Labour Laws Amendment Bill: briefing; Compensation Fund turnaround strategy

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Employment and Labour

20 April 2016
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Committee received a briefing from Ms Cheryllyn Dudley (ACDP) on her Private Members Bill (PMB), called the Labour Laws Amendment Bill. The presentation covered background information to the Bill which sought to provide for parental leave, adoption leave and commissioning parental leave. It also provided for the payment of parental benefits as well as commissioning parental benefits from the Unemployment Insurance Fund (UIF). The presentation also spoke to the 2013 White Paper on Families, the Basic Conditions of Employment Act and the Unemployment Insurance Act, consultation and who Ms Dudley interacted with. International comparisons were also provided along with financial implications for the state and the parliamentary procedure.

Members posed questions of clarity as the Chairperson noted that discussions on taking the process of the PMB further would occur at a later stage. The Committee wanted to know what studies had been conducted in terms of costs of the Bill on the state, UIF, companies and its impact on productivity. Questions were also raised around challenges to paternity, adoptive leave and the support of gay couples in this regard, controls in place if both parents applied for extended periods of paternal leave and paternal leave with regard to stillbirths and miscarriage in the third trimester.

The Committee was then briefed by the Department of Labour and the Compensation Fund on the Action Plan to turnaround the Fund. The comprehensive presentation covered background information and analysis of the environment in terms of financial management issues, administrative issues, service delivery issues and people issues. Objectives of the Action Plan were covered in terms of the pillars of the Plan, namely, financial administration, customer focus and service delivery improvement, internal business processes and administration and people management. Members were then taken through the initiatives of the Action Plan according to the pillars outlined above and progress made therein along with progress made with claims processing regarding medial payments, compensation benefits and pension payments.

Members largely felt that plans were often spoken to and quite easy to draft but the proof of the pudding, so to speak, was in the results and they were interested in how paper would be translated into action. Members were shocked to hear that no payments were made for four months for claims in 2014 and asked what caused this massive delay. Other questions were asked about the court case and the supposed ignoring of judgements, the Post Traumatic Stress Disorder panel and who it comprised of, the current state of staff morale and training on systems which was identified as a challenge. A member appealed for the Department to look into issues of documentation getting lost at the Eastern Cape office where compensation claims were lodged. The Committee took comfort in the fact that a change management process was in place but asked what was being done to ensure that staff were brought on board to create buy-in for implementation of the Action Plan and what was being done about staff resistant to change. Members were pleased that complaints were being addressed by the Fund, the detailed report which provided insight on how  turnaround would be achieved and the work done by the new Commissioner – the DG should be lauded for this appointment. The Committee would continue monitoring progress moving forward. 

Meeting report

Committee Agenda for the Day

After the Committee secretary took Members through the Committee's agenda for the day, the Committee duly adopted it with no amendments.

Members also observed the birthday of the Chairperson and relayed their well wishes.

Labour Laws Amendment Bill: Presentation by MP Cheryllyn Dudley

Ms Cheryllyn Dudley (ACDP) began by noting that the Labour Laws Amendment Bill sought to provide for parental leave, adoption leave and commissioning parental leave. It also provided for the payment of parental benefits as well as commissioning parental benefits from the Unemployment Insurance Fund (UIF).

This Private Members Bill was drafted in line with African Christian Democratic Party’s (ACDP) policy on family values, the Green Paper on family, calls by COSATU and appeals made to the ACDP by fathers who felt strongly that provision should be made in law for“paternity leave”. Fathers played an important role in the upbringing of their children.

The ACDP was of the opinion that such a provision would facilitate early bonding between fathers and their children and that stronger and healthier families would be one of the many potential benefits for society as a whole. The Department of Social Development’s 2013 White Paper on Families highlighted exploring the possibility of calling for the inclusion of paternity leave in the Basic Conditions of Employment Act 75 of 1997 and strengthening the recognition of parenting and support for parents in the workplace. The White Paper also called for ensuring that labour policies and laws supported gender equity at the workplace and recommend the development and implementation of paternity leave.

