Unemployment Insurance Amendment Bill [B25D-2015]: consideration of written submissions & public hearings planning

NCOP Economic and Business Development

25 October 2016
Chairperson: Mr M Rayi (ANC, Eastern Cape)
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Meeting Summary

Documents handed out:
ABSA Bank Submission
Thamsanqua Remegius Dlame Submission [awaited]

Two written submissions had been received on the Unemployment Insurance Bill. The first was from an individual by the name of Thamsanqua Remegius Dlame. The Committee however agreed that the submission was more of a petition and had nothing to do with the Bill. The Committee agreed that the submission by Mr Dlame would be forwarded to the Select Committee on Petitions. The Department of Labour was asked to speak to the points made in the Absa Bank submission. The submission spoke mainly to the amendment of section 5 of the Unemployment Insurance Act. The intention behind the amendment of section 5 was to bring the Department of Labour in line with section 48 of the Unemployment Insurance Act. The first point by Absa Bank was on the definition of “contributor” and that the definition should be included in the Bill. The definition of “contributor” was in the Unemployment Insurance Fund Act. The definition of a “contributor” was someone who was a natural person who made contributions. A “contributor” could not be a company. There was no need to include the definition in the Bill as it was in the Unemployment Insurance Fund Act. The second point raised in the Absa Bank submission was that “retention of contributions” needed to be explained. The explanation was given that section 48 of the Unemployment Insurance Act allowed for the Board to advise the Minister of Labour on the creation of schemes to alleviate unemployment. The Bill enabled the Minister of Labour to create unemployment schemes for domestic workers. It was an enabling provision to the Minister of Labour. The third point made was about learners participating in learnerships not having tax references. It was pointed out that even domestic workers did not have tax references. For that matter many types of workers did not have tax references. It depended on the wage level of workers. It was explained that everybody that was employed was protected even if the person did not have a tax reference. Even illegal employees were protected. The issue that Absa Bank had was that the Bill did not speak to interns and apprentices. If a person worked more than 24 hours then the person was protected by unemployed insurance. There were exclusions that were set out in section 82(2) of the Skills Development Act. The Bill however did away with any exclusions as long as the person worked more than 24 hours. There was also a point made in the submission about Skills, Education, Training Authorities (SETAs) but it was considered to be an operational issue that had nothing to do with the Bill. Another point was about learners who did not complete learnerships losing their benefits. It also said that learners participating on learnerships who went on maternity leave would not return to complete learnerships due to the maternity benefits that they received. The Department of Labour explained that it all depended on the contributions made by the learners and the credits that they accumulated. If no contributions were made due to not working then no credits was built up. This meant that they would not get benefits. If a person was dismissed then the person was entitled to benefits but if the person resigned then the person was not entitled to benefits. Absa Bank also raised an issue about persons participating on learnerships who went on maternity leave not being sufficiently covered. Such individuals were in fact covered. The assertion by Absa Bank was not backed up by evidence. In closing the Department of Labour noted that some of the issues raised by Absa Bank were already covered by the Bill and the rest were misunderstandings on the provisions of the Bill.

Members briefly discussed the issue of tax references and its possible inclusion in the Bill and whether all persons falling within or outside the taxable income range should be registered with the South African Revenue Services (SARS). The Department of Labour agreed that persons should be registered with SARS but that the reality was that there were categories of employees not registered ie foreigners and domestic workers. The crux of the matter was that all persons whether registered or not should be protected and should be entitled to claim unemployment benefits. The Committee was satisfied that the submission by Absa Bank would not necessitate substantive changes to the Bill. Members pondered the decision on whether to allow Absa Bank to make an oral presentation to the Committee in line with holding public hearings on the Bill or to simply respond to the submission made in writing. The Parliamentary Law Adviser’s Office offered some guidance that the Bill was a section 75 bill. Even though public submissions could be invited there was no need to hold public hearings. A distinction needed to be made between public participation and public hearings. The National Council of Provinces had to do public participation but was not required to do public hearings. However in light of constitutional court cases the suggestion was made that the Committee rather invite Absa Bank to make an oral presentation. The Committee agreed to respond in writing to Absa Bank’s submission and would also give Absa Bank the option of presenting its submission on 1 November 2016 if they so wished.

The Committee adopted outstanding minutes and postponed the consideration of its Oversight Report on its oversight visit to Johannesburg and Pretoria until the following day 26 October 2016. 

Meeting report

Consideration of written submissions on the Unemployment Insurance Bill [B25D-2015]
The Chairperson noted that two submissions had been received on the Bill. It had been circulated to members. There was one from Absa Bank and the second from a private individual by the name of Mr Thamsanqua Remegius Dlame.

Both Mr E Makue (ANC, Gauteng) and Mr W Faber (DA, Northern Cape) both said that the submission from Mr Dlame had nothing to do with the Bill.

