Labour Bills: Department of Labour response to submissions & way forward

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Employment and Labour

18 April 2018
Chairperson: Ms S van Schalkwyk (ANC
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Meeting Summary

The Committee met to process and discuss the National Minimum Wage Bill responses submitted by the Department of Labour (DoL) in response to comments from affected stakeholders.


The Committee agreed with the Department of Labour on most of its responses to employer organisations which had submitted comments on particular clauses, except for sub-clause 5 (2). It also noted that a number of issues were cross-referenced in other legislation, such as the Labour Relations Act and the Basic Conditions of Employment Act.


The main areas of discussion covered the definition of “worker” in the Bill, as opposed to “employee;” the minimum number of hours of work; sectoral determinations and applications for exemptions; consideration for commission earners; the effect of changes in conditions of employment; the calculation of the national minimum wage, and its annual review; and the establishment of the National Minimum Wage Commission.


The Department asked to be allowed to return to the Committee the following day with redrafted clauses

Meeting report

Department of Labour report on public comments on National Minimum Wage Bill


Ms L Theko (ANC) asked whether the Committee would be processing the National Minimum Wage (NMW) Bill clause by clause.


The Chairperson replied that not all the clauses had had comments submitted to the Committee, so it would focus only on clauses which had been contested by the public. However, if the Committee Members wanted to contest any other clause which the Department of Labour (DoL) had not responded to, that would be allowed. Clause by clause deliberation would be done at the end when a new draft bill, including the comments and guidance of the Committee, would have been produced.


She then proceeded with reading the NMW Bill, requesting inputs from the Committee.


Mr M Bagraim (DA) said the NMW would be doing the opposite of the preamble, and he disagreed that affective redress to the economy would occur, as jobs would contract with the introduction of the NMW.


Ms P Moteka (EFF) said the DoL’s response to AgriSA did not cover all that AgriSA had raised.


Mr L Mashile (ANC) asked whether AgriSA’s comment meant that there was no prospect of redress in the current environment of low economic growth, seeing that it was part of the sector vested in economic growth.


Mr Kweta Mongameli, Senior State Law Advisor, Office of the Chief State Law Adviser (OCSLA), said that AgriSA seemed to have based its input on the preamble and not specifically on the long title of the bill.


Mr X Ngwezi (IFP) also agreed with the perception that AgriSA’s input seemed to have been conditioned on an environment of economic growth, as if the Committee was in charge of the economy of the country and that without that environment there would be no redress.


The Chairperson said she perceived that the Committee agreed with the current draft of the preamble. She asked the DoL for comment.


Mr Thobile Lamati, Director-General (DG), DoL, recalled that AgriSA supported the NMW, but had pleaded for an extension of the transitional period by one year from what had already been proposed.


Definition of worker


The Chairperson asked the DoL to submit the amended version of the definition of ‘worker,’ as captured in the new draft NMW bill.


Mr Lamati read: “Worker” means any person who works for another and who receives, or is entitled to receive, any payment for that work whether in money or in kind.


Mr Bagraim requested that records show that the DA would not support any form of definition of ‘worker’ apart from the definition of ‘employee’ already captured in the Basic Conditions of Employment Act (BCEA).


Mr Moteka supported the definition, as submitted by the DoL.


Ms Theko also concurred with the new definition.


Mr Mashile asked for an elaboration on what had been the different definitions for worker and employee in the labour law amendments for the BCEA and NMW Bill.


Mr Virgil Seafield, Deputy Director-General (DDG), Labour Policy and Industrial Relations, DoL, said the DoL believed that ‘worker’ and ‘employee’ were concepts the International Labour Organisation (ILO) used interchangeably for different purposes in conventions and other instruments. Indeed, the ILO differentiated the two concepts, and the DoL believed that ‘worker’ was a more expansive definition covering a broader scope of workers, and that the NMW would cover not only those in formal work but also those that were employed casually.


Mr D America (DA) said the DoL had not responded to Mr Mashile, but had deliberately played around with words in differentiating the two concepts in terms of the employment relationship.


Mr Lamati said that as already indicated, ‘worker’ was much more expansive as it included independent contractors. ‘Employee,’ as defined in the BCEA, had been defined as any person -- excluding an independent contractor -- who worked for another person, or the State, who received or was entitled to receive, any remuneration and any other person who in any manner assisted in carrying the business of an employer.


Ms Fatima Ebrahim, Legal Adviser, Parliament, said that there was a difference as the NMW cast the net wider than the BCEA, especially regarding independent contractors. An employee in the BCEA would have many other benefits, including leave, which rationally would not apply to someone doing piece meal or casual labour. The NMW Bill sought to say that notwithstanding that a person was not an employee in the BCEA manner, where BCEA stipulated that people who worked less than 24 hours a month were not protected by the provisions of the BCEA, the NMW Bill would still ensure that those persons would be paid a minimum of R20 per hour. She believed that the courts would in time develop jurisprudence on the meaning of ‘worker,’ but she did not foresee that being too problematic, as the NMW provision had to be viewed in the context of the financial threshold of R20. The true independent contractors or consultants would certainly, from her perspective, not be delivering work/services for an amount of R20 per hour, as it would be shown that those would be professional service providers. She understood the definition to be wider to give effect to the intent of the policy although practicalities. As later stated in the NMW bill, this meant that clauses 32 and 33 of the BCEA would also apply to people under the NMW. Those two clauses of the BCEA dealt with the payment of remuneration, where it was stipulated that a person owed a wage had to be paid within seven days, where a gardening jobber who did two-three hours of work could be told to come back the following week to collect payment. Certainly such instances could be resolved, as she doubted that casual labourers would agree to do work, only to be paid later.


The Chairperson said that the poorest, who were being disadvantaged by the BCEA exclusions, would then be covered in the NMW bill provision and definition.


