Unemployment Insurance Fund Amendment Bill [B25-2015]: Department response to submissions with Minister’s introduction

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Employment and Labour

24 February 2016
Chairperson: Mr Y Yengeni (ANC)
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Meeting Summary

The Committee received responses on issues raised during public hearings from the Department of Labour (DOL). Amendment of section 24(7) by clause 10 reads that “Subsection (5) does not apply to a contributor who voluntarily terminated her pregnancy”. Most of submissions object to the insertion of this clause since voluntary termination of pregnancy is regulated by Termination of Pregnancy Act and not by Unemployment Insurance Act. The Department response was that it does not want to regulate the termination of pregnancy aspect but was trying to clarify the application of the prior provision that is subsection (5) in the same section. This must not be viewed as introduction of new requirements.  

On the submission urging the UIF to enter into progressive investments with the Public Investment Corporation to stimulate the economy, DOL welcomed the proposal but indicated the PIC and IDC are already carrying out this mandate, for example, by investing in agricultural sector and contributing towards housing in the platinum belt. The investment mandate was reviewed annually to keep up with the developments within the economy.  

On the appointment of regional appeals committee by the UIF Board, the concerns in submissions were this board was advisory and cannot appoint committee members and this may erode checks and balances. DOL replied that members of the appeals committee are nominated by their constituencies who are members of the labour confederations, community constituencies, business and government. Therefore their appointment can still be finalised by the Minister since this does not change their operations.         

On the omission of graduates in the definition of unemployment, DOL replied that UIF was a contributory insurance that covers employees who contributed during their employment. Graduates were unemployed subsequent to their completion of their studies and therefore they do not qualify to receive benefits.

Members across the political divide were supportive of the amendments even though some wondered if banning the use of middlemen between claimants and the UIF affected one’s right to freedom of choice. Members urged DOL to do more UIF inspections on private households for domestic workers who were the most vulnerable, and often lost their jobs. There were also many potential beneficiaries not registered for UIF working in private homes that were used as business premises. While the Committee was against use of middlemen, there were also problems with UIF computer systems going down for hours, and the use of middlemen prevented one from having to queue all day when the system was down. Members asked if learners include interns, those on learnerships and experiential learners. Members asked if termination of pregnancy due to substantial risk to fetus or mother was considered voluntary termination of pregnancy.

It was later noted by the secretariat that a late submission by organized labour objected to clause 4 (where the Minister may designate a Department of Labour or UIF employee as Accounting Officer) saying it was not in the Bill at NEDLAC and that no public hearing was done before going to NEDLAC. The Chairperson noted that whatever was discussed at NEDLAC was not binding on the Committee but they would ask DOL to explain why the clause was included after NEDLAC.
 

Meeting report

Introduction by Minister of Labour
Ms Mildred Oliphant, Minister of Labour, welcomed the opportunity to appear before the Committee. The UIF Amendment Bill has included civil servants, fixed term contracts of six to 12 months and dependents of deceased were given six to 12 months to process their claims. Some of the amendments were administrative. The UIF was not able to fund those who resign at work, but those who become sick and get retrenched. She had to leave for an economic cluster cabinet meeting and would leave the presentation for the senior bureaucrats.

Mr M Bagraim (DA) supported the amendments. The UIF was there to help those that found themselves in circumstances beyond their control. He differentiated between those who resign because of constructive dismissal and one should not consider those who resign if it was within their own control.

Mr I Ollis (DA) was in broad agreement with the Bill. He asked if agencies that submit claims on behalf of beneficiaries should be banned and also if it was good to stop a person from seeking the assistance of another person in helping to process claims.

Minister Oliphant replied that DOL discourages submission of claims by middlemen as this does not lead to the beneficiary receiving more money and the contributor can only claim what was in her credits. From the experience of the Compensation Fund, she strongly discourages middlemen. She then left for the cabinet cluster meeting.

Department of Labour response to submissions
Mr Thobile Lamati, Director General: DOL, said about 99.9% of the people who attended the public hearings supported the Bill, except the discouragement of middlemen. He would respond to the comments raised during the public hearings held in Parliament on 03 February 2016 (see document). Some of the responses from DOL were as follows:

1. Clause 10 amending section 24(7)
Amendment of section 24(7) by clause 10(b) states: ...does not apply to a contributor who voluntarily terminated her pregnancy”. Most of submissions object to the insertion of this clause since voluntary termination of pregnancy is regulated by Termination of Pregnancy Act and not by UI Act.

Response
The Department does not want to regulate the termination of pregnancy aspect but was trying to clarify the application of the prior provision that is subsection (5) in the same section. This must not be viewed as an introduction of new requirements. 

