Labour Laws Amendment Bill: deliberations

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Employment and Labour

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

Relevant Document
Constitution of the Republic of South Africa, 1996
Unemployment Insurance Act 63 of 2001

The Chairperson said that this meeting had been convened to consider points raised in the public hearings on the Labour Laws Amendment Bill (the Bill), and in light of some of the views expressed a the hearings, she did not think that it would be possible for the Committee to proceed, as anticipated originally, with the clause by clause deliberations. Members asked to be briefed by the Parliamentary Legal Advisers on the challenges, and the Legal Adviser noted that the main problem and concern seemed to be that the Bill, in its present form, was discriminatory in that different percentages of benefits were being proposed for different categories of maternal/paternal benefits. This had become clear from an actuarial report from the Unemployment Insurance Fund (UIF) that was based on certain assumptions around a 66% benefit, whereas it was clear that for others the benefit was calculated at 60%. Another bill had been tabled some time ago by the Department of Labour that had increased maternity benefits to 60%, prior to the current Bill being drafted. Claims for parental, adoption or commissioning parental benefits from the UIF would be paid at 60%. However, it was assumed that paternal benefits of 12 days, mostly paid by the fathers' companies, would be paid at 66%, as would adoption claims. It was anticipated that more males than females were likely to claim, but there was also uncertainty on other categories of claims and the numbers of likely claims, in respect of adoption, commissioning parent and surrogacy benefit. The Legal Advisers felt that, in order to avoid litigation, the Department should bring all categories of benefits in line.

The Department of Labour noted that these types of benefits fell under section 27 of the Constitution, which were considered subject to the principles of available resources and progressive realisation, a point made by the Constitutional Court in the cases of Grootboom and Mazibuko. The Bill did have financial implications and it was initially agreed that a 2% increase could be allowed in the contributions received by the UIF. However, the alterations and additions in the labour laws amendments had resulted in cost implications of around 1.8%, and the Department was worried that in the event of economic difficulties the Bill might be unaffordable to implement. The Department said that the briefing by the officials had always spoken of 60% benefit, and it was the actuarial report that had made the assumption of 66%.

Members asked why the Department had not previously mentioned its concerns around affordability, and sought clarity on how the perceptions of the actuaries had come about. The Committee had been prepared to look favourably on the 60% benefit, and the Department should have been clearer on what it could and could not afford. The Department sought to explain how the maternity benefits would be de-linked from others, and that surrogacy would still need separate consideration, although the likely number of claims could not be anticipated; surrogacy was likely to be paid in line with adoption benefits. Members, however, felt that there was a distinct possibility that claims of discrimination were valid, and felt that they could not deliberate further on the Bill. The Department was accordingly requested to give further consideration to the concerns expressed during the public hearings and the questions and suggestions of the Legal Adviser and of Members, and to revert to the Committee with further suggestions at a future meeting.

The Committee adopted the minutes of 9 November, and the updated fourth term programme.

Meeting report

Chairperson's opening remarks
The Chairperson noted that the purpose of this meeting was to deal with matters arising from the public hearings on the Labour Laws Amendment Bill, and wanted to double-check with Members whether they differed from her own view that it would not be possible to move to clause by clause deliberations at this meeting. She suggested that members should note the comments and concerns of the legal advisers, and raise their own queries or concerns about anything expressed in the public hearings. The Parliamentary Legal Advisers' comments on discrimination had been distributed to Members.

Ms F Loliwe (ANC) asked that Members be granted a short adjournment so that the ANC could caucus on how it wished to proceed on the deliberations, and this was granted.

On resumption of the meeting, Ms Loliwe noted that the Committee had been asked to reflect upon the public hearings, but in order to do that, she asked that the legal advisers brief the Committee on what was conveyed in the actuarial report, the first draft, and what had been presented by the Department of Labour (DoL or the Department), with particular reference to affordability concerns.

The Chairperson agreed.

