Compensation Fund inspectorate report on Top 20 non-compliant companies; Supported Employment Enterprises performance & sales improvement plan

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Employment and Labour

06 March 2019
Chairperson: Mr B Mashile (ANC)
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Meeting Summary

The Compensation Fund said that the Top 20 companies reported injuries related to the head, back, right shoulder, thumb injuries, right leg and right ankle injuries. An inspection of the 20 companies was done. However, only Shoprite’s injuries were specifically dealt with in this report. Inspections revealed that the wholesale and food retail and agriculture and forestry sector showed to have the greatest number of reported injury claims.

The Western Cape, Gauteng and KwaZulu-Natal also showed a high number of injuries for all sectors that were inspected. The compensation fund found that section eight and 17 of the Occupational Health and Safety (OHS) Act of 1993 was contravened six times by Shoprite. Shoprite was also in contravention of the regulation four, six, seven and nine of the General Administration Regulations. These dealt with employees’ rights to information, consultation and recording of injuries.

The Committee asked what informed the inspections; why the compensation fund specifically focussed on Shoprite; how many inspectors were in the Western Cape; which province had the highest number of injuries and whether inspections also take place in townships where there are smaller companies.

The Supported Employment Enterprises (SEE) said that they have accumulated backlogs in delivering services and that there is a lack of a standardised operating procedures and products which have impacted negatively on their operations. The SEE has seen opportunities in working with stakeholders such as the Departments of Health (DOH) and Education (DBE). The strategy to acquire new customers will include exhibitions, increased participation in open bids, and return to old customers who will support the SEE. The percentage of sales that were generated was R45 million, which is R23 million less than the target. The Limpopo and Mpumalanga factory projects will increase employment opportunities and increase the current production of the organisation. For the organisation to break-even it must accumulate at least R200 million per year. SEE currently relies on a government subsidy relief of R141 million.

The Committee asked how the R20 minimum wage affects the workshops and commented on the organisations’ importance. Members also asked how the organisation plans on being self-sufficient and what the effects of the late payments from government are.

Meeting report

Opening remarks

The Chairperson welcomed the delegates from the Department of Labour and read out the agenda of the meeting.

Mr Zolani Sakasa, Committee Secretary, read out the apologies submitted.

Presentation by the Compensation Fund

Mr Tibor Szana, Chief Inspector: Occupational Health and Safety (OHS): Department of Labour (DOL), said there are a number of injuries reported by the inspectors in the Top 20 companies. Some of these include; head, left thumb, right hand, multiple injuries, right ankle, left foot and right eye injuries. The department was delegated to inspect Top 20 companies, but the department will highlight injuries that took place in Shoprite, because Shoprite showed to have the greatest number of claims related to injuries. The inspection showed that the retail sector reported a large number of claims related to injuries than the non-retail sector.

The department visited Shoprite’s Head Office and met with senior management. A clear expectation concerning injuries was conveyed to senior management at Shoprite. The department presented Shoprite with its injury figures compared to other companies in their sector and how they will reduce the number of injury claims. Shoprite had 58 contraventions, a compliance level of 37% and only 34 Shoprite franchises that complied with the OHS Act of 1993.   

The inspection showed that Shoprite contravened the sections eight and 17 of the OHS Act of 1993. Section eight speaks to the general duties of the employer and section 17 speaks to the availability of Health and Safety Representatives. This indicates that there is a breakdown in Shoprite’s structure which would impact on the health and safety of employees in the workplace. Also, Shoprite was found to have contravened Regulations four, six, seven and nine of the General Administration Regulations. Employees did not have copies of the OHS Act, there were no negotiations and consultations with the employees regarding the appointment of Health and Safety Representatives, and there is no register of recorded injuries available. Injuries must be recorded by the employer so that they do not occur again.

Mr Szana said the department will recommend two cases to the National Prosecuting Authority (NPA) for prosecution.

The types of inspections the inspectors were engaged in, in the first quarter are the wholesale and retail sector which also showed to have the greatest number of claims for injuries. The other sector that is showing to be a worldwide problem is the agriculture and forestry sector. The construction sector is also a high risk for injuries. Mr Szana added that the department spent at least 70% of their time on this sector. The wholesale and retail, construction, iron and steel inspections were also very high in the second and third quarter.


The Chairperson asked whether most of the injuries take place in the storage room or the front store, and what informs the department to carry out inspections, because some of the sector inspections show that there were no inspections done in some provinces.

Mr Szana said that the department communicates to the managers responsible for Health and Safety in Shoprite that there needs to be a driving focus in terms of the number of claims. The department has dealt directly with Shoprite’s Head Office because the office controls all the activities on the lower levels and if the structure is not right at senior management level then everything that is filtered down will affect the Health and Safety of the company.

Mr Vuyo Mafata, Acting Director-General (ADG), DOL said that between the first and third quarter, the bulk of inspections conducted took place in the wholesale and retail sector. The inspections are done quarterly; however, these are also based on the number of claims received by the department.

