Unemployment Insurance Amendment Bill [B25D-2015]: Department of Labour briefing, with Minister in attendance

NCOP Economic and Business Development

06 September 2016
Chairperson: Mr B Nthebe (ANC, North West)
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Meeting Summary

Minister Mildred Oliphant provided an overview of important aspects of the Bill. The purpose of the Bill was to align the legislation with other pieces of legislation like the Basic Conditions of Employment Act. The amendments would also deal with constitutional issues as well as with compliance with the International Labour Organisation’s standards. Prior to the proposed amendments public servants were not covered by the Unemployment Insurance Fund. The same applied to contract workers. Domestic workers were also now covered when it came to maternity benefits and miscarriages. The amendments improved on the payment of benefits as well as extending the period for the payment of benefits. Contributors were also now required to nominate beneficiaries in the event of their deaths. The amendments also ensured that appeals and such could be done by board members at regional level. This made it simpler for contributors to deal with issues closer to them than to go all the way to head office. The Department of Labour was also asked to look into the possibility of the Fund to cover persons who had resigned from their employment. The Department had agreed that after 18 months after the was promulgated and implemented a review would be done to look into the issue. The matter had been discussed at the National Economic Development and Labour Council.     

The Department of Labour briefed the Committee on the Unemployment Insurance Amendment Bill.
The Committee was provided with background information on the Unemployment Insurance Fund and legislation that went along with it. The intention of the Bill was to improve service delivery by the Fund. The unemployment Insurance Board recommended that the Unemployment Insurance Act No 63 of 2001 be amended. The proposed amendments were needed to address the issue of workers who were presently excluded in the Act and by so doing to conform to the International Labour Organisation’s standards. The amendments would also improve the payment of benefits to contributors and to extend the period within which benefits were payable. In addition, the Bill had to address the exclusion of civil servants in current legislation which was contrary to the constitution.

Clause 1 - extended unemployment insurance benefits to employees who were under contracts of employment contemplated in section 18(2) of the Skills Development Act, 1998, and employees as defined in section 1 of the Public Service Act No 103 of 1994.
Clause 2 - provided for the refinancing of the unemployment insurance beneficiaries to facilitate re-entry into the labour market.
Clause 3 - aligned the Unemployment Insurance Act with the Public Investment Corporation Act, 2004.
Clause 4 - provided for the payment of benefits to contributors who lost part of their income due to reduced working times and to provide for a 66% fixed rate of the payment of maternity benefits.
Clause 5 - section 13(3) of the Act provided that a contributor’s entitlement to benefits accrued at a rate of one day’s benefit for every completed six days of employment as a contributor subject to a maximum of 238 days which was not in line with Schedule 2 as proposed in the Act. In order to address this anomaly, an amendment to section 13 of the Act was proposed in order to provide for 365 days instead of 238 days. The clause also allowed contributors to claim benefits if they had credits regardless of whether or not they claimed within that four-year cycle. The clause also sought to delink maternity benefits from unemployment benefits. 
Clause 6 - proposed the deletion of paragraph (a) in section 14.
Clause 7- increased the period of submitting applications for unemployment benefits. Currently applications had to be submitted within six months and the proposal was to extend the period from between six to twelve months.  
Clause 8 -
provided that a contributor was entitled to illness benefits if the employee had been ill for a minimum of seven days. The Act provided for a minimum period of fourteen days.
Clause 9 - provided for a period when a contributor was entitled to maternity benefits in case of miscarriage.
Clause 10 - changed the period for submitting maternity benefits and allowing the application to be submitted anytime as long as it would be within twelve months from the date of birth of the child instead of the current eight weeks before childbirth.
Clause 11 - extended the period in which the dependants may apply for benefits on behalf of the deceased contributor from six months to eighteen months. Provision was also made allowing contributors to nominate their beneficiaries in cases of death benefits.
Clause 12 - prohibited any agency or a person purporting to be acting on behalf of the applicant to charge any fee against the applicant.
Clause 13 - empowered the Board to appoint regional appeal committees for each region determined by the Minister.
Clause 14 - repealed the enforcement processes which were enforced through the Basic Conditions of Employment Act.
Clause 15 - provided for the functions of the regional appeals committee in the constitution of the Board.
Clause 16 - allowed the Minister to issue regulations pertaining to special dispensations on domestic employers, small business/enterprise regarding submission of information.
Clause 17 - sought to amend Schedule 2 of the Act so as to empower the Minister to vary the Income Replacement Rate and the benefit period through regulations.
Clause 18 - Short title

