoL could prioritise cases without becoming part of the judiciary. He asked if there was an alternative.

Mr Mamashela was not adverse to using definitions, but sometimes they tended to narrow issues. Disability had come out in the public hearings while discrimination had been debated at Nedlac. A case could be argued purely on technicalities, and this should be avoided. When clause-by-clause deliberations took place, the applicable codes would be available to Members. The Labour Relations Act would be amended to ensure the smooth functioning of the Labour Court. DoL interacted with the court on management issues, not on the merits of any case. Cases around compliance orders not being followed would be discussed with the court. Provision could be made for this aspect once a fortnight. There was an agreement between Nedlac and the Labour Appeal Court. The parties met every three months to discuss aspects of the administration of the court. Nedlac was given regular briefings on how the backlog of cases was being addressed. There was an arrangement in the Western Cape to have specific days to hear compliance order cases. The Labour Court was interested in social justice and the speedy resolution of cases.

Committee business
Mr A van der Westhuizen (DA) proposed that where the minutes were reported as being adopted, there should be a qualifier as to whether any amendments were made or not.

Mr Manamela suggested that Members be given the chance to read the Draft Committee Report on unannounced visit to Cape Town and Nyanga Labour Centres first, and that the adoption be deferred to a later date.

The Chairperson had received a letter from the Minister on private-public partnerships. A date would be set for a presentation on this matter and on the . He suggested some other meetings.

Mr van der Westhuizen found it commendable that the Chairperson was moving so swiftly on the suggestion to Committees that they meet with the internal audit authorities.

The meeting was adjourned.


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