Department of Labour inspections and investigations based on Committee 2017 oversight visits; UIF Report

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Employment and Labour

01 November 2017
Chairperson: Ms F Loliwe (ANC)
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Meeting Summary

The Department of Labour briefed the Portfolio Committee on Labour on inspections and investigations done in Gauteng, the Western Cape and KwaZulu-Natal. Findings across the board to varying degrees showed non-compliance to various labour laws including Unemployment Insurance Fund (UIF) benefits, Occupational Health and Safety.

In Gauteng the company visited was in contravention of immigration and labour laws. For instance, the company had more foreign employees than local employees, i.e. 90 foreigners (mainly from India and Zimbabwe) compared to 60 locals. Indians occupied the technical jobs whilst Zimbabweans served as mere laborers. Overall, it was revealed that the company was in contravention of the International Cross-Border Labour Migration (ICBLM) or “scarce skills” transfer plan and work permits procedures. In the Western Cape, although many companies, mainly in the clothing and textile sector, as well as agriculture, have been able to show compliance by the time the Department conducted their follow-up visits.

The report showed that factories in KZN showed non-compliance on a prolific scale and many remained non-compliant at follow-up visits. The bulk of the cases had been forwarded to the South African Police Services (SAPS) and the National Prosecuting Authority.

Members discussed the dysfunction at the Metal and Engineering Industries Bargaining Council (MEIBC) and the non-payment of UIF, which was identified as a major issue in South Africa. The Committee wanted to know why the situation in KZN was out of control, how companies disregarded the laws by employing foreign nationals and the fact that an unregistered company got away with flaunting labour laws.

The UIF Commissioner provided the Committee with an update on the funds distribution and highlighted that the main objective was to contribute to the development of infrastructure crosscutting industry structures and at the same time creating sustainable jobs through sound investing in unlisted investment transactions. The investment mandate was executed through the sharing of responsibilities and duties by the Public Investment Corporation (PIC) and the Industrial Development Corporation (IDC). Productivity SA was funded 100% by the UIF and funds are released on quarterly tranches after the previous tranche has been fully accounted for based on the quarterly proposal submitted. R14 780 255 was transferred to productivity SA. The balance from the previous funding was R4 899 745. The total for the period under review was R19 680 000. Productivity SA supported 81 companies and UIF was still verifying supporting documents in relation to the assisted companies.

The Committee wanted to know more about the Trans African Concessions (TRAC) Company which manages the road link between South Africa and Mozambique and the impact of employing undocumented foreign national that crossed the border illegally. Members committed to look into .the possibility of inviting non-compliant companies highlighted in the report (if possible) to account to the Committee.

Meeting report

The Chairperson welcomed everyone. An apology was received from Mr D America (DA) and the Chairperson also acknowledged the apology from the Director-General.  

Progress Report on 2017 Oversight Visits in Gauteng Province: briefing by Department of Labour

Tshepo Mokamatsidi, Chief Director: Provincial Operations (Gauteng), DOL, said an oversight visit was conducted on 1 August 2017 by the Portfolio Committee at South Africa Steel Mills in Vereeniging. It was found that the company did not comply with immigration and labour laws. For instance, the company had more foreign employees than local employees, i.e. 90 foreigners (mainly from India and Zimbabwe) compared to 60 locals. Indians occupied the technical jobs whilst Zimbabweans served as mere laborers. Overall, it was revealed that the company was in contravention of the International Cross-Border Labour Migration (ICBLM) or “scarce skills” transfer plan and work permits procedures. DOL was requested to conduct an in-depth inspection. On 10 August 2017, the Department, the South African Revenue Services (SARS), the Department of Home Affairs (DHA) and the Metal and Engineering Industry Bargaining Council (MEIBC) conducted a follow-up investigation. MEIBC found that the employer was non-compliant due to irregularities in contract of employment, pay slips and MEBIC related statutory instruments. The company was also in contravention of the Public Employment Services Act as it failed to produce work permits for foreign nationals. Occupational Health and Safety (OHS) also found irregularities in line with health and safety. The Employer Audit Services (EAS) also found deficiencies including changing company name without following due processes. It also found that only South Africans were registered for Unemployment Insurance Fund (UIF), contravening pieces of legislation in line with UIF and other deviances were found in taxation.