Mr Bagraim said that every morning at a traffic light near his home, there was a window washer who washed his car windscreen without permission, to whom he paid R10. He would cease to allow that person to do that, because with the NMW Bill definition that casual work made the individual at the traffic robot a worker. However ridiculous such cases sounded, a lot of casual labourers would be cut out and that would create a lot of problems. He reiterated the position of the DA that it disagreed with the NMW Bill definition of ‘worker’.


The Chairperson continued reading from the DoL document, noting that affiliates of Business Unity SA (BUSA), as signatories to the code of good practice at the National Economic Development and Labour Council (NEDLAC), would not dismiss people based on the implementation of the NMW.


Mr Bagraim said there was already good labour relations law in SA and that the DoL knew that about 70% of the workforce did not even have letters of appointment. The NMW would just force some employers to ignore all labour relations law. The DoL also knew that dismissals also fell under retrenchments, as dismissals for operational requirements -- an employer could never be forced to keep anyone at work when that was unaffordable. Others would simply not employ new people. Regarding the exemption process, it would be interesting to see how the DoL would manage the perceived avalanche of applications for exemptions that was foreseeable.


Mr Moteka said even though the ILO discouraged exemptions, SA still allowed it and from the comments of employer associations, exemptions would necessarily need to be quite strict as employer associations seemed to be ambivalent over compliance with the NMW.


Mr Mashile said he read the input to be a perception of AgriSA and not something within the purpose of the NMW as drafted, and the DoL had responded adequately to that, as there would also be the exemption process together with the regulations.


Ms Theko also supported the purpose of the NMW Bill remaining the same.


Definition of employer


The Chairperson went back to Chapter 1 to read ForestrySA’s proposed amendment to the definition of ‘employer.’


Ms Theko said that as earlier agreed, the Committee supported the definition of ‘worker’.


The Chairperson explained that the discussion was on employer, not employee, and definitions as captured in Chapter 1, and not the application of concepts within the NMW Bill. She asked for input from the Committee.


Mr Moteka supported the DoL proposal to keep the definition of employer as already captured.


Mr Bagraim said there was an outstanding Constitutional Court judgment on the definition of ‘employer,’ and the Committee had to consider that as it was deliberating the definition, and should wait for that judgment as it was imminent.


Ms Ebrahim said indeed the NUMSA v Assigned Services judgment had been a decision of the Labour Appeal court, which had found that a temporary employment service for purposes of the Labour Relations Act (LRA), was if an individual had been assigned to work longer than three months, then that individual automatically became an employee of the place where that individual had been assigned. Because of that, the definition of ‘employer’ could be problematic. However, she was proposing that the definition could be amended to read: ‘employer’ means any person who is obliged to pay a worker for the work that that worker performs for that person, or on behalf of that person. That would then cover temporary employment service (TES) in the first three months, so that going forward the site where an individual would be stationed could then take over.


Mr Mashile proposed that the Committee park the definition of employer and return to it, as there was the issue of labour brokers, which were employers in kind and when they did not pay and were sub-contracted to Pick ‘n Pay, the retailer would ultimately have to pay the workers in some instances. He asked that the Committee allow itself to apply itself to that definition, pending the judgment.


Mr Moteka asked for a broader elaboration of the definition of ‘employer’ from Ms Ebrahim before the Committee finished with the NMW Bill, and agreed with the proposal from Mr Mashile.


Mr Lamati requested that the DoL be allowed to submit written inputs as to why it wanted to keep the definition of employer as originally drafted.


Mr Bagraim said that the DoL’s response to the Institute for Economic Justice’s (IEJ’s) first comment about the DoL’s policy approach to protecting low paid workers and regulating the labour market, accordingly seemed unclear as government had already over-regulated the labour market without ever implementing the regulations. He wanted clarity on what the DoL had been driving at there. He also presumed that the response from the DoL, that Clause 7 (b) (i) of the NMW Bill required that the Commission consider the need to retain the value of the minimum wage in light of inflation and the cost of living, had been read in conjunction with the clause speaking to job retention.


He thought that the second paragraph of the IEJ probably was talking to protection for other terms and conditions of employment, such that employees would not only receive wages but would have protection of their other benefits, and that throwing out sectoral determinations did not cover everything that the IEJ had raised.


He was not sure why there would be a need for weekly and monthly equivalents of the NMW if the hourly rate was retained, unless of course some day labourers would receive a letter of appointment.


He asked that the DoL submit the minutes of the Committee of Principals at NEDLAC on 21 September 2017, as he did not have those minutes.


Mr Moteka said that the IEJ’s comments had to be assimilated into the NMW Bill. He also supported Mr Bagraim that the minutes he had requested be submitted to the Committee.


Purpose of the Act


Mr Mashile said he had read in Clause 2 (a) that the purpose of this Act was to advance economic development and social justice by improving the wages of lowest paid workers. He wondered how the clause would be interpreted after the implementation of the NMW. The majority of the IEJ’s comments seemed to be technical issues which could be accommodated by the regulations of the NMW Bill.


The Chairperson asked the DoL to comment on the meeting of the Committee of Principals.


Mr Lamati said the NEDLAC decision had been that the issue of hours had to be referred to a panel of experts, and it had been said the panel had prescribed the hours as captured in the NMW Bill. There was also a provision that the NMW Commission would do further work on the hours, once it had been established. Some sectoral determinations had been made through such an arrangement, as provided for in law. Certainly the DoL was supposed to have referenced that, instead of the meeting of the Committee of Principals.


Regarding over-regulation, this was open to discussion and interpretation, as the Committee was aware that some sectors had opted to self-regulate through bargaining councils and agreements where they had set their own minimum wages, and the DoL had simply agreed to those.


The DoL had never intended to do away with sectoral determinations (SDs) and the benefits contained therein. The benefits of sectoral determinations would be retained in the NMW.