Parliamentary Legal Adviser briefing
Ms Desiree Swartz, Parliamentary Legal Adviser, said that one of the main concerns expressed by the legal advisers related to the discriminatory challenges. The existing position was that some people going on maternity leave would be entitled to claim maternity benefits to the value of 60% of salary, whereas others might receive 66%. In one bill tabled to Parliament by the DoL, maternity benefits were increased to 66%, but that bill had been based on a position prior to the current Labour Laws Amendment Bill (the Bill) being drafted. The major concern was that the current Bill was not addressing those two different positions. An instruction was given to the DoL to address these issues under a new proposal, but they were not addressed because the affordability of bringing all benefits in line could go beyond the 2% contribution.

She expanded upon the dichotomy. An actuarial report from the Unemployment Insurance Fund (UIF) had been presented to the Committee early in 2016, which had raised concerns about constitutionality. She referred Members to page 16 of that report and said that the problem was a difference between maternal and paternal benefits.

A claim for parental, adoption or commissioning parental benefits from the UIF would be paid out at 60%. The actuarial report, however, assumed that each father would have all 12 days available to claim, at 66% paternity benefits. The report noted that females were generally not receiving maternity benefits from the companies, but males were receiving paternity benefits from their companies; therefore it was also assumed that a greater number of males would claim their benefits than females.
In addition, page 77 of the actuarial report noted that those claiming adoption leave and benefits would get benefits at 66%.

Ms Swartz commented that paternity benefits and adoption benefits should be brought in line with maternity benefits. She cited page 7 of the actuarial report  and said that the adoption benefits had been ignored for the purpose of quantifying the impact of benefit changes, because there were very few claims for adoption benefit. There were 70 claims in 2016. When she had asked for statistics on  commissioning parental benefits, the DoL could not provide her with figures, but she assumed that these benefits would, similar to adoption benefits, be relatively low.

The Chairperson asked for the comments of the Department of Labour on these points.

 Both claims of adoption benefits and commissioning parental benefits would be very little.

Mr Thembinkosi Mkalipi, Chief Director, Department of Labour, said that he thought the comments on constitutionality related to section 27 of the Constitution. That section, which dealt with healthcare, social security, social assistance, food and water, was grounded on two principles - available resources and progressive realisation. Positive measures should be taken in accordance with the said principles. These principles were emphasised and confirmed in the Constitutional Court decisions in the cases of Grootboom, in respect of housing and Mazibuko, in respect of water.

He made the point that there were financial implications to the Labour Amendment Bill. It had been agreed initially that a 2% increase could be allowed in the contributions received by the UIF. Before the DoL could proceed with any Bill, it had to ensure that there was funding available for its implementation. The alterations and additions that were being made in respect of the  labour laws gave rise to a 1.8% increase, very close to the 2% increase referred to earlier. However, he urged Members to think carefully about what might happen in the event of a further economic crisis.

Ms Loliwe sought clarity on the controversial issue of whether maternity benefits currently stood at 60%.

Mr Mkalipi agreed that they did.

Mr Ollis sought clarity from Ms Swartz on what she was proposing that Members could do, and on what the actual elements of the proposals in the Bill were that could result in the Bill being found unconstitutional.

The Chairperson sought clarity from Mr Mkalipi on whether the Bill initially proposed benefits of 66%.

Mr Mkalipi responded that it had been the actuaries who perceived that 66% could be affordable but when he came to brief the Committee, he had referred to a 60% benefit.

The Chairperson said that it was the DoL who came up with the percentage of 66%. She recalled that Mr Mkalipi had been asked whether the Bill was affordable, and he responded in the affirmative. She sought clarity on why the DoL did not state at that stage that it could not afford the Bill if it did come into operation, and how the actuarial perception had come about and on what it had been based. The Committee had been prepared to proceed with the Bill, on the basis of benefits of 66%, and not 60% - and this had been based on a report, not a perception. However, whether this was an assumption or a perception she stressed that the DoL  could have made it clear whether or not it could afford to implement the Bill in its current form.

Mr Mkalipi responded that DoL had to take a policy decision as to whether it could proceed with the Bill, with benefits of 66%. He noted that the current adoption benefits were paid from credit, and were different from maternity benefits.  In this Bill the DoL was stating that maternity benefits would be de-linked from other benefits, meaning that it was possible for a person to claim maternity benefits today, and could also be claimed with a period of six months after a person had lost employment, without losing any entitlement credit in the intervening period. This was the reason why the UIF would continue to pay the benefit at the scale of 60%, and that was the core of the issue.