The Committee was provided with insight into the process followed on the Bill. Needless to say the National Assembly passed the Bill on 19 May 2016 and referred it to the National Council of Provinces. Hence the Bill was before the Committee. 

At the outset of the meeting Members engaged in debate about Members not attending Committee meetings of late. Some of the reasons given for Members’ non-attendance were perhaps that Members had been redeployed after the recent 2016 municipal elections or that Members had party matters to deal with. The point was made that if the Minister of Labour had made an effort to start attending the Committee’s meetings Members should also do so.
 
Minister Oliphant explained that she had been unable to attend Portfolio and Select Committee meetings due to Cabinet meetings on a Tuesday and Wednesday. The same applied to other Ministers not being able to attend meetings in Parliament. Parliament had taken a decision that Members of the Executive would only attend meetings where they were invited by chairpersons of committees.

Members appreciated the attempt by the Department in setting up regional structures to deal with issues like appeals but felt it could mean that too many structures were created and the suggestion was made that the Department should look into the possibility of clustering regional structures. There seemed to be confusion amongst Members as to whether the Bill was an s75 or an s76 bill. After a fair amount of debate the matter was settled that the Bill was in fact an s75 bill. The Department was asked whether there was a salary threshold for Unemployment Insurance Fund beneficiaries. Could a person claim both maternity and Unemployment benefits? Members commended the Department on the fact that the Department was contributing towards housing developments in the North West Province; and what the plan was to do the same in other provinces.  Members were satisfied overall with the public consultation that had taken place on the Bill but nevertheless asked for a report on the consultation that had taken place at National Economic Development and Labour Council. All in all, the Bill was not considered contentious by Members and the proposed amendments made sense. An argument that was gaining ground was that a person who had resigned from his/her job should be entitled to claim UIF benefits. The argument made was that the UIF benefits should be considered deferred wages of the individual.
 

Meeting report

The Minister of Labour, Ms Mildred Oliphant, graced the meeting with her presence.
 
Opening remarks

Mr J Londt (DA, Western Cape) expressed disappointment about Members not showing up for meetings. The Committee in the present meeting did not even have a quorum. In the past the Committee had complained about the Minister of Labour not attending meetings but now the Minister was attending and Members were not. There had to be repercussions for Members who did not attend meetings. He noted that the DA members were for the most part present in the Committee’s meetings and if a quorum were needed they fulfilled their obligation.

Mr S Mthimunye (ANC, Mpumalanga) said the issue of Members of the Committee had been brought up in the Committee’s previous meeting. As the whip of the Committee he had been tasked with identifying which Members were still part of the Committee after the 2016 municipal elections. The Committee needed to ATC who the Members of the Committee were. He unfortunately did not have the information as yet. He pointed out that DA Members were in the Committee to do a job and not to form a quorum.

Mr W Faber (DA, Northern Cape) remarked that it was correct that DA Members were part of the Committee to do its job and not to form a quorum but he wished to on record that ANC members needed to attend the Committee’s meetings. 

The Chairperson encouraged Members not to engage the issue of member’s attendance with the Department of Labour (DOL) about to do a briefing. There were changes in the membership of the Committee. There were also party matters that kept Members occupied and hence Members could not always attend meetings. There was no need for a quorum as the Unemployment Insurance Amendment Bill was not to be adopted at present. The briefing was the start of the process on the Bill for the Committee.

Mr Londt said when it came to controversial issues the Committee needed to deal with it head on.

The Chairperson agreed. 