The Chairperson agreed with the observations by the members and said that it looked more like a petition. He felt it best that the Committee forward it to the Select Committee on Petitions.

The Committee agreed.

The Chairperson said that the Committee had to decide on whether to allow Absa Bank to make an oral presentation. He asked the Department of Labour to speak to the points made in the Absa Bank submission.

Ms Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour, said that the submission spoke mainly to the amendment of section 5 of the Unemployment Insurance Act. The first point was about the definition of “contributor” and that this definition should be included in the Bill. The definition was already included in the Levy Act which was legislation of the South African Revenue Service (SARS). The definition of a “contributor” was someone who was a natural person who made contributions. A “contributor” could not be a company. There was no need to include the definition in the Bill as it was already covered in other legislation.

The second point raised in the Absa Bank submission was that “retention of contributions” needed to be explained. Section 48 of the Unemployment Insurance Act allowed for the Board to advise the Minister of Labour on the creation of schemes to alleviate unemployment. The Bill enabled the Minister of Labour to create unemployment schemes for domestic workers. It was an enabling provision to the Minister of Labour.

The third point made was about learners participating in learnerships not having tax references. He pointed out that even domestic workers did not have tax references. For that matter many types of workers did not have tax references. It depended on the wage level of workers. Everyone who was employed was protected even if the person did not have a tax reference. Even illegal employees were protected. The issue that Absa Bank had was that the Bill did not speak to interns and apprentices. If a person worked more than 24 hours then the person was protected by unemployed insurance. There were exclusions that were set out in section 82(2) of the Skills Development Act. The Bill however did away with any exclusions as long as the person worked more than 24hours a week.

There was also a point made in the submission about SETAs but he felt it to be an operational issue that had nothing to do with the Bill. Another point was about learners who did not complete learnerships losing their benefits.

Absa Bank also raised an issue about persons participating in learnerships who went on maternity leave not being sufficiently covered. He however said that such individuals were in fact covered. The assertion by Absa Bank was not backed up by evidence.

In closing he said that some of the issues raised by Absa Bank were already covered by the Bill and the rest were where there were misunderstandings on the provisions of the Bill.

The Chairperson said that the Committee still had to decide whether Absa Bank would be allowed to make an oral presentation to the Committee.

Mr Makue stated that he looked at the submission from a legislator’s point of view and not from the Department of Labour’s point of view. He referred to the term “contributor” and asked if the Unemployment Insurance Act stipulated that the Bill be read in conjunction with other legislation. If it did not then it was a problem. He was in agreement that the Bill should be read in conjunction with the Levy’s Act. Was there perhaps a need to include the definition of a “contributor” in the Bill? On the amendments to section 5, he agreed that it related to employees and not employers. On the tax reference issue, he said that the Committee needed to be proactive on legislation. A great deal of work was being done on skills development which could mean that there were more people who became artisans and apprentices. This could lead to a situation where there were many people entitled to benefits but who simply were not registered for tax purposes. Legislation was clear that employed persons had to register with the SARS. He was not entirely convinced that Mr Mkalipi’s argument on tax reference held up. He agreed that the SETA issue was an operational one. He pointed out that on maternity benefits the fact was that employers did not give women appropriate benefits. He said that Mr Mkalipi had responded that learners going on maternity leave were covered. For the most part the Committee agreed with the responses given by the Department of Labour on the Absa Bank submission. He suggested that either the Committee invite Absa Bank to do an oral presentation or that the Committee respond to Absa Bank in writing.

Mr Faber agreed with some of the points made by Mr Makue. On the matter of registration for tax purposes he said that where a foreigner applied for a work permit he was required to register with the SARS. He noted that even if a person did not fall within the taxable bracket the person had to register with the SARS even if no tax was being paid.

Mr B Nthebe (ANC, North West) noted that what Mr Mkalipi was saying was that there were people who were working but were not registered for tax. Practically speaking there were people who were employed legally or illegally who were covered to receive unemployment insurance benefits. The definition of “contributor” was adequately covered as the Bill had to be read in conjunction with other legislation. On the matter of interns and apprenticeships he noted that the Bill intended to remove exclusions. He was not sure what it was that Absa Bank was uncomfortable with. Some of the issues raised by Absa Bank could be resolved outside of legislation. SETAs were one such issue. He did not agree with Absa Bank’s statement that learners who went on maternity leave would not return to complete learnerships due to maternity benefits received.  People would not stay perpetually pregnant. The truth of the matter was that people participating in learnerships often were on the lookout for better opportunities.

