Unemployment Insurance BIll: response by Department

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Labour

26 March 2001
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Meeting report

LABOUR PORTFOLIO COMMITTEE
27 March 2001
UNEMPLOYMENT INSURANCE BILL: RESPONSE BY DEPARTMENT ON SUBMISSIONS

Chairperson: Mr S Manie

Documents handed out:
Department of Labour - Proposed amendments to the Unemployment Insurance Bill (Appendix 1)
Comments of Stakeholders from Public Hearings (19 and 20 March) (Appendix 2)
 
SUMMARY
The Department of Labour has agreed in principle to include domestic workers and seasonal workers within the scope of the Unemployment Insurance Bill. The Department of Labour has reduced the time frame for the investigation (as to how to include these workers) from eighteen to twelve months. The Committee welcomed this, however, opposition parties were concerned about the lumping together of seasonal and domestic workers. They believed that the issue of seasonal workers was far more technical than domestic workers, and thus had to be separated in the Bill.

MINUTES

The Department, having considered the submissions made at the public hearings, made reference to six key policy inputs:
Domestic and Seasonal Workers - The Department has agreed to include domestic and seasonal workers within the scope of the Bill subject to mechanisms as to how to collect the contributions of such workers. The investigation into how such workers are to be included would most likely begin immediately. Furthermore the period of investigation is now limited to one year.
State Employees - The Department has agreed to consult with the Minister of Finance and of Public Service Administration on this issue. It is not an issue that can be immediately resolved.
Composition of Board - The Department has agreed to review the size and the composition of the Board. The members of the Board will now consist of three members nominated by NEDLAC to represent organised labour and three members to represent organised business. Three members appointed by the Minister to represent the interests of the State. Three members to represent the public.
Migrant Workers - The Bill already provides sufficient guarantee for migrant workers. The Department believes that there was a misreading of this provision in the Bill. The Bill refers to a "contract of service" which refers to a person that works in SA for a fixed period of time (contract based) to do a specific job. These workers are not covered by the Act. Those workers, who work in SA almost permanently, would be covered by the Act.
Income from other Sources - The Department has agreed to exclude State disability grant as a collateral source.
Employees working less than twenty four hours per month - The Department has disagreed to the inclusion of such workers in the scope of the Bill. The Department does not support the inclusion of such workers because it is important for the Department to maintain the consistency of the application of existing legislation, specifically the Basic Conditions of Employment Act.
Monies paid in error - The Department will consider the recommendations made by stakeholders to extend the time period during which contributors may pay back monies paid in error to them, from thirty days to ninety days.
See document for the remainder of amendments proposed by the Department.

Discussion
Mr N Clelland (DP) said that seasonal workers and domestic workers "cannot be lumped" together in one investigation and in one reference in the Bill. He asked the Department what was its approach to dealing with this issue as seasonal workers are more of a technical problem.
The Department replied that the investigation and inclusion of seasonal workers was in line with the Department’s acceptance of domestic workers.

Mr Oliphant (ANC) stated that the Committee needed to know that the Department is taking the issue of domestic workers seriously. The Chairperson added that they needed to know what mechanisms are to be put in place for the payment of contributions by domestic and seasonal workers. He also suggested that the term "investigation" should be replaced with, "period of consultation". In his opinion, the term "investigation" refers to a situation were one needed to establish whether there are enough facts to support an outcome and such an investigation can go either way.

The Department replied that there needed to be an institutional framework in place so that the inclusion of domestic and seasonal workers could be sustained. The department has to find out first, how to collect the contributions of such workers. Thus the institutional frameworks for such collection must be in place.

Mr Middleton (IFP) asked whether the investigation would begin twelve months from now or even later.
The Department replied that the investigation would technically begin on promulgation of the Act. The investigation, however, might begin immediately as the Department and the Minister are discussing it. The Minister has the power to allow the investigation to start now.

The Chairperson made it very clear that the department and the Committee both agreed that domestic and seasonal workers would be included in the scope of the Bill. Only the mechanisms as to how to collect the contributions from such workers are to be investigated.

Mr Clelland said that the Department should ensure that the inclusion of seasonal workers in the scope of the Bill does not present farmers with an administrative nightmare. Unemployment insurance specifically relating to contributions of seasonal workers should not be over-regulated.

The Department stated that it would not agree to the inclusion of those workers who work for less than twenty - four hours a month.

The Chairperson said that that was not the issue. He was concerned with those workers who work for various employers for less than twenty four hours a month but yet the total time of being employed amounted to twenty four hours or more.
The Department replied that these workers would not be included in the Bill.

Mr Clelland said that he was concerned with this as it would be a loophole for those employers who do not want to pay UIF contributions to ensure that the employee only works for less than twenty four hours a month.

The Department also stated that it would consider an additional clause in the Bill to further define the powers of the Minister in respect of categories of contributors. This would mean that the Minister may declare a certain category of employees as contributors to the Fund.

The Chairperson said that this gives the Minister the power to define the scope of the Bill. Thus the Minister may deem whatever he wanted to whenever he wanted to, without any intervention by Parliament. He would be taking over the role of Parliament. Mr Oliphant suggested that such a power conferred on the Minister could have a retrogressive effect. The Minister may be able to deem categories of employees as non-contributors or as falling outside the scope of the Fund.

The Department replied that the provision conferring such a power on the Minister essentially came from the atypical employment sector. This would allow them to access social security. Also the Minister would have to consult with the Board first before making such a declaration and if it is a strong Board, then the powers of the Minister may be curbed.

The Department also proposed an amendment to section 10 of the Bill. In terms of this amendment the Minister of Labour may request the Minister of Finance to adjust the national budget so that any deficit in the Fund is covered. Mr Blaas (NP) asked whether there was a commitment from Treasury to accept this responsibility.

