Labour Bills: Department of Labour response to submissions

NCOP Economic and Business Development

27 June 2018
Chairperson: Mr M Rayi (ANC; Eastern Cape)
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Meeting Summary

The Committee met with the Department of Labour for a briefing on responses to comments from the public on the National Minimum Wage (NMW) Bill; Labour Relations Amendment (LRA) Bill, and the Basic Conditions of Employment Amendment (BCEA) Bill.

The Department indicated its responses were in the context of its understanding of the issues raised. Free Market Foundation (FMF) gave a submission on the NMW Bill and raised concerns about the inflexibility of labour laws as well as regulatory biases against the employment of low-skilled workers. The Department’s response was that all comments on their submission are ideological comments. They do not deal with substance of the amendments.  They attack the whole concept of labour market regulations. FMF further queried whether the Bill does comply with the Constitution. It believed matters in the NMW Bill requiring discretionary decision-making on the part of the Department should be reduced to a minimum. The Department’s response was that there is no discretionary decision-making anticipated in the Bill. The Chief State Law Advisers have certified it as compliant with the Constitution. The Department also has a staff complement of experienced legal practitioners who went through the bills throughout the drafting stages.

Purpose of Act

The Institute for Economic Justice gave a submission on objectives of introducing a NMW. The NMW intended to be part of a new national wage policy that should aim to reconfigure the wage structure and overcome the apartheid cheap labour legacy.  It should be seen as part of a broader socio-economic transformation agenda.

The NMW should be part of a broader package of measures. The Department noted the comment. It is expected that, over time, the national minimum wage will contribute to reconfiguring the wage structure.  It currently does constitute an important part of the Department’s policy approach to protecting low paid workers and regulating the labour market accordingly.

A submission by the Shukumisa Coalition in collaboration with other NGOs and civil society organisations outlined the Department of Social Development’s (DSD) system of subsidisation to non-profit organisation (NPO’s) who provide social welfare services. However, the Department pointed out that the main problem was not the minimum wage but the low subsidy that is received from Government.  The level of the subsidy cannot be resolved by the NMW Bill, and could only be resolved by the parties concerned and the availability of funding.  The Bill makes provision for exemption, and the Department was currently having discussions on ways to exempt NPO. Shukumisa Coalition had further recommended that the NMW Commission include representation of the NPO social welfare sector. The Department supported the proposal for representation of the NPO sector on the Commission although this should be facilitated by the Community constituency.

Members pointed out that any arguments for or against the labour laws would never be ideologically neutral. However, the bottom-line is underpaid workers had to be protected from exploitation across the board. The provision on exemptions should not be abused by employers. Will the promulgation of NMW Bill be retrospective? Would there be dispute resolution mechanisms in the event that the Minister disagrees with NMW Commission’s recommendations? How would the abuse of exemptions be curbed? The Department ought to be clear what efforts it was making to avert abuses.

The Chairperson indicated that the Committee will have deliberations on the three bills on 7 August 2018.

Meeting report

Department’s response to submissions

Mr Virgil Seafield, DDG: Labour Policy and Industrial Relations, Department of Labour, said the responses were in the context of the Department’s understanding of the issues raised. On concerns about the capacity of the Inspectorate, the Department agreed to the extent that it acknowledged the fact that there were challenges. However, a lot was being done to spruce up enforcement capacity not only at organisational but also at the institutional level. Notably, the Department was in liaison with National Treasury to evaluate the extent to which the Inspectorate could be better capacitated within a budget. Engagements to ensure the Inspectorate was being utilised more effectively were also underway. However, compliance to legislation was the responsibility of the employers. He noted that some of the public comments were based on previous drafts of the legislations; drafts which had gone through the National Assembly. Some of the issues had already been addressed in subsequent drafts.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour took the Committee through the Department’s responses to public comments.

