Unemployment Insurance Amendment Bill: comments

Meeting report

LABOUR PORTFOLIO COMMITTEE
25 August 2003
UNEMPLOYMENT INSURANCE AMENDMENT BILL: DELIBERATIONS

Chairperson: Mr D Olifant

Documents handed out:
Outline of Black Sash Submission (Appendix 1)
COSATU Submission on the Unemployment Insurance Amendment Bill (B-35 2003) (Appendix 2)
Department of Labour Proposed Amendments to the Unemployment Insurance Fund.
Unemployment Insurance Amendment Bill [B35-2003]

SUMMARY
Black Sash and COSATU commented on the Unemployment Insurance Amendment Bill. Discussion revolved around the inclusion of workers who resigned and those who were entitled to claim under the Bill. Additionally, COSATU raised concerns around the inclusion of Public Servants in the Bill and the extension of the maternity benefits contemplated in the Bill.

MINUTES
Mr Makhonto (Department of Labour Commissioner) presented the proposed Unemployment Insurance Amendment Bill. The Bill makes recommendations regarding domestic workers with multiple employers, seasonal workers, Public Servants and domestic workers who become unemployed as a result of their employers death.

Mr Makhonto outlined the amendments to sections 3(1)(b), 3(1)(c), 11, 21, 24 and 27.

Mr Mama of Black Sash expressed his organisation’s concern as to the exclusion in the Bill of those workers who resign from their employment. He proposed that the Bill either include all workers who resign or only those workers who resign in compelling circumstances.
COSATU made their submission which included comments on the continued exclusion of Public Servants from the Fund, the limitation of maternity benefits, the lack of a Fund guarantor and the general financing of the Fund.

Discussion
Mr Olifant (DA) welcomed the committee to this special meeting to consider the submissions of COSATU and Black Sash concerning the proposed Unemployment Insurance Amendment Bill ("the Bill"). He said that because of a time constraints the submissions of other interested parties had been addressed in writing.

Mr Olifant (DA) apologised on behalf of Ms Thabethe (ANC), Mr Oliphant (ANC), Mr Koen (the State law adviser), Mr Rasmeni (ANC) and Mr Moonsamy (ANC) for their absence.

Mr Makhonto (Commissioner from the Department of Labour) commenced his presentation on the Bill. He proposed the following amendments:

In section one, the deletion of the definition of the CCMA. This is to comply with the replacement of the CCMA with the Regional Appeals Committee in section 37 of the Unemployment Insurance Act ("the Act"). His request to effect this amendment would facilitate the administration of the Unemployment Insurance Fund ("the Fund") and would make the claims process more efficient.

Furthermore, the Bill seeks to delete the reference to seasonal workers in the Act so as to treat seasonal workers the same as other employees.

Section 3 (1)(b) of the Act had the unintended effect of excluding all full-time employees that receive remuneration under a learnership agreement from contributing to the Fund. However the intention is that only learners who were not in the employment of their employer when the agreement was concluded and their employers are to be excluded from contributing to the Fund. Therefore, the amendment is proposed.

The amendment in section 3 (1)(c) seeks to exclude Public Servants from contributing to the Fund. This is as a result of a study conducted to determine whether Public Servants should be covered by the Bill.

In terms of section 3 (1)(e) of the Bill, the Bill aims to ensure the Act does not apply to State pensioners.

In section 11, the Minister is required to submit a business plan. This position is incorrect. It is the Commissioner who should prepare this business plan and the Director-General who should file this business plan. The amendment creates these obligations.

Section 12 enables domestic workers in the employ of multiple employers to be considered partially unemployed and eligible for benefits if they are to lose one or a number of their jobs.

Section 16 creates the situation in which domestic workers who become unemployed as a result of the death of their employer may be allowed to claim for benefits under the Fund

The Bill seeks to amend sections 21, 24 and 27 of the Act in so far as they relate to the payment of illness, maternity and adoption benefits. These benefits would then be based on a top up rule in terms of which the Fund would supplement the reduced earnings of such people so as to bring their income to a maximum of 100% of their income had they not been ill, on maternity leave or on adoption leave.

Mr Makhonto said he hoped these amendments would be approved.

Mr Olifant (DA) acknowledged that there would be questions from the committee with regard to the presentation but he asked that the visitors be allowed to make their presentations before a question session.