The hourly denomination had been standard practice, and the DoL had included the schedules in the sectoral determinations to simplify matters.


Regulations had already been developed and were awaiting completion of the processing of the labour bills through Parliament.


Mr Seafield said the NMW initiative was to improve the wages of lowest paid workers, as 43-46% of workers earned below the proposed level of the NMW Bill. The NMW aimed to cover workers that were currently not covered by sectoral determinations, or bargaining council and individual agreements.


The Chairperson hoped that it was clear that the current sectoral determinations and bargaining council agreements, in relation to the NMW levels could not be adjusted downwards, only upwards. In other words, if a worker already received R25 or more, the introduction of the NMW levels was not supposed to be used to revise down hourly levels. Moreover, the NMW was intended to raise the levels for those earning below R20, so that R20 per hour would be the floor.


Mr Moteka said that the regulations were an intervention into what was clearly an abuse of workers currently. He said the EFF perspective was a R5 000 NMW per month to avoid the hourly levels being abused by employers.


Mr Mashile reiterated his earlier comment about clause 2 (a), noting that after implementation of the NMW the lowest paid would be notched at R3 500 monthly. He was proposing that the DoL expand on that clause and how it would be extended after implementation.


The Chairperson cautioned the Committee on foreshadowing discussions that were still to be had.


Mr Lamati responded that the difficulty with setting an absolute figure was that it took away the flexibility that employers had to have to decide together with employees on the hours of work. The DoL had therefore decided to speak about the hourly rates instead of an absolute figure, because even if an absolute figure was agreed upon, and the employer needed only six hours instead of 10 from the employee, then the employer could not be forced to pay the greater amount.


On the purpose of the NMW, specifically clause 2 (a) as referenced by Mr Mashile, that clause was a living clause because of the changing nature of work. With new forms of employment which would come in from the fourth industrial revolution, it had been important for the DoL to have cover for the lowest paid worker as per clause 2 (a), and there would never be a time when the clause would not be required.


The Chairperson requested that the Committee proceed with the work, as the detail of the implementation of the NMW would still be work that was forthcoming, but the Committee had to agree on the purpose of the NMW.


Mr Moteka proposed an additional clause to read as sub-clause 2 (f), reducing wage inequality, as it had been excluded, taking into account that the country was in its current crisis because of ‘apartheid wages,’ because that had been omitted previously.


He reiterated that the Committee had to be assured by the DoL that if there could be no absolute figure for a monthly salary, and while the jury was still out on what the panel of experts decided on hourly rates, how many hours per day workers would be allowed to work.


The Chairperson proposed that the Committee deal with hourly rates when it got to the clauses on the calculation of wages. She noted Mr Moteka’s additional sub-clause proposal requesting the Committee’s view on that.


Ms Theko said that seeing that the preamble read, ‘noting the need to eradicate poverty and inequality,’ the proposed sub-clause 2 (f) would seem repetitive.


Mr Mashile said that the proposed sub-clause 2(f) was a ‘nice to have’ inclusion, but when proposing a NMW and not having a national maximum wage, then the proposed sub-clause 2 (f) was beyond the control of legislators because those earning in the upper limit would earn more. This would undercut the NMW and would undermine the reduction of the wage gap entirely. If the purpose was to set upper and lower limits, the Committee would be able to clear say it was in control, or reducing the wage gap. However, the purpose was to set a NMW.


The Chairperson asked for input regarding the two views from Mr Moteka and Ms Theko.

The majority view was for clause 2 to remain, without sub-clause 2 (f).


Mr Moteka commented that Committee work had to be in the interest of improving workers’ conditions, and should not be partisanal.


The Chairperson requested that the Committee be concise with its inputs, as there remained a lot of work ahead. She continued reading from the DoL inputs document.


Application of the Act


Sub-clause 3


She asked that the DoL elaborate on the comment from the SA Tuna Association and SA Longline Hake Association.


Ian Macun, Director: Collective Bargaining, DoL, said when the earlier explanation on ‘worker’ had been submitted, it had been made wider to include seafarers. Secondly, as noted in the DoL’s response, the Merchant Shipping Act (no 57 of 1951 as amended) regulated only working conditions and said nothing about the wages of seafarers, which was why the DoL proposed that the NMW had to be applied to seafarers as well.


He added that the employer associations in the fishing industry had bemoaned that the NMW was challenging for their sector, as it was difficult for them to calculate hours of work, as fishers went out to sea for days to weeks on end. He then referenced the DoL’s response in its document.


The Chairperson asked the DoL whether the reference in its responding document, reading: “An amendment should be made to sub-clause 3(3) of the BCEA to include the National Minimum Wage Act after the reference to SDs, including the application of chapters 3, 4, 5 and 6,” were current amendments to the BCE bill, or would come in future.


Mr Lamati replied that the current amendments to the BCE bill were what were being referred to.


The Chairperson asked whether the Committee agreed with the response of the DoL on matters to do with seafarers.


With the Committee in agreement, she continued reading.


Mr Mashile said the SA Tuna Long Line Association plea, to be afforded a transitional period for the implementation of the NMW without having participated in the proper forums during public consultation, seemed to stem from abuse of process, and sectors would still be allowed to apply for exemptions at the end. He therefore proposed that the Committee leave that issue without any change in process.


The Chairperson said that seeing the Committee agreed that the transitional period would remain only for the sectors as specified, no other sector would be allowed a transitional period.


She continued reading and asked for input from the Committee.


Chapter 2: National Minimum Wage


Sub-clause 4 (2)


Mr America said that indeed, as AVBOB had stated, the NMW bill was unclear how employers were to deal with commission earners like estate agents, for example. What portion of the contract of employment of that agent would be deemed compliant with payment of a NMW, when no houses had been sold from one month to the next? More clarity had to be given to avoid that being left to different interpretations.