Free Market Foundation (FMF) gave a submission on the NMW Bill and raised concerns about the inflexibility of labour laws as well as regulatory biases against the employment of low-skilled workers. The Department’s response was that all comments on their submission are ideological comments. They do not deal with substance of the amendments.  They attack the whole concept of labour market regulations. FMF further queried whether the Bill does comply with the Constitution. It believed matters in the NMW Bill requiring discretionary decision-making on the part of the Department should be reduced to a minimum. The Department’s response was that there is no discretionary decision-making anticipated in the Bill. The Chief State Law Advisers have certified it as compliant with the Constitution. The Department also has a staff complement of experienced legal practitioners who went through the bills throughout the drafting stages.

Chapter 1: Interpretation, Purpose and Application

Labour & Enterprise Policy Research Group submitted that the use of the definition of employee as defined in the BCEA will narrow the scope of application of the NMW and will compromise its ability to achieve its objective.  The NEDLAC agreement was based on a broader definition which will include independent contractors. The BCEA also retains section 62A which is not aligned to the changed definition in the NMW Bill. The Department’s response was that this is incorrect. The definition of ordinary hours of work does exclude the definition of worker.  A worker must still work his ordinary hours of work. Definition of worker had also been amended to mean “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.

Purpose of Act

The Institute for Economic Justice gave a submission on objectives of introducing a NMW. The NMW intended to be part of a new national wage policy that should aim to reconfigure the wage structure and overcome the apartheid cheap labour legacy.  It should be seen as part of a broader socio-economic transformation agenda.

The NMW should be part of a broader package of measures. The Department noted the comment. It is expected that, over time, the national minimum wage will contribute to reconfiguring the wage structure.  It currently does constitute an important part of the Department’s policy approach to protecting low paid workers and regulating the labour market accordingly.

The Institute for Economic Justice submitted on hourly denomination. It believed the NMW Commission should review the hourly provision and its possible abuse after the first year and consider the introduction of a weekly and/or monthly NMW. The Department noted the comment and indicated that although an hourly minimum remains the most appropriate denomination of the NMW for the circumstances that apply in the South African labour market, in particular, the significant number of casual, seasonal, contract work and workers in other forms of employment and remuneration.

Chapter 2: National Minimum Wage

Labour & Enterprise Policy Research Group believed that by making unilateral altering of wages, hours of work or other conditions of employment an unfair labour practice, it removes the right to strike over these issues. The Department’s response was that in terms of the Bill, 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. The Research Group had further submitted that Sections 4(7) and 5 will create confusion and it should be made clear through an explicit link to sections 4 and 4A of the BCEA what deductions are permitted and which are not permitted. The Department agreed and indicated that the protection afforded through the unfair labour practice provision is brought in to protect the primarily vulnerable and unorganised workers. An amendment had been made to add section 34 of the BCEA to S4(7) of the NMW.

Calculation of Wage

A number of stakeholders believed the Section should be amended to cater for exceptions with regard to deductions allowed in terms of domestic, farm and forestry determinations. The Department’s response was that this is catered for in that the Transitional Provisions allow the sector determinations to continue, including the provisions relating to allowances. They further proposed a new subsection (5(1) (d)) to make it clear that employer contributions to UIF, medical aid or retirement funds are excluded from calculation of NMW. However the Department felt there was no need for this. Exclusions are clear that statutory deductions must be deducted from the NMW. Medical Aid and provident fund rules will also apply.

Section 6: Annual Review

Labour & Enterprise Policy Research Group believed a problem was likely to arise regarding the ‘coordination’ of bargaining council negotiations with the NMW annual adjustment. This could undermine the collective bargaining arrangements and threaten jobs in certain sectors. The Department’s response was that when the President promulgates the law, the President will also announce the date of review by Regulation. The Department had met all Bargaining councils to ensure that there is coordination between their adjustments and the NMW once it is promulgated.

Annual increases

The Institute for Economic Justice believed the NMW Commission must progressively improve the real value of the NMW. The level of the increase above inflation to be determined by other factors listed. Inflation must be calculated on the level of inflation faced by low-paid workers. Minimum levels for a family must be considered as a key factor in determining the increase. The Department, in response, pointed out that the February agreement by NEDLAC social partners noted that the annual adjustments should not lead to an erosion of the value of the national minimum wage. This remains a matter for the NMW Commission, the Minister, Cabinet and Parliament.  Section 7(b) (i) of the Bill makes reference to the need to retain the value of the NMW. The legislation should not prescribe on this issue, nor should it be prescriptive on the methods used to calculate inflation and other indicators to be used for the annual review of the NMW.

