Basic Conditions of Employment Amendment Bill & Labour Relations Amendment Bill: Department response to public submissions

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Meeting Summary

Members of the Select Committee on Labour and Public Enterprises met with the Department of Labour to discuss the latter’s response to the public submissions received concerning in relation to the Basic Conditions of Employment Amendment Bill & Labour Relations Amendment Bill. The Department stated that the presentation would touch on the overall grievances from the stakeholders submitted and then Members would have the chance to address their concerns.  The main concerns of the stakeholders were the effects the Bill would have on collective bargaining and jobs in the country. Many changes were being made to provisions related to strike balloting and picketing; these changes were based on feedback from previous meetings.

A big concern was the status of employees and the rights they had.  For example, at what point did a contract employee have the right to the same benefits as their full time co-workers, and how long could fixed term contracts be before severance pay was owed?  The status quo was that a fixed term contract had to be at least 24 months long before any severance pay would be considered, but a 12 month term was suggested.  The Department also wished to provide short term workers with expanded rights if they worked for a six month contract or longer.

The Department’s two major concerns were jobs and the vulnerability that the changes could bring about. They stated that the changes they were making were calculated risks, and although some jobs may be lost, over time employees would recover and be better off.   Minority unions would benefit from the changes as their rights would be extended and their employees fairly represented.  Although many businesses opposed this change, it was necessary in ensuring equal and fair treatment.

Labour inspectors would see their roles change as well.  They were responsible for enforcing the law and making compliance orders.  Inspectors could issue compliance orders and avoid using the historically ineffective method of obtaining promises from violators to right their wrongs.  The Bill also made it easier for inspectors to take employers to court when they had violated their promises, and to speed up the legal processes.

Members expressed concern over the rights of individuals and some felt that unions held too much power in the Bill.  Concerns were raised over short term employee rights as Members believed that six months was an appropriate time period for employees to work before receiving benefits.   The Committee asked for clarification on the difference between types of employment and the length they entailed and on the definition of employer.  Was the labour broker who supplied the employee the employer, or was the company that hired the labour broker the employer?

The Committee asked if there were any monitoring methods in place to ensure that labour inspectors did not abuse their powers or take bribes.  Some Members expressed concern that the Bill gave the Minister too much power.  Retrenchment payments were of concern and the relation between employers and unions in this regard was questioned. The Committee was worried about the effects the Bill would have on the workforce of South Africa and the short term job losses that could occur.  Members believed that the country was in a difficult economic situation and job losses and delays in negotiations with unions would not help the overall economic forecast of the country.

Members also wished to know if the Bill would aide in speeding up the legal processes in the labour field, as these processes tended to take a long time to resolve in court.  The finality of the decision of the Commission for Conciliation, Mediation and Arbitration (CCMA) was brought into question.

Meeting report

The Chairperson commenced the meeting by stating that it had been requested in order to reduce the workload Members had during the constituency period and that it was important to receive this information.   

Briefing by Department of Labour
Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour, commenced the presentation by stating that the purpose was to address some of the concerns raised by different stakeholders in regards to the proposed changes to the Basic Conditions of Employment Bill and the Labour Relations Amendment Bill.  He noted that the presentation would primarily address the main concerns of the stakeholders and avoid getting into specific grievances from specific bodies.

The main issue that was brought up by stakeholders was their concern over the effects the changes will bring to collective bargaining and jobs in the country.  He commenced with the amendments to sections 64, 65, 67 and 69, and noted the deletion of all new clauses related to strike ballots and picketing.   These deletions were based on feedback from a meeting previously held in Pretoria.  Changes were also made to section (71a) which called for the deletion of a clause dealing with public officials exercising authority in the name of the state.  An example of the effect of this clause was immigration officers, as it was stated that positions such as those were essential and people could be injured or die if they were to strike.  

The deletion of the probation clause as part of the fixed term contract provisions (section 189B(4)(e)) was also noted as important.  Fixed term contracts that finished after 24 months left the employee with the right to severance pay, but the Committee had stated that 24 months was far too long and 12 months was suggested.  The Committee wanted to address the section related to employees who were under short term six month contracts and had continued to work past this mark, as they deserved expanded rights.  Sections 193B(3) and 198C(2)(d) had been reworded with the latter being related to the employment of part-time employees earning below the threshold.

The floor was then briefly opened for questioning starting with Mr H Groenewald (Northwest, DA) who asked for clarification on changes to laws regard strikes and the balloting of them.  How would the changes in the Bill affect the democratic rights of individuals and in the case of a union deciding to strike, how would individual rights be protected?

Mr Mkalipi responded that a ballot vote was only required if the constitution of a union stated so, but there was no law stating that the constitution of a union must have a ballot vote.