Mr Moteka agreed with the DoL response, that a worker had to be able to have a basic wage so that commission could then be something else, so that a person would be able to service his/her monthly commitments.


Mr Bagraim said that if he were an estate agent and had sold nothing for five months, and then managed to sell a property for R1 million, would the scenario be that he had to deduct the hours he had spent from the sale amount, or was he supposed to expand the amount to sustain him for a year to, say, R500 per hour, because businesses would start doing that and say they had been paying the agent that amount and therefore would deduct the hourly rate of the previous five months from the sale amount.


Mr Mashile asked whether the Committee wanted commission earners to run around for a whole month trying to sell something and because no sale would have materialised by the month end, then the person would remain unpaid. He agreed with Mr Moteka that commission earners had to be protected as he had proposed.


The Chairperson reiterated the DoL response that it was in line with the Committee’s sentiment.


Mr Lamati said the employment contract between a commission earner and employer had to change to guarantee the minimum hours worked thenceforth.


The Chairperson asked if the Committee agreed to proceed.


Mr Moteka appreciated the DoL’s response, noting that somewhere in the NMW Bill it had to be clearly inserted that commission earners had to have employment contracts stipulating minimum wages or hours of work.


The Chairperson said that as this was already captured in the responding document of the DoL the Committee’s sentiment was already covered and needed no specific delimitation.


Mr Bagraim said he still required an answer to his analogy, failing which he understood Mr Lamati to agree that the hourly rates for commission earners could be deducted, as he had proposed. Moreover, if an estate agent worked for multiple employers, each employer could put a ceiling that the agent could not work more hours than agreed with each employer, and would be paid accordingly. He requested comment from the DoL on whether that was what the response to AVBOB meant.


Mr Lamati referenced sub-clause 5 (3) of the NMW Bill under calculation of wages, which read: “(3) Subject to sub-clause (2), if the worker is paid on a basis other than the number of hours worked, the worker may not be paid less than the national minimum wage for the ordinary hours of work.” The provision had been inserted to cover the scenarios Mr Bagraim had spoken about, and when one entered into a contract of employment that contract had to be compliant with the prevailing laws. Therefore, if there was an agreement with the commission earner that the deductions would be effected in compliance with the law -- for example, for the Unemployment Insurance Fund (UIF) and all other funds -- an employer could not at a later stage say they would deduct the NMW already paid to an worker from the commission they would be earning because work would have been done, apart from whether sales had been recorded or not.


The Chairperson said the NMW was to protect a worker from being disadvantaged, as already outlined, and any unilateral change to a contract of employment by an employer to say a worker could work only four hours and not more could constitute gross unfair labour practice.


Mr Bagraim said that the DoL and Chairperson were missing his point, as he was referring to upper limit commission earners, like an individual earning R1 000 per day for two hours of work. The employer would owe the worker R1 000 commission plus the R40 or R80 for the two hours worked, but would the employer then be allowed to deduct the two hours, as the worker would be earning in excess of the NMW? When the DoL spoke about changing conditions of employment, most estate agents were independent contractors who were not contracted and had no specific hours prescribed, and his point was seeing that a contract was being legislated into being by law, then hours of work also had to be legislated because a NMW had to be complied with.


The Chairperson said that was AVBOB’s following concern, as per the DoL’s responding document. She asked the DoL to address Mr Bagraim’s example regarding its response about independent contractors.


Mr Lamati said the uniqueness of independent contractors was self-regulation of their hours of work, and the condition that without a sale there would be no remuneration. The DoL knew and had experience of people working without getting payment, and the purpose of the NMW Bill was to improve the wages of the lowest paid workers and to ensure that no one would be paid a wage below the NMW. The notion that had been raised was if there was no sale but a worker had worked, did that make it fair and mean the worker did not deserve payment? That was unfair. What was being said was that if a worker had had a contract with an employer where the pay was R1 000 for two hours, the NMW law was saying the employer had to pay the worker for four hours going forward. An employer could not unilaterally effect deductions to anyone’s salary, and the NMW would ensure that no one went home without a wages after selling their labour. What Mr Bagraim had analogised was what the DoL was hoping to remedy, because if an agent made R1 million sales and the agent decided to withdraw from an insurer of the employer’s choice, then the employer deducted the insurance contribution directly from the worker’s commission unilaterally, which was not correct nor fair practice.


Mr Moteka said that Members might think he wanted to overload the NMW Bill, but some inputs had opened his eyes because the analogy of four hours and independent contractors opened them up to abuse by others, as their contracts would stipulate that they had to meet impossible targets in the four hours at the risk of non-payment of wages without meeting the targets.


The Chairperson concluded that the intention of the NMW would remain that no worker was to be worse off in terms of wages after the implementation of the NMW. She then read the following input and asked for comment.


Sub-clause 4 (6)


Mr Mashile said he did not understand the first comment of the Labour & Enterprise Policy Research Group (LEPRG).


Mr Macun said the DoL had also struggled with the comment from the LEPRG. He referenced draft clause 4 (6): “It is an unfair labour practice for an employer to unilaterally alter wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage, and clauses 191, 193, 194(4) and 195 of the Labour Relations Act (LRA) apply, unless the context indicates otherwise.” He said the former three clause of the LRA set out a labour dispute resolution procedure for unfair labour practices. The procedure allowed disputes to be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA), and the BCEA also had similar provisions. The CCMA submission on the NMW Bill had spoken to the increased work load the CCMA would incur because of the provisions.