The surrogacy benefit was also considered prior to tabling the Bill, and this could be considered together with adoption benefits. The number of surrogacy claims were not clear, and so it was impossible to determine with any accuracy the number of possible claims under this category. In the meantime, surrogacy claims would be considered under the adoption benefits category, and the claimants would be paid the same.

Ms Swartz repeated that the Bill was offering parental and commissioning parental benefits at 60%. However, a particular concern remained that unless something different happened, some people would be entitled to receive 66% whereas others would get 60%. This was surely discriminatory. Members should see how the discrimination could be fixed, in order to prevent legal challenges in the future.

Mr B Mkongi (ANC) said that he understood the position of the DoL. Nonetheless, he was concerned with the discrimination which would surely result in litigation, which in turn would be costly for the DoL. Up to June 2016, Members had been told that the payments would be made at the scale of 66%. However, when the Bill was due to be deliberated on, DoL was suddenly saying that  Litigation would be costing money the DoL. Up until June 2016, Members knew that benefits would be paid at the 60% scale. He commented that this had all been a waste of time.

The Chairperson sought clarity on the issue of legality and asked whether the DoL felt that it would be a strong legal position, if claims of discrimination were made.

Mr M Bagraim (DA) said that he did not think that this was a wise question to ask the DoL. He referred to page 3 of the actuaries' report, and sought clarity on whether benefit changes were calculated at 60% or 66%. At page 16, the assumption of 66% was stated to be “commendable”. However, he wanted to know whether, in the event that benefit changes were calculated at 66%, this increase would still amount to less than 2% in relation to the contribution received by the UIF?

The Chairperson said that Members should guard against giving people an excuse or opportunity to take the DoL to court. If the issues were not addressed now, and the Bill was passed in its present form, resulting in the DoL being taken to court, the Committee would be blamed. She believed that the Bill must be sent back to the DoL to enable it to fully consider all the constitutional implications and concerns that had now been raised.

Mr Mkongi said that the public expected their Parliamentary representatives to pass laws that would stand the test of time. It was not the DoL who would be blamed for passing discriminatory laws. It was the Committee who would be blamed. He was strongly of the view that if the DoL was taken to court, it would not be able to justify the discriminatory approach that it had taken.

Ms S van Schalkwyk (ANC) was concerned with the Committee’s move to still deliberate on the Bill, despite the intimation from the Parliamentary Legal Adviser that the Bill was discriminatory. She noted that reference had been made to an actuarial report that did not appear to be based on fact, but on assumptions. That raised even more question around the uncertainties. She suggested that the DoL should go back and address the constitutional concerns. The Director General of the Department should then come back to advise the Committee what position the Department had decided to take. She urged the Committee to pay due heed to the advice from the Legal Adviser that this Bill may well be unconstitutional, and not to attempt to take it further.

Ms Loliwe expressed her understanding that the Parliamentary Legal Adviser thought that the Bill, if passed in its current form, would not meet the threshold requirement of constitutionality. She urged all Members to apply their minds very carefully to the new indications that the Bill might not be constitutionally sound, because of the discrimination cited. She would like Members to go back and discuss the issue with their parties, and return with revised positions.

Mr Ollis stated that he supported the view that the DoL should go back and consider the actuaries' report, and take whatever steps were necessary to bring the Bill in line with the Constitution. He suggested that the Department be asked to do this within the next week.

The Chairperson, having considered Members' views, said that the presentation due to be given by the Department today should be held in abeyance. She instead asked that the Department take into consideration the views, inputs and suggestions at this meeting and return with comments and suggestions to a later meeting.

The DoL delegates were excused.

Adoption of minutes
The draft minutes of the meeting on 9 November 2016 were adopted, with a minor amendment.

Committee programme adoption
The updated Committee Programme for the fourth term of 2016 was tabled, considered and adopted.

The meeting was adjourned.



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