Mr Mazwrogwani Phathela, Director: Legal, Department of Labour, corrected what Mr Mkalipi had stated on where the term “contributor” was defined. It was not defined in the Levy Act but rather in the Unemployment Insurance Fund Act. On the amendment of section 5, he said that the intention was to bring the Department of Labour in line with section 48 of the Unemployment Insurance Act.  The idea was to bring in schemes so that people did not lose their jobs. The Department of Labour trained employees of companies who were in distress.  

Dr Y Vawda (EFF) noted that when persons seeking employment came into SA they fell into two categories. The first was in employment that was taxable and the second was in employment not taxable. There were foreigners from SA’s neighbouring countries who were employed as doctors and teachers for instance who did pay tax. He did not understand why workers like agricultural workers had to be registered for tax when they were not required to pay tax.

Mr Mkalipi on tax references said that the Department of Labour did not condone people who did not register for tax. He said that if tax references were included in the Bill then there would be unintended consequences. If the Bill introduced tax references then there would be a number of employees who would be denied income when they were unemployed. It must be made easy for people to claim unemployment insurance benefits. On the issue of learners who went on maternity leave not returning to complete learnerships he felt that this assertion by Absa was not supported by evidence.

The Chairperson said that the non taxable provisions did not only apply to foreigners coming into SA but also to domestic workers. He asked the Parliamentary Law Adviser’s Office what its take on the Absa Bank submission was.

Ms Noluthando Mpikashe, Parliamentary Legal Advisor, said that she had considered the submission made by Absa Bank and that most of the issues raised were policy issues. She agreed with the responses given by the Department of Labour.
 
The Chairperson said that the Committee still had to decide whether Absa Bank should be allowed to make a public hearing or if the Committee should send it a response in writing.

Mr S Mthimunye (ANC, Mpumalanga) asked whether the Committee was on track with its Public Participation Framework.

Ms Mpikashe said that the Bill was a section 75 bill. Even though public submissions could be invited there was no need to hold public hearings. However in light of constitutional court cases she suggested that the Committee rather invite Absa Bank to make an oral presentation.

Mr Nthebe stated that the Committee was not compelled to do public participation. It was due to the constitutional court cases that it was recommended to do so. The options were either to invite Absa Bank to make an oral submission or to extend public participation.

The Chairperson suggested that perhaps the Committee could respond in writing to Absa Bank stating that the Committee felt that the issues it raised were policy issues and that the Committee would not be making substantive amendments to the Bill. He was concerned that if the public participation process was opened up again then the Bill could not be dealt with timeously by Parliament. This could mean that the Bill would only be concluded in March 2017.

Mr M Khawula (IFP, KwaZulu-Natal) responded that the Committee should ask what the intention of doing public participation was. Was it to meet legal requirements or was it to get inputs from the public?

The Chairperson agreed that it was not the Committee’s intention to only meet legal requirements. The Bill was a section 75 bill and had already been to the provinces. The National Assembly had already done good public participation.

Ms Mpikashe noted that a distinction needed to be made between public participation and public hearings. The National Council of Provinces had to do public participation but was not required to do public hearings.

Mr Makue pointed out that the Bill itself stated that consultations had taken place. He asked that the Committee be provided with the report on the consultations that had taken place at National Economic Development and Labour Council (NEDLAC).

The Chairperson stated the Committee still had to decide on whether to invite Absa to make an oral presentation or whether just to respond in writing.

Mr Makue responded that the Parliamentary Law Adviser’s Office had said that the issues raised by Absa Bank were covered. Hence the Committee could just respond in writing. 

Ms M Dikgale (ANC, Limpopo) felt that it was perhaps best to invite Absa Bank to present. She was concerned about the issue of maternity leave of learners.

Mr Mthimunye said that the communication to Absa Bank could state that if they so wished they were welcome to make a presentation to the Committee.

The Chairperson noted that the Committee would respond in writing to Absa Bank’s submission and would also give them the option of presenting if they so wished on 1 November 2016.

The Committee agreed.

Committee Minutes
Minutes dated the 11 October 2016 was adopted as amended.  

Oversight Report of the Committee on its visit to Johannesburg and Pretoria, 29 August 2016 – 2 September 2016
The Chairperson stated that the Report was incomplete as more information had to be added to it.

Mr Makue said that he had suggested grammatical and technical changes to the Report. 

The Chairperson suggested that the Report be quality checked and cleaned. Members could adopt the Report the following day 26 October 2016 when the Select Committee on Trade and International Relations had a sitting.

The Committee agreed.

Mr Mthimunye commented that Report looked more like an oversight minute than an oversight report. The Report should set out the visit’s purpose, impact of the visit and also what the objectives of relevant department were. He did understand that Committee Staff followed a certain format. 

The Chairperson said that it was an issue that would be addressed. He suggested that for each day of the oversight visit Committee Staff had to draft a report for the day. Once the oversight was over all the reports on the various days of oversight could be compiled.

The meeting was adjourned.

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