Mr Mama the Regional Co-Ordinator of Black Sash thanked the Committee for their efforts in amending this legislation.

Mr Mama (Black Sash) said that section 16 of the Act accounts for all employees except those who had resigned from their employment. He said this issue had been raised with the Commissioner who called this a "legislative black spot". However, rationale behind the exclusion was given by the Department later. The Department held that allowing these people to claim would be opening the Fund up to fraud. Furthermore, the Department held that it is accepted insurance practice that benefits will not be paid out where the beneficiary has caused his own misfortune. Therefore, resigning persons would not be entitled to claim.

Mr Mama (Black Sash) said that the Department’s decision sought to remove rights from those who previously held rights. This is inconsistent with the Constitution that requires the rights system to be progressive rather than regressive.

Additionally, the exclusion of these people contravenes the Constitutional right to equality before the law. Therefore, he moved to have the Committee include all workers who resign or at least to include those workers who resign for compelling reasons.

Mr Mshudulu (ANC) asked for clarity as to what would constitute a compelling reason and he asked whether NEDLAC had been utilised by Black Sash in an attempt to address their concerns.

Mr Mshudulu (ANC) also asked whether Black Sash’s earlier concerns had been addressed.

Mr Redcliffe (DA) asked Mr Makhonto for clarity as to when the Act came into effect. He had some confusion as to whether those resigning before the Act came into operation could still claim benefits.

Mr Mama (Black Sash) referred the committee to the Black Sash document for an idea as to what would constitute a compelling reason.

Mr Mama (Black Sash) said Black Sash was not referred to NEDLAC by the Department for this matter.

Mr Makhonto commented that Black Sash was in fact covered by the NEDLAC Act and therefore they could protect the interests of the organization.

Mr Makhonto said that the law had come into effect on 1 April 2002 and the exclusion of people who had resigned would only operate in respect of those people resigning on or after that date. Therefore, the Department continued to administer claims on behalf of people resigning before this date.

Mr Redcliffe (DA) asked for the rationale behind the exclusion of these people.

Mr Mshudulu (ANC) commented that he understood this meeting to be an opportunity for visitors to make their presentations. It was not the occasion to ask such a question.

Mr Olifant (ANC) said it was unfair to revisit this rationale.

Mr Redcliffe (DA) said he had asked the question as Black Sash had raised the issue. Mr Redcliffe (DA) said that if he would not be allowed to ask this question, the meeting’s process would be undermined.

Mr Olifant (DA) ruled Mr Redcliffe (ANC) out of order. He did not believe that denying this question would undermine the process. He said that Mr Redcliffe (DA) should have received a mandate from his party as to prior discussions.

Mr Mshudulu (ANC) asked Mr Mama (Black Sash) as to how closely his organization had been working with the Labour Centres.

A Black Sash representative said Black Sash works very closely with these centres.

Mr Mzondeki (ANC) asked to follow up on how Black Sash would define a compelling reason.

Mr Mama (Black Sash) said Black Sash had failed to arrive at a "one size fits all" definition of what constitutes a compelling reason.

Mr Olifant (DA) stated that Black Sash’s submission would be taken into account when the debate regarding the submissions begins. COSATU was invited to begin their presentation.

Ms Govender (COSATU) said that although significant progress had been made in the Act, a number of issues still remain to be addressed. These include the continued exclusion of public sector workers from the fund, the limitation of maternity benefits and the lack of financial guarantors of the Fund and general financing of the Fund.

Ms Govender stated the continued exclusion of Public Servants from the Fund constitutes discrimination between public and private sector workers and violates the Constitutional right of these workers to access to social security. Although there had been a briefing as to the findings of the investigation into the inclusion of Public Servants there had not been a report published that could be subject to legal and actuarial scrutiny.

With regard to the financing of the Fund, Ms Govender (COSATU) represented that COSATU believe the State should act as guarantor of the Fund so as to make good any Fund shortfalls.

She said that COSATU felt it was critical to include workers who had resigned as excluded these workers amounts to discrimination. Additionally, the inclusion of constructive dismissals had created an anomalous situation, since it often takes the form of a resignation. This poses an administration problem in that these people may not be able to claim if it was not clear as to whether they had resigned or whether they have been constructively dismissed.