The LRA also had clause 64, which dealt with the right to strike, and clause 64 (4) specifically spoke to unilateral changes in the terms and conditions of employment. Clause 64 (4) spoke to the unilateral changes in terms and conditions of employment in a mutual and strikeable manner. The effect, therefore, of clause 4(6) of the NMW would then be to remove the right to strike for any worker who would have suffered a unilateral altering of wages, hours of work or other conditions of employment, which indeed was an unfair labour practice which was referable to the CCMA, and would not be a strikeable issue. However, in terms of clause 64, if a trade union three years into the future had workers who were working shifts, and those were unilaterally changed by the employer, workers could still strike on that. Overall in respect of the NMW Bill, the right to strike was indeed limited and the DoL stood by the fact that individual disputes over unilateral changes to pay had to be referred to the CCMA.


Mr Bagraim appreciated the explanation, commenting that strikes were for a wish and not rights, because the NMW was creating rights.


The Chairperson observed that the Cape Chamber of Commerce & Industry (CCCI) had a similar comment with a slightly different caveat at the end, and asked for input from the Committee.


Mr Mashile agreed with the DoL’s response to the CCCI.


Mr Bagraim differed, commenting that if a business was not making its targeted returns, then it could propose a change in its model or retrench. He therefore agreed that what clause 4(6) meant for businesses could not only stagnate operations, but could indeed bankrupt them as the CCCI had intimated.


The Chairperson disagreed with Mr Bagraim, noting that businesses could not unilaterally change conditions of employment because if they could not pay a NMW, then they could apply for exemptions.


Mr Mashile said surely, even if Parliament unilaterally changed the conditions of employment of Members of Parliament (MPs), they would cause a big rumpus over such uncanvassed changes. Therefore, the NMW Bill prescribed only that an employer who was under duress operationally had to first explain to workers before changing the business model, because if labour conditions were fair then decreasing hours of work would constitute no issue for workers if they were taken into confidence, as no worker would opt for dismissal.


Mr Moteka proposed that the Committee had to insert a provision to protect workers earning above the NMW from being dismissed and rehired at the NMW by the same employer.


The Chairperson asked whether the NMW already had a provision addressing Mr Moteka’s concern.


Mr Lamati replied that the DoL’s response remained unchanged, and the spirit of the response was that businesses could make changes to employment conditions only in consultation and consensus with workers.


Ms Theko supported the response from the DoL.


Mr Bagraim said if the employees did not agree to employment condition changes, then businesses would retrench or shut down operations anyway.


Mr Moteka said he had not been responded to, adding that it was sad that even when he submitted proposals they were being rejected because they were from an opposition party.


Ms Theko proposed that Mr Moteka submit a draft proposal so the legal advisors could advise the Committee appropriately.


Ms Ebrahim said that clause 189 of the LRA dealt with dismissals because of operational requirements. She assumed that if an employer was unable to pay the NMW, that then became an operational issue. Clause 189 (3) (h) read: “The employer must issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but not limited to (h) the possibility of the future re-employment of the employees who are dismissed.”


She suspected that trade unions or a labour law expert would insist that in the written notice, 189 (3) (h) be included, and that if a worker who had been retrenched was re-employed, that would be at an hourly rate higher than the NMW or the original rate at which the dismissal had occurred. They would perhaps also request that if an employer was to re-employ in that position, then the right to refuse had to be first given to workers who had been dismissed. The DoL could advise better, so as to capture Mr Moteka’s sentiment.


Mr Macun concurred with Ms Ebrahim that Mr Moteka’s concern was fully covered under the LRA dismissal procedures.


Mr Moteka said nowhere in the NMW had it been stated that an employer who formally could afford the NMW, could not apply for an exemption when the NMW was no longer affordable. Secondly, if a person was retrenched, the person was no longer a worker, and if the same person applied for the same position with the same employer after retrenchment, he did not see how that same person could demand to be paid the same employment conditions from the previous employment.


The Chairperson proposed that the Committee could return to the provision, and would allow the legal advisors time to craft a draft provision which would assimilate Mr Moteka’s view.


She said the legal advisors had submitted a proposed definition of ‘employer’. She read: “Employer means any person who is obliged to pay a worker for the work that that worker performs for that person or on behalf of that person. The amendment would allow the employee to act against the TES or the client, except where the client is deemed in terms of the LRA to be the employee.”


Mr Bagraim said the definition was not in line with the definition of ‘employer,’ as captured in the BCEA or the LRA. For the purpose of the NMW, it seemed that there would be two types of employers -- one which employed workers, and another which employed employees.


Mr Mashile said he was uncertain why the Committee had to consider reading the legislation, because the definition of ‘employer’ in the NMW Bill would become that in the NMW Act only, and no other law. He also sought clarity whether ‘person’ referred to individuals and entities alike.


Mr Lamati said the DoL preferred to keep the definition it had provided as the draft provision by Ms Ebrahim. Although it was understood that it had been submitted to factor in the deeming provisions from the LRA, this draft provision would make issues difficult. He then outlined how the employment relationship moved from a TES to the client after a worker would have been on site for more than three months.


Mr W Madisha (COPE) requested that the DoL go back to where the definition of employee had been captured.


The Chairperson said the Committee had already passed that part, but requested Mr Madisha to allow the Committee to finalise the issue of the ‘employer,’ so that ‘employee’ could then be revisited.


Mr Bagraim did not understand why there would need to be a change of definition for ‘employer’ as captured in the NMW Bill, and although there would be litigation forthcoming and even though Ms Ebrahim had tried to speak to any decision of the court on that definition, there already was a definition in the BCEA and things were simply being complicated by proposing a different definition elsewhere.


Mr Mashile said he was comfortable with the definition of ‘employer’ in the NMW Bill, because ‘employer’ in the BCEA would exclude some workers, unless Mr Bagraim would accept substituting the ‘worker’ definition to speak to ‘employee’.


The Chairperson requested the Committee to deal only with the definition of ‘employer’.


Mr Bagraim said that as Mr Lamati had pointed out to him, there was no definition of ‘employer’ in the BCEA -- that is, the person using the definition of ‘employer’ would be the ‘employer,’ and clause 200A in the BCEA defined the ‘employee’. Since 1995, Parliament had been struggling to define ‘employer’ and that was his point -- that the NMW could not be allowed to upset what had been such a struggle to define since then to date, because there was also case law to that effect.