Labour replied that such a provision was in accordance with an agreement reached at NEDLAC. Also any agreement entered into at NEDLAC is done not as the Department of Labour, but as Government. Furthermore, there was a representative from Treasury present, when the NEDLAC agreement was reached.

The Chairperson stated that he was unsure about the exclusion of learnership agreements and apprenticeship agreements. They become part of the workforce for a few years and when they become unemployed there is no provision for them.

The Department responded that the this exclusion was due to the need to encourage the development of these apprenticeships. There has to be an incentive for employers to take on such apprentices.

The meeting was adjourned.

Appendix 1
AMENDMENTS PROPOSED UNEMPLOYMENT INSURANCE BILL [B3-2001]
CLAUSE 1
1.         On page 5, after line 11 to insert the following definition:
            “child” means any person under the age of 18 years.
2.         On page, after line 21, to insert the following definition:
“seasonal worker” means any  person who is continuously employed by an employer in agriculture for a period of less than four months and is not an employee or domestic worker for purposes of this Act

CLAUSE 3
1.         On page 6, from line 29, to omit clause 3 and to substitute:
Application of this Act
3.         (1)        Subject to subsections (2) and (3), this Act applies to all employers and employees, other than-
(a)        employees employed for less than 24 hours a month by a particular employer;
(b)        employees who receive remuneration under a learnership agreement registered in terms of the Skills Development Act, 1998 (Act No. 97 of 1998); and
(c)        a person who enters the Republic for the purpose of carrying out a contract of service, apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service, apprenticeship or learnership, as the case may be, or by any other agreement or undertaking to repatriate that person, or if that person is so required to leave the Republic;
(d)        employees in the national and provincial spheres of government;
(e)        the employer of any person contemplated in paragraphs (a), (b), (c) or (d).
(2)(a) The Minister must, as soon as possible after this section takes effect, designate or appoint a body which must investigate and make  recommendations regarding the system for the collection of contributions in respect of domestic workers and seasonal workers.
(b) The recommendations must be made within 10 months from the date that this section takes effect (c)        The Minister must consult the Board on the outcome of the investigation.
(c) The Minister, by notice in the Gazette, must determine the date from which domestic workers and seasonal workers and their employers must make contributions in terms of this Act and the date from which those workers become entitled to any benefits contemplated in this Act.
(d)        Different dates may be determined in terms of paragraph (c) in respect of domestic workers and seasonal workers, but both such dates must be within  12 months of the commencement of this section.

CLAUSE 10
1. On page 8, in line 31, after "1999)" to insert  ", in order to cover any deficit in the Fund".  

CLAUSE 13
1.         On page 9, in line 35, to omit “dividing the monthly remuneration by 30,33” and to substitute “multiplying the monthly remuneration by 12 and dividing it by 365”.
2.         On page 9, in line 36, to omit “dividing the weekly remuneration by 7” and to substitute “multiplying the weekly remuneration by 52 and dividing it by 7”.
3.         On page 9, from line 40, to omit subsection (3) and to substitute:
(3)        Subject to subsection (6), a contributor's entitlement to benefits in terms of this Chapter accrues at a rate of one  day's benefit for every completed six days of employment as a contributor.
(4)        A contributor’s entitlement contemplated in subsection (3) is  subject to a maximum accrual of 243 days benefit in the four year period, less any days of benefit received by the contributor during this period.
4.         On page 10 , in line 1, to omit “(3)” and to substitute “(4)”.

Clause 14
1.         On page 10, from line 6, to omit paragraphs (i), and  (ii) and to substitute:
            "(i)        subject to subsection (2), any benefit provided by the State"
2.         On page 10, from line 14, to omit paragraph (iv) and to substitute:
                        (iii)       any payment from whatever source as a result of that contributor’s unemployment with an employer, except that the contributor shall be entitled to benefits once such payment has been exhausted at a rate equal to the usual remuneration of that contributor, which rate shall be determined from a certificate of service issued under section 42 of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997), whilst that contributor was employed with that employer.
3.         On page 10, after line 25, to insert the following subsection:
            (2)        Any benefit payable in terms of this Act to a contributor who is in receipt of a benefit provided by the State must be reduced to the extent that the contributor is entitled to such benefit provided by the State.

CLAUSE 15
1.         On page 10, in line 29, to omit “application in terms of section 17” and to substitute “unemployment".

CLAUSE 16
1.         On page 10, from line 37, to omit paragraph (a) and to substitute:
            (a)        the reason for the unemployment is–
                        (i)         the termination of the contributor’s contract of employment by the employer of that contributor
                        (ii)the dismissal of the contributor, as defined by section 186 of the Labour Relations Act, 1995 (Act No. 66 of 1995), excluding constructive dismissal of that contributor;
                        (iii)       the termination of the contributor’s employment due to the ending of the fixed term of contract, or
                        (iv)       insolvency in terms of the provisions of the Insolvency Act, 1936 (Act No. 24 of 1936.

CLAUSE  18
1.         On page 11, in line 42, after “contributor” to insert “receives unemployment benefits and”.

CLAUSE  19
1.         On page 11, in line 49, to omit “or receives ” up to and including “illness” in line 50 and to substitute “contributor”.

CLAUSE 20
1.         On page 12, in line 15, after “Chapter” to insert “or adoption benefits in terms of Part E of this Chapter; or”.
2.         On page 12, from line 10 to omit paragraph (a)

CLAUSE 21
1.         On page 12, in line 22, to omit “in each week of” and to substitute “for”.
2.         On page 12, in line 23, to omit “weekly”.
3.         On page 12, in line 25 to omit “weekly”.

