Labour Laws Amendment Bill costing: Department of Labour briefing; Committee reports adopted

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Employment and Labour

09 November 2016
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Department of Labour (DoL) briefed the Committee further on the costing of the Labour Laws Amendment Bill, in answer to the Committee's concerns as expressed at a previous meeting. Three scenarios in regard to the amendments had been proposed. The Nedlac social partners agreed to consider further amendments to the Unemployment Insurance Act, 18 months after the promulgation of the current Bill. The Nedlac partners further proposed that further amendments should be tabled for consideration, even though the current Bill had not yet been promulgated. Therefore, there were now proposals for amendments to that Bill to include short time employment, fixed term and seasonal employment, as well as documented asylum-seekers. Parental benefits or paternity leave had been introduced by the Private Member’s Bill, which was currently before Parliament. The position of informally or self-employed people was also considered. Another point still under consideration was whether the UIF should cover those who resigned.

The DoL summarised the main changes proposed by the various stages. The 2013 Amendment Bill proposed the following changes:

Part 1: Extension of benefits to 365 days with a flat rate of 20% after 238 days, and adjustment of benefit accrual at rate of one day for every five days worked.

Part 2: Maternity and illness benefit changes.

Part 3: Unemployment benefit cycle changes.

Part 4: Extension of Death claims submission period from six to 18 months.

Part 5: Extension of unemployment claims submission period to six to 12 months.

Part 7: Inclusion of persons on learnership contacts and migrant workers.

The 2015 Amendment Bill had proposed the following changes:

Part 8: Payment of benefits in the case of reduced salary.

Part 9: Extension of maternity claims submission period from eight weeks prior to birth to 12 months after birth.

The NEDLAC latest proposals were now:

Part 10: Inclusion of persons employed in the informal sector.

Part 11: Payment of 12 days of paternity leave to fathers.

Part 12: Payment of benefits to persons who had resigned.

This presentation took into consideration all the proposed changes, which had a financial impact on the Unemployment Insurance Fund (UIF). Graphs were presented, showing an evaluation report of each of these 12 proposals, and a projection of the solvency ratios over the next ten years, based on comparisons of the position with and without the resignation benefit, proposals in the Amendment Bill and Nedlac, and a 60% salary resignation benefit. UIF would be able, according to the actuarial report, to cover all amendments that were proposed currently. It would be spending more than the 2% contribution if everything currently in the Bill were to be implemented along with the new proposals, with benefits to be paid out of investments. The extension of benefits to cover resignations would be the more expensive proposal. DoL recommended that the proposed amendments might be considered and proposals ranked and rationalised for implementation. Implementation should be staggered due to the financial implications, and the identity proposal could be considered at a later stage.

Members welcomed the presentation and remarked that it made more sense than the previous one. They agreed with all recommendations except the last one in relation to identity proposal, which would require further consideration. Members sought clarity on whether an unemployed father could be paid UIF benefits if his wife died when giving birth. They also exchanged ideas on whether UIF should be payable on resignation, on the position in regard to self-employment with comparisons also to other countries  and on employees in informal employment. They also queried who would receive the benefits around adoption in a LGBT couple.

Members adopted the Committee's reports on the public hearings on the Labour Laws Amendment Bill, the oversight visit to the Northern Cape from 14 to 16 September 2016, and the DoL presentation of its First Quarter 2016/17 report.
 

Meeting report

Labour Laws Amendment Bill further costing report: Department of Labour briefing
Mr Thembinkosa Mkalipi, Chief Director: Labour Market Policy, Department of Labour, took the Committee through the presentation on the costing of the Labour Laws Amendment Bill (the Bill). He noted that the Nedlac partners had agreed to consider further amendments to the Unemployment Insurance Act (UIF Act), eighteen months after the promulgation of the current Bill. The Nedlac partners further proposed that further amendments could be tabled for consideration now, even though the current Bill was not promulgated. It was proposed to make amendments in relation to short time employment, fixed term and seasonal employment, and documented asylum-seekers. The parental benefits and paternity leave were covered in a Private Member’s Bill which was before Parliament. Amendments to deal with informally-employed or self-employed people, as well as resignations, were new proposals which were still under consideration.

Mr Mkalipi noted that the 2013 Amendment Bill proposed the following changes:

Part 1: Extension of benefits to 365 days with a flat rate of 20% after 238 days, and adjustment of benefit accrual at the rate of one day for every five days worked.

Part 2: Maternity and illness benefit changes.

Part 3: Unemployment benefit cycle changes.

Part 4: Extension of Death claims submission period from 6 to 18 months.

Part 5: Extension of unemployment claims submission period to 6 to 12 months.

Part 7: Inclusion of persons on learnership contacts and migrant workers.

Mr Mkalipi then noted that the 2015 Amendment Bill proposed the following changes:

Part 8: Payment of benefits in the case of reduced salary.

Part 9: Extension of maternity claims submission period from eight weeks prior to birth to 12 months after birth.

Mr Mkalipi noted that the Nedlac partners had then proposed the following changes:

Part 10: Inclusion of persons employed in the informal sector.

Part 11: Payment of 12 days of paternity leave to fathers.

Part 12: Payment of benefits to persons who had resigned.

Mr Mkalipi noted that the current presentation was prepared taking into consideration the proposed changes which had a financial impact on the Unemployment Insurance Fund (UIF). He took the Committee through graphs showing an evaluation report on the matters he had just outlined, in Parts 1 to 12. He also tabled a projection of the solvency ratio, over the next ten years, for the base financial projection, excluding resignation benefit, Amendment Bill and Nedlac proposals, and the 60% salary resignation benefit. (see attached slides for full details).