Ms Ebrahim said the interpretation in the Act defined ‘person’ to include entities, therefore no further amendment was required in the NMW in that regard.


Labour law challenges were that labour was comprised of a suite of laws which required cross-referencing when determining something. However, her understanding of the ‘worker’ definition in the NMW had been cast wider, which was also why her submission for ‘employer’ definition had been proposed, as she had submitted as it had been based on the definition of ‘employee’ as captured in the BCEA. Whether the Committee accepted her submission, this did not remove the recourse that a worker would have, but her submission had been based on the practicality of a worker being in the employ of a TES and being sent to different sites over a period of weeks. If it was presumed that the worker had not been paid the NMW hourly rate, that would mean in the current law that the worker would need to act against the site where they were stationed by the TES, whereas if her submission was accepted that would enable the worker to act against the TES. The definition practically for her would not affect whether someone would be able to claim the NMW or not, but from whom they would be claiming the NMW.


The Chairperson reiterated that the Committee had to decide whether it accepted the DoL’s definition of an ‘employer,’ or that which Ms Ebrahim had submitted.


Mr Madisha accepted the submission made by Ms Ebrahim of ‘employer’ to be captured in the NMW.


Mr Bagraim disagreed.


Mr Moteka agreed with the amendment.


The Committee agreed with the amended definition of ‘employer’ in the NMW.


Calculation of Wage


Clause 5


The Chairperson continued reading from the DoL’s response document.


Mr Bagraim asked whether the DoL input meant that SDs would remain in place, despite there being a NMW.


Mr Lamati said there was no time limit and that SDs would remain, but the wage component would be affected by the review by the NMW Commission when implementing the NMW. Employment conditions would remain intact as well, but would be affected by any proposal the NMW Commission would make to the Minister of Labour to improve employment conditions of a specific sector.


The Chairperson reaffirmed that SDs would remain in place for only two sectors that had been exempted from the NMW, whereas the other sectors with SDs which were below the R20 NMW rate would be brought up, to be in line with the hourly rate of the NMW when the law was enacted.


The DoL agreed.


Ms Ebrahim said that a problem arising from the SDs remaining in place through the transitional provisions, was that the Minister would have the power only to cancel or suspend a SD. However, the Minister would not be allowed to vary or issue a new one, and legislation had to be drafted for the future. Her concern was that the employment conditions and deductions contained in any current SDs were for the current work environment, whereas with future work changes where an amendment would need to be made, the DoL would not be able to amend certain conditions of that SD. Her concern and submission was that SDs could be retained, but the parts dealing with the wage had to be deleted and linked with the NMW. She asked for comment from the DoL as to whether her technical reading was in line with what had been proposed


The DoL replied that Ms Ebrahim had read correctly.


The Chairperson notified Members that as it agreed on the calculation of the wage in the NMW, it was also considering provisions that would affect the BCE Bill as well.


Mr Mashile asked when the Committee would be given the draft proposal submitted by Ms Ebrahim.


The Chairperson reiterated that as the Committee was processing the NMW Bill, the clause was contained in the BCE Bill and would be amended there. The cross-referencing would affect multiple clauses of the two bills, and the Committee would simply affect changes in the BCE Bill as and when they processed them in the NMW Bill.


Mr Bagraim said people could not take a break when on board a vessel, and if an employer contracted workers for only four hours, even though physically a worker would be on board a vessel for 24 hours, how would it be determined whether a person was on duty or off in such situations, although the BCEA had a wage calculation guideline?


The Chairperson replied that she thought the matter had been clarified already.


Mr Macun said that as earlier stated, the DoL had referred the matter back to the seafarers’ associations during public hearings for them to determine how they would monitor working hours on a vessel, as it was an operational issue. The DoL understood that some vessels did keep records of when fishermen were on duty and off-duty, separate from rest hours. With pilots, his understanding was that they were working immediately they boarded an aeroplane. The guaranteed minimum number of hours was not the issue, but how long the fishermen were working during the catching of fish and calculating aggregately, factoring in other aspects and not only just the tonnage of fish caught.


Sub-clause 5 (1) (b)


The Chairperson then read the Labour & Enterprise Policy Research Group (LEPRG) comment on the calculation of wages.


Ms Ebrahim said that it was important that the Committee was cognizant that the section of the BCEA guaranteeing four hours as the minimum time of work used the term ‘employee,’ as defined in its provision. Therefore, that would not cover all the ‘workers’ in terms of the NMW Bill, and if the intention was to cover every worker including someone coming to your home for casual labour, that person would not be covered in clause 5 of the NMW Bill, as according to the BCEA that person would not be an ‘employee’.


The Chairperson asked what the legal advisors were proposing.


Ms Ebrahim replied that the decision was based on policy, and the DoL could advise better.


Mr Lamati said the DoL would consider the issue.


The Chairperson said that all the areas the Committee had flagged would return to the DoL, which had to respond to them the following day.


Mr Madisha said he was not satisfied with the response that the DoL would process the comment by the legal advisors, because that commitment had no guarantee that the inputs would be considered.


The Chairperson said she did not believe the DoL to be saying that it would unilaterally consider what had been submitted, but that it would redraft clause 5 of the NMW Bill accordingly and return to the Committee for its input before proceeding.


She then continued reading the Cape Chamber of Commerce & Industry’s input on clause 5 of the NMW Bill.


Mr Bagraim said he understood what the CCCI had been trying to avoid, as clause 5 had the consequence of discouraging employers from offering allowances for transport, accommodation, bonuses or other payments in the future. Although those costs might be minimal for the employer, they could be substantial for employees and could mean less take home pay.