CLAUSE 22
1.         On page 12, in line 43, to omit “weekly”.

CLAUSE 24
1.         On page 13, in line 9, to omit “in each week of” and to substitute “for”.
2.         On page 13, in line 10, to omit “weekly.”
3.         On page 13, in line 12, to omit “weekly”.

CLAUSE 25
1.         On page 13, in line 34, to omit “weekly”.

CLAUSE 27
1.         On page 14, in line 6, to omit “in each week of” and substitute “for”.
2.         On page 14, in line 7, to omit “weekly”.
3.         On page 14, in line 10, to omit “weekly”.

CLAUSE 28
1.         On page 14, in line 26, to omit “weekly”.

CLAUSE 30
 1.        On page 14, in line 49, after “spouse” to insert “or life partner”.
2.         On page 14, in line 50, after “spouse” to insert “or life partner”.
3.         On page 14, in line 52, to omit “weekly” wherever it occurs.
4.         On page 14, from line 55, to omit subsection (4) and to substitute:
(4)        A dependant  is not entitled to receive benefits under this Part if that dependant has received any monies  from whatever source as a result of the contributor’s death, except that the dependant shall be entitled to receive benefits once such monies have been  exhausted at a rate equal to the usual remuneration of the deceased contributor, which rate shall be determined from a certificate of service issued under section 42 of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997), whilst that contributor was employed with that employer.

CLAUSE 31
1.         On page 15, in line 14, to omit “weekly”.

CLAUSE 35
1.         On page 15, from line 43, to omit subsections (2) and (3) and to substitute:
(2)          If the Commissioner determines that a person contemplated in subsection (1) has been paid benefits in error or in excess of the person’s entitlement, the Commissioner must, within three years of the date of erroneous payment, make a written demand for repayment from that person.
(3)        A written demand contemplated in subsection (2) must include
-
(a)        a statement of the amount paid in error;
(b)        an explanation of why that person was ineligible to receive the funds; and
(c)        evidence that the person to whom the demand is addressed actually received the funds.
            (4)        The persons contemplate in subsection (1) must refund the amount within 90 days of the written demand.

CLAUSE 37
1.         Clause rejected.

New Clause
1.         That the following be a new clause to follow clause 36:

Disputes relating to payment or non-payment of benefits

37.       (1)        A person who is entitled to benefits in terms of this Act may appeal to the appeals committee of the Board if that person  is aggrieved by a decision of
-
(a)        the Commissioner to suspend such person’s right to benefits; or
            (b)        a claims officer relating to the payment or non-payment of            benefits.
                        (2)        A person who is dissatisfied with the decision of the appeals committee may refer the matter for arbitration to the CCMA.

[Regarding clauses 38 to 41 a comment was received pointing out that the procedure contemplated in those clauses are very cumbersome and labour intensive. A more efficient and cost-effective method appears in section 87 of the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No 130 of 1993)  The enforcement system under COIDA allows the Director-General to directly impose a fine and to issue an order that has the effect of a court order. The appropriateness of inserting similar provisions in the Bill is being investigated with a view to making a recommendation to the Committee. See attached copy of section 87 of COIDA.]

CLAUSE 49
1.         On page 18, in line 22, to omit “four”: and to substitute “three”.
2.         On page 18, in line 23, to omit “four”: and to substitute “three”.
3.         On page 18, in line 24 to omit “and” and to insert the following paragraph:
            (c)        three members must be nominated by NEDLAC to represent the community; :
4.         On page 18, in line 25, to omit “four”: and to substitute “three”.

CLAUSE 50
1.         On page 18, in line 50, after “Board” to insert “, which must include an appeals committee”.

CLAUSE 57
1.         On page 20, after line 48, to add the following subsection:
                        (3)        (a)        In order to determine the payment of benefits in terms of this Act, the Commissioner may access any information on a database of the State which contains information regarding social security.
                                    (b)        For purposes of paragraph (a) the Commissioner must co-operate with other State institutions  to link their respective databases.

CLAUSE 68
1.         On page 24, in line 27, after “section” to insert “, 69”

NEW CLAUSE
1.         That the following be a new clause to follow clause 68:
            Inclusion and exclusion of persons from ambit of Act
(1)        The Minister may, after receipt of an application in a prescribed form  and after consultation with the Board, by notice in the Gazette declare that as from a date specified in the notice any specified class of persons, or any person employed in any specified business or section of a business or in any specified area, shall
-
(a)        not be regarded as contributors for purposes of this Act; or
(b)        be regarded as contributors for purposes of this Act.
(2)        The procedure referred to in section 55(1) applies with the necessary changes to a notice issued under subsection (1)

SCHEDULE 2
1.         Schedule rejected.

NEW SCHEDULE
1.         That the following be a new Schedule to follow Schedule 2:

SCHEDULE 2
MATHEMATICAL CALCULATION OF CONTRIBUTOR’S ENTITLEMENT
The benefit to which a contributor is entitled is calculated in one of two ways, depending on a contributor's income prior to becoming unemployed:
1.         Contributors who earned less than a particular amount--known as the "benefit transition income level"--are entitled to a percentage of their previous pay. 
2.         Contributors who earned more than the benefit transition income level are entitled to a flat benefit, equal to the entitlement of a contributor who was previously paid at the benefit transition income level.

The benefit transition income level
The 1953 International Labour Organisation Convention (Convention No. 102) stipulates that the wage of a skilled manual worker should determine the appropriate income level at which to set a ceiling for membership of a social insurance scheme.  Over the years, South Africa's Unemployment Insurance scheme has roughly kept pace with this guideline.  The benefit transition income level is therefore linked to this rate.