2. Investment
The submission urged the UIF to enter into progressive investments with the Public Investment Corporation which will be able to stimulate the economy.

Response
The Department welcomed the proposal but indicated that the PIC and IDC are already carrying out this mandate by investing in agricultural sector as an example, as well as contributing towards housing in the platinum belt. The investment mandate was reviewed annually to keep up with the developments within the economy.  

3. Regional appeals committee
The appointment of regional appeals committee by the UIF Board. The concerns were the Board was advisory and cannot appoint committee members. This may also erode checks and balances.

Response
The members of the appeals committee are nominated by their constituencies who are members of the labour confederations, community constituencies, business and government. Therefore their appointment can still be finalised by the Minister since this does not change their operations.         

4. Definition of ‘unemployment’
Omission of graduates in the definition of unemployment.

Response
The UIF was a contributory insurance that covers employees who contributed during their employment. Graduates were unemployed subsequent to their completion of their studies and therefore they do not qualify to receive benefits.

5. 100% rate / death benefits for life
Proposal for benefits to be paid at the rate of 100% of the total loss of earnings and a proposal requiring death benefits to be paid to the beneficiary for life. 

Response
The UIF determines the rate of payment after receiving advice from the Fund actuaries. The Fund always guard its solvency. Paying 100% may be detrimental in the long run.

The same principle applies to the proposal to pay death benefits for the life time of the beneficiary. The current proposal had been valuated and a report submitted by the actuaries.

6.Review of four-year cycle
The four-year cycle should be reviewed since it denies benefits to employees.

Response
The four-year cycle is reviewed in clause 6 (amendment to section 13) where a new clause was inserted allowing for payment of benefits as long as there are credits.       

7. Clause 12 amending section 33
There was a concern about the amendment wherein UIF bars payment for services offered.

Response
The services offered by UIF are free and therefore no one should be charged for these services. The establishment and operation of agencies offering UIF services was discouraged. The labour unions / federations also supported this proposal.

8. Domestic workers
Domestic workers must be paid more benefits than other workers.

Response
The benefits were paid according to a sliding scale of 38% - 60% of the earnings. People earnings less were paid at the higher rate than those earnings more. Therefore domestic workers were also benefiting from the current dispensation.

11. Parents who adopt children excluded
The concern about the exclusion of parents who adopt children.

Response
Adoption benefits are already covered in the Act under section 27. The only challenge is that the application can only be processed after receipt of the adoption order which takes time to obtain from the Department of Justice. However benefits are paid for the full period of leave.

12. Clause 4 amending section 11(1)
Insertion of section 11(1A) wherein the Minister may designate any employee of the Department of Labour or UIF as Accounting Officer: (1A) The Minister may, where necessary, designate the Commissioner or any other appropriate officer or functionary of the Fund or the Department to perform the functions of the accounting authority, on such conditions as the Minister may determine.

Response
This was aimed at allowing the Accounting Authority to designate individuals to focus on the Fund only and address challenges without distractions from other responsibilities of the Department.

13. Inclusion of resignations, paternity leave and those in informal sectors and surrogacy
The proposals for the inclusion of resignations, paternity leave, surrogacy and those in the informal sector in future amendments.

Response
It was agreed at NEDLAC during negotiations that the parties will meet 18 months after the promulgation of the Bill to consider other possible amendments. All the proposals will also be subject to actuarial valuation.

Discussion
Mr Ollis was supportive of the amendments as there was high unemployment in the country. There were two principles clashing in preventing unsuspecting workers from being charged high fees by middlemen but at the same time preventing free choice. Claimants do not receive more money from using middlemen. He asked if claimants must be stopped from exercising their free choice by not using middlemen. He noted there were problems with UIF computer systems going down twice a week at Randburg and Kempton Park. In such an environment where a person has to spend the whole day sitting there because the computer system was down, was it fair to stop agencies? He asked who agreed and disagreed at NEDLAC.

Mr Bagraim asked if the UIF accepted representation in the processing of appeals. The 100% once off payment should be strongly discouraged as it supported collusion between business and employees. UIF was different from other insurances as it supports those that find themselves in unfavourable situations. The CCMA has a help desk and the same should be done with UIF to cure the problem of agencies as more people use UIF than the CCMA. DOL must find a way to reach out to domestic workers as they were the people who were downtrodden, who often lose their jobs and yet many of them were unregistered with UIF. Sporadic inspections must be done and DOL must appoint more inspectors. Small businesses also have employees not registered for PAYE. The discussion of proposals to include other parties in the remit of UIF benefits, after 18 months’ promulgation of the Bill, must be subject to actuarial valuation.