Ms Dudley said the Bill, which dealt with parental leave and also provided for adoption and surrogacy leave, was drafted in a manner to harmonise it with current legislation and to ensure the provisions contained in the Bill would pass constitutional muster. It was, however, important to note that the ACDP did not support, nor did it in the past support amendments to the Children’s Act, 2005 which allowed for same-sex couples to adopt children. The Basic Conditions of Employment Act, 1997, provided that an employee may take four months maternity leave in respect of that employee’s child. This maternity leave was paid for by the UIF. It further provided that an employee who was the father of the child may take three days family responsibility leave when that employee’s child was born. The family responsibility leave was paid for by the employer.  The three days family responsibility per annum that fathers were entitled to was quickly exhausted as it also covered illnesses and deaths of family members.  An employee was entitled to adoption benefits from the UIF but there was no legal obligation on the employer to grant adoption leave

Currently, adoption leave was a matter for negotiation between individual employees and employers - a major obstacle in the way of encouraging adoption. Neither the Basic Conditions of Employment Act nor the Unemployment Insurance Act made provision for leave or payment of benefits where an employee had become a parent through a surrogate motherhood agreement referred to in the Children’s Act, 2005. It was important for the well-being of society and children for both parents to play an active role in their lives. 

The Bill was consulted with the UIF Board and the National Economic Development and Labour Council (Nedlac) and there was interaction with COSATU, ACDP constituency and Mr Henri Terblanche who referenced the the Department of Justice 2012-2013 Annual Report which showed the divorce rate was up by 28% from 39 573 to 50 517. This had social and financial implications for families. A 2010 London School of Economics Research found that divorce rates were lower in families where husbands help with housework and childcare. In Sweden, couples were 30% less likely to separate if the father took more than two weeks leave to care for the first child (Olah, 2001). 120 or more days leave taken during the1990s saw the development of closer emotional relationships with children and fathers felt more responsible for childcare after the leave period was over (Chronholm, 2004). In Norway, two in-depth studies of ‘leave sharing couples’ found that when fathers took leave ‘there is a redefinition and redistribution’ of tasks at home (Brandth and Kvande, 1998) and ‘a development of competence’ in childcare (Brandth and Kvande, 2005). Richard Branson's new policy was to offer 12 months paternity leave for employees who had been with Virgin for more than 4 years to receive paternity or maternity leave pay of 100% while newer employees were remunerated proportionally. Netflix in the USA offered unlimited parental leave for the first year of a child’s life with full salary. Netflix said people tend to perform better at work when they are not worrying about home. Virgin allowed staff to take as much time off as they wanted provided they and their team were up to date on projects and and their absence did not in any way damage the business.

From a comparative perspective, the following cases were highlighted:

-Cameroon: 10 days paid paternity leave of which three were compulsory
-Australia: 14 paid days
-Kenya: 14 paid days  

Ms Dudley stated there will be financial implications for the state, in particular the UIF, which will be required to pay the new benefits envisaged in this Bill.

In terms of the parliamentary procedure, the Bill should be dealt with in terms of the procedure established by section 75 of the Constitution, since it contained no provision to which the procedure set out in section 74 or section 76 of the Constitution applied.  It was not necessary to refer this Bill to the National House of Traditional Leaders as it did not contain provisions pertaining to customary law or customs of traditional communities.

Discussion

The Chairperson noted that the Bill would not be discussed now but Members could ask questions of clarity around the presentation should they wish.

Mr M Bagraim (DA) read the documentation and thanked Ms Dudley for bringing the matter to the House. Obviously proper assessment needed to be done as to what the costs would be to the UIF and the state and the companies along with the impact on productivity. Paternity, very different to maternity where one knew who the mother was, was a particular problem. A man may father a child with many women and at what point did one actually cut off maternity leave if the male had four children in one year by four women?  What happened if a male was challenging paternity but claiming paternity leave from the employer? Such issues were quite vexed in SA and he wanted to hear what the research was on this because it was known that men do father kids from many liaisons sometimes with people they have only met for one night. He was not pointing fingers at men but said that it was a reality.  When claiming from the UIF, it seemed popular to claim to have many children - would this be the case with fathers as well?

The Chairperson sought clarity on what the Member was referring to by one night.

Mr Bagraim explained a man may father a child from a one night stand and if so, could he still claim his paternity leave?

Ms F Loliwe (ANC) asked what would happen if the father did not meet the criteria for the UIF to be paid out. In the Swedish practice, was the reference to 484 all the kids one could have or for how many confinements?

Ms Dudley said the legislation was based per annum so a father could not apply more than once a year. It was also safeguarded by the fact that if the woman complained the father was not present and bonding with the child, that father would not qualify for applying for the leave. It was also unlikely that there would be full pay so anyone taking that leave would be dedicated to the purpose because they would lose out in terms of full pay. This made it unlikely that it would be used casually if they had a job paying well.

