Labour Bills: deliberations

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Employment and Labour

19 April 2018
Chairperson: Ms S van Schalkwyk (ANC) (Acting)
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Meeting Summary

The Portfolio Committee on Labour met for further deliberations on the Department’s responses to comments on the Labour Bills. The National Minimum Wage (NMW) Bill as well as the Basic Conditions of Employment (BCEA) Bill were discussed. Highlights of the discussions were as follows:

On the NMW Bill, The Retail Association had proposed that functions of NMW Commission (Section 11) be amended to include; “advising the Minister on sectorial determinations.” The Department’s response was that an appropriate amendment to section 11 was to be considered, and an amendment to the definition of Commission in the BCEA to refer to the NMW Commission will also be done. Members were agreeable to the Department’s written response.

Section 15

Labour organisations had proposed the creation of a provision to allow for low-wage bargaining councils to apply for a phase-in to the NMW level. This could allow low wage sectors and certain wage categories in agreements to phase-in to the NMW. However, the Department believed applications for a phase-in should be to NEDLAC before the introduction of the NMW. Further, Labour submitted there should be a review of the exemption system every 12 months to ensure that the objectives of the exemption system was achieved. The Department’s response was that this provision was not part of the NEDLAC agreement and if it is introduced at this stage, it will be difficult to justify special treatment for those covered by council agreements.  The preferred solution was to utilise the exemption provisions in the NMW Bill and regulations. It will be extremely difficult to give a special dispensation to some bargaining councils when other sectors may well be in a similar position, that is, where a sector is characterised by labour intensive, low wage employment.

Clause 13 (c)

The National Minimum Wage Research Institute, in its submission, had recommended that the NMW Commission be given direct authority over the staff of the Secretariat. It commented on the opportunity offered by the NMW Commission to develop in-house capacity for research to be conducted by the Secretariat rather than outsourced. The Department’s response was clause 13 already makes clear that the Minister must provide the Commission with a Secretariat to perform the listed functions. The intention is to have a combination of in-house capacity in the Secretariat, supplemented as necessary by outsourced research capacity. The Parliamentary Legal Unit (PLU) would further engage the Department on the nature of the Commission to make issues such as the appointment of the Commissioners, how vacancies would be filled, its budget structure and others completely clear. These were in-house issues which the PLU would engage the Department on.

Chapter 4- Exemptions

AgriSA had submitted that a regulation is needed to specify the timeframe for applications and feedback and the presumption that exemptions have been granted if no communication has been received. The regulation needs to deal with the requirements to qualify for exemptions and include information on incentive schemes to assist business to pay the NMW. The Department’s response was the Regulations that will address the exemption process will be published in due course. The DA disagreed with the majority position that stakeholders should wait on the Department to publish Regulations in due course. It believed the regulations should be published as an addendum to the Bill so they are discussed by the Committee upfront. However, majority of Members said having Regulations as an addendum to the Bill would be problematic because an Act should be a dynamic document. The Regulations should be discussed separately. The Committee would engage the Department on the regulations after the Bill is passed.

Secondly, the Committee deliberated on the Basic Conditions of Employment Bill.

Section 3: Insertion of Section 9A – Daily wage

AgriSA had submitted that this proposal would have employers paying twice for the same work to be done.  In the agricultural sector, various conditions determine whether an employee could perform work on a particular day, like rain, heat, cold, etc.  In most instances, where employees do not reside on the farm, they are transported to the workplace at the employers cost. In unsuitable circumstances, the employer will probably not fetch the employees on the particular day and have them working on a more suitable day. Either way, the employees will be paid for work performed.  This proposal has employers paying twice for the same work to be done. The Department’s response was that the responsibility resides with the employer to inform workers if their services will not be required. If there is proper communication and poor weather prevents work to be performed, workers will not be expecting transport and there will be no obligation to pay for work not performed. If workers that are to be picked-up by the employer are not informed that there will be no work on a particular day and they are not collected, the minimum daily wage payment will apply.