Ms F Loliwe (ANC) said the UIF amendments bring a lot of fresh air to the majority of South Africans. UIF contributions were very small and agencies should be discouraged. UIF must stick to its claim period and, as the ANC, it supported the amendments.

Mr D America (DA) asked if termination of pregnancy due to substantial risk to the fetus or the mother was considered voluntary termination of pregnancy. The UIF need to consider that as exceptional circumstances.

Mr Lamati appreciated the support the Bill received from Members. A claimant to UIF was free to lodge a complaint with Chapter Nine institutions if he/she was unsatisfied with service delivery. The DOL relationship was with the claimant and even though people use agencies, the DOL accounts to the claimant. The agencies expect it to account to them which was not the case. It took the advice about the establishment of help desks. The issue of domestic workers was difficult as the relationship was a paternalistic one and the worker only complains when the relationship was no longer good. Moreover, a private house was not constitutionally regarded as a work place. DOL appreciated the need to appoint more inspectors but this was only feasible if justice was received from the Budget Speech being delivered later in the afternoon. Medically terminated pregnancies were covered.

Mr Boas Seruwe, UIF Commissioner, replied it was currently upgrading its IT systems across the country. The money paid to beneficiaries was very little and people were free to have representation, but the money paid was very little.

Mr Mazwiogwani Phathela, DOL Director: Legal Services, replied that the provision for miscarriage benefits was that it should not be paid for voluntary termination of pregnancy. In case of medical challenges, the person was paid illness benefits. Claimants do not appear in person for appeals, but through written documentation.

Mr Bagraim said thousands and thousands of potential beneficiaries of UIF benefits were home based. Labour laws trump all other laws except the Constitution. A person can claim income tax from the household based business. DOL needs to read the Labour Relations Act again. He asked if having 15 workers doing sewing work in his garage was still considered a private home or a business premise.

Mr Thembinkosi Mkalipi, DOL Chief Director: Labor Relations, replied the workplace of an employee was a place where they work. The problem was access and inspectors do not have automatic access as the employer who was the owner of the property also works somewhere.

Mr Loliwe thought some issues should be left for the clause by clause debate.

Mr T Rawula, EFF, asked if learners include interns, graduates and experiential learners.

Mr Seruwe replied learners included those on learnership, interns and those doing experiential work.

Mr America asked who qualified to be classified as a nominated beneficiary of a deceased person as most people do not have wills.

Mr Seruwe replied that the Act says spouse and children were automatic beneficiaries, but include other people if the mentioned categories were not there. The person was asked to nominate a beneficiary on application.

The Chairperson asked if inspectors just back off whilst workers were being abused because it was private residence.

Mr Lamati replied that he agreed that all legal provisions were applicable even to households. However, inspectors cannot just break in to make an inspection. The Basic Conditions of Employment Act does not consider a private household as a workplace. This impacts on the work of the inspector and usually the DOL will sent letters beforehand saying on this day, it will come to make an inspection.

Mr Bagraim said it seems the DOL was treating houses with great caution. Many people were running businesses from home. The DOL may need a permanent court order that entitles it access to all private household as not making inspections was leaving many people vulnerable.

Mr Lamati replied that there were two instances in which inspectors can access houses which was on consent or written application from the Labour Court.

The Chairperson thanked the DOL for their input. The Committee will continue to engage with the DOL. The DOL delegation left the room

The Committee Secretary noted that he received some submissions after the closing date that were against clause 13 that bars agencies from acting on behalf of claimants and the clause on termination of pregnancy. Organized labour objects to clause 4 saying it was not in the Bill at NEDLAC and that no public hearing was done before going to NEDLAC.

Ms Loliwe asked if the submissions were for or against the Bill.

Mr Ollis said that these submissions should have been mentioned whilst the DOL was still in the Committee room.

Mr Eric Nyekemba, DOL Parliamentary Liaison Officer, replied that the original Bill was brought to Parliament in 2014 and lapsed in the Fourth Parliament before finalisation. Public hearings were conducted by the Department. The Cabinet Memorandum clearly states that this is not a new Bill, but the former Bill from the previous parliament which has been updated.

Mr Rawula said the Committee can ask NEDLAC if the two disputed clauses were not discussed at NEDLAC because this was betrayal of collective bargaining.

Ms S van Schalkwyk (ANC) asked about the geographical spread of the submissions because some of them may be fabricated.

The Chairperson said she will invite a DOL representative next week to answer to that but whatever was discussed at NEDLAC was not binding on the Committee.

Mr Ollis said NEDLAC was an advisory to government to avoid fights on the streets. The Committee can send a letter to the Director General asking him to explain why the clauses were included after NEDLAC.

The meeting was adjourned.
 

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