The current income ceiling is R8 099 per month.  This will become the initial benefit transition income level for the purposes of this Act.  However, in terms of section 12(3)(a), the Minister may change the benefit transition income level from time to time to reflect changing patterns of income.

Contributors who previously earned less than the benefit transition income level
For contributors who earned less than the benefit transition income level, entitlement to benefit is earnings-related.  A contributor's entitlement is calculated according to the following formula:

Benefit = Daily Income * IRR

where IRR is the Income Replacement Rate corresponding to the contributor's daily income.

Daily Income
If a contributor was paid weekly, daily income is the weekly rate of pay divided by 7.
If a contributor was paid fortnightly, daily income is the fortnightly rate of pay divided by 14.
If a contributor was paid monthly, daily income is the monthly rate of pay multiplied by 12, then divided by 365.

Income Replacement Rate
The Income Replacement Rate (IRR) determines the percentage of a contributor's previous income to which the contributor is entitled in the form of benefits.  The IRR is a variable, so it defines a sliding scale.  A contributor who previously earned a low wage is entitled to receive benefits representing a larger proportion of her or his previous income than a contributor who previously earned a higher wage.

The IRR is at its maximum when income equals zero, and it reaches its minimum where income is equal to the benefit transition income level.  The maximum IRR is fixed at 60%.  The minimum IRR is currently set at 38%.  However, the Minister may vary the minimum IRR in terms of section 12(3)(b).

Using current values, the IRR can be calculated according to the following formula:
            IRR = 29.2 + (99779.68 / (3239.6 + Yi))
where Yi represents a contributor’s monthly rate of income.  (Consistency of units is essential.  To calculate IRR from daily or weekly rates of pay, please refer to the more detailed explanation of the IRR formula in the technical note below.)

Contributors who previously earned more than the benefit transition income level
Contributors who earned more than the benefit transition income level are entitled to a flat benefit equal to the benefit transition income level multiplied by the minimum IRR.

At the current benefit transition income level of R8 099 per month, this works out to R101.18 per day:

Daily income = (8099 * 12) / 365) = 266.2685
IRR = 38% or 0.38
Benefit = 266.2685 * 0.38 = 101.18

Duration of benefits
In terms of section 13(3), a contributor is eligible to receive one day's benefit for every six completed days of employment, up to a maximum of 238 days (34 weeks).  A contributor will therefore be eligible to claim benefits for the maximum duration after being continuously employed for four years.  If a contributor has already drawn benefits (other than maternity benefits) in terms of this Act in the preceding four years, the number of days for which the contributor is eligible to claim benefits will be reduced accordingly.

To calculate the number of days of benefits to which a contributor is entitled:
1.         Determine the total number of days that the contributor was employed (and contributing) in the four-year period immediately preceding the date of application for benefits.
2.         Divide the total number of days by 6, disregarding any remainder or fractional portion of the result.
3.         Subtract the number of days (if any) for which the contributor claimed benefits (other than maternity benefits) in terms of this act during the preceding four years.

Amount of  benefit payment
The benefit payment to which a contributor is entitled in any given period shall be the amount of the benefit entitlement multiplied by the number of days for which the contributor is eligible to receive benefits during the payment period.

Technical note on the Calculation of IRR
The sliding scale for the Income Replacement Rate (IRR) is represented by a portion of the curve (rectangular hyperbola) produced by a graph of the function y = 1 / x, where the y axis represents the IRR and the x axis represents income.  However, in order to associate this curve with values that are meaningful for this purpose, it is necessary to apply adjusting formulae.

Calculating the IRR associated with any given level of income below the benefit transition income level can be done in three steps:

1.         The rate of income is transformed into a corresponding value on the x axis (xi).  The formula for this is:
                        Yi = (xi - x1)    YLRR / (x2 - x1)   (1)
where:
            Yi is the contributor’s rate of income;
            YLRR is the benefit transition income level; and
x1 and x2 are constants that determine the portion of the curve that is that is used to calculate IRR.

            The current values of the parameters YLRR, x1 and x2 are:
            YLRR = R8 099 per month
            x1 = 2
            x2 = 7

Using these values, expression (1) can be simplified to:
                        xi = 2 + (Yi / 1619.8)   (1a)
where Yi is expressed as a monthly rate of income.  [It is important to ensure that both the contributor’s rate of income (Yi) and the benefit transition income level (YLRR) are expressed in the same units--monthly, weekly, or daily.]
           
2.         The y values corresponding to the x values are calculated using the general formula:
                        y = 1 / x   (2)
thus:
                        y1 = 1 / x1
                        y2 = 1 / x2
                        yi  = 1 / xi

3.         The yi value is then converted to the corresponding IRR.  The formula for this is:
IRR = LRR + (yi - y2)   (URR - LRR) / (y1 - y2)    (3)
where:
IRR is the income replacement rate;
            LRR is the lower (minimum) income replacement rate; and
            URR is the upper (maximum) income replacement rate.
The current values of the parameters LRR, URR, y1 and y2 are:
            LRR = 38%
            URR = 60%
            y1 = 1/2
            y2 = 1/7

Using these values, expression (3) can be simplified to:
                        IRR = 61.6yi + 29.2   (3a)

SCHEDULE 3
1.         On page 28, in line 11, to omit "R93 288" and to substitute "R97 188".
2.         On page 28, from line 13, to omit Table One and to substitute:

Appendix 2

COMMENTS OF STAKEHOLDERS FROM PORTFOLIO COMMITTEE HEARINGS ON 19 AND 20 MARCH 2001


CLAUSE

ISSUE RAISED

PROPOSAL BY STAKEHOLDER

GOVERNMENT COMMENT

Contributor definition

Work done (Marius Olivier)