Section 64

The Acting Chairperson noted the Labour & Enterprise Policy Research Group, stating that Section 191, 193, 194(4) and 195 of the Labour Relations Act provides that bargaining councils may hear disputes within their jurisdiction.  This jurisdiction also applies to section 64(4) disputes. This was at odds with the amended section 64(1)(dA) which grants the CCMA exclusive jurisdiction to hear disputes regarding non-compliance with the NMW Act. The Department’s response was the amendment grants inspectors the right to refer disputes in relation to the NMW and UI Acts to the CCMA. Bargaining Councils have a responsibility to enforce their agreements and deal with disputes in relation to non-compliance with agreements.  The CCMA’s jurisdiction is granted in relation to a national statute to ensure that disputes are dealt with expeditiously and with consistency.

Section 16: Section 76A – Fine for not complying with NMW

Agri Western Cape, during public hearings, understood that government has a duty to ensure that employees receive the correct wage, but a penalty of twice the wage is severe and unrealistic and cannot be agreed to.

The Department’s response was that the most appropriate remedy will be to comply with the law or apply for an exemption if the employer cannot afford to pay the NMW. An alternative proposal was that a non-compliant employer be required to pay interest on an outstanding payment or that section 76A be amended to read the “lesser” of twice the value of the underpayment or twice the employee’s monthly wage. The Department said Rule 39 of the CCMA was clear with regard to frivolous and vexatious conduct by either party.  It should apply equally to both parties.

On the enforcement of the Bills, the Department indicated that an enforcement strategy for the NMW would be presented to NEDLAC for discussion with social partners.

Members pointed out that the country has robust labour laws but compliance was the issue. Enforcement was the cornerstone of it, and making sure the Department’s inspectorate is properly capacitated was paramount towards strengthening compliance. Further, the Committee expected updates on progress on the Department’s discussion with social partners. The discussions would continue the following day.

Meeting report

The Acting Chairperson welcomed everyone to the second day of deliberations on the labour Bills. She indicated that the Committee had received correspondence from some stakeholders that the Department’s response to submissions was not inclusive of all the comments submitted during public hearings. The Department would be given an opportunity to respond and time to address the omissions going forward. She took the Committee through the Department’s comments on submissions.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour, said the Department’s response document was not a verbatim reproduction of stakeholder comments. This response document only captured key issues which the Department felt would be important during Committee discussions. 

Deliberations on the National Minimum Wage (NMW) Bill

Clause 11(b) - Functions of Commission
The Acting Chairperson noted that the Forestry SA had commented that the requirement of the Commission to report annually should include a need to report on the economy, including levels of employment. However, the Department’s response was this is implicit in reporting on the economy, but could be added.

Mr B Mashile (ANC) was wary about the demand to have the Commission report on the economy. This was tantamount to transforming the Commission into National Treasury, and would make the reporting on the NMW by the Commission onerous. He felt the clause was adequate as is.

Mr M Bagraim (DA) agreed that Forestry SA’s comment was a big ask. It would be an impossible task for the four-member Commission to also report on the economy. Reporting on the state of the economy was not within the Commission’s mandate and would duplicate the role of Treasury.

Mr P Moteka (EFF) said the clause was sufficient as is and there was no need for the Department to add anything. The Commission should specialise on NMW reporting.

Members unanimously agreed.

Clause 11(c)
The Labour & Enterprise Policy Research Group, University of Cape Town, submitted that the way the section currently reads fails to respond to section 27 of the Employment Equity Act (EEA).  The NMW on its own will have little impact on reducing income differentials and it is recommended that amendments be made to section 27 of the EEA. The Department’s response was that it corresponds with the Basic Conditions of Employment Act (BCEA) and the intention is for the NMW Commission to take further the process of formulating recommendations to deal with income differentials.
Mr Mkalipi pointed out that the process of amending EEA to deal with the aforesaid concerns had already commenced at NEDLAC.

The Acting Chairperson said the comment hence falls away if processes to deal with the concern were underway.

Section 11
The Retail Association proposed that functions of NMW Commission be amended to include; “advising the Minister on sectorial determinations.” The Department’s response was that an appropriate amendment to section 11 was to be considered, and an amendment to the definition of Commission in the BCEA to refer to the NMW Commission will also be done.

Members were agreeable to the Department’s written response.