She addressed the exclusion of State Pensioners from the Bill. COSATU proposed that State pensioners be included in the Bill. This concern is especially relevant to domestic workers who were of pensionable age. In many cases these workers were forced to supplement their pensions by working. These workers received reduced payouts to take into account their working income. Consequently, she said when these workers become unemployed they may end up with a lower income than pensioners receiving full benefits because of the administrative time-lag in adjusting their status from employed to unemployed. Therefore, she asks for these pensioners to be entitled to unemployment benefits.

Additionally, that pensioners approaching pensionable age were reluctant to contribute to the Fund as they were aware that they would be unable to claim their contributions back on reaching pensionable age. These workers were left vulnerable when they lost their jobs prior to reaching pensionable age as they would not be entitled to benefits. No mention had been made by the Department of what happens to the funds claimed from pensioners reaching a pensionable age and they are unable to claim these funds back.

Ms Govender (COSATU) called on the Committee to do more to address the needs of women claiming maternity benefits especially those who are less likely to receive monthly income during the maternity period from their employers.The provision needed to be made to delink the maternity benefits from the period for which a woman had been employed. This would protect women who fall pregnant but have not accumulated the full quota of credits and as such do not qualify for four months of benefits.

She stated the report commissioned by the Committee into the extension of maternity benefits had not, as yet, been made public. She asked if this could happen so that the Bill could be subjected to legal and actuarial scrutiny.

Mr Redcliffe (DA) asked when the actuarial review mentioned in the Cosatu submission was to be tabled.

Mr Pillay (NNP) enquired how COSATU felt about the holistic actuarial review that was agreed upon in terms of the NEDLAC agreement in 2000.

Mr Colman (COSATU) said that low benefits could be tolerated by COSATU until the Fund stabilises but he wanted the Department to respond to the process to which they agreed in terms of the NEDLAC agreement.

Mr Makhonto said the Department had not departed from the NEDLAC agreement. A full review of the Fund would take place and the Committee should reconvene to discuss this review. He said the review would also go to NEDLAC.

Mr Mshudulu (ANC) asked whether COSATU had engaged on the issue of Public Servants.

Mr Colman (COSATU) said that this is why COSATU wanted to obtain the report on this issue.

Mr Pillay (DA) wanted COSATU to clarify what they implied by "under certain defined conditions" on page four of their submission with regard to their call for the inclusion of workers who resign "under certain defined conditions".

Mr Redcliffe (DA) said that people in receipt of a pension technically may not be considered as unemployed. He asked for COSATU’s response to this.

Mr Colman (COSATU) said COSATU would appreciate the guidance of the Committee with regard to what could constitute these "certain defined conditions".

Ms Govender (COSATU)said that a person’s employment status is not a technical matter. Employment depends on the claimants’ factual circumstances rather than their legal circumstances.

Mr Polus (COSATU) wanted to highlight a statistic that 1,7 million of the 2,2 million households headed by individuals greater than sixty years fall below a monthly income or R801 per month.

Mr Olifant (DA) thanked the visitors for their submissions.

Mr Colman said COSATU were available to provide further submissions if the Committee required them as each submission they have compiled correspond to a particular time frame.

Mr Olifant (DA) adjourned the meeting.

Appendix 1
OUTLINE OF BLACK SASH SUBMISSION

This is a summary of the attached submission and mentions the pertinent issues raised in the submission.

LEGISLATIVE OVERVIEW

· Benefits accruing in the event of termination of employment in terms of Section 16 of Unemployment Insurance Act of 2001 (the Act).

· Comparison with old dispensation UIF Act 1966.

· Engagement with the department.

RATIONALE FOR EXCLUSION

· Exposure to fraud.

· Insurance principle not allowing benefit for a person who causes own misfortune.

BASIS FOR INCLUSION

· Progressive realisation of social security rights in terms of Section 27 of the Constitution.

· Laws should be in line with the normative status of a country.

· Legislative anomaly of protecting illegal acts while excluding resignation.

POSSIBLE MANNER FOR INCLUSION

· Amending Section 16 to include protection of all resigning employees.

· Alternatively protecting resignation which is occasioned by compelling reasons.

25th August 2003.

