Compensation Fund action plan; Department of Labour Quarter 1 performance; Labour Laws Amendment Bill:finalised

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Employment and Labour

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

The Committee adopted the Labour Laws Amendment (LLA) Bill clause by clause.

The Committee was briefed by the Compensation Fund on its Action Plan. The briefing provided background to the need for an Action Plan, objectives of the Action Plan, pillars of the Action Plan and a summary of the progress made. The presentation also covered highlights of the activities and progress made on claims processing. There were also comments on the Recommendations made to First Quarterly Performance Report of the DoL which were also adopted. Minutes on 08 November 2017 minutes were considered and adopted.

The Committee questioned supply of chronic medication, discharge of services to clients, plans to deal with backlogs as well as the Department’s position on the current vacancy rate. Challenges in the rural areas were strongly raised. There was further discussion on rehabilitation and reintegration, efforts to improve service delivery and unemployment in SA. 

Meeting report

Clause-by-clause voting on the Labour Laws Amendment (LLA) Bill

The Chairperson gave a brief summary of what must be taken into consideration in line with the Labour Laws Amendment (LLA) Bill. Focus should be more on Clauses 9 and 10. She sought consensus in line with Clauses 1 to 6 – adoption was moved by Ms S Van Schalkwyk (ANC) and seconded by Ms L Mjobo (ANC).

Before adoption of Clauses 7 to 12, Adv Charmaine Van Der Merwe, Senior Parliamentary Legal Adviser, clarified two outstanding issues in Clauses 9 and 10. In Clause 9 (a), she highlighted a mathematical calculation that was supposed to be five days of employment and not four. Under Clause 10 Subsection (5), she said it is supposed to be 17 to 32 rather than 17.32 weeks.

Adoption of clause 7 to 12 was moved by Ms L Theko (ANC) and seconded by Ms N Tolashe (ANC).

Clauses 13 to 18 were Ms Van Schalkwyk and seconded by Ms Mjobo.

The Bill in its entirety was adopted by Ms Tolashe seconded by Mr D America (DA).

Consideration of the Draft Report of the Portfolio Committee on Labour on the First Quarterly Performance Report of the Department of Labour

Mr Z Sakasa, Committee Secretary, briefly outlined the gist of the First Quarterly Performance Report of the Department of Labour (DoL) for consideration. The Report reflected the First Quarterly Report on the performance of the Department of Labour and its entities in meeting strategic objectives for 2017/18 as presented to the Committee in a meeting held on 18 October 2017. This Report gives an overview of the presentations made by the Department and its entities, focusing mainly on its achievements, output in respect of the performance indicators and targets set for 2017/18 and the financial performance. The Report also provides the Committee’s key deliberations and recommendations relating to the Department’s and entities’ performance.

The Draft Report of the Portfolio Committee on Labour on the First Quarterly Performance Report of the Department of Labour was adopted Ms T Tongwane (ANC) and seconded by Ms Theko.

Presentation by the Department of Labour on the Action Plan of the Compensation Fund

The Committee Secretary noted that an apology was received from the DG of the Department.

Ms Tolashe said the absence of the DG was unacceptable.

The Chairperson said the Committee was unimpressed about the continuous absenteeism of the DG dubbing it as an anomaly.

Mr Vuyo Mafata, Commissioner of the Compensation Fund, said he will pass the message to the DG. He then presented the Action Plan of the Compensation Fund and noted that the Compensation Fund (the Fund) has been receiving adverse spotlight from media and other key stakeholders due to its service delivery record. In an effort to restore its damaged reputation and improve the service delivery record, the Fund developed an Action Plan which will serve as a blueprint or Launchpad for service delivery improvement initiatives. An Action Plan was developed by management of the Fund in June 2015 and implementation started on 1 July 2015. The Action Plan was submitted to the Standing Committee on Public Accounts as resolved during the appearance of the Fund at the Committee in June 2015.

The Action Plan is not a replacement for the current Strategic Plan and Annual Performance Plan of the Fund but will enhance and boost the pursuit of the objectives of the Fund. The main objectives of the Action Plan are to put in place basics that will assist in improving service delivery performance in the Fund, increasing efficiency of the Fund‘s overall administration, financial management and operations as well as restoring the reputation of the Fund.