Section 15
The Acting Chairperson noted that labour organisations proposed the creation of a provision to allow for low-wage bargaining councils to apply for a phase-in to the NMW level. This could allow low wage sectors and certain wage categories in agreements to phase-in to the NMW. However, the Department believed applications for a phase-in should be to NEDLAC before the introduction of the NMW. Further, Labour submitted there should be a review of the exemption system every 12 months to ensure that the objectives of the exemption system was achieved. The Department’s response was that this provision was not part of the NEDLAC agreement and if it is introduced at this stage, it will be difficult to justify special treatment for those covered by council agreements.  The preferred solution was to utilise the exemption provisions in the NMW Bill and regulations. It will be extremely difficult to give a special dispensation to some bargaining councils when other sectors may well be in a similar position, that is, where a sector is characterised by labour intensive, low wage employment.

Members agreed with the Department’s response.

Clause 13 (c)
The National Minimum Wage Research Institute, in its submission, recommended that the NMW Commission be given direct authority over the staff of the Secretariat. It commented on the opportunity offered by the NMW Commission to develop in-house capacity for research to be conducted by the Secretariat rather than outsourced. The Department’s response was clause 13 already makes clear that the Minister must provide the Commission with a Secretariat to perform the listed functions. The intention is to have a combination of in-house capacity in the Secretariat, supplemented as necessary by outsourced research capacity.

Mr Mashile said the relationship between the Commission and the Secretariat needed to be clarified. Members had to be given time to decide on the constitution of the Commission and its mandate.

Mr Mkalipi said there was a distinction between the executive boards and advisory boards in government. The Commission would be an advisory board with limited functions. Commissioners would be conducting their work on a part-time basis.

Ms Fatima Ebrahim, Parliamentary Legal Adviser, said the Parliamentary Legal Unit (PLU) would further engage the Department on the nature of the Commission to make issues such as the appointment of the Commissioners, how vacancies would be filled, its budget structure and others completely clear. These were in-house issues which the PLU would engage the Department on.

The Acting Chairperson said the explanations were clear and the PLU would get back to the Committee after engaging with the Department on the identified issues.

Chapter 4- Exemptions
The Acting Chairperson said AgriSA submitted that a regulation is needed to specify the timeframe for applications and feedback and the presumption that exemptions have been granted if no communication has been received. The regulation needs to deal with the requirements to qualify for exemptions and include information on incentive schemes to assist business to pay the NMW. The Department’s response was the Regulations that will address the exemption process will be published in due course.
 
The majority of Members agreed.
Mr Bagraim disagreed with the majority position that stakeholders should wait on the Department to publish Regulations in due course. The Committee must exercise it oversight role on the formulation of the regulations. He added that small businesses have always complained that the regulations were complex. He believed the regulations should be published as an addendum to the Bill so they are discussed by the Committee upfront.
Mr Mashile said having Regulations as an addendum to the Bill would be problematic because an Act should be a dynamic document. The Regulations should be discussed separately. The Committee would engage the Department on the regulations after the Bill is passed.
The Acting Chairperson said it was not within the Committee’s capacity to change standard procedure. She agreed with Mr Mashile.
Clause 15
Forestry SA submitted that Exemptions should be made easier to acquire through allowing not only registered “employers’” to apply for exemption on behalf of their respective members or particular groups of them, but through changes to the regulations, allowing representative bodies such as Forestry SA, who are not such registered organisations, to do so, specifically in relation to a group or groups of their members through a “blanket exemption” mechanism. The Department’s response was Section 15 makes provision for an employers’ organisation registered in terms of any law to act on behalf of its members. Blanket exemptions will, however, not be catered for as information on individual employers will be required.
Mr Moteka expressed concern that having employers’ organisation registered in terms of any law acting on behalf of its members might open doors for abuse. He felt employers must apply for the Exemptions individually rather than having employer organisations do so on their behalf.
Mr Bagraim was in agreement with the Department. He emphasised that the said employer organisations should be registered at all times.
Mr Mashile commented that Exemptions should not be made easy. A strong case for exemptions should made by organisations before they are considered and granted. This would significantly reduce cases of abuse of the systems.
Ms Ebrahim advised that the manner and form of the exemptions would be best prescribed. The provisions in their current form had no conditions for the granting of exemptions. She suggested that the conditions be added.
The Acting Chairperson said the provisos should be adequately captured as pointed out by the Ms Ebrahim.