Mr Mashile said the Committee had to protect the real take home pay of workers. There were different reasons employers provided allowances for transport, accommodation and bonuses, and the amounts were not necessarily to bolster the take home pay of employees only.


Mr America said that the Committee could not in legislation codify the exclusion of allowances, as only certain sectors would have their workers affected. The majority of workers generally had to bear the costs of those type of deductions, such as for transport and accommodation, personally.


Mr Lamati said the DoL had reviewed what was already in law, as the BCEA sub-clause 35 (b) calculation of remuneration provided what needed to be excluded. Furthermore, the NMW would be based on the hours worked and the DoL would not take away the generosity of employers.


The Chairperson asked if there were any other views, besides those of Mr Mashile and Mr Bagraim on the CCCI input on clause 5 of the NMW Bill.


The Committee accepted the DoL response to the input on clause 5 from the CCCI.


Sub-clause 6 (6)


The Chairperson asked the DoL to submit the clause 6(6) (a) to require the Minister to table the NMW Commission’s recommendations, as well as the schedules, in the National Assembly.


Mr Lamati read the clause:


“The Commission must review the national minimum wage annually and make recommendations to the Minister on any adjustment of the national minimum wage, which minimum wage must commence on the first of May each year; the review report to the Minister must reflect any alternative views including those of the public, in respect of any recommendations in terms of sub-clause (1). If the Minister does not agree or requires clarity in terms of the report and recommendations, the Minister may refer the report back to the Commission to clarify or reconsider their recommendations.”


In sub-clause 6 (7) (a), if Cabinet approves the adjustment to the NMW, the Minister must table the recommendations of the Commission with the amended schedules 1 & 2 in the National Assembly.


The Committee asked the legal advisors to check whether ‘table the recommendations of the Commission with the amended schedules 1& 2 in the National Assembly,’ would mean appearance in the Announcements, Tablings and Committee reports (ATC) only, or would be debated by the relevant Committee as well.


Mr Lamati submitted that there was a sub-clause 6 (7) of the NMW bill which read:


“If the National Assembly does not pass a resolution to the contrary within 14 days of tabling, the amended schedules 1 & 2 take effect on 1 May of that year.”


Ms Ebrahim said the way the amendment had been crafted gave Parliament the power to decide whether the NMW would be adjusted or not. Her concern was that the provision had been drafted in the negative, as it made it a condition that if the National Assembly (NA) did not pass a resolution to the contrary within 14 days of tabling, the amended schedules would take effect on 1 May. The drafting of the provision held Parliament to ransom, that it had to sit within that 14 days of tabling. She proposed a redraft which would read: “The adjusted NMW would take effect on 1 May the following year, subject to the NA passing a resolution.”


Mr Mashile said he was troubled by the proposition that Parliament had to be involved in executive decision making, when the executive was charged with decision making and then accounting to Parliament.


Mr Lamati requested that the DoL be allowed to redraft and resubmit the provision to that clause, in consultation with Parliament’s legal advisors.


Mr Ebrahim said the Committee still needed to make a policy decision on whether it wanted the NMW to be set by the Minister of Labour, or if Parliament would set the NMW based on what the Minister and the Commission would have submitted to Parliament, since currently clause 6 (6) of the NMW Bill provided that Parliament could object and introduce a new NMW.


The Chairperson asked for input from the Committee.


Mr Bagraim believed that Parliament had to be given an opportunity to decide, as well as the President of the country, because the NMW Bill was probably one of the most financially far-reaching pieces of legislation South Africa (SA) had ever had.


Mr Madisha said that SA was not a dictatorial state, where only Ministers and the President were going to make decisions. He accepted the DoL’s request to redraft clause 6 (6), and also supported the view that Parliament had to be consulted on adjustments to the NMW.


Mr Mashile said the ANC would reserve its position on the matter and would advise its position the following day.


Annual Review


The Chairperson continued reading from the DoL’s response document.


Mr Bagraim said that the DA strongly supported the view that incorporated into the review should be economic conditions within the sector, consultation with recognised industry associations, employer associations and chambers of commerce, as recommended by FishSA.


Mr Mashile said the DoL’s response was enough.


Ms Theko also supported the DoL’s response.


Ms Ebrahim commented that the NMW Bill said the review would consider conditions in particular sectors which would form part of the determination for what the NMW would be, but she wondered if new sectors would ever be introduced later on in terms of categories, or whether the intention was to eventually have one NMW in future. If the intention was to include another sector later, then in another amended schedule that category could be included which currently was not covered by the NMW Bill. She requested clarity from the DoL on that.


Mr Lamati said the intention was not to close the door on any changes that the NMW Commission could make in future. The DoL accepted the view from Ms Ebrahim.


The Chairperson said seeing that there was agreement, the clause would be amended accordingly, not to exclude that intention.


Ms Ebrahim said that as the legal advisors, together with the DoL, they would include the redraft in sub-clause 4 (1) which spoke about the amount in schedule 1.


The Chairperson then read the Southern African Catholic Bishops' Conference (SACBC) Parliamentary Liaison Office input.


Ms Ebrahim said the SACBC were asking that the annual review report of the NMW Commission be published for public consumption, as that was not included in the NMW Bill provisions.


The Chairperson asked if the DoL had already crafted the clause 5 amendment to the NMW Bill, to respond to the SACBC.


Mr Macun said what was envisaged were two products of the NMW Commission. These were recommendations regarding adjustments, and a report of the Commission’s work which could include the recommendations for adjustments.


The Chairperson proceeded with reading.


Mr Bagraim said he agreed with the DoL’s response to the IEJ input specifically -- that legislation was not supposed to prescribe nor be prescriptive on the methods used to calculate inflation and other indicators.


Mr Moteka agreed with the DoL’s response.


Mr Mashile proposed that it had to be specified that the NMW would either remain constant or upwards after each review. There could be no adjustment downwards.