Remarks by Minister of Labour
Minister Mildred Oliphant proceeded with an overview of important aspects of the Bill. She said she had been unable to attend Portfolio and Select Committee meetings due to Cabinet having meetings on a Tuesday and Wednesday. The same applied to other Ministers not being able to attend meetings. Parliament had taken a decision that Members of the Executive would only attend meetings where they were invited by chairpersons of committees. The purpose of the Bill was to align the legislation with other pieces of legislation like the Basic Conditions of Employment Act. The amendments would also deal with constitutional issues as well as with compliance with the International Labour Organisation’s standards. Prior to the proposed amendments public servants were not covered by the Unemployment Insurance Fund (UIF). The same applied to contract workers. Domestic workers were also now covered when it came to maternity benefits and miscarriages. The amendments improved on the payment of benefits as well as extending the period for the payment of benefits. Contributors were also now required to nominate beneficiaries in the event of their deaths. The amendments also ensured that appeals and such could be done by board members at regional level. This made it simpler for contributors to deal with issues closer to them than to go all the way to head office. The DOL was also asked to look into the possibility of the UIF to cover persons who had resigned from their employment. The DOL had agreed that after 18 months after the Bill had been promulgated and implemented a review would be done to look into the issue. The matter had been discussed at the National Economic Development and Labour Council (NEDLAC).     

The Chairperson asked the Department of Labour to concentrate on the Unemployment Insurance Amendment Bill for the present meeting and to defer the briefing on the Labour Laws Amendment Bill which was a Private Members bill.

Department of Labour (DOL) on the Unemployment Insurance Amendment Bill
The delegation comprised of amongst others Mr Virgil Seafield, Deputy Director General: Labour Policy and Industrial Relations; Mr Thembinkosi Mkalipi, Chief Director: Labour Relations; Mr Mazwiogwani Phathela, Director: Legal; and Mr Teboho Maruping Acting UIF Commissioner.

Mr Mkalipi undertook the briefing.
The Committee was provided with background information on the Unemployment Insurance Fund (UIF) and the legislation that went along with it. The intention of the Bill was to improve service delivery by the UIF. The Unemployment Insurance Board recommended that the Unemployment Insurance Act No 63 of 2001 be amended. The proposed amendments were needed to address the issue of workers who were presently excluded in the Act and by so doing to conform to the International Labour Organisation’s standards. The amendments would also improve the payment of benefits to contributors and to extend the period within which benefits were payable. In addition, the Bill had to address the exclusion of civil servants in current legislation which was contrary to the Constitution.

Clause 1 - extended unemployment insurance benefits to employees who were under contracts of employment contemplated in section 18(2) of the Skills Development Act, 1998, and employees as defined in section 1 of the Public Service Act No 103 of 1994.
Clause 2 - provided for the refinancing of the unemployment insurance beneficiaries to facilitate re-entry into the labour market.
Clause 3 - aligned the Unemployment Insurance Act with the Public Investment Corporation Act, 2004.
Clause 4 - provided for the payment of benefits to contributors who lost part of their income due to reduced working times and to provide for a 66% fixed rate of the payment of maternity benefits.
Clause 5 - section 13(3) of the Act provided that a contributor’s entitlement to benefits accrued at a rate of one day’s benefit for every completed six days of employment as a contributor subject to a maximum of 238 days which was not in line with Schedule 2 as proposed in the Act. In order to address this anomaly, an amendment to section 13 of the Act was proposed in order to provide for 365 days instead of 238 days. The clause also allowed contributors to claim benefits if they had credits regardless of whether or not they claimed within that four-year cycle. The clause also sought to delink maternity benefits from unemployment benefits.  
Clause 6 - proposed the deletion of paragraph (a) in section 14.
Clause 7- increased the period of submitting applications for unemployment benefits. Currently applications had to be submitted within six months and the proposal was to extend the period from between six to twelve months.  
Clause 8 -
provided that a contributor was entitled to illness benefits if the employee had been ill for a minimum of seven days. The Act provided for a minimum period of fourteen days.
Clause 9 - provided for a period when a contributor was entitled to maternity benefits in case of miscarriage.
Clause 10 - changed the period for submitting maternity benefits and allowing the application to be submitted anytime as long as it would be within twelve months from the date of the birth of the child instead of the current eight weeks before childbirth.
Clause 11 - extended the period in which the dependants may apply for benefits on behalf of the deceased contributor from six months to eighteen months. Provision was also made allowing contributors to nominate their beneficiaries in cases of death benefits.
Clause 12 - prohibited any agency or a person purporting to be acting on behalf of the applicant to charge any fee against the applicant.
Clause 13 - empowered the Board to appoint regional appeal committees for each region determined by the Minister.
Clause 14 - repealed the enforcement processes which were enforced through the Basic Conditions of Employment Act.
Clause 15 - provided for the functions of the regional appeals committee in the constitution of the Board.
Clause 16 - allowed the Minister to issue regulations pertaining to special dispensations on domestic employers, small business/enterprise regarding submission of information.
Clause 17 - sought to amend Schedule 2 of the Act so as to empower the Minister to vary the Income Replacement Rate and the benefit period through regulations.
Clause 18 - Short title
The Committee was provided with insight into the process followed on the Bill. Needless to say the National Assembly passed the Bill on 19 May 2016 and referred it to the National Council of Provinces. Hence the Bill was before the Committee.  