Ø      Include them

Agree

Definition section

Definition of “remuneration” too complex (Marius Olivier)

Ø      Use BCEA definition

Agree, explore with SARS to simplify definition

1

Definition of domestic workers might exclude people in similar occupations (Community Constituency [P])

Ø      Ensure that definition covers all similar workers

Disagree, definition in line with BCEA

1

Remuneration is not defined simply the UI Bill (Fedusa [C])

Ø      Define remuneration in the UI Bill

Noted

1

Definition of “employee” in both bills includes “an employee as contemplated in paragraphs (a) and (b) of the definition of employee in the fourth schedule to the Income Tax Act.  Paragraph (a) of the fourth schedule to the Income Tax Act includes a natural person, who, for all purposes other than that of deducting PAYE would not be regarded as an employee
This paragraph also includes a natural person who would be regarded as an independent trader for all purposes other than that schedule (PAG [M])

Ø      Definition of employee to be reviewed so that it applies to genuine employees

Input noted, to be discussed with SARS







Input to be discussed with SARS

1

The exclusion of commission and payment for piecework as part of remuneration is unfair to workers paid by these measures (PAG [M])

Ø      Remove these two exclusions

Disagree

Schedule 2

Graduated scale starts too low (Marius Olivier)

Ø      Start benefits at 45% sliding up to 60%

Disagree, financial viability not taken into account

Part G of chapter 2

Treatment of UIF cheques (NADEL)

Ø      UIF cheques should have the same status as salary cheques

Accepted, banking practice and to be dealt administratively

3

Inclusion of high income earners (Marius Olivier)

Ø      Could be challenged

Disagree, principle of solidarity be maintained

3

Exclusion of Public Servants (Marius Olivier)

Ø      Include public servants

To consult with Minister of Finance and of Public Service Administration

3

Learners excluded (Marius Olivier)

Ø      Include learners

Disagree

3

Domestic workers (Marius Olivier)

Ø      Include domestic workers

Agree in principle

3

Seasonal workers (Marius Olivier)

Ø      Include seasonal workers

Agree in principle

3

Define seasonal workers (Women on Farms [H])

Ø      Include seasonal workers

Agree, will add definition

3

Casual workers (Women on Farms [H])

Ø      Include casual workers

Disagree, in line with the BCEA

3

Income ceiling and high income earners (Ms B A Bird [B]

Ø      Decrease income ceiling and exclude high income earners

Disagree, principle of solidarity will be undermined

3

Exclusion of domestic workers and public servants (Black Business Council [R])

Ø      Include domestic workers and public servants
Domestic workers should not be expected to contribute

See above

3

Exclusion domestic, seasonal and state workers (NADEL)

Ø      Law should apply civil servant
Domestic workers to contribute voluntary during the interim
Add provisions to facilitate voluntary contributions from domestic workers

See above

3

Exclusion of domestic and seasonal workers (Fedusa [C])

Ø      Include domestic and seasonal workers under UIF coverage

See above

Schedule 3

Graduated benefit scale is unfair (Fedusa [C])

Ø      Leave 45% as is or implement a 60 – 40% scale

NEDLAC agreement

Schedule 3

Contributions will be payable on all remuneration with no limit and costs to employers will be huge (PAG [M])

Ø      Set a clear maximum contribution threshold

Agreed, ceiling to be changed – R93 288 to R97 188

3(1)(b)

Exclusion of employees who receive remuneration under learnership contracts (Community Constituency [P])

Ø      Must be included under coverage

Disagree

3(1)(e)

Danger exist that employees might be categorized to ensure that they are included by the Act (Community Constituency [P])

Ø      Legal framework needed to protect these workers

Agree

3(1)(e)

Exclusion of domestic workers (Community Constituency [P])

Ø      Must be included

See above

3(1)(e)

Exclusion of Public Servants (Community Constituency [P])

Ø      Must be included

See above

3(1)(d)

Migrant workers not covered (Marius Olivier)

Ø      Include migrant workers

Disagree, covered

3(1); 3(2)

Domestic workers (SADSAWU [F])

Ø      Delete and include domestic workers

See above

3(1)(a)

Less than 24 hours (SACBC [D])

Ø      Include them

Disagree, in line with BCEA

Schedule 3; 12(3)(b)

Scale of benefits (COSATU [N])

Ø      60% should be minimum, flat-rate minimum of R200

Disagree, uncovered risks, financial liability be affected

3(1)(b)

Exclusion of learnerships (COSATU [N])

Ø      Need to revisit this aspect

Disagree

3(1)(c)

Inclusion of public servants (Disabled People of South Africa [I])

Ø      Include public servants

See above

3(1)(c)

Public servants (SACBC [D])

Ø      Include government workers

See above

3(1)(c)

Exclusion of Public Servants (Fedusa [C])

Ø      Delete clause 3(1)(c)

See above

3(1)(c)

Exclusion of Public Servants (COSATU [N])

Ø      Clause 3(1)(c) should be deleted
Clause to be inserted requiring Government to provide subsidy equal to its employer contribution.  This formula should be reviewed in two years

See above

3(1)(d)

Exclusion of migrant workers (COSATU [N])

Ø      Must be reviewed

Disagree, they are included

3(1)(e)

Domestic workers and seasonal workers (Commission on Gender Equality)

Ø      Include domestic workers

Agree in principle

3(1)(e)

Domestic workers (SACBC [D])

Ø      Include domestic workers

See above

3(1)(e)

Exclusion of domestic workers (COSATU [N])

Ø      Bill to provide for a clear inclusion of domestic and seasonal workers
Investigation must be about method and not principle of inclusion