Mr I Ollis (DA) thought it was clear Ms Dudley put a lot of work into the matter and it was always appreciated when someone came before the Committee well prepared. He was cognisant of the international trends and of the trends of the International Labour Organisation (ILO), which was to move from maternity leave to parental leave and he was accepting of this. There were lots of technical questions to ask of the presentation- as a gay man who hoped to be married in the next two years, although not knowing yet whether he would want to adopt children, was Ms Dudley saying she would support his right to adopt children as a gay man or not? He sought clarity on whether the Bill and the ACDP would support his rights. In terms of the cost, there were some important questions and when developing a Private Members Bill, one of the questions to ask was the economic impact of the Bill thus it was important to understand the economic impact of this Bill. The DA's policy was to support parental and adoption leave on the condition that costs were known and it was affordable. What studies had been done in terms of the UIF and the costs to employers with regard to financial impacts? If there were two parents applying for parental leave, what were the controls in that regard? Were both parents entitled to parental leave simultaneously or was it only one parent?  This was also not just after the birth or adoption but longer term. How would it be controlled if both parents were taking leave for extended periods from the different companies? Were there mechanisms to ensure there was no “double dipping”? In Britain there was a rule on how mothers and fathers of children took that leave because they could not both be off for extended periods. He asked what kind of controls would be in place with this particular Bill to ensure that everyone was not off at the same time for the various periods.

Ms Dudley explained that when she presented to NEDLAC she was obviously aware that business and government would be the most weary – business did not seem to have anything in particular to say but she made it known that a party like the ACDP had extremely limited resources so the kind of research they did would have severe limitations. Hopefully business, and others, would be able to bring forth more in-depth information – this appeal went out to the Department and other parties who had more resources to be able to access the deeper information in terms of financial impacts. It was a trend more and more, particularly amongst skilled labour, to go on the extreme side of parental leave-this was also in the case of companies making huge amounts of money who decided it was good for them to include parental leave so that information was there and hopefully could be accessed by the Committee's researchers for Members to be well informed. The Department would be able to look at possible effects on UIF, easily quantify it and bring it to the Committee. With adopting, not many children could be adopted in the space of a year because the process was very long but everything was relevant to an annual application for the leave. The ACDP did not support adoption in terms of same-sex couples and she did not see this changing in the near future but there was acceptance of the law – the legislation should not become a LGBT issue because it was a socially important issue. The legislation was based on how the law stood today so that there was no discrimination against anyone.  Two parents applying for leave would not really happen because maternity leave was provided for. In the situation of adopting there was a choice between the 10 days and 10 weeks but it was intentionally open so that the couple could decide which would take what time depending perhaps on what kind of job they had, who earned what and how much loss there would be.  This was aligned to provisions set out in the Unemployment Insurance Act and that adoption leave should only be in relation to a child below two years – ideally she would support leave for a child above two years but she had a feeling the Department would not necessarily buy-into that at this particular stage. The rationale for giving ten weeks and not four months was that an adoptive parent need not recover from giving birth.

Ms S Van Schalkwyk (ANC) questioned possible parental leave with regards to stillborn or miscarriage in the third trimester and asked Ms Dudley to elaborate on this if she had taken it into consideration.

Ms Dudley pointed out that section 25 (4) of the Basic Conditions of Employment Act provided for a person who had a miscarriage during the third trimester or who bore a stillborn child, was entitled to six weeks maternity leave which commenced from the miscarriage or stillbirth. Adoptive leave excluded this period to recover after birth, miscarriage or stillbirth.

Mr Ollis asked if the reference to a legal adviser's comments was a parliamentary legal adviser or advice sought from the ACDP itself.

Ms Dudley replied that it was the parliamentary legal adviser.

The Chairperson thanked Ms Dudley for giving further explanation to the presentation. The Committee would take the process forward.

Presentation on Action Plan of the Compensation Fund

Mr Thobile Lamati, Director-General, Department of Labour DG, began the presentation with background information noting that the Compensation Fund (the Fund) had been receiving negative spotlight from media and other key stakeholders due to its service delivery record. In order to restore its reputation and improve the service delivery record, the Fund had developed an Action Plan which will serve as a blue print for the service delivery improvement initiatives. The Action Plan was developed by management of the Fund in June 2015  and implementation started on 01 July 2015. The Action Plan was submitted to the Standing Committee on Public Accounts as resolved during the appearance of the Fund at the Committee in June 2015. The Action Plan was not a replacement for the current Strategic Plan and Annual Performance Plan of the Fund but will enhance the pursuit of the objectives as outlined in these documents.

Mr Lamati explained that in terms of an analysis of the environment, financial management issues included:

-Poor quality of information used for financial reporting

-Inability to produce accurate monthly financial statements

-Inability to carry out some of the financial management functions on the financial system

-Non compliance to Supply Chain Management Policies and regulations resulting in a high number of financial misconduct cases

-High number of Auditor-General of SA (AGSA) audit findings that had not been dealt with over a number of years

-Inadequate capacity in the Chief Directorate: Financial Management

Administration Issues included:

-Poor communication within the Fund

-Oversight committees highly involved in operational management of the Fund.