In terms of progress, the Revised Employer Assessment Model is being finalised and Actuarial Assessment and Socio-Economic Impact Assessment System (SEIAS) was completed. The concurrent consultation process at ‎the National Economic Development and Labour Council (NEDLAC) commenced and the policy will be published for comments in January 2018. The position paper was developed and adopted as an accounting policy for revenue. This was reflected in the annual financial statements of 2015/16 and 2016/17. The initial ICT intervention to deal with loading and reduction of assessments was revised due to further research. An Actuarial model is being developed to achieve the same objective. Employer discounts were calculated and applied against the employer account. R211 million was refunded back to qualifying employers. Enhancements on key-offs and batch processing has been completed in line with improving debt collection. A total of R2.4 billion worth of Interest and Penalties incorrectly charged was identified for possible correction as prior year errors. An approval to write off the R2.4 billion was granted. The prior year inaccurate interest penalties were written off.  The correction of prior errors on interest, penalty and prior impairments correction of errors were also completed. The system enhancement on completeness and accuracy of revenue was signed off.

In light of an actuarial model for determination of loading and reduction of tariffs, suspension on the implementation of section 85(2) will be lifted prior to the end of the 2017/18 financial year. 20 policies were approved by the DG and were implemented in the Fund. The number of findings reduced from 141 to 89 in the 2015/16 and 2016/17 financial years. The system enhancement to deal with clarification accounts was found not to be possible.  The Fund developed a manual process to clear long outstanding reconciliation items in the clarification account. The reconciling items have reduced by 78%. Concurrently system architectural limitations causing the problems were rectified on SAP to ensure these reconciling items did not occur in future.  The Fund has gone live on the clarification.

Additionally, on progress, in line with implementation of algorithm checks for the Fund’s deposits,

Memoranda of Understanding were signed with four banks and a database of all employers was submitted to the banks.  All deposits are validated against the database to ensure employers use correct reference numbers. In an endeavor to improve the process of benefit payments, an ability system module was decommissioned as a claims payment and reporting module. New licenses for SAP FS-CD were acquired and implemented. The Legal Case Management System went live on the 3 November 2017. R62 million out of the R96 million of unclaimed merit rebates was identified in the SAP FS-CD and cleared to employers.  A process is underway to identify long outstanding deposits as well as overpayments. The automation of payment process was done in the SAP and ability decommissioned to improve the bank reconciliation processes. The Chronic Medication Dispensing service provider was appointed in September 2016 and the service provider commenced with distribution of medication. Since inception of the contract in September 2016, the Fund dispensed medication to 664 clients for the period up to October 2017. Regular monthly meetings are held with hospitals, organised industry bodies and other related stakeholders in an effort to improve relations. A Rehabilitation Policy has been developed and was going through approval processes. The Rehabilitation and Return to Work Strategy was developed. Pilot projects are being identified to partner with public health facilities in rolling our rehabilitation facilities. A rehabilitation and reintegration unit has been established and posts advertised to capacitate the unit.

A  Post-Traumatic Stress and Disorder (PTSD) panel was appointed and a Regulation on Compensation for PTSDs was developed by the panel. The Regulation will be published for public comments prior to implementation in Quarter Three. A reorganised query resolutions process was implemented and the Fund has filled all vacant posts in the call centre.  The Directorate is visiting provinces where there is a huge volume of queries and in addition, the Directorate has deployed customer care agents in hotspot labour centres to assist and focus on Compensation for Occupational Injuries and Diseases (COID) service delivery issues.

Furthermore, the Minister of Labour approved a new structure for the Fund that realigns the core business functions of the Fund. The move of the employer registration and compliance function from Chief Directorate: Financial Management to Operations Management is part of the Reviewed CF Organisational Functional Structure and this has been done as of 1 October 2017. The new organisational structure is being implemented and vacant senior management posts were advertised. Core business posts will be prioritised for filling before the end of the 2017 calendar year. There is ongoing progress to eradicate backlogs on both medical and compensation claims.

System enhancements have been implemented to address system challenges preventing speedy adjudication of claims skilled medical, claims personnel in labour centres and provincial offices are being filled. The Fund has finalised the appointment of senior medical personnel in seven provinces and junior positions in most provinces.  The Western Cape and Eastern Cape were planned for 17 November 2017.