Furthermore, labour organisations proposed the creation of a provision to allow for low-wage bargaining councils to apply for a phase-in to the NMW level. This could allow low wage sectors to and certain wage categories in agreements to phase in to the NMW. The Department’s response was that applications for a phase-in should be to NEDLAC before the introduction of the NMW. Labour further believed there should be a review of the exemption system every 12 months to ensure that it is achieving the objectives of the exemption system. The Department’s response to this provision was not part of the NEDLAC agreement and if it is introduced at this stage, it will be difficult to justify special treatment for those covered by council agreements.  The preferred solution is to utilise the exemption provisions in the NMW Bill and regulations.  It will be extremely difficult to give a special dispensation to some bargaining councils when other sectors may well be in a similar position, that is, where a sector is characterised by labour intensive, low wage employment.

The Acting Chairperson indicated the Committee had dealt with the labour organisations’ concerns as identified during a previous engagement.

Mr Mashile felt the labour organisations comment seemed to be inadvertently undermining the intent of ushering in the NMW

The Acting Chairperson noted that the NMW-RI had recommended that the NMW Bill should deal with more of the detail relating to exemptions rather than leaving it all to regulations. The NMW-RI opposed any prospect of sector-wide exemptions being granted  and do not support the wording relating to an employers’ organisation acting on behalf of its members being able to apply for exemptions. They recommended removal of the words ‘employers’ organisation’ from section 15(1) and if it is deemed necessary to provide for mechanisms through which whole subsectors or groups of employers are to be excluded that this take place through the NMW Commission. Further, the delegation of power to grant exemptions and the work of the Commission needs a clear interface.  The view of the NMW-RI was that those granting exemptions should be within the Secretariat and be accountable to the Commission.

The Department’s response was that Section 16 does not, according to the submission, make reference to the need to collect and make public data on exemptions. They recommend that the Minister be instructed to provide regulations on “(c) the collation and public dissemination of relevant statistics relating to exemptions applied for and granted.”  In addition, the issues will be addressed in Regulations, and the NMW Commission will release statistics on exemptions as part of their annual report.

Mr Bagraim underscored the need for the Regulations to be fully understood by the public and ensure Parliament gets sight of it. This would go a long in addressing the concerns raised by stakeholders.

The Acting Chairperson noted that the Institute for Economic Justice felt reference to employer organisations should be removed from the Exemptions clause. The Bill should specify the key elements that must be contained in regulations, including the requirement to submit financial statements. The Department’s response was the intention is to allow employers organisations to assist their members is lodging application although applications will have to be per individual employer. Further, the draft Regulation dealing with exemptions did specify key information requirements that should accompany an application by an individual employer for an exemption.

Mr Bagraim cautioned that companies applying for exemptions should not be named and shamed. Naming and shaming such companies would be of no material value.

The Acting Chairperson said the proposal came from a number of stakeholders during public hearings. Identifying companies applying for exemptions was in the interest of openness and transparency and to ensure that impact of the exemptions is evaluated continually.

Mr Moteka agreed with the Institute for Economic Justice’s submission. It was key that this aspect of the regulations be clarified.

Mr Mkalipi said transparency in the Regulations was the core. The Department would bring the draft regulations for discussions with the Committee before they are gazetted. The terms and conditions would be made clear. In addition, for enforcement purposes, labour and employees should be able to identify the companies which submit applications for exemptions, to ensure the NMW is complied with.
 
Short title and commencement

Schedule 1
The Acting Chairperson noted F Pretorius’ submission that market forces of supply and demand must play their role in setting wages in order to adapt to high unemployment rate. Therefore no consideration should be given to a further national minimum wage. The Department replied the national minimum wage is intended to improve the wages of lowest paid workers and to protect them from unreasonably low wages.  Market forces will not on their own deal with the low level of wages paid in many sectors.  There is also evidence of minimum wages not impacting negatively on employment and the economy.

Members agreed and said there was no need to debate whether there should be a NMW any longer.

The Acting Chairperson said Mr S Ntshudu submitted that the NMW should be at least R6000. Also, Level 3 in the public sector should be abolished, and the Bill should enhance access to adequate housing. The Department’s response was that the national minimum wage at R20 was the level recommended by an expert advisory panel and agreed to by the NEDLAC constituencies.  It is viewed as striking the appropriate balance between improving wages of the lowest paid and minimising the risk of job losses. Public sector levels are the subject of collective bargaining in the public sector bargaining councils. A national minimum wage deals with earnings and not benefits, such as housing. The latter is a matter for contracts of employment and collective bargaining.