BLACK SASH POSITION ON THE UNEMPLOYMENT INSURANCE

AMENDMENT BILL

INTRODUCTION:

The Black Sash has as one of its goals to ensure the creation of a comprehensive legislative framework for the vulnerable in our society. Through our advice offices, we daily serve people who seek assistance in enforcing their rights, and we take this opportunity to bring the experiences of these people to the attention of the committee insofar as it pertains to the draft amendment bill currently before the committee, especially as the Black Sash was one of the civil society organ isations that engaged with this committee during the passage of the 2001 Unemployment Insurance Fund Act.

In particular, we argued strongly in favour of the extension of the right to cover for domestic and seasonal workers. As with many a statute, the UIF Act 2001 came with some problem areas of its own. We will address the committee on the perplexing exclusion of resigning employees

This issue were raised on various occasions with the Department. In fact, Commissioner Shadrack Mkhonto, referred to the exclusion of resigning employees as a "legislative blind spot" that should be attended to. The Unemployment Insurance Amendment Bill (the Bill) is measured against this background.

The Bill

1. Contributions by domestic workers who receive social assistance:

The bill effects changes to a number of areas, including the issue of domestic workers. However, we believe that pensioner domestic workers should be brought within the safety net.

2. Benefits to people who resign from their employment:

Conspicuously, benefits for resigning employees remain excluded.

Interestingly, the UIF Act no 30 1966 which was repealed by the UIF Act of 2001 catered for this now disempowered group of employees. The legislative purpose that the former Act sought to address did not alter at all. If anything, the need for a comprehensive social security net has deepened.

Curiously, the common reason given by the department for the exclusion has nothing to do with unemployment as such. The broad rationale is that the old system, which covered resigning employees, was vulnerable to fraud. In other words, gaps in administrative systems, is sufficient reason to take away pre-existing rights. Section 27 of the Constitution guarantees the right to social security, which right is subject to progressive realisation.

The removal of the pre-existing right to unemployment insurance is a regressive move that we do not feel is justified under our constitution for the reasons set our below.

The Black Sash is in possession of a heavy body of anecdotal evidence of the extent of suffering and exposure to grinding poverty the status quo has on the poor people in our country. For the purposes of this position brief, mention can be made of only the following:

4:. Only yesterday, Nosakhele Mhambi of Cross Roads approached the Black Sash Cape Town Advice Office, as she wanted to claim unemployment benefits. She had just resigned to take care of her son Vincent who was disabled by a stray bullet lasi month.

4:. Other employees who, due to impossibly long distances between their homes and places of work, end up resigning in order to avoid adverse employment records (as they may be dismissed of consistent lateness or absence without leave). Invariably, these are breadwinners who are fit and available for work.

4:. The situation is compounded by the prevalence of illness in the family, and in particular the effect of HIVIAIDS for many in South Africa. Many employees resign out of a desperate need to take care of their sickly loved ones. This is a social problem and our laws are supposedly crafted to respond to our societal problems.

Many of such cases abound and the applications for benefits are routinely declined by the Department. The common denominator is that most of this group of employees do not resign to pursue other business and I or employment interests but are compelled by situations far beyond their control.

Legal Overview

One of the hallmarks of an effective legislation is that it should respond adequately to its intended beneficiaries' circumstances. For this particular group of contributors, the Bill fails lamentably.

The legal justification for the exclusion is that an established principle of insurance law does not cover a person who caused his/her own misfortune. The obvious reasoning is that resigning employees should look in the mirror for the person to blame.

It is a moot point whether such rationale would withstand legal scrutiny if a generous interpretation were employed. This is precisely the case because most of the employees, as shown above, do not cause the insured harm on themselves and their dependants.

To illustrate and simplify the point, no insurance company repudiates a claim arising out of an accident where the insured driver, consciously avoided an oncoming danger, smashed and damaged the vehicle in the process. Such driver, although s/he may literally have caused the damage, cannot be prejudiced by a situation which was overwhelmingly caused by outside I other forces.

Our Constitution, in terms of section 9 further promotes the notion of equality before the law. The continued exclusion is an affront to this solemn promise.

Conclusion

Policies, which result in law, should not be divorced from a normative status of a country. Our laws should be sensitive to and appreciate the keen challenges facing the majority of our workforce.

Given the large gaps in the current social security safety net for people between the ages of 9 and 60 (65 for men), for most employees, the Unemployment Insurance Fund represents the only security net. In addition, few have access to alternative schemes such as pension or provident funds. (This, though, is not an attempt to convert the Unemployment Insurance Fund into a Pension or Provident Fund).