See above

3(1)(e)

3(2)(a)(b) and (c)

Exclusion of domestic workers and the legality of such exclusion
18 months period of investigation (Black Sash [K]

Ø      No further investigation is needed
Include domestic and seasonal workers
Time to be limited to one year if investigation is justified

See above

3(1)(e); 3(1)(c); 3(2)

Exclusion of domestic and seasonal workers and public servants (SACC [E])

Ø      Include domestic and seasonal workers upon enactment of the Act.
State to finance shortfall

Delete 3(1)(e); 3(1)(c) and 3(2)
Include domestic workers and defer implementation by 12 months

See above



3(2)

Investigation on domestic & seasonal workers (Community Constituency [P])

Ø      Investigate the incremental effect of work done by casual workers, learnerships, seasonal and domestic workers
Address gender inequalities and women

Disagree

4

Nature of the Fund (COSATU [N])

Ø      The Fund should be a fully-fledged agency.  This should be incorporated as part of the terms of reference of the review process under the transitional provisions

Disagree

9(c)

Timing for the application of benefits, six months is too short (Black Business Council [R])

Ø      Extend period to 4 years

Disagree, 6 months

10

State underwrite (Commission on Gender Equality)

Ø      Subsidise the Fund

 Provision in bill clear

10

State underwriting Fund (SACBC [D])

Ø      State to underwrite

 See above

10

Deficit underwriting (Black Business Council [R])

Ø      Government should underwrite the Fund
Regular actuarial evaluations

 See above

10

Government to stand in for future short falls (Fedusa [C])

Ø      Government to stand as guarantor

Clause 10 adequate

10(4)

Financial crisis of the Fund (COSATU [N])

Ø      State should underwrite the Fund
Clause 10(4) needs to be strengthened to ensure that the government meets any deficit incurred by the fund due to normal and responsible operations

NEDLAC agreement

12(3)(b)

Scale of benefits, benefits may vary (COSATU [N])

Ø      Amending of benefits needs to be done via Nedlac or the UI Board

Covered in 12(4)

13

Use of basic rate of pay to calculate daily rate is unfair
Formula to calculate benefits in schedule 2 is confusing (PAG [M])

Ø      Daily rate should be based on annual earnings
Scrap schedule 2 and replace it with a simple scale of benefit payment related earnings levels

Disagree

Disagree

13(1) Schedule 2

Calculation of daily rate of remuneration yield different answers (SACC [E])

Ø      Use a single method to calculate daily rate of remuneration

Agree to review

13(1)(3)

Calculation of benefits (Marius Olivier)

Ø      238 – 243 days, revise clause

Agree

Schedule 13(3)

Calculation of number of benefit days is confusing 238 vs 243 days in 4 years

Ø      Benefit days should be 243 in four years

See above

13(3)

Limitation of benefits to a maximum of 34 weeks in 4 years (COSATU [N])

Ø      Needs to be reviewed

Disagree, NEDLAC agreement

14(a)(i) and (ii)

Double dipping, receiving benefits from various state beneficiaries, systems (Marius Olivier)

Ø      Include benefits from Road Accident Fund or all income replacement from state provided benefits; top up benefit, linked database

Agree, change wording

14(a)(iii)

Exclusion of benefits when receiving from bargaining council unemployment schemes but not private insurance against unemployment (Marius Olivier)

Ø      Top up Bargaining Council benefit and not exclude employee totally

Disagree, collateral sources

14(a)(iv)

Monies from any other source due to unemployment should not be limited to retrenchment but also constructive dismissal payments, misconduct, incapacity, retirement fund and periodical or ongoing payments (Marius Olivier)

Ø      Lump sum monies should also be considered for illness, maternity, adoption and dependants benefits, to be exhausted

Agree, look at

14(a)(iv)

“Whatever source” (Marius Olivier)

Ø      Stakeholder proposal.  This is inconsistent with dependant benefits on the one hand and illness maternity, adoption benefits on the other

Agree to look at

14(a)(1)

Disability grants separate to UI (Disabled People of South Africa [I])

Ø      Exclude disability grants

Agree, will delete

14(a)(iv)

Retrenchment benefits, how is exhaustion determined (COSATU [N])

Ø      Not acceptable

Disagree, NEDLAC agreement, collateral income

15(1)

Date on which entitlement to unemployment commences (Marius Olivier)

Ø      Should reflect date of unemployment rather than date of application

Agree

16(1)(a)

Involuntary unemployment (Marius Olivier)

Ø      Employment may be terminated due to death of employer (operation of law)
Should be no reference to Insolvency Act pending amendments
ILO Convention 168
Termination due to mutual agreement must be covered

Involuntary Unemployment

16(1)(a)

Constructive dismissal – Termination of Job (Commission on Gender Equality)

Ø      Include benefits for unemployment due to constructive dismissal

Disagree, voluntary unemployment must not be encouraged.  Remedy exists

16(1)(a)

Reasons for unemployment (SACC [E])

Amend section to read:  a.  The reason for the unemployment is:

(i)  the termination of the contributor’s contract of employment by the employer of that contributor,
(ii)  the dismissal of the contributor, as defined by section 186 of the Labour Relations Act, 1995 (Act No. 66 of 1995),
(iii)  the termination of the contributor’s employment due to the ending of the fixed term of contract, or
(iv)  the suspension of that contributor’s contract of employment in terms of the provisions of the Insolvency Act, 1936 (Act No. 24 of 1936)

Refer to Prof. Olivier comments below, agree to review

16(2)(b); 18(2)

Inconsistency between 16(2)(b) and 18(2); 13 weeks too low (Marius Olivier)