Mr Szana added that what the compensation fund requires of companies to report under the OHS Act is not necessarily the same as what the compensation for Occupational Injuries and Diseases Act requires of companies to report concerning injuries. There is a slight disjuncture between the two Acts, so one might have a higher reporting of injuries in some sectors than usual. For example, the transportation sector may not show a high number of injuries than what there actually are because the OHS Act does not allow the compensation fund to inspect all types of transportation incidences.

Mr M Bagraim (DA) asked if the presence of organised labour unions contributes to the lessening of injuries in the workplace because employees would have the advantage of lodging claims through their unions. He urged the department to also conduct inspections on small companies.

Mr Bagraim enquired why most of the injuries were reported in the greater provinces such as Western Cape, KwaZulu-Natal and Gauteng. He asked if this had any relation to there being a larger number of employees in those provinces.

Mr D America (DA) asked how many inspectors are in the Western Cape, and if most of the inspections took place in the townships or in the urban areas. He asked if there were any differences in the manner in which inspections are conducted in the townships and the urban area. He added that it would have been useful if the compensation fund had compared Shoprite’s number of injuries with those of other large retailers such as Pick ‘n Pay and Spar. 

Ms S van Schalkwyk (ANC) said it would have been beneficial to the Committee if the compensation fund had also included the statistics for other large retailers. She asked if there were any workshops planned to educate employees and their employers on health and safety issues, and what the difference is between a ‘head injury’ and a normal ‘head’ injury as indicated in the report.

Ms Van Schalkwyk asked which sectors are listed under the heading ‘other’, and what is the definition of “HBA” under the sector inspection spread. She also asked how the compensation fund ensures the protection of ‘casual workers’ and that they are able to report their injuries. She enquired about the types of inspections that take place in government buildings, and why there is a zero under the sector inspections in some provinces.

Ms L Theko (ANC) asked what recommendation the compensation fund gave to the NPA, and how the injuries impacted the labour force in the top 20 companies.

The Chairperson said the report by the compensation fund is vague and not company specific. The Chairperson said he would have liked a breakdown of all the injuries in each company. He asked what the main causes of the injuries are and whether there are any follow-ups to the inspections, and which sectors are inspected frequently.

Mr Szana responded that the inspectors plan their own inspections. There are times when the companies being inspected are given a notice of inspection, and other times inspectors arrive unannounced. Unannounced arrivals have in the past been deemed undesirable because the inspectors would arrive to find that the relevant persons responsible for health and safety are not on-site or available. During the inspections, the inspector would do a walk-about with either the shop stewards or the employees and an attendance register is signed by all individuals present during the inspection. If the inspector notices that there have been contraventions to the OHS Act, a notice of contravention is sent to the company afterwards. The inspections are either proactive or reactive in nature. The reactive inspections happen when the inspector notices that there is a contravention of the OHS Act.

Mr Szana said that the compensation fund cannot respond whether the presence of a labour union decreases the number of injuries in the workplace.

Mr Szana said that inspections take place in both big and small companies, as well as in the townships and urban areas equally. The Western Cape, KwaZulu-Natal and Gauteng have higher levels of activities, hence why inspections are more. Many of the injuries take place in the backroom where there is more movement and activities taking place, especially movement with dangerous machinery and equipment.

Ms Szana said that there are currently workshops being held in KwaZulu-Natal, and there are close to 20 inspectors in the Western Cape. There are specific sectors in provinces where the inspections did not show any results, hence some provinces show a zero. There has been a number of complaints received from employees working in government buildings; such reports include the recent incident where a school building in Gauteng collapsed and injured some learners.

The Chairperson asked if financial resources limit the compensations fund’s capacity to conduct inspections.

Mr Mafata responded that the compensation fund’s finances have improved in the last few years. The compensation fund has taken over the funding for OHS. As result, the costs incurred by the department for OHS would be covered by the Compensation Fund. Also, the department is in the process of increasing the number of Health and Safety inspectors in the country to 500. The department also has a fund called ‘Strengthening Society Fund’ where the department invites Non-governmental Organisations (NGOs) to apply for funding for teaching programmes for workplaces and teach workers about their rights and labour laws. The nature of injuries that are reported are injuries that result in temporary disablement, however, if the injury causes a permanent disability the employee is registered onto the compensation fund’s pension register and that employee is paid a pension until death.

Mr Szana added that follow-ups are done six months after an inspection has showed that there has been a contravention of the OHS Act.

Ms Van Schalkwyk commended the compensation fund on the improvements made.

The Chairperson recommended that in the sectors where no injuries were found, a hyphen must be placed, and that the sectors where no inspections were done a zero should be inserted. He suggested that there be an increase of inspectors that will be proactive.  