Incongruously, the status quo allows for an employee who is dismissed for a gross infraction to benefit from the Fund, but starve one who resigns for plausible reasons. It is hoped that the portfolio committee can make the much-needed intervention and correct this injustice.

Black Sash 25August2OO3

Appendix 2
COSATU SUBMISSION ON UNEMPLOYMENT BILL [B35-2003]

1.      introduction

COSATU welcomes the opportunity to comment on the Unemployment Insurance Amendment Bill (hereafter "the Bill"). The Unemployment Insurance Act 63 of 2001 (UIA) introduced a number of welcome changes including a progressive scale of benefits with lower income earners getting a higher proportion of their income than high-income earners; the extension of coverage to high-income earners which recognises the principle of solidarity and equity and brings greater stability to the Unemployment Insurance Fund (UIF); and the "delinking" of unemployment benefits from maternity benefits that allows pregnant women to claim maternity benefits without affecting their rights to claim their unemployment benefits.

Nevertheless at the time the UIA was passed, COSATU and various other civil society organisations raised a number of serious concerns around the substance and process. While some of these have been addressed, such as the recent inclusion of the domestic workers and seasonal workers, a number of contentious issues have remained unresolved. These include the:

·       Continued exclusion of public sector workers from the fund;

·       Limitation of maternity benefits; and

·       Lack of financial guarantees and general financing of the Fund.

In addition to responding to specific provisions in the Bill, this submission focuses on the extent to which the above concerns are addressed in the current process as well as other processes around unemployment insurance. Further, the UIA has been in operation for more than a year, making this an appropriate time to address various problems that have been identified in the course of its implementation. In this respect the submission takes into account the following exclusions from benefits under the UIA:

·       Workers who receive old age pensions; and

·       Workers who have resigned.

1.      The Continued Exclusion of Public Service Workers

We have consistently registered our objections to the continued exclusion of public service workers from benefits under the UIA. Excluding certain sections of the labour market from specific labour legislation significantly undermines the realisation of a unified labour market dispensation, which is the stated aim of the Department of Labour. We strongly believe that such an exclusion is unconstitutional, since it unfairly discriminates against public service workers and violates their constitutional rights to equality. Further, it contradicts the State’s obligation to progressively realise everyone’s rights of access to social security under section 27 of the Constitution.

Apart from concerns about equity and discrimination, the inclusion of public service workers would substantially contribute to the stability and viability of the Fund. This would further entrench the principle of solidarity already incorporated into the Act.

During the Parliamentary process on the UIA, the Committee instructed the Department to investigate and report to the Committee on the financial implications and viability of including public service workers. We note that this investigation has been completed and the Department subsequently briefed the Committee in November last year on the findings. In terms of these findings the recommendations were to retain the current exclusion of permanent state employees.

We note with concern that the full report has not been made public on the grounds of "confidentiality", which we believe contradicts the Promotion of Access to Information Act. We are therefore calling on the Committee to instruct the Department to release the report publicly and to allow for a process of public comment. There is a need to allow civil society organisations to engage with the underlying financial and legal considerations informing the recommendations against including public service workers.

2.      Financing

It has been our consistent view that the State underwrite the fund and make good any shortfalls. However, the UIA merely makes provision for the Minister of Labour to request the Minister of Finance to make an emergency allocation to cover any deficit in the Fund. Thus the Minister of Finance retains a discretion to refuse such a request.

We note as a positive development that for the first time in a number of years the Fund has reflected a surplus of R1.4 billion for 2002/03. This is due to a combination of reasons. Firstly, the increased efficiency and capacity through the use of the South African Revenue Services (SARS) as the collection agency. Secondly, the inclusion of higher-income earners, who were previously excluded, has contributed to the stability of the Fund. Finally there has been a considerable increase in budgetary allocations over the past few years to the Fund.

For the years 2001/02, 2002/03 and 2003/04 the respective amounts of R 612 million, R 327 million and R 257 million were transferred to the Fund. This is compared to the mere R 7 million allocated in previous years. This confirms our view that the State should play an active role in guaranteeing the stability of the fund.

While we recognise that the R 1.4 billion surplus for 2002/03 represents a positive development, this should not create a false sense of security. Firstly, domestic workers and seasonal workers have only just been included. These are particularly vulnerable sectors, with lower income earners who face cyclical unemployment. Accordingly, contributions from these sectors are less likely to substantially increase the size of the Fund, although it is to be expected that there may be a considerable increase in the number of claims for benefits. Further, collection of contributions from these sectors are undertaken by the Department as opposed to the SARS, which places increased administrative and capacity demands on the Department.