There were 382 open vouchers TTD’s to the amount of R2 390 951 from 9 November 2016 to 14 November 2016.  The payment of TTD’s has not changed since November 2016. The project of integration of SAP and uMehluko will recommence. 1039 permanent disability’s amounting to R20 668 037.44 were paid to as at 31 October 2017. Quality assurance was done and results were implemented in order to improve systems used for processing and paying claims. There was no suitable service provider - specifications were reviewed and the new bid will be advertised during the third quarter. In the interim, an in-house case management process was developed and implemented in the second quarter of 2017/18 by the Medical Case Coordinators in the provinces. The Legal Case Management System went live on the 3 November 2017. Declaration of financial interest is implemented for Senior Management Service (SMS) members.  The Policy for non-SMS members was approved but not yet implemented. Security background screening of officials is being done regularly. The ethics survey has been completed and recommendations are being implemented. Fraud and ethics training has be conducted to all COID officials.

More so, the skills audit was conducted and a training plan was developed and was being implemented where skills gaps were identified. This entails a combination of training and appointment of skilled personnel. The provision of support, training and development interventions, coaching and mentoring are being undertaken as part of the implementation of the recommendations of the Skills Audit project. A performance management policy is being strictly implemented and all staff have performance agreements and are assessed biannually. The Change Management project has been completed - a report was produced along with a survival guide for staff with regards to future change interventions. All new projects are following a formal change management process. Investigations on decentralisation issues were conducted – a report was produced and recommendations were implemented. The Compensation Fund Organisational Functional Structure has been finalised and approved by the Minister on 31 March 2017.  The structure would be implemented during the 2017/18 Financial Year. 


Mr M Bagraim (DA) asked if the computer system was filled with professional people.

Ms Van Schalkwyk acknowledged that the report was well presented. With the supply of chronic medication, she asked what the Department’s plans were in terms of fast tracking discharge services to clients. What was the Department planning to do with the backlogs? She then asked what the vacancy rate of the Department was, why the Department was migrating people from other provinces and why local people were not just employed instead.

Mr L Khorai (ANC) emphasised the matter of communication was a worrying factor and asked if the Department was satisfied in this regard. In rural areas, people are not getting information. The claims started in a loss – were there mechanisms to recover claims lost in the past? The Departmental system is not favoring the poor. There is no information in the constituency offices in the rural areas and the farms.

The Chairperson noted that from 31 August 2017 to 31 October 2017, development of the rehabilitation and reintegration programme of injured employees was 50% and 90% respectively.  From 31 August 2017 to 31 October 2017, restructuring of the query resolution process to improve the turnaround time for customer queries and complaints was 67% and 100% respectively. Why was the Department not using the same enzyme and what was the miracle that happened with regard to the above mentioned figures? In SA, the Department removed the rural areas, for instance, the mines. Literary, people are not able to access departmental technology.

Mr Mafata responded that the Department is working to improve the system to speed up payment of claims. Not all pensioners are on chromic medication. On the migration of people, more than 1000 people were processing claims in Pretoria. As a result of decentralisation, workers were migrated. The Department also created a post for social rehabilitation as well as for the creation of the pension unit to manage clients. In response to the vacancy rate, the number of posts increased therefore the vacancy rate increased as well.

The Chairperson said there is a problem of unemployment in SA.  

Ms Tolashe said there is no coordination between departments and the Departmental clientele is mainly in rural areas. If the clientele is predominantly in rural areas, due retirement as all people went to their home towns, the Department is supposed to talk directly to the clientele, that is, rural areas. She also queried long queues at the Departmental offices, though she noted that matter was for discussion for another day since it is not directly linked to the agenda of the meeting today.

Ms Tongwane asked when the policy for non-SMS members will be implemented since the Department said it was approved but not implemented or was implemented partially.

Mr Mafata said the policy will be implemented as soon as possible. In line with the declaration by non-SMS members, it is now required to submit declaration of interest.

Comments on the Recommendations made to First Quarterly Performance Report of the DoL

Mr Bagraim was happy with the recommendations. He however acknowledged the problem of unemployment and proposed that unemployment must be indicated to raise awareness of the problem.

The Chairperson concurred, stating that the Department must try and improve the creation of jobs.

Recommendations adopted by Ms Van Schalkwyk and seconded by Ms Theko and Mr Bagraim.

Adoption of Draft Committee Minutes dated 8 November 2017

Mr Bagraim moved for adoption of the minutes. Ms Theko seconded the motion.

Draft Committee Minutes dated 8 November 2017 were adopted with amendment.

The meeting was adjourned.


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