Mr Moteka quipped he was in support of Mr Ntshudu’s proposal.

Mr Bagraim said everyone understood that the NMW would lead to some job losses but there was need for some balance. Every decision would be a give and take.

Mr Mashile said Mr Ntshudu’s proposal should not be taken seriously at this stage as the Committee was past such aspects in its discussions.

Schedule 1(2)
The Acting Chairperson said Forestry SA submitted that Clause 2(a) should be changed to indicate a phasing in period of three years for farm worker to reach 100 percent of the national minimum wage. The Department said as indicated above, the period within which farm and domestic workers are brought up to the national minimum wage will be determined by the NMW Commission pending research on the timeframe.  The NEDLAC agreement on the introduction of the NMW states that it should be within 2 years pending research by the Commission on the timeframe.

On clause 3, Forestry SA said the definition of farm worker should be reworded to add “on site” primary forestry processing activities and to include security guards on forestry premises. The Department’s response was that the definition as currently worded is broad enough to cover these activities in forestry.

Members agreed with the Department’s position on the comment. The Committee was not reopening the matter as it was clear.

Schedule 2- General
The Acting Chairperson noted that Forestry SA said the implementation of the NMW be put on hold until the economic environment improves to an extent whereby the unintended consequences thereof will be minimised.  The Department replied this would not be possible given the agreement in NEDLAC and subsequent developments.  The exemption process is intended to mitigate for potential negative effects on business.

Mr Mashile said the Committee could only consider such a submission only if Forestry SA was in a position to indicate when the economic environment would be conducive for a NMW. Workers on the ground were suffering and such a view should be rejected.

The Acting Chairperson pointed out that this aspect of the Bill had been dealt with extensively during previous discussions.

Forestry SA further submitted that the phasing in period of the NMW applicable to farm workers be extended to a minimum of three years. The period within which farm and domestic workers are brought up to the national minimum wage will be determined by the NMW Commission pending research on the timeframe.  The NEDLAC agreement on the introduction of the NMW states that it should be within 2 years pending research by the Commission on the timeframe.

Members agreed.

The Shukumisa Coalition’s submission supported the introduction of the NMW but pointed to the difficulty for some non-profit organisations (NPO’s) to pay the proposed minimum given the current system of government subsidy. Recommendations were made for the establishment of an expert group to investigate the subsidies and that the sector be granted a temporary exemption until the expert group completes its work. In response, the Department stood by its definition of employee and the understanding of a volunteer as a person who performs a service without receiving any pay.  The issue that will be given attention is the category of volunteer’s in the NPO social welfare sector who receive a stipend. Further, the Department was considering a special exemption route for NPO’s that would enable the NMW to be applied but with the possibility of a 12 exemption for NPO’s who receive a subsidy but cannot comply with the NMW.

Mr Bagraim said the definition of “pay” in relation to the distinction between an employee and a volunteer was a big issue. He asked for the Department’s comment on this. There were many disputes sitting with the CCMA due to confusions around what volunteers are entitled to.

Mr Moteka said his reference to volunteers during a previous engagement was not of those working with NPOs but was about those working for the Department of Social Development and other government agencies, such as home-based care givers. He pointed out that these were not included in any categories from the onset. He pointed out that the Minister had however clarified that home-based care givers were considered to be employees and would be protected through the NMW dispensation.

Mr Mashile said if care givers are employed and therefore entitled to a remuneration, the employer would be obliged to pay them above the NMW. Also, if volunteers are entitled to a ‘pay’ and if they have a contractual obligation with an employer, they were entitled to be paid a NMW as well.

Mr Mkalipi said there had been extensive consultations on the distinction between workers and volunteers as relevant to the NMW discourse. After consultation with legal counsel, the Department agreed that a ‘volunteer’ is a person who volunteers to work without expecting to be paid. Such a person would have taken a conscious decision to provide a service to society without an expectation for remuneration for the work rendered. Therefore, there was a need to clarify the definition of a ‘volunteer’ to reduce cases of exploitation within the labour market. It could not be an employer to make a determination on whether one is a volunteer or not. The understanding was an individual (employee or volunteer) would either fall under the extended public work program (EPWP) or the category covered by the NMW enforcement.