Dealing firstly with the evaluation outcome, Mr Mkalipi noted that the actuarial report indicated that the UIF was in a position to cover all amendments in the current Bill. The UIF would spend more than the 2% of contribution if the Bill and new proposed amendments were all implemented (the benefits would be paid from investments). Resignation appeared to be the more expensive proposal.

He concluded that the proposed amendments might well be considered, with the various proposals to be ranked and rationalised for implementation. Implementation should, however, be staggered due to the financial implications. An identity proposal could be considered at a later stage.
 

Discussion
The Chairperson welcomed the presentation and noted that the previous presentation was made prematurely. The content of this presentation was more relevant. She agreed with all recommendations, except the last recommendation of identity proposal being considered at a later stage and said that this point also needed to be considered specifically.

Mr B Mkongi (ANC) agreed that the latest presentation made more sense than the previous one. He said that both the Committee and Department of Labour (DoL or the Department) should consider addressing all concerns to avoid future litigation. Comprehensive research should be done in order to address all concerns in the Bill. He was wondering why the DoL did not engage with the Department of Small Business Development. However, the DoL explained that the DSBD dealt with people who were self-employed. There was no relationship whatsoever between the UIF and self-employed people.

Mr I Ollis (DA) sought clarity what would happen if a mother died after giving birth, and who might then get adoption leave; he also wanted more information on leave for a LGBT couple, and what “the commissioning parent” meant.

Ms F Loliwe (ANC) welcomed the presentation but said that the previous presentation had not focused on the content of the Bill. She would like clarity on certain of the financial implications.

Mr M Bagraim (DA) sought clarity on the theoretical position of the self-employed person, in the employment context, and what the UIF was proposing exactly. He asked why self-employed persons should be covered by the UIF if they could no longer employed themselves.

Ms Desiree Swartz, Legal Advisor, Parliament, said that the law was not clear on the position of a woman who died after giving birth. If she was married, her husband could apply for benefits.

She noted that the term “commissioning parent” was defined in the Children's Act.

In relation to the LGBT partnership, she noted that the person giving birth was the one who could take maternity leave. She was of the view that the person who applied for adoption of child would be the one to take leave. 

Mr Mkongi reiterated that labour bills should be designed to minimise future litigation and sought clarity on the reason why the UIF was not paying for unemployed woman who gave birth.

Mr Mkalipi responded that a mother who was pregnant could not be allowed to work for the month prior to giving birth, and so any woman who was about to give birth should apply for UIF one month before maternity leave. They could also still apply for the UIF three months after giving birth. If a woman had applied, then died when giving birth, the application would be finalised, and the benefit would become part of the assets of the deceased, divided amongst the surviving heirs. In principle a father could not adopt his own children, and if the father was not employed, it meant that the family lost a breadwinner, but the UIF could not compensate for this particular loss of income. The legal question would be why the UIF could give a benefit to an unemployed woman who gave birth but could not pay for an unemployed man whose wife had died whilst giving birth. He clarified that in relation to a LGBT couple, the court would determine who would receive benefits, but usually a certificate was granted stating who had adopted, In relation to self-employment, he gave an example of India, which had many self-employed people who did not benefit from anything equivalent to UIF but it was an international trend to consider those employed in the informal sector as employees.

Mr T Rawula (EFF) sought clarity by asking what the types of reductions were. What was the prerequisite for an application for UIF? He asked whether a person who was employed to work in a spaza shop could qualify for UIF. He further asked whether people who resigned could be paid by the UIF.

Mr Mkalipi responded that spaza shops employees were covered; the law was clear that any person who worked more than 24 hours a month must be registered for UIF. That included domestic workers. The problem was inspection of these sectors, where the responsibility to inspect lay with the DoL, and inspectors should be ensuring that workers were able to enjoy their rights, including the minimum wage. In relation to resignations, he indicated that the reason no UIF was payable was purely the issue of costs; a person who resigned should move on to being employed elsewhere, and was not actually losing their job in the same sense as other job losses.

Mr Bagraim stated that the country was faced by the challenge of people who resigned from work, and if the UIF were to pay them this would only encourage this. Many people who had enormous debts were cheating the UIF stating that they were unemployed when they had in fact resigned.

Mr Rawula said that the issue of resignation could not be approached with the one-size-fits-all model; people may not deliberately choose to resign, and he cited the example of constructive dismissal.

The Chairperson stated that those who faced with constructive dismissal had to approach the CCMA for relief.

Ms Loliwe sought clarity on whether Mr Rawula was proposing a new amendment which would give rise to financial implications.

Ms S van Schalkwyk (ANC) stated that Members should focus on the Bill in its current form, not propose new amendments.

Mr M Plouamma (Agang) welcomed the presentation and agreed that Members should deliberate on the Bill in its current form.

Mr Rawula responded that he was not making a new proposal but was making a point to substantiate the report.

Mr Mkongi said that issues of possible contestation could be discussed now, and he made the point that some of the points could be covered by the social security system.

Mr Plouamma stated that Mr Mkongi’s proposal would burden the current social system.

Mr Mkalipi stated that the Labour Laws Amendment Bills were proposed in order to protect the current and future generations.

Members adopted the Report on the Labour Laws Amendment Bill

Committee minutes
The minutes of 22 November 2016 were considered and adopted

Committee Draft Reports
The Draft Report of the Portfolio Committee on Labour on the public hearings on the Labour Laws Amendment Bill [PMB 5-2015] dated 9 November 2016 was considered and adopted.

The Report of the Portfolio Committee on Labour on an Oversight Visit to the Northern Cape from 14 to 16 September 2016 was considered and adopted.

The Portfolio Committee report on the Department of Labour's First Quarterly Report on its strategic objectives for 2016/17, dated 9 November 2016, was considered and adopted.

The meeting was adjourned.
 

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