Mr Moteka disagreed with a NMW that would remain constant -- it had to go up with each adjustment.


Mr Bagraim said that if a NMW adjustment went downwards, that would be breaking many other labour laws. The point of the IEJ was that if the NMW remained constant over a period while inflation and other indicators changed, the value of the NMW dropped.


The Committee agreed with the DoL and the Chairperson proceeded reading.


Conduct of annual review


Sub-clause 7(b) (vii)


Mr Mashile said that he was concerned as to whose word would carry more weight between the NEDLAC social partners and independent experts on the impact of the recommended adjustment on employment, or the creation of employment.


Mr Moteka proposed a substitution of ‘alleviation’ by ‘eradication’ in sub-clause 7 (a) (ii). In addition, ‘promote’ in sub-clause 7 (a) had to be substituted by ‘ensure’.


He said the NMW Commission always had to link its targets with inflation to ensure sustainability and the viability of the NMW, because without that research, it had already been shown in other countries that the NMW became eroded and inequality increased. To that extent, he proposed a substitution of ‘consider’ with ‘ensure’ in sub-clause 7(b).


Mr Bagraim said he disagreed with Mr Moteka completely, because his proposals went against everything the Commission was supposed to be doing.


The Chairperson said sub-clause 7 (b) (i) was quite expansive, but she would allow the DoL to respond to the Committee’s inputs.


Mr Macun said that the DoL was aware of the difficulty of evaluating the impact of adjustments, and planned to conduct workshops even before the establishment of the NMW Commission to develop a framework for monitoring and evaluation to assist the Commission. The DoL accepted that there would be more than one statistical model required to reduce the possibility of conflicting interpretation of evidence, but the NMW Bill left the final decision to the Commission. As clause 12 of the NMW Bill set rules for the Commission’s conduct, it was expected that the Commission, like any public body, would grapple with controversies.


Mr Lamati said the reality was that there would be those outside of the Commission who would challenge its work. The Committee had to have faith that the Commission would do credible work, as it would use credible models to provide advice to DoL.


The Commission would do all the things that Mr Moteka had raised, but using the terms as he had proposed would seem to imply that the Commission would have to arrive at a predetermined result, which was not the intention of establishing the Commission. It had to use evidence-based information to develop recommendations, and the DoL believed the wording used was appropriate. That also extended to the other substitutions suggested, because the NMW was but one tool that would and could assist in reducing poverty.


Mr Moteka accepted the rationale from the DoL.


National Minimum Wage Commission


Establishment of Commission


Mr Bagraim said that in terms of the enabling environment for the Minister to update the SDs earlier referred to, he wanted the DoL’s response to be read with that earlier response. He agreed with the DoL.


Composition of Commission


Clause 9


Mr Bagraim did not believe the community constituency at NEDLAC spoke on behalf of the unemployed and possibly that needed strengthening, but discussion on this issue could be had somewhere else.


Mr Moteka did not understand how the unemployed were affected by a NMW Bill.


Mr Bagraim said the unemployed had an interest, in that they would want to be employed, but if the NMW was set too high new employment prospects were diminished.


Mr Mashile accepted the DoL’s rationale about the community constituency at NEDLAC. He asked for clarity on what was meant by ‘independent’ in sub-clause 9 (1) (a).


Mr Lamati said generally ‘independent’ referred to the fact that the Chairperson of the NMW Commission would not be taken from any of the constituencies at NEDLAC. However, the DoL accepted the input, and it was the Committee’s decision in fact.


Mr Madisha proposed that ‘independent’ be removed from the sub-clause.


The Committee agreed.


Sub-clause 9A


Mr Lamati said that the input by the NMW Research Institute (RI) formed part of the responses which the DoL had requested time to redraft or respond to the following day.


Mr Mashile said he had reservation about sub-clause 9 (2) specifying that members of the NMW Commission had to be permanent residents of SA, since that did not necessarily mean they were citizens of SA.


The Chairperson requested that legal advisors be allowed to work and advise the Committee accordingly before it finalised the NMW bill.


Mr Bagraim was concerned that if decision-making on the NMW Commission was intended to be by consensus, what happened if there was no consensus? There possibly needed to be a realignment of NEDLAC to try and include inputs from small businesses and the unemployed, as there seemed to be a thread running in the submissions that NEDLAC was possibly too entrenched in its own traditional membership, as the South African Federation of Trade Unions (SAFTU) had also complained previously.


Mr Moteka said the intention to reach consensus was always sought, but out-voting each other was a reality and practice, and that could not now be treated as special.


Mr Mashile agreed that out-voting was a practice. Furthermore, there were also bilateral agreements between business and trade unions or the community, where the intention was to clarify and engage each other.


Mr Lamati said the DoL envisaged that the NMW would operate similarly to how the Employment Conditions Commission (ECC) currently operated. When there were disagreements there, parties were allowed to engage each other and those that remained in disagreement were allowed to submit minority reports so that their voices would be heard. He did not foresee a crisis therefore.


Functions of Commission


Sub-clause 11(b)


Mr Moteka proposed that the Committee stop work for that day and continue the following day, as the quality of discussions going forward was being compromised.


Mr Bagraim seconded the proposal by Mr Moteka.


Ms Ebrahim submitted that indeed Mr Mashile had been correct, that naturalization not only took ten years, but permanent residents could not vote without naturalisation. Therefore the Committee had to decide if ‘permanent resident’ was to be deleted or kept, with reference to sub-clause 9 (2).


The Chairperson said the Committee would decide on that the following day.


Mr Mashile said that naturalised people did not necessarily need to be brought into the NMW Commission, since they ordinarily were citizens.


The Chairperson said there had been a unanimous decision that the Committee would finish later due to the slow pace of the processing of the NMW Bill and other labour bills.


The meeting was adjourned.

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