Despite this the Department of Finance intends once again reducing the budgetary allocation over the medium term with the allocation for 2005/06 reverting to R 7 million. The Consolidated Report of the Committee of Enquiry into Comprehensive Social Security noted the following:

"… although falling claim levels and improved financial controls have eased the financial crisis for the meanwhile, the UIF remains vulnerable. Until the special conditions in which the UIF is required to operate are acknowledged, and appropriate Government top up funds (in the form of a regular contribution to the UIF) are provided, this vulnerability will remain.

3.      Actuarial Review

Agreements reached at NEDLAC in 2000 on the Unemployment Insurance Bill provided for the implementation of a comprehensive, holistic actuarial review, which would look into a number of issues including the status of the Fund, financial guarantee from the State, and the level of benefits. This would allow a number of questions to be addressed in particular the low amounts of benefits and the frequency at which they may be claimed. We are prepared to submit more detailed questions on these issues if the Committee wishes to pursue the matter.

4.      Resignations

Section 16(1)(a) of the UIA identifies the various categories that qualify for unemployment benefits, which are limited to:

·       Workers whose contracts have been terminated by their employers or as a result of the ending of a fixed-term contract;

·       Workers who have been dismissed by their employers as defined by section 186 of the Labour Relations Act (LRA). This includes constructive dismissal; and

·       Unemployment as a result of insolvency.

We believe that a serious anomaly has arisen in respect of the above since resignations are not covered. Accordingly, workers are not eligible for unemployment benefits even if they resign for legitimate reasons. For example, a worker may resign because conditions are made intolerable owing to sexual harassment by another worker, or conditions at home force a rural worker to resign owing to the death of the head of the household. However, despite these being legitimate reasons for resignation, these workers would not be able to claim unemployment benefits. We believe that this situation is extremely discriminatory and has caused considerable hardship for many affected workers.

Further, the inclusion of constructive dismissals has created an anomalous situation, since it often takes the form of a resignation. Many workers who are constructively dismissed may state that they resigned either because they are unwilling to damage future job prospects or are not informed about what constitutes a constructive dismissal. This is further complicated by the fact that deciding what constitutes a constructive dismissal is a highly subjective process. These raise serious questions in respect of implementation, especially around the administration of the applications for benefits.

Accordingly we are calling on the Committee to insert an amendment into section 16(1)(a) to provide for the inclusion of resignations under certain defined conditions, and subject to a fair process. While the question of exclusions is not specifically covered in this Bill, we believe that it is important that the Committee address this problem within the current process. Further, it is relevant since the Bill reviews other exclusions as well.

1.      Specific Provisions on the Bill

1.      Inclusion of Seasonal Workers and Domestic Workers

All references in the Bill to seasonal workers and domestic workers are deleted especially where these provide for their exclusion. These amendments are in line with recent inclusion of the application of the UIA to domestic and seasonal workers. We strongly welcome this since it is something we have long called for.

2.      Exclusion of Persons Who receive Old Age Pensions

In terms of the current legislation people who receive old age pensions and continue to work are in an anomalous position. Currently they are excluded from claiming benefits in terms of section 14(a)(I), although they are required to pay contributions to the UIF. The Bill seeks to address this by inserting a new section 3(1)(e), which removes the requirement to contribute to UIF.

We recognise that the underlying emphasis is to protect old age pensioners. However, after considering the implications we have concluded that it would be more appropriate to do the reverse which would be to ensure that this category or workers is properly included.

This concern is especially relevant to domestic workers of pensionable age. According to our discussions with SADSAWU a larger proportion of domestic workers are in fact over the age of 60 years. In many cases they are forced to work as domestic workers to supplement their pensions. In order to qualify for a pension, one has to comply with a means test. It is important to note that the minimum wage stipulated by the sectoral determination is lower than the maximum income to qualify for a pension. Accordingly, it is not irregular/illegal to draw a pension and work.

It is also important to bear in mind that those domestic workers drawing pensions have to contend with significantly reduced payouts that take into account their working income. Consequently in such a case a domestic worker who becomes unemployed may end up having a lower income than other state pensioners who receive the full pension benefit. Therefore it is important that the unemployment benefit be made available to ensure that the income does not fall below a minimum threshold.