Mr Moteka wanted it to be on record that the EFF was against the NMW figures proposed on Schedule 1 of the Bill.

Afternoon session  
The Acting Chairperson pointed out that Members and stakeholders should recognise that most of the aspects of the Labour Bills had been already extensively canvassed at NEDLAC. However, the Committee was a platform for further engagements on same.

Mr Bagraim asked about the welfare institutions which get a budget from government. They got to testify that their budgets were inadequate and that should they be required to pay a minimum wage, they would have to retrench. He asked if they would be allowed to apply for exemption or put the NMW provisions on hold for a period of say eight months.

Mr Mkalipi said companies would have to adjust to the NMW and must start planning ahead from now just as they do for tax increases. The general consensus at this stage was that for employer or government agencies would have to fully comply or apply for exemptions; failure to which they would have to face the wrath of the law.

The Acting Chairperson said some of the issues now being raised had already been extensively canvassed and raising them once more would drag the processes further.

Mr Mashile commented on the establishment of the NMW Commission as stipulated in clause 14 of the NMW Bill. The general understanding was that the Commission should be an independent body financed by an Appropriations Bill through parliament. He felt this was not the way to go because, ordinarily, the Commission would be set up to advice the Minister. The Commission’s administration and secretariat should therefore be under the Director-General’s purview. Stakeholders should not attempt to create a Chapter 9 institution.   

Mr Bagraim disagreed and queried how having an independent NMW Commission could possibly create any problems as identified by Mr Mashile. Having an independent body would ensure proper accountability. Having the Commission under the Department would turn it into almost a farce which might not be able to function effectively.

Ms Ebrahim indicated that discussions on the constitution of the Commission were still ongoing with the Department. The discussions traversed on whether decisions about the appointment of commissioners must be taken by the Minister or Parliament, and if by the Minister- how regularly would he/she be required to account before Parliament.

The Acting Chairperson noted that Mr Mashile’s view was the majority position and the Committee must proceed on that basis.

Deliberations on the Basic Conditions of Employment Bill (BCEA) 

The Acting Chairperson took the Committee through the Department’s response to public comments on the Basic Conditions of Employment Bill

Section 1(a)
The Acting Chairperson noted that SAIPA had made a submission asking about the premise behind substituting the Skills Development Act with the Employment Services Act. The Department had explained that the purpose was to update the section to make reference to the relevant law that now provides for employment services.  This was no longer within the purview of the Skills Development Act.

Members were in agreement with the Department.

Section 3: Insertion of Section 9A – Daily wage
The Acting Chairperson said AgriSA submitted that this proposal would have employers paying twice for the same work to be done.  In the agricultural sector, various conditions determine whether an employee could perform work on a particular day, like rain, heat, cold, etc.  In most instances, where employees do not reside on the farm, they are transported to the workplace at the employers cost. In unsuitable circumstances, the employer will probably not fetch the employees on the particular day and have them working on a more suitable day.  Either way, the employees will be paid for work performed.  This proposal has employers paying twice for the same work to be done. The Department’s response was that the responsibility resides with the employer to inform workers if their services will not be required. If there is proper communication and poor weather prevents work to be performed, workers will not be expecting transport and there will be no obligation to pay for work not performed. If workers that are to be picked-up by the employer are not informed that there will be no work on a particular day and they are not collected, the minimum daily wage payment will apply.

Mr D America (DA) said the Committee should stick to what was agreed upon by stakeholders at NEDLAC.

Members agreed.

Section 64
The Acting Chairperson noted the Labour & Enterprise Policy Research Group, stating that Section 191, 193, 194(4) and 195 of the Labour Relations Act provide that bargaining councils may hear disputes within their jurisdiction.  This jurisdiction also applies to section 64(4) disputes. This was at odds with the amended section 64(1)(dA) which grants the CCMA exclusive jurisdiction to hear disputes regarding non-compliance with the NMW Act. The Department’s response was the amendment grants inspectors the right to refer disputes in relation to the NMW and UI Acts to the CCMA. Bargaining Councils have a responsibility to enforce their agreements and deal with disputes in relation to non-compliance with agreements.  The CCMA’s jurisdiction is granted in relation to a national statute to ensure that disputes are dealt with expeditiously and with consistency.