Section 10: Establishment of Commission

Stakeholders submitted that the NMW Commission must be given a mandate to adjust sectorial determinations appropriately and to recommend their extension, if bargaining councils are not set up in the three year period. All non-wage conditions must be explicitly protected and the Commission given a mandate to adjust these, as appropriate. It was further submitted that a provision to require the Minister to seek the advice of NEDLAC on any amendment or withdrawal must be reinstated. The Department’s response was that the NMW Commission has been given a function of advising the Minister on sectorial determinations which might include adjustments in the conditions of employment attached to them.

Section 11(c) & (e): Functions of Commission

Labour & Enterprise Policy Research Group believed the way the section currently reads fails to respond to section 27 of the Employment Equity Act.  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 Employment Equity Act. The Department’s response was that it corresponds with BCEA and the intention is for the NMW Commission to take further the process of formulating recommendations to deal with income differentials. There are current processes in place to amend the EEA, and the process is at Cabinet level and if there was a need to amend it should be amended there. There was no need to amend currently.

Schedule 1

A member of the public believed the NMW should be at least R5000. 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.

A submission by the Shukumisa Coalition in collaboration with other NGOs and civil society organisations outlined the Department of Social Development’s (DSD) system of subsidisation to non-profit organisation (NPO’s) who provide social welfare services. However, the Department pointed out that the main problem was not the minimum wage but the low subsidy that is received from Government.  The level of the subsidy cannot be resolved by the NMW Bill, and could only be resolved by the parties concerned and the availability of funding.  The Bill makes provision for exemption, and the Department was currently having discussions on ways to exempt NPO. Shukumisa Coalition had further recommended that the NMW Commission include representation of the NPO social welfare sector. The Department supported the proposal for representation of the NPO sector on the Commission although this should be facilitated by the Community constituency.

Discussion

Mr E Makue (ANC, Gauteng) asked if there was anything new that was not raised in the National Assembly. Also, was there a union for security workers? If so, what was its position on the NMW?  He urged that the Department of Social Development be engaged in time to ensure that the concerns raised by Shukumisa Coalition on behalf of social services sector workers are dealt with expeditiously.

Mr J Parkies (ANC) pointed out that any arguments for or against the labour laws would never be ideologically neutral. However, the bottom-line is underpaid workers had to be protected from exploitation across the board. The provision on exemptions should not be abused by employers. Also, there was a suspicion that the secret balloting provision was a means of taming unions. He asked for comments on this.

Mr B Nthebe (ANC, North West) asked for the Department’s view on sectorial determinations vis-à-vis introduction of the NMW. Some stakeholders hold the view that the Department sought to do away with sectorial determinations or water them down. Will the promulgation of NMW Bill be retrospective? Would there be dispute resolution mechanisms in the event that the Minister disagrees with NMW Commission’s recommendations? How would the abuse of exemptions be curbed? The Department ought to be clear what efforts it was making to avert abuses.

Mr Seafield replied that the submissions were the same as those received in the National Assembly. There were a number of trade unions covering security sector workers and at some stage the Department had engaged with around 18 trade unions as part of the drafting of the NMW Bill. On the Department’s position in relation to sectorial determination, simplicity is the key as it would free up resources and enable swifter enforcement. Although the Department believes sectorial determination should be simplified, it remains a reality within the South African labour market. He agreed that enforcement capacity within the Department was crucial. Balloting was not a new provision; the amendments merely specified the nature of the process. 

Mr Mkalipi pointed out that the NMW is a political decision such that in cases whereby the Commission was not in agreement with the Minister, Cabinet would have to make the final determination. Decisions taken by the Minister and the Commission would be expected to be rational to avoid legal challenges. The NMW Bill, upon promulgation, was not going to be backdated. The system to handle exemptions was built in such a way that particular information would be required, and there would be consequences in the event of abuses. 

The Chairperson appreciated the engagements and indicated that the Committee will have deliberations on the three bills on 7 August.

The meeting was adjourned. 

 

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