Discussion
Mr Mthimunye said when a bill had been before the National Assembly (NA) it was often stated that the bill had been before Parliament. He clarified that parliament comprised of both the National Assembly and the National Council of Provinces (NCOP). He understood the reasoning behind the DOL having regional structures but perhaps a mechanism could be put in place to cluster regional structures. Often times many structures could end up being superfluous. He asked the Department to look into the issue of clustering. He asked that the Committee be provided with a report of the consultation process that had taken place at NEDLAC level. He said that the Bill being an s76 bill would be submitted to provinces.

Mr Seafield noted that the regional structures would have regional appeal committees. The intention was to place the process where it was required. The idea was to make the process more accessible to persons. Clustering of structures could have the implication of making it difficult for some in that they would have to travel far to get to the clustered structure.

Mr Phathela explained that regions were divided according to provinces. So if there were nine provinces then there would be nine regions. The Minister would appoint members of committees at regional level after consultation with the NEDLAC. The NEDLAC would come up with nominations.

Mr Mkalipi said that the NEDLAC Report would be provided to the Committee.

Mr Londt said public hearings on the Bill had already take place. He begged to differ with Mr Mthimunye and said that the Bill was an s75 bill. He asked how the payment holiday issue would be brought in. Would it be left in the hands of the Minister? The DA was satisfied with the consultation that had taken place at NA level.

Mr Mkalipi assured the Committee that the NEDLAC Report would be provided. He said the
Act did not speak to payment holidays. He noted that payment holidays were raised when National Treasury introduced the youth subsidy. It was however not provided for in legislation.

Minister Oliphant said the issue of the leave holiday/proposal was received by National Treasury. The matter still needed to be discussed. The issue had also found its way to NEDLAC but had not found support.   

The Chairperson confirmed that the Bill was an s75 bill.

Minister Oliphant said that a Minister on tabling legislation in Parliament had to submit it to both Houses. Parliament itself would decide which House would deal with the legislation. The State Law Adviser’s Office had said the Bill could be tagged a section 75 or section 76 bill. Parliament had a joint tagging committee to make a decision. Parliament decided that the Bill was a section 75 Bill.

Mr E Makue (ANC, Gauteng) asked whether there was a salary threshold for UIF beneficiaries. Could a person claim both maternity and UIF benefits?    

Minister Oliphant said the threshold was set at R178 000 but the threshold had been set way back in 2012 and needed to be reviewed.

Mr Mkalipi, on maternity and UIF benefits, said a person could not have both. If a person was dismissed before going on maternity leave, then the person was entitled to UIF benefits and not maternity leave benefits. He explained that it all depended on the sequence of things and whatever came first.  