Ø      13 weeks too low especially when considering 5 year penalty for fraud

Agree, review to emphasise re-integration into employment

16(3)

Illness vs unemployment benefits (COSATU [N])

Ø      Decision of claims officer appears arbitrary

Disagree, internal guidelines for claims officers

16(3)

Claims officer’s discretion to stop a contributor’s unemployment benefits if the contributor falls ill and the claims officer feels that such illness will prejudice the contributor’s chances of securing employment
There is a danger that this clause will open up a gap between UIF benefits and disability benefits since a claims officer’s assessment of the impact of the contributor’s illness will not necessarily coincide with the assessment of a district surgeon or other health official (SACC [E])

Ø      A stronger link should be drawn between the termination of UIF benefits and the commencement of disability benefits in order to prevent people from falling through this gap

Disagree availability test for employment is the key criteria to be considered

17(5)

Advising applicant on application (SACBC [D])

Ø      Claims officer must advise on remedy

Disagree, covered

17(5); 36(3); 37

Right to appeal is not present (COSATU [N])

Ø      Check compatibility with Administrative Justice Act

Noted, appeal to be handled by UI Board

18(1)

Payment point (Commission on Gender Equality)

Ø      Employers to choose

Agree, it is covered

19(1)

Period of illness begins once 50% or less of remuneration received (Marius Olivier)

Ø      Delete 50% rule

Agree

20(1)

Right to illness benefits restricted to cases of illness (SACC [E])

Ø      Access to illness benefits should include periods of unemployment due to incapacity for other medical reasons
Substitute illness with the term “medical disability”





Disagree – definition too narrow

20(2)(c)(ii)

During illness not entitled to Unemployment benefits, but also should not be entitled to adoption benefits (Marius Olivier)

Ø      Amend clause to include adoption benefits

Agree

21(1); (2)

Top-up UIF amount when an agreement exists (COSATU [N

Ø      Guide to illustrate how the top-up will work

Agree, will be developed

23; 26

Illness and maternity benefits method and place of payment (NADEL)

Ø      Method of paying benefits should include direct deposit into savings account

It is the preferred method

24

Maternity benefits (Commission on Gender Equality)

Ø      100% benefits for further 2 months at 60%

Disagree

24(4)

Period of maternity benefits (NADEL)

Ø      Propose a maximum of 24 weeks

Disagree, BCEA been adopted

24(5)

6 weeks benefits for miscarriage or stillbirth after confinement (NADEL)

Ø      A contributor who has had a miscarriage during the pregnancy, but prior to being confined should also be entitled to the 6 weeks maternity benefit

Not agreed, claim under illness benefits

25

Confinement vs childbirth (Commission on Gender Equality)

Ø      Replace “confinement” with “time of childbirth”

Disagree, impractical consideration

30(2)

Child’s age; if the life partner claims, then child cannot claim (Marius Olivier)

Ø      Equitable sharing of benefit between dependants, financially, dependant; “dependant” definition in Act 24 of 1956

Agree, look at Child Care Act, Pension Fund Act, to define “dependant” “spouse”, “life partner”

30(2)(a); 30(2)(b)

Omission of “life partner” (SACBC [D])

Ø      Include life partner

Agree

30(4)

Why include monies from other sources when calculating dependant’s benefits (SACC [E])

Ø      Unrelated income should not curtail the dependant’s capacity to claim UIF benefits

Disagree, money from collateral sources should be taken into account

33(2)

“Debt” and benefits paid in error (SACBC [D])

Ø      Delete 33(2)

Disagree

34

Taxation of benefit (Black Business Council [R])

Ø      Fund should be fully exempted from income tax

Disagree, benefits not taxed

35

1 year period for Fund to reclaim (SACBC [D])

Ø      1 year

Agree, propose 3 years

35; 33(2)

Recovery of benefits paid in error (SACC [E])

Ø      Delete section 33(2)
Insert two new sections after 35(1) as follows:
1A  If the Commissioner determines that a person has been paid benefits in error or in excess of the person’s entitlement, the Commissioner must, within three years of the date of erroneous payment, make a written demand for repayment to that person.
1B  A written demand contemplated in subsection (1A) must include:
a.  A statement of the amount paid in error;
b.  An explanation of why the recipient was ineligible to receive the funds; and
c.  evidence that the person to whom the demand is addressed actually received the funds [this could be a copy of the record of deposit or of the person’s signature in a register to indicate collection of funds]
35(2) replace 30 days with 60 days

Disagree
Agree





















Agree

35(2)

Monies paid in error to contributors (SACBC [D])

Ø      30 days to 60 days

Agree, propose to extend to 90 days

36(6)(c) of 1966 Act

Illness benefits not payable caused through own misconduct (Marius Olivier)

Ø      Should exclude benefits where employee has contributed to his illness by misconduct

Disagree

37

Appeals and disputes (COSATU [N])

Ø      Determine whether the removal of appeal mechanisms is in line with the Administrative Justice Act

 

48

Powers of the Board (Fedusa [C])

Ø      Change powers to that of watchdog
Review size and composition of Board

No, PFMA sufficient
Agree

48(1)(a)

No reason is given why the powers of the Board to advise the Minister on policies to minimize unemployment and create schemes to alleviate the effects of unemployment were removed (SACC [E])

Ø      Board should recommend policies for minimizing unemployment and creating schemes to alleviate the effects of unemployment

Disagree cannot be accommodated.