Mr Groenewald interjected and stated that there were many illegal structures in the mining and motor industries.  In some situations people had gone on strike but others claimed it was an illegal strike, how were these people protected?

Mr Mkalipi responded that there was no such thing as an illegal strike. The right to engage in strike action is entrenched in the Constitution and is regulated by the Labour Relations Act. An unprotected strike is simply a strike that does not comply with the Labour Relations Act. When workers began intimidating each other it becomes a criminal act because the Act does not tolerate any intimidation.

The Chairperson asked for any questions to be asked at the end of the presentation.

Briefing Continued
Mr Mkalipi continued by stating that many organisations had raised the issue of constitutionality in the changes being brought about to the Bill, but the Bill had been certified by both the state law advisors and the parliamentary law advisors.  Both were happy with how the areas of concern were addressed and noted that the Bill was not prohibiting labour brokering, but regulating it.

For the Department the two biggest concerns were jobs and any vulnerability that could be brought about by the changes.  He noted that all employees were entitled to fair labour practices as per the Constitution.  The new regulations had sparked concern that they would have a negative effect on job numbers, but Mr Mkalipi assured Members that this was a calculated risk that was necessary.  He compared it to previous situations in which regulations were enforced to raise the wages in the farming sector.  Although there were job losses they were minimal and the changes were necessary in protecting the most vulnerable of employees.

Submissions with regard to amendments to section 21 which dealt with the exercise of organisational rights had been criticised and supported.  The business sector was generally unsupportive in extending rights to minority unions, whereas the Department felt it was necessary to make it easier for trade unions to organise as people working on fixed-term contracts needed to be fairly represented.  Furthermore, equal treatment of employees must be looked in the context of South Africa’s history.  The changes being brought about were designed to ensure that Constitutional rights of employees were withheld and that those employed by labour brokers were treated fairly.  Despite the disagreement from some stakeholders, it was the view of the Department that equal treatment was deserved for equal work. But in saying this, the Department was also clear in ensuring that employees with greater qualifications and skill than their co-workers still deserved more pay.

Mr Mkalipi then moved onto key issues revolving around labour inspector practices.   He stated that labour inspectors were responsible for enforcing the law and making compliance orders.   Their powers were found in section 68 of the Basic Conditions of Employment Act (BCEA).  Inspectors were required to exercise a great deal of discretion in their decisions, especially when determining what disciplinary route to take when dealing with an employer who breaks the law.  Inspectors had the power to issue compliance orders rather than rely on promises, which had historically been ineffective.   The process of taking those who ignore their compliance order to court had been sped up, as in the past it was far too long.   These changes forced employers to keep their promises and act swiftly on the requests of the inspector.

Labour tenant issues were then briefly touched on. Mr Mkalipi provided the example of a farmer making an agreement with an employee to have a small farm in exchange for their labour. The issue was that these people were not properly represented and were often paid minimal wages.  The amendments made addressed the situation in which labour tenants derived their income from occupying and/or using land, this income was to be taken into account when determining their wages.

The presentation then moved into the various comments from the South African Society for Labour Law (SASLAW) which began with comments on section 158(1B).  The Department disagreed with SASLAW’s proposal to delete the term “jurisdictional issues” because the term gave the Department some flexibility in what may or may not be reviewed.   SASLAW requested that section 187 be clarified, but the Department felt that it was sufficiently clear as written. Mr Mkalipi clarified that this section was designed to place further regulations on company lockouts, in order to end the practice of companies using lockouts as a way to compel employees to accept their requests.

Section 33 determined that a contract could not force the employee to buy anything from their employers, unless it was of direct benefit to the employee.  Mr Mkalipi provided the example of MTN offering their employees a discount on their cell phone plans as a positive instance of this.   He ensured that no offer by an employer could prevent pensions from being a future option.

Mr Groenewald asked what an individual’s democratic rights were with regard to strikes.  He felt that the unions held the power and individual rights were not covered in the Bill.  The Department had stated that the country would recover from the short term job losses that the Bill would trigger, but how?  He reiterated his request for clarification on the sections related to contract employees receiving benefits after six months versus after three months.  He felt that they should stick with six months because if employers had to provide benefits after three months they would be more likely to cut jobs to avoid paying.

Mr M Jacobs (Free State, ANC) was uncertain about the issues surrounding labour brokering. There was a need for clarity on who the employer was in these situations – was it the labour broker or was it the entity which had contracted the labour broker?   Mr Jacobs asked for clarification on casual, temporary, and part-time employment as there were temporary workers in supermarkets that were there every day.   He further expressed concern that the Minister had too much power.  What would happen if the Minister misused these powers?

The Chairperson brought up the results of the regulatory impact assessment and asked for an explanation of the desired equal treatment of temporary and fixed term contracts. Was this going to lead to job losses?  Would there be a monitoring system in place to ensure that labour inspectors did not abuse their powers by taking bribes to turn a blind eye on employers who were not complying with provisions?