-Organised structures for management interaction were in existence but were not fully functional

-Consultants engaged with duplicated scope in some cases and no effective skills transfer

-Inadequate ICT Environment thus contributing to poor system deployment

-Poor record management processes

Service Delivery Issues included:

-Inadequate ICT infrastructure resulting in volumes of unpaid medical claims (including legal challenges) and infrequent payment of benefits

-Refusal by medical providers to assist our clients

-Risk of over reliance on ICT Service providers for the claims systems (a licensee of the Fund)

-Lack of integration of the systems of the Fund to allow for seamless reporting and monitoring of performance

-Medical service providers who destabilised the Fund’s systems for its own advantage

-Unregulated/undefined involvement of third parties in the claims process

-Claims data was still in three systems (eClaims , ICM and uMehluko)

-Limited medical professionals for assessment of medical claims

-Inadequate training on the systems of the Fund

Mr Lamati outlined that people issues included:

-Low staff morale

-Unintended consequences of decentralisation

-Relations between staff and management

-Breakdown in the relationship between organised labour and management (lack of trust)

-Silo operations among the different units in the Fund

-Lack of accountability (no consequences)

-Poor change management efforts for all transformation projects (including  system deployment)

-General unhappiness with salary levels in the organisation

-Poor management of personal development plans

Looking at the Action Plan, the main objectives of the Action Plan were to put in place basics that will assist in :

-Improving the service delivery performance in the Fund

-Increasing the efficiency of the Fund‘s overall administration, financial management and operations

-Restoring the reputation of the Fund

Pillars of the Action Plan included:

-Financial Administration: Focus on addressing the root causes of the audit disclaimers and improving the financial management capacity in the Fund

-Consumer focus and service delivery improvement: Focus on improving the customer and stakeholder experience in the Fund

-People Management: Focus on improving the administrative efficiencies of the Fund

-Internal Business process and administration: Focus on improving the service delivery environment of the Fund.

Mr Lamati said the initiatives of the Action Plan were broken down into short, medium and long term goals depending on resource requirements of initiatives. 74% progress was achieved on short term activities while 26% was in progress - 26% of activities/initiatives that were in progress were moved to medium term  due high dependency on some of the projects currently taking place in the Fund.

The Committee was then taken through the initiatives of the plan based on the pillars outlined above and progress made. With the progress on claims processing, the Fund had started to make significant progress with regards to the processing of claims (medical payments, compensation benefits and pension payments). Members were taken through the progress made with medical payments, compensation benefits and pension payments and examples of medical claims deleted. 

In conclusion, ICT remained one the biggest dependencies for the success of the turnaround interventions at the Fund. Delays in this area will contribute negatively to improved performance.  The Fund started a significant number of the identified projects and will continue to monitor implementation to ensure that deadlines set were met.

Discussion

Mr Bagraim noted that there were plans and plans and plans but he wanted to see the results – plans were quite easy to draw up but the proof of the pudding was in the results. He was surprised to hear that for four months, according to the graphs in the presentation, there were no payments made to South Africans just last year and this was obviously reflected in the number of complaints received.  A massive court case was recently reported in the news where a judgement was granted against the Fund – this judgement appeared to have been ignored by the DoL. Perhaps as part of its plans, the Committee should be told what was being done about this because it was shocking to hear a judgement against government was being completely ignored. He publicly praised the new Commissioner for answering complaints sent of late – the Commissioner was also very competent and helpful to callers on a public radio interview two nights ago. He also praised the DG for the appointment of the Commissioner. The main issue though was how paper would be translated to action.

Mr Lamati said that he was very committed that that which was presented to the Committee would be implemented and as noted in the presentation, implementation had already begun for the Action Plan. The Plan was developed in June 2015 and implementation had already commenced. He appreciated the good comments which spurred the officials on to deal with the challenges experienced at the Compensation Fund. In terms of the judgement referred to, it related to an agreement that the previous Commissioner had with a company called Compsol on how the outstanding claims would be processed. A settlement agreement was concluded and this agreement was then taken to Court and made an order of the Court. Subsequently, Compsol approached the High Court and alleged that the Commissioner renegade on the implementation of that settlement agreement. The Compensation Fund defended the matter and the Judge ruled in favour of the Fund. The issue was that the then Commissioner did not file papers opposing the matter. When he enquired why no papers were signed and filed, he was informed that the legal counsel used by the Compensation Fund at the time to represent the Commissioner, submitted unsigned documents which were rejected by the court. He was not at liberty to tell the Committee why the papers were not signed but he had instructed legal services to investigate and find out why the papers were not signed. The matter went back to 2009 and the issues that Compsol raised had since been dealt with in terms of the pace at which the Fund were processing their claims - any claims that Compsol currently had were new. The judgement was in no way a reflection of the Compensation Fund as an institution and court orders were taken seriously. In fact the legal section of the Fund had been beefed up and claims were adjudicated properly and on time. As time went on, it was hoped the legal challenges experienced would decrease as improvements were made with processing claims.