49(1)(a)

Chairperson of the Board (Fedusa [C])

Ø      Chairperson should be appointed from amongst Board

Disagree

49(2)

Representation by community on Board (Disabled People of South Africa [I])

Ø      Include community representation

Agreed

49(2)

Develop Chamber in NEDLAC (SACBC [D])

Ø      Include community

See above

49(2)

Members representing interests of community and development organizations are not catered for (SACC [E])

Ø      Representatives from community and development organizations should be included in the Board

See above

57












Proposed database will be corrupt and not reflect the correct details of the contributors
Database will make it easier for fraudulent claims to be made
Database will be continually out of date
Monthly submissions by employers will generate large volumes of data files and complicate the administrative process
It will be difficult for employers to comply with the requirements of the database as the currently stand and its limitations
UI Bill excludes domestic and seasonal workers from contributing whilst the UI Contributions Bill includes them
Non SA citizens can be contributors but will not have 13 digit bar coded IDs (PAG [M])

The advice of PAG on practical issues involved in setting up and maintaining a database should be heeded









Agree on inputs, matters for implementation








Agree, will be corrected


Note inputs, matter for implementation

10(4)

State as guarrantor (BSA [G])

Ø      State to underwrite Fund

 clause 10(4) and Nedlac Agreement covers

 

Government to stand in for current overdraft (FEDUSA [C])

Ø      Government to make good overdraft

See above

Schedule 3

Status of schedule 3, an example or scale of benefits (COSATU [N])

Ø      clarification

It is an example as mentioned in 12(2)

Part D

Maternity benefits should not be dealt with in an unemployment benefit scheme (Marius Olivier)

Ø      Should be placed separately under a different system

Disagree

Part E

Adoption benefits (Marius Olivier)

Ø      Should be placed in a family related benefit system

Disagree

Part F

Dependants benefits should not be totally excluded; 14(a)(iv) only applies to contributors (Marius Olivier)

Ø      Should not be total exclusion even if there is other sources of money

Agree, technical

Clause 66

CCMA arbitration means that Labour Court would only be able to review and not allow an appeal as per 168 of 1999.  CCMA Commissioners capacity (they don’t have to be legally qualified) (Marius Olivier)

Ø      The Labour Court be empowered to deal with appeals from CCMA decision to bring it in line with 168.

See above

New

Unemployment schemes (Marius Olivier)

Ø      Include schemes to combat unemployment

Disagreed

New clause

Atypical employee – self-employed, independent contractors (Marius Olivier)

Ø      Include atypical workers, make provision for them to contribute voluntary

Will consider deeming provision of employees by Minister

New clause, including definition of “spouse”, “life partner”

“financially Dependant” S38(7) of 1966 Act (Marius Olivier)

Ø      Include financially dependant as test

Disagree

New clause

Partial unemployment (Marius Olivier)

Ø      Allow a particular level of benefits in addition to income from part-time work.  S35(11) of 1966 Act to be retained

Agree, look at it

New clause

Suspension of employment, e.g. during a protected strike or operational requirements (Marius Olivier)

Ø      Benefits be paid at a certain level for employees whose work has been suspended

Disagree

UICB

Responsibility of 2 Commissioners.  One responsible for collection and the other for payment benefits (Marius Olivier)

Ø      Need streamline systems
Linked databases
Well equipped staff

Noted, administrative issue

Department structure issue

Labour inspectors not accountable to UI Commissioner (Marius Olivier)

Ø      Inspectors should be directly accountable to UI Commissioner

Disagree

Dispute resolution clauses under UICB and UIB.  Clause (13(2)(d); UICB; Clause 37; UIB

2 adjudicating systems for contribution and benefit disputes is confusing.  What happens if there is a dispute about both contribution and benefit (Marius Olivier)

Ø      Should be combined under the UI Bill as per Minister’s statement
Adhere to ILO Convention 168 of 1991 in terms of appeal procedure

Agree to review

 

UIF to be reviewed after two years (FEDUSA [C])

Ø       

NEDLAC agreement not for law

 

Unavailability of UIC Bill (FEDUSA [C])

Ø      Bills to be handled simultaneously

Chairperson, PC – letter to Chairperson of Finance Committee

 

Administrative capacity (FEDUSA [C])

Ø      Overhaul administrative structure

Noted

 

Requested to do oral presentation but was not present at the hearings (Pan African Lawyers for Human Rights [J]

Ø       

Ignore

 

Separation of UI and UIC Bill (COSATU [N])

Ø      UI and UIC Bill should be merged or considered simultaneously

Disagree merger, support simultaneous consideration

 

Grant to liquidate the current debt of the fund
State as a guarantee of the fund for two years
Review in 2002
2% contribution rate to remain
No provision is made by State on the 2001/2 budget to assist the Fund (COSATU [N])

Ø      The issues raised should be incorporated into the UI Bill
Transitional arrangements need to be captured in the legislation as well as the undertaking to secure state financial support for the fund.  The bill should capture that a review should take place after two years and that a report is submitted to Nedlac and Parliament.  The Committee should request Parliament to instruct the treasury to present a proposal specifying the extent of the current debt and interest burden of the fund, how the treasury proposes to liquidate this, and a financial plan to cover shortfalls during the transitional period

NEDLAC agreement covers this

 

6 months maternity benefits (COSATU [N])

Ø      Re-look after the review process

Noted

 

Plain language (COSATU [N])

Ø      Provide illustrated guide which simplifies the Act

Noted will be developed

 

Financial state of the current fund is inadequate to meet the fund’s obligations (Black Business Council [R])

Ø      A new administration system which is effective and efficient should be implemented

 NEDLAC agreement

 

UICB to be tabled (BSA [G])

Ø      Include UICB in portfolio committee

See above

 

Complexity of unemployment for disabled (Disabled People of South Africa [I])

Ø       

Noted

 

Domestic Workers:  unstable, no job security, low paying (Community Constituency [P])

Ø      Further discussions with DoL
Legal framework to protect these workers

Agree




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