Mr Bagraim said he was happy with the CCMA having the jurisdiction, but the reality was one goes to a bargaining council after having a multifaceted dispute with an employer. He asked if the bargaining council had the power to handle such multifaceted complaints or employees would need to go to the bargaining council for some disputes, and the CCMA for those relating to non-compliance with the NMW Act. It had to be provided for that disputes relating to the NMW, regardless of whether there are bundled with other disputes and grievances, should go to the CCMA. This would then do away with possibility of forum shopping.

Mr Mkalipi pointed out that the Department’s inspectors do not have the experience possessed by bargaining councils. Bargaining council agreements are complex and technical such that the Department would not want a situation whereby inspectors would have to interpret these agreements. The Department would not want to add on the workload of the inspectorate to an extent that they would have to interpret and enforce bargaining council agreements.

Mr Bagraim was not satisfied with the explanation. Trade unions would still be put under enormous pressure because they would have to go to two forums in the event that there were breaches traversing issues beyond the NMW.

Mr Thobile Lamati, Director-General, Department of Labour, explained that the bargaining councils have their own dispute resolution mechanisms. In the event that a dispute was not only about the NMW and was, for instance, about conditions of service, the dispute resolution mechanism of the bargaining council would then have to deal with both the disputes on the NMW and the conditions of service, without going to the CCMA. On the other hand, in the case of ordinary companies which do not fall under the bargaining council, these would have to go to the CCMA.

Mr Bagraim appreciated the explanations and indicated it was now clear.

Section 6:  Section 64 – Referral to the CCMA

Section 64(dA)
The Acting Chairperson noted the Labour & Enterprise Policy Research Group’s submission that non-compliance with bargaining council minimum wages would also constitute non-compliance with the NMW. This creates an anomaly in that BC agents will identify non-compliance but only the Department inspectors may institute proceedings against non-compliant employers. The same will also apply in respect of contraventions of section 4(6) of the NMW Bill. The Department’s written response was that this does not necessarily follow.  Basic Conditions (BC) minima are expected to be above the NMW. LRA makes provision for BCs to enforce their agreements. The inspectors enforce the NMW outside of the jurisdiction of BC’s on the assumption that agreements must specify wages above the national minimum, as required by the NMW Bill.

Members were satisfied with the Department’s response. 

Section 68(3)
The Labour & Enterprise Policy Research Group submitted that there was no provision for employers to dispute the process of making an undertaking an arbitration award in terms of s68(3).  Section 69(5) and (6) read with section 7 allows an employer to challenges a compliance order. It was unclear why the distinction is made between the process to enforce an undertaking and a compliance order.  The Memorandum of Objects also does not explain this difference. The Department’s response was that undertaking is an agreement. If an employee does not agree then an employer can just refuse to sign the undertaking. If the employer signs the Undertaking then the employer cannot dispute what they have agreed to.  Therefore there is no provision for an appeal.  A compliance order is one issued by an inspector and in relation to which an employer may refer a dispute to the CCMA.

Mr America said although the Committee had agreed to this provision, it was incumbent upon the Department to train its inspectors on the technical aspects of the relevant statutes.

Sections 8 & 9 (s 68 & 69)
On the amendment to sections 68 and 69 which allows the CCMA to make a compliance order an arbitration award and to hear disputes by employers arising from compliance orders issued by inspectors, Clicks proposed that the current system of referring compliance and enforcement disputes to the labour court be retained. The Department’s response was that CCMA was anticipating an increase of its workload of approximately 15%. It was preparing for dealing with these cases and it is anticipated that it will have the necessary resources to deal with these disputes in a more expeditious manner than the Labour Court. 

Members agreed.

Section 11: Section 73 – Order to be made an arbitration awards
The Consumer Goods Council of SA (CGSA) commented that the extension of the CCMA’s jurisdiction will place increased pressure on “an already under-resourced and under-funded CCMA.” The Department noted the comment and indicated the CCMA was preparing to deal with the anticipated additional case load. On the CGCSA’s call for an appeal procedure in relation to CCMA awards issued in relation to non-compliance with the NMW, the Department indicated that provision for a review process would be made in the Bill. CGSA further submitted that the current system of referring compliance and enforcement disputes to the Labour Court is appropriate and there is no need to change it. However, the Department’s position was that the use of the Labour Court for compliance and enforcement matters will be too cumbersome for NMW related matters. The advantages of extending the CCMA’s jurisdiction was likely to far outweigh the disadvantages. It is also important to note that for Bargaining Councils the current law requires that enforcement is done through arbitration.