Ms Loliwe asked why the compensation payment stood at 3.5% for 2015/16, according to the presentation – was this because of a decrease of claims or slow pace of payment?

Mr Ollis sought explanation for the months when zero payments were made as reflected in the presentation- he could understand a drop in payments but zero was troubling. Did staff close offices for these months or did the computer system crash? It was shocking to hear of non-payments for months for the entire country. He was pleased with the detailed report which provided real insight on how the turnaround would occur. The emphasis was on monitoring results and this could not be done right now as a lot of matters were in progress. His request was that in six months the Fund returns with a presentation on results to see what achievements were made to know whether the Action Plan was working in practice.  He raised the issue of the Eastern Cape office where people submitted their applications for compensation benefits – there were so many complaints from this office of documents going missing and claims never getting processed and the public was so angry about this. Had the Department or Compensation Fund officials visited this office to do on the ground inspections to talk to people in the queues? His appeal was for the sake of the public.

Mr Lamati responded that challenges relating to the Eastern Cape office were picked up and would be addressed. It had to do with the manner in which decentralisation was implemented and the number of people there to perform the function did not correspond but it was being addressed. Decentralisation was good because it ensured that processing took place closer to where claimants were. Progress reports would be provided to the Committee as and when required.

Mr Vuyo Mafata, Commissioner, Compensation Fund, added that the payment period was at the time when a new claims management system was being implemented and the challenges were widely publicised. The Fund did make up for payments not made during this time. 

Ms Van Schalkwyk asked if there were timelines in place perhaps for when backlogs would be totally eradicated. She also wanted to know the current state of affairs with staff morale and training on the systems which was identified as a challenge.

Mr Lamati indicated there were timelines and it could be made available to Members in the form of a document. On the issue of staff morale, it had improved drastically and the new HR manager was interacting with staff. There was a general degree of enthusiasm given that issues raised by staff were given the necessary attention. 

Mr D America (DA) noted that for a turnaround strategy to be successful it also required a new approach to the way things were done but theory suggested that people were resistant to change. It was comforting to know, from the presentation, that a change management process was underway but the question was whether a new strategy had been developed in order to orientate the staff to implement the new changes required of them and what would be done with those employees who might be resistant to change?  What would be done to bring them along and create buy-in into the new strategy? Regular report back to the Committee would be welcome to judge the success of this turnaround strategy.

Mr Lamati responded that the staff and organised labour were involved in the Action Plan – there were meetings where plans from the Department were shared and labour could raise their concerns. The Fund was a lively organisation largely because the changes were welcomed and staff looked forward to being part of the change. Staff were also brought on board with the enhancement of system challenges experienced. Staff were also aware of the challenges confronting the Fund.  Some staff indicated they would love to be moved to other sections because they thought they could add more value in other areas. Also staff wanted to engage in training and management was addressing this. All in all, there was general cooperation. Ordinarily there were those who did not agree with what was put on the table but they were continually engaged. Ultimately if they did not want to be part of the change sweeping organisation, would have to find another home but the Fund walked with them as the contribution of employees were valued.

The Chairperson noted that the DG referred to Post Traumatic Stress Disorder (PTSD) and sought more information on this panel and who it was consisted of.

An official from the Compensation Fund replied that the Fund was experiencing problems with claims adjudication relating to PTSD and so there were delays in terms of these claims. The specialist panel assisted the Fund with these claims by providing advice and in the development of a policy to adjudicate these PTSD claims. The panel included physiotherapists, psychiatrists, social workers and general practitioners.

The Chairperson noted that the Action Plan would be monitored.

Committee Minutes dated 7 April 2016

Noting that the minutes were circulated to Members beforehand, they were adopted without amendments by Mr Bagraim and seconded by Ms T Tongwane (ANC).

Committee Minutes dated 13 April 2016

Noting that the minutes were circulated to Members beforehand, they were adopted without amendments by Mr Bagraim and seconded by Ms Van Schalkwyk.

The meeting was adjourned.

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