In terms of enforcement, South Africa Steel Mills was issued a number of notices stretching from prohibition notice through improvement notice to contravention notices. The enforcement embody among other things competency certificates, health and safety, general administrative regulations, environmental regulations for work place, machinery regulations, regulations for hazardous chemical substance, electoral installation regulations as well as noise induced hearing regulations. Notices also included improvement notices as well as compliance notices with relevant Acts. A follow-up will be made on expiry of notices issued. The employer should register and declare all employees to UIF and all the eligible foreign national employees must be registered with South Africa Steel Mills. The issue of non-compliance with UIF should be referred to the SARS. A follow-up done on 25 October 2017 revealed that the company was still not complying with OHS. The Department therefore will be initiating prosecution against South Africa Steel Mills for failure to adhere with OHS regulations.

Discussion

Mr M Bagraim (DA) said that for the past two years, the MEIBC had been dysfunctional. In terms of oversight, DOL must also go to smaller companies which are also dysfunctional. Non-payment of UIF was a major issue in South Africa and he recommended that the inspectors be the Department’s eyes and ears.

Ms S Van Schalkwyk (ANC) said that employees are complaining that UIF was being deducted but not being paid. She recommended a clampdown of these employers and a total shutdown of the companies caught on the wrong side of the law to show seriousness of the matter. Employees should be looked after.  

Mr L Khorai (ANC) asked what was going to happen after follow-ups. He was worried about actions thereafter and whether it would be binding. Health and safety was being undermined. Companies are blacklisted for non-compliance and he asked if the communities are aware of the non-compliances taking place.

Mr T Tongwane (ANC) said intention to initiate prosecution was not enough and she asked when the Department was going to act. She said the 49 incidents of 2015 and 2016 must be explained.

The Chairperson said the recommendations are not saying anything and lacked substance.

In response to the oversight of smaller companies, Ms M Bronkhorst, Chief Operating Officer (COO), DOL, said the Department did not have the capacity to inspect all places or all companies in the informal sector. It did not mean that the Department was ignoring small companies and businesses. She agreed that the recommendations are supposed to be specific and promised that the Department will make a follow-up on that to make sure that recommendations are nor focusing on generalities but specificities.

Ms Schalkwyk requested the follow-ups in three days.

Mr Khorai said that promises, procedures and processes are taking long while people are dying and others are losing their jobs or properties. It was alleged that the Department was always on the side of the employer at the expense of employees. He also requested explanations on reported unfair dismissals. He asked what confidence people can have when they turn to DOL.

Mr W Madisha (COPE) asked what would be happening next and he agreed with Mr Khorai in requesting for an explanation on the overlooked unfair dismissals. He also raised queries with regard to the company in Gauteng where there are 90 employees from outside South Africa and said unregistered companies can do anything to employees.

The chairperson said focus should be on Gauteng and crosscutting questions should be responded to later.

Ms Bronkhurst said all questions are crosscutting and she will respond after the presentation on the Western Cape.

Progress Report on 2017 Oversight Visits in Western Cape Province

Mr Mawele Ntamo, Acting Chief Director: Provincial Operations (WC), DOL, said the Portfolio Committee focused on companies in the clothing and textile under the Clothing and Textile Industry Bargaining Council and agricultural sector. The focus of the oversight visit was mainly on OHS as well as compliance to the Unemployment Insurance Act and Compensation for Occupational Diseases Act. Companies inspected were Trade Call Investments Apparel, Romatex, Gerli Clothing, Abagold and De Tuin farmstead.

It was found that Trade Call Investments Apparel failed to do risk assessments to ensure the coverage of all ergonomic related risks. However, after follow-up, it was found that the company has complied. The inspection on 12 January 2017 also revealed that Romatex was in compliance with the Occupational Health and Safety Act. The inspection on 25 July 2017 on Gerli Clothing also showed compliance with the Occupational Health and Safety Act. Abagold complied with the contraventions during a follow-up inspection on 19 May 2017. In line with the current status of De Tuin (Porterville), it was also founded that the employer had resolved the main issues raised in the notice. In line with Sectoral Determinations, Abagold farm was found to be fully compliant with the Sectoral Determination 13 for farm workers and no notices were served. De Tuin (Porterville) was not allowed to make any deductions other than what was prescribed in the Sectoral Determination 13. Deductions were stopped with immediate effect and particulars of employment provided were not in line with the Sectoral Determination 13 for seasonal workers, but contracts are now in line with the Sectoral Determination 13 farmworkers.