Members said this was clear, noted and agreed.

Section 16: Section 76A – Fine for not complying with NMW
Agri Western Cape, during public hearings, understood that government has a duty to ensure that employees receive the correct wage, but a penalty of twice the wage is severe and unrealistic and cannot be agreed to.
The Department’s response was that the most appropriate remedy will be to comply with the law or apply for an exemption if the employer cannot afford to pay the NMW. An alternative proposal was that a non-compliant employer be required to pay interest on an outstanding payment or that section 76A be amended to read the “lesser” of twice the value of the underpayment or twice the employee’s monthly wage. The Department said Rule 39 of the CCMA was clear with regard to frivolous and vexatious conduct by either party.  It should apply equally to both parties.

Mr Moteka said it was problematic that some employers were contemplating non-compliance with the NMW and were already pleading for leniency. He emphasised that the penalty for non-compliance should be even more severe than the proposed. He suggested incremental fines and even blacklisting for those employers who are repeat offenders. 

Mr America did not agree with the Department’s response to Agri Western Cape submission. He believed there were other ways of ensuring compliance rather than the proposed punitive measures. It would be clumsy and impractical to blacklist non-compliant employers as in most cases, non-compliant employers were small time businesses.

Mr Moteka expressed concern that some parties seem to be arguing that the Department should be lenient to employers who would not be compliant with the NMW. Compliance should be compulsory and non-negotiable.
Mr Mashile said if government was to enforce the NMW, the proposed punitive measures should be supported. Compliance should be enforced on some of the errant employers. Disincentives for non-compliance should be built into the system. A register of repeat offenders should be prepared and be reported by the NMW Commission in its yearly reports.  

Mr Mkalipi noted that there seemed to be an understanding that the Department should not pursue the criminal route in dealing with non-compliance. The Department would explore various possibilities but stick with the principle that workers should be the ones receiving the benefit instead of having the fines being paid into the fiscus.

Section 20: Transitional Provision
The Acting Chairperson noted OXFAM’s comment on enforcement. The Department’s response was that instead of increasing the workload of the CCMA, the powers of labour inspectors of the Department to enforce compliance from employers must rather be strengthened.  The proposed amendments would render the NMW unenforceable. Thus enforcement would remain the responsibility of a completely overhauled Labour Inspectorate with extended powers.

Members agreed.

General
The Acting Chairperson noted ZS Ntshudu’s comment that employees who work in hazardous conditions should be paid a danger allowance. The Department’s response was danger pay is a matter for collective bargaining and hazardous conditions are regulated by the Occupational Health and Safety Act, not the Basic Conditions of Employment Act.

Members felt the Department’s response was clear and agreed.

Enforcement- General
The NMW-RI expressed concern at the capacity of the inspectorate to enforce the NMW and were further concerned at a reference only to education regarding the NMW. The Department’s response was that this was not a legal issue. An enforcement strategy for the NMW would be presented to NEDLAC for discussion with social partners.

Mr Bagraim said the country has robust labour laws but compliance was the issue. Enforcement was the cornerstone of it, and making sure the Department’s inspectorate is properly capacitated was paramount towards strengthening compliance. He asked for an indication on the number of inspectors within the Department currently.

Mr Mashile said the comment did not assist that much as the capacity of the inspectorate was a departmental issue. The Department would ordinarily want to have a well-capacitated inspectorate. However, financial constraints due to lean budget allocations from the fiscus was beyond its control. 

Mr Lamati indicated that the Department currently had 1600 inspectors across the country and was in the process of adding more as the Unemployment Insurance Fund (UIF) and compensation fund would be employing ‘payroll auditors’ soon to deal with UIF issues. This would release the ‘BCEA inspectors’ who could now focus on the NMW and other conditions of employment. The Department was also looking into engaging an additional 200 inspectors in the current financial year. However, the Department felt the matter being raised by the NMW-RI did not speak to the legislation itself but its enforcement.

The Acting Chairperson said the Committee expected updates on progress on the Department’s discussion with social partners. She thanked everyone and indicated discussions on the Bills would continue the following day.

The meeting was adjourned.

 

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