Presentation by the Supported Employment Enterprises

Mr Sam Morotoba, Deputy Director-General: Public Employment Services, DOL, explained the entity’s SWOT analysis, adding that the organisation has accumulated backlogs in delivering its orders and it has outdated technology and machinery. He attributed the organisation’s failures to inappropriate organisational structure and lack of standardisation in operating procedures and product. Supported Employment Enterprises (SEE) has in the past identified stakeholders such as the Department of Health (DOH) and Department of Basic Education (DBE). He said that SEE’s main threats are the lack sufficient support in the maintenance of existing production infrastructure, inadequate and ineffective governance and delegation of authority, and Supply Chain Management (SCM) processes.

SEE’s strategic objectives are to create 1000 new jobs for people with disabilities, increase revenue to R400 million by 2024 and change the business model. In order to do this the SEE will have to increase participation in open bids and return to old customers who used to make us of the SEE support. It will also have to improve on its turn-around times of issuing quotations and create a customer database, pursue new business within existing long-term contracts and promote a strategic alliance to enhance quality. Additional new persons with disabilities employed at SEE were 96 against a target of 100, and the percentage of sales generated as at 18 February 2019 was R45 million against a targeted amount of R68 million.

In order to create 1000 additional jobs by 2024, the SEE will establish working relationships with special schools and Employment Services of South Africa (ESSA). A succession plan and the creation of a career advancement plan will be developed by SEE as well as amending the current SEE governance framework in the Employment Services Act of 2014. The Limpopo and Mpumalanga new factory projects will help increase employment opportunities for persons with disabilities, grow the market and footprint of the entity, increase service delivery and customer service to the current SEE customers in Limpopo and enable the SEE to achieve its mandate to create employment opportunities.  The project is divided into two phases to ensure that that factory is established into a viable and sustainable business. The first phase will be the establishment and launching of the factory and the second phase will be the development of business and the operations of the factory, which involves the management of the factory.

The new business model will assist with re-engineering the production process for quality and service delivery improvement, help align the supply chain operations and business development to facilitate the continuous improvement of SCM and strengthen the skills set of management and factory workers.

Mr Spheni Ngcongo, Chief Financial Officer (CFO), SEE, DOL said the major threat facing the organisation is the low revenue base. The cost of sales is in excess of R143 million and the National Treasury’s funding only fills the gap between low revenues and cost of sales. It is therefore important that SEE generates revenue in excess of R200 million and manage its costs well in order to achieve self-sustainability.


Mr Bagraim said that many of the supported private workshops are unable to pay the R20 per hour minimum wage to workers. As a result, two of the large workshops have since closed due to the inability to pay minimum wage. He said that this is an opportunity for the SEE to form partnerships with these workshops to keep them open. It was unfortunate that people with disabilities only represent 1% of the workforce in South Africa when the national target is set at 5%. He asked if there were any innovative ways in which the SEE can assist with reaching this target. He added that there are several organisations who are willing and want to employ more people with disabilities, however companies need assistance with identifying qualified people living with disabilities. The SEE should put more emphasis on training more people with disabilities.

Ms Van Schalkwyk said the SEE plays an important role in ensuring that people with disabilities are accommodated in the workplace.

The Chairperson asked how the SEE deal with government’s late payments to service providers, and the challenges the SEE experiences between Directors in the SEE and the Department.

The Chairperson said that there is some level of contradiction in the report. The organisation says that it wants to be self-sufficient, yet it is an entity under a government department which is not a profit-making department. In order for the SEE to financially grow it will most likely have to operate like a private organisation. The Chairperson was concerned about how the increase of 1000 jobs will lead to a revenue increase of R100 million by 2024. He suggested that the SEE consults National Treasury on how to use the SMART technique to set its goals. 

Mr Morotoba responded the Chief Executive Officer (CEO) of the SEE is at the same level as a Chief Director in a department. The SEE encountered serious problems in the past relating to late payments by government departments. Also, National Treasury has in the past written of millions of Rands that were owed to the SEE. National Treasury has allowed the SEE to charge a 50% upfront payment to deal with financial losses. Once the services have been provided, the SEE demands the remaining 50% payment. There is roughly 4.2 million people living with disabilities and only a small percentage of these people are registered with the different workshops. There has been a demand for the SEE to open more workshops for people living with disabilities. People employed at the SEE are on the SEE standard income, i.e. they do not receive any monies from the Department of Social Development (DSD).

Mr Ngcongo added that in the past the organisation used 4x4 vehicles for deliveries to factories. The organisation has since procured six-ton trucks for six of their factories, and the order for additional six-ton trucks is being finalised.

The Chairperson asked why lack of transportation has been listed as a potential risk if the trucks have already been purchased. He said that the risk should have been taken out of the report if the matter has already been dealt with.   

Adoption of draft minutes

20 February 2019

Mr M Bagraim (DA) moved for the adoption of the Minutes.

Ms S van Schalkwyk (ANC) seconded the adoption.

27 February 2019

Mr Bagraim moved for the adoption of the Minutes.

Ms L Mjobo (ANC) seconded the adoption of the Minutes.

The meeting was adjourned.

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