Mr Phathela added that if maternity benefits were paid out and a person was dismissed later and credit was exhausted then no UIF was payable. If, however there were credits still available then UIF benefits could be claimed.  He explained that after the Bill was published it went out for public comment. It was also referred to NEDLAC. National Assembly had also called for public comment.

Mr Makue responded that Clause 5(b) (b) of the Bill stated, “the payment of maternity benefits may not affect the payment of unemployment benefits.” He felt the explanation given by the DOL said that the payment of one benefit did depend upon the payment of the other.

Mr Maruping said that where the person applied for maternity benefits the person had to still be employed. Where a woman was employed and she lost her job she could apply for both. So say a woman applied for maternity benefits and she lost her job then she was entitled to apply for UIF.

Mr Mkalipi said that in the law presently if one applied for maternity benefits then it affected your credits. Maternity benefits should not affect one’s credits. Workers were not allowed to claim twice or at the same time.

Mr Makue felt that perhaps the Bill should state that where a claim was made it should not affect credits. He agreed that persons could not claim for both. As it stood in Clause 5(b) (b) there was perhaps a need for an amendment.  

Mr Faber, on the tagging of a bill, said the joint tagging committee had to decide within three days on the tagging. Thereafter it needed to be ATC’d. The Bill was a section 75 bill and was thus national. The joint tagging should be done already. It was a national competency.

Mr Mthimunye asked whether the Bill was a section 75 or section 76 bill.

The Chairperson noted that the tagging of the Bill would not be changed. It was a section 75 Bill.

Minister Oliphant confirmed that the Bill was tagged a section 75 bill. Before 2014 documents had stated that the Bill was a section 76 bill. Parliamentary Law Advisers and the State Law Advisers had debated the matter and decided it was a section 75 bill. On maternity benefits, it could only be claimed if the person had a miscarriage but not if the person had chosen to terminate the pregnancy voluntarily.

Ms M Dikgale (ANC, Limpopo) appreciated that the UIF was contributing to housing developments in the North West Province.  She asked what plan was in place to extend it to other provinces.

Mr Maruping, on the project in the North West, said the Royal Bafokeng had approached the Presidential Infrastructure Committee (PIC). There would be other projects that the PIC would drive.

Minister Oliphant stated that the Royal Bafokeng had approached the PIC to invest in the provision of housing of mineworkers. A Memorandum of Understanding (MOU) had been signed.

Ms Dikgale responded that on housing most mines did not assist. Was it the intention of the DOL to sell the idea to the mining sector?

The Chairperson was glad that the amendments had changed the application period requirement for maternity benefits. For many years there had been issues regarding section 18(1) and 18(2) of the Act. The extension of the claim period for UIF benefits was also supported. The project in the North West Province on housing developments with the Royal Bafokeng was something that could be sold to other areas. The idea was to have portable skills for people in order for them to be sustainable. Arguments had been made that UIF benefits should be considered to be the individual’s deferred wages. It was felt that even when a person had resigned the person should be entitled to UIF benefits as well. This argument was gaining dominance. It was something that could be considered in the future. The proposed amendments did make sense. Public participation would take place. The Bill was not considered a contentious bill. The provision of maternity benefits to vulnerable sectors was a good thing.

Minister Oliphant reacted that on the training of workers there was the National Skills Fund. The Fund had been transferred to the Department of Higher Education and Training. She suggested that the Committee could request a briefing. On the matter of the UIF benefits applying to persons who had resigned, the DOL was willing to engage with organised labour over the issue.  The issue was being discussed by organised labour.

Mr Seafield reiterated that the NEDLAC Report would be provided to the Committee. The DOL had also done an actual assessment of the Bill which had been presented to the Portfolio Committee on Labour. It could be presented to the Committee as well.

Minister Oliphant said issue of the PIC investing in the housing of workers had been sold to mining companies at the recent mining lekgotla. The PIC had been very amenable to the idea.

The Chairperson asked the Minister to look into what Impala Platinum had done on mining housing.

Committee Minutes
Minutes dated 16 August 2016 were adopted as amended.

The meeting was adjourned.
 

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