We believe that the basis for the payment of UIF must be distinguished from that of the old age pension, which accrues as a right as a citizen to a form of social welfare to be used by older persons. The UIF on the other hand is a temporary measure to compensate for loss of employment income. Our argument in this respect should be distinguished from the exclusion of a person from drawing both pension and disability benefits, both of which are social welfare payments. It is discriminatory to exclude someone from enjoying the benefits of their contributions, including those which were made before they reached pensionable age.

The continued exclusion from the UIA will have the effect of undermining the principle of achieving a unified labour dispensation, since affected workers will not be able to rely on the legislation for protection.

It must be borne in mind that we are dealing with a very vulnerable sector of the labour market, which is predominantly represented by black women who are amongst the lowest paid. Age as a factor considerably compounds this and increases likelihood of exploitation.

Further, there is a substantial incidence of households headed by older persons whose pensions serve as the primary source of income. The incidence of HIV/AIDS, cyclical forms of unemployment and general prevalence of poverty have substantially contributed to this phenomenon.

Of further concern is that there is a perception amongst domestic workers who draw pensions that they are not allowed to work. This has impacted significantly on the registration process. This has the indirect effect of undermining efforts to formalise their working arrangements and creates opportunities for avoidance of obligations in respect of the minimum wage and conditions. We believe that complete exclusion from the UIF will only further entrench this misconception that their working arrangements are illegal.

Further, where a domestic worker is approaching the official retirement age (but is not as yet eligible for a pension) they often choose not to register for UIF on the basis that they are unlikely to benefit. However, this leaves them unprotected in the intervening phase.

Accordingly we recommend that the proposed exclusion not be implemented. Further, section 14(a)(i) should be deleted. This would then allow affected workers to draw unemployment benefits if necessary.

1.      Need for Clarity Regarding Previous Contributions

Notwithstanding our recommendations noted above, we believe that the Department should clarify its intentions in respect of the previous contributions that it collected from affected workers before they reached a pensionable age.

3.      Partial Loss of Employment

Clause 4 inserts a new section 12 A, which recognises the right to benefits if a domestic worker becomes partially unemployed. Clause 5 provides for a new section 13(6), which states that the total income (including the wage and the unemployment benefit) should not exceed the benefit that would have been paid out had the worker become wholly unemployed.

We welcome these amendments as they recognise the peculiar situation that domestic workers face in that they often have multiple employers. It recognises that it is crucial to address even a partial loss of income. Further provision should be made to ensure that a worker would receive the maximum benefit applicable taking into account the credits accumulated.

4.      Death of an Employer

Clause 6 proposes that unemployment benefits may be paid to a domestic worker who is unemployed as a result of the death of the employer. We welcome this provision since it addresses the situation that is specific to domestic workers.

5.      Topping Up of Benefits in respect of Illness, Maternity, and Adoption

Currently, benefits paid out in respect of the above are set off against any payments received from the employer. So if the income from the employer is greater or equal to that the UIF benefit, then no UIF benefit will be payable.

In terms of the proposed amendments to sections 21, 24 and 27 a top up benefit will now be applicable in respect of illness, maternity or adoption. Therefore it is possible to receive both the benefits from the employer and the UIF. The proviso is that the total income should not exceed total remuneration.

We strongly welcome this amendment, which goes a substantial way to addressing our concerns about the limited maternity benefits provided. Having noted this we believe that more needs to be done to address the situation of more vulnerable workers who earn lower incomes and who are less likely to be unionised. As such they are less likely to get paid maternity leave from their employers. This creates a situation of inequality when compared to higher income earners who are more likely to get a 100% of their normal income.

Accordingly we believe that there is a need to urgently investigate increasing maternity benefits on a general scale (which would also benefit lower income earners.)

1.      Delinking of Maternity Benefits from the Employment Period

Provision also needs to be made to delink the maternity benefits from the period that a woman has been employed for. This would protect women who fall pregnant but have not accumulated the full quota of credits and so therefore do not receive benefits for all four months.

2.      Investigation and Report into Maternity Benefits

As with the question of public service workers, the Committee instructed the Department to investigate and report on the extension and increase in the level of maternity benefits. We believe that this report needs to be released publicly and made subject to comment.