Mr Jacobs brought up the issue of retrenchment payments. If an employer wished to make retrenchments they consulted with the unions, but what was the meaning of these consultations?  There was potential for this system to be abused.

Mr Mkalipi began by addressing Mr Groenewald’s concern, stating that individuals expressed their rights by joining the union in the first place.  They also had the right to move out of the union as freedom of association was guaranteed. However, if there was intimidation in the balloting process then the police needed to be involved because it became a legal matter.

In terms of job loss due to increased wages, Mr Mkalipi said that they could not argue that there would be no job losses; the issue was how extensive the losses would be.  The Department was confident that long term recovery would happen.

Mr Groenewald followed up by saying that the Northern provinces were where all the trouble was with the mines.  The mining companies were delaying work for over fourteen thousand people.  His worry rested in short-term jobs; people were losing their livelihood because of wage issues in the mines and it could not continue.

The Chairperson suggested that the Department answer that question later when they had more time to research the issue.

Mr Mkalipi then spoke about three, six, or 12 month periods before someone became an employee with full benefits.  If a three month period was initiated it would allow those who were employed through a labour broker to achieve higher pay and an increase in living standards faster.

The definition of employer was something that had previously been discussed.  It was found that defining the term ran the risk of eliminating labour brokers.  If this was to happen many employees could lose their rights on the basis that their employer (the labour broker) was not defined as such.  Internationally, nowhere else had a definition of employer for similar reasons.  However, defining an employee was very important and that was the intention of the legislation.

The powers of the Minster were under the regulations of the Constitution; any perceived abuses could be taken to court and business would be the first to do so.  Mr Mkalipi believed that the institutions of South Africa were strong and would prevent Ministers from abusing their powers.

Mr Mkalipi then touched on the effectiveness of inspectors in obtaining results from employers.  The Department stated that in all instances inspectors were told to try and get a written promise from the employer and when obtained the inspector had the right to take it to court if the promise was broken.  The courts did not respect those who did not keep their agreements. More concerning for the Department was the potential corruption of inspectors, there was no fool proof law in place that could prevent this.   What was important was that the Department reacted swiftly to cases of corruption and set a precedent to discourage others from doing it.

It was noted that jurisprudence changed over time as the conditions and structures around it changed.  The laws had changed and it was now a matter of waiting to see how the courts interpret them.

Mr Mkalipi noted that the Department had to take a cautious approach to retrenchment as employers needed to be assured that retrenchment would not destroy them.  The Department noted that one did not want to save 1000 workers at the expense of 10 000 if an employer went under because they had to wait too long to retrench employees.  Part-time workers were to be used as tools in order to alleviate any difficult labour issues, such as finding people to work weekends, but part-time work should not be used to exploit the workforce.  It was a tool to provide flexibility.

Mr Groenewald believed that unions had too much power.  He cited the mining labour disaster in Marikana as an example of this.  In Marikana the mines were at a standstill due to the demands of the unions being too high, thousands of people lost work because of this and it was unacceptable.  Unions even fought amongst each other, further compounding their problems.  Parliament needed to put unions in place and straighten them out, the economics of the country were in rough shape and South Africa could not afford some of the demands that they were making.  The Bill needed to help South Africa get back on track economically but as it stood he did not believe that it would.

Mr Jacobs asked for the Department to address disputes and legal processes in the labour field taking too long.  He then asked for clarity on equal payment for part-time workers.

Mr Mkalipi said that it was not the intent of the Bill to take away the power of workers, rather it was part of a bigger debate – that of minority rights.  In terms of speeding up court cases they wanted to initiate a system in which the company being brought to court was made to put up the monetary figure in question upfront as a security deposit.  It was believed that this would encourage companies to seek resolutions faster.

Mr Jacobs asked what would happen to the interest accrued on the deposit during legal processes.

Mr Mkalipi was not sure what would happen to it, but assured the Members that the State would keep it.

Mr Jacobs said that the presenters were not providing the clarity the Members were seeking.  He asked if it was possible for decisions taken in the Commission for Conciliation, Mediation and Arbitration (CCMA) to be taken as final. Would that give their forums more rights than other courts?

Mr Mkalipi stated that CCMA cases could only be reviewed in the Labour Court and not in the High Court.  The current laws said that the decisions of the CCMA were final and binding and that was not being changed, the changes in the Bill just reinforced the finality of these decisions. This would lead to fewer challenges of CCMA rulings.  Labour disputes should have quick resolutions and if every case was reviewed after a decision had been made it undermined this theory.  Restricting reviews would restore the intent of the original legislation.

The Chairperson thanked the Department for their clarifications and everyone who expressed interest in the legislation.  It was an important piece that would help the people of South Africa.  The meeting was adjourned.

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