Discussion

Mr Khorai (ANC), said he was not yet conversant with the nitty-gritty of the Department and he requested the Department to explain in full so that he that he can be able to grasp the issues.

Ms Van Schalkwyk said that in terms of current status, the Department did not zoom in into the other areas.

Mr Madisha (COPE) asked who the Department checked on to come to the conclusion that there was improvement, i.e. did the Department check with the employers, unions or employees.

In response to the current status being not exhaustive enough to cover other areas, Ms M Bronkhorst said DOL will ask for other assessments.

Progress Report on 2017 Oversight Visits in KwaZulu-Natal Province

Ms Thembi Nene-Shezi, Chief Director: Provincial Operations (KZN), DOL, said Jarna Trading Enterprise has not complied in line with conditions of employment and the matter was set down for arbitration. Contributions to UIF are up to date and therefore compliant. In terms of OHS, there are no first aiders and first aid box, obstructed floors, no toilet paper, soap or similar cleansing agent, no hot running water for showers, no facilities for safekeeping of personal items, dust bins kept in ding area and facilities are not hygienic. There is also no certificate of compliance for electoral installation. Follow-up inspections were conducted on 4 July and 10 August 2017 and the employer complied with citations on the contravention notice.

An investment company was also non-compliant with conditions of employment. UIF contributions are up to date. In terms of OHS, there were many flaws in the company. A follow-up inspection was conducted on 26 June 2017 and the employer was not complying with the contravention notice. The matter was referred to the National Prosecuting Authority as a recommendation for prosecution on 3 July 2017. It was set down for prosecution on 11 September 2017. Employer complied with the contravention notice after the follow-up but was fined R2 000 by the Durban Magistrate Court on 11 September 2017.

Stephlyn clothing CC has not complied with the conditions of employment and the matter was set down for arbitration. UIF contributions were also not up to date but the audit on 25 May 2017 showed that the company was up to date with UIF contributions. There were a lot of irregularities in line with OHS. A follow-up inspection conducted on 5 September 2017 showed that the employer was not complying with the contravention notice. The matter was referred to the statutory services as a recommendation for prosecution and a summons was served on 31 October 2017.

SOP Trading was not complying with conditions of employment. Deviations were also observed in line with OHS. The matter was referred to statutory services as a recommendation for prosecution and summons was served on 31 October 2017.

Africa HK manufacturing has not complied with the conditions of employment. UIF contributions were up to date. In line with OHS, a lot of deviations were recorded. Inspection on 26 June 2017 was to no avail as the company had moved to another area. Inspection on 22 September 2017 found that the employer was not complying.

Sky Sheng was not complying with the conditions of employment. UIF contributions are now up to date following a payroll audit on 25 May 2017. OHS was also flawed with irregularities. A follow-up inspection conducted on 26 June 2017 showed that the employer was not complying with the contravention notice and the matter was referred for cases opened at SAPS on 27 October 2017.

Inspection with regard to conditions of employment was not yet done by the Bargaining Council to Prod-U-Star 83 CC. UIF declarations were all correct, but OHS irregularities were rampant. The follow-up inspection on 26 June 2017 shows that the employer was not complying with the contravention notice. The matter was referred to SAPS on 27 October 2017.

Top Dress Clothing has not complied with conditions of employment. UIF contributions show compliance. OHS showed non-compliance. Follow-up inspection conducted on 26 June 2017 shows that the employer was not complying, though not with the whole contravention notice. The matter was referred to SAPS on 27 October 2017.

Siqalakabusha Primary Worker Cooperative was not complying with the conditions of employment. Details on UIF contributions showed that it was compliance, but showed non-compliance in terms of Occupational Health and Safety. A follow-up inspection on 6 July 2017 showed that the company was partially compliant and the outstanding matters were referred to statutory services as a recommendation for prosecution. Summons was served on 31 October 2017.

ZAIC Clothing failed to comply with conditions of employment. The matter was set down for arbitration. The company was found complying on UIF contributions upon inspection. A follow-up inspection conducted on 6 July 2017 found the employer complying with OHS.

 Fashion River has not complied with the conditions of employment and the matter was set for arbitration. The company was found complying on UIF contributions upon inspection. There were a lot of flaws in OHS and a follow-up inspection conducted on 6 July 2017 found the employer not complying. The matter was referred to statutory services as a recommendation for prosecution and summons was served on 31 October 2017.

The Bargaining Council was not part of the visit to Angels Footwear Manufactures CC and did not provide a report on the conditions of employment. There was under declaration of employees in line with UIF. OHS was flawed and the matters were referred to statutory services as a recommendation for prosecution, summons served on 31 October 2017. All foreign nationals removed from the work places above were deported through Lindela Deportation Centre. Inspection of Quin Sheng which was supposed to be on 31 March was abandoned due to language barrier. It was then conducted on 23 May 2017. There was no compliance with the contravention notice and the matter was recommended for prosecution on 23 August 2017, but it was referred back for inspection. Continuing contraventions for Quin Sheng were referred for prosecution and a compliance order was served on the employer. It was worth noting that some notices are still underway and follow-up inspections will be conducted to ascertain adherence after the expiry of such notices.

Discussion

Mr Bagraim said that a host of factories in KZN are not complying and he asked for an explanation.

Ms Van Schalkwyk noted extensive reference to courts and asked what happened afterwards. She asked; do they comply with the relevant legislations. She recommended deportation of illegal immigrants who are working without proper documentation as a way to send a strong message to the would-be non-compliant companies. She also asked if the Department publicised such actions on non-compliant companies so that other employers become scared. There was a need to capacitate the inspectorate so that they can do their duties and responsibilities efficiently and effectively.

The Chairperson raised the case of Newcastle of the employees who were housed in terrible circumstances and she asked for an update.

In response, Ms Bronkhorst said that DOL informed workers about their rights. The issue of fines must be discussed with DHA in terms of companies employing illegal immigrants. In response to the case of the Newcastle employees, she said there was no updated report and it will be provided in due course as soon as it was out. In response to the extensive reference to the courts, she said some magistrates are saying it was too much.

Mr Bagraim (DA) requested an explanation on the proliferation of criminal activities in the Kwazulu-Natal with regard to labour laws. He recommended that KZN draw lessons from the Western Cape.

 In response, Ms Bronkhorst said some employers are stubborn to the extent that the Department has to take the companies to court.

Report on Unemployment Insurance Fund: briefing by Department of Labour

Mr Teboho Maruping, UIF Commissioner, DOL, said the money of the fund was supposed to be invested as provided in terms of the Public Investment Commissioners Act. The main objective was to contribute to the development of infrastructure crosscutting industry structures at the same time creating sustainable jobs through sound investing in unlisted investment transactions. The investment mandate was executed through the sharing of responsibilities and duties by the Public Investment Corporation (PIC) and the Industrial Development Corporation (IDC). Productivity SA was funded 100% by the UIF and funds are released on quarterly tranches after the previous tranche has been fully accounted for based on the quarterly proposal submitted. R14 780 255 was transferred to productivity SA. The balance from the previous funding was R4 899 745. The total for the period under review is R19 680 000. Productivity SA supported 81 companies and UIF was still verifying supporting documents in relation to the assisted companies. In the Western Cape Province, the following companies were visited: Romatex – that was assisted with a turnaround by Productivity SA as well as De Riviere Investment (UIF Agri-Fund). Transnet and South African Airways Technical are still on training in terms of progress on visited companies.  

Discussion

The Chairperson asked on the Trans African Concessions (TRAC) Company which manages the road link between two countries – South Africa and Mozambique. She asked if the Department, in line with Mpumalanga and Mozambique was having a Memorandum of Understanding with the latter.

Mr M Bagraim also shared the same sentiment.

Ms L Theko (ANC) said the report covered a lot of questions raised before.

In response, Ms Nene-Shezi said the Department will come back and present more. By incorporating Mozambique, it was part of drawing lessons from the neighboring countries, not necessarily undermining the capacity of South Africa.

Mr Madisha asked what about those coming from Zimbabwe which affected the entire employment sector. Labour laws and salaries are being overlooked by employers taking advantage of people coming from outside South Africa.

In response, Ms Bronkhorst agreed that people are being exploited.

Ms Van Schalkwyk considered inviting non-compliant companies to the Committee (if possible) to explain why there are failing to comply.

The Chairperson asked the Secretary to communicate with the companies deviating from the labour and immigration rules.

Adoption of minutes

Minutes dated 25 October 2017 meeting was adopted without amendments.

The meeting was adjourned.

 

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