Unemployment Insurance Bill: deliberations

Meeting report

LABOUR PORTFOLIO COMMITTEE
12 October 2001
UNEMPLOYMENT INSURANCE BILL: DELIBERATIONS

Chairperson: Mr S Manie
Documents handed out:
Unemployment Insurance Bill [B 3–2001]
Proposed Amendments to the Unemployment Insurance Bill
Presentation by Department on policy inputs to Unemployment Insurance Fund Bill

SUMMARY
The Committee considered the proposed amendments to the Unemployment Insurance Fund Bill. They considered issues relating to domestic and seasonal workers, the composition of the Board of the Unemployment Insurance Fund, the issue of migrant workers, income from other sources and employees working less than 24 hours a month.

MINUTES
Mr Les Kettledas (Deputy Director General: Labour Policy and Labour Market Programmes, Department of Labour) recapitulated the issues that were discussed at the previous meeting on Tuesday. Issues relating to domestic and seasonal workers were discussed, the composition of the Board of the Unemployment Insurance Fund, the issue of migrant workers, income from other sources and employees working less than 24 hours a month.

State Employees
State employees are not to be included in the Bill at this stage. This matter needs to be dealt with within the Public Service Co-ordinating Bargaining Council. The position of the government at this stage is that public servants are to be excluded from this legislation.

Composition of the UIF Board
The Bill has been amended to provide for the inclusion of representatives from organizations representing the community and development interests. The size of the Board remains the same.

Migrant Workers
There is a distinction between migrant employees with contracts of employment vis a vis those employees with contracts of service and learnership. The current Bill provides adequately for the coverage of this category of workers. There is therefore no need to amend the Bill.

Income from other sources
Clause 14 of the Bill has been amended to clarify the above position. Disability grants that the state provides would be excluded as a collateral source.

Employees working less than 24 hours a month
The current provisions as they stand in the Bill remain.

Recovery of benefits paid in error
Amendments have been made to effect the following:
-the State has to inform the affected beneficiary within three years whereafter it lapses
-there is a repayment of benefits paid in error. It has to be made within the period of 90 days rather than within 60 days as it had been proposed.

Dispute Resolution
This position has been clarified and Clause 37 has been amended to provide for an appeals committee.

Enforcement
Clauses 34–81 have been amended to simplify the enforcement procedure in line with the Compensation for Occupational Injuries and Diseases Act.

Ministerial Powers
An additional clause to define the Ministerial powers in respect of categories of contributors has been included.

Funding Arrangements
The Nedlac agreement sufficiently addresses the UIF funding needs for the current and transitional periods. Clause 10 has also been amended to deal with future funding needs of the fund.

Discussion
Clause 1
Mr Shadrack Mkhonto (Commissioner: Unemployment Insurance Fund, Department of Labour) suggested that there be an insertion of a definition of a child in Clause 1 which was not included in the initial draft Bill. A child is any person under the age of 18 years.

Ms S Botha (DP) commented that she had a problem with the practicality of this definition especially insofar as it may be applicable to those persons who leave school before they have reached the age 18 and are able to work. She was concerned whether this would not amount to child labour.

Mr Sithole (ANC) inquired if the Department verified the definition of a child from the Basic Conditions of Employment Act.

Mr Kettledas (Dept of Labour) replied that the proposed definition is consistent with the provisions of the Basic Conditions of Employment Act. This Act provides that a child is a person under the age of 18 years of age.

Mr Clelland (DP) asked what this means for persons who leave school at the age of 17?

Mr Kettledas replied that the current position is that no child under the age of 15 years of age can be employed. This is in terms of the Basic Conditions of Employment Act and other international conventions. Persons who are between the ages of 15 and 18 and who are employed are dealt with by the provisions of the United Nations Convention, the International Labour Convention etc. He insisted to say that a child is a person under the age of 18 years. He concluded that if a person under the age of 18 years is employed his relationship with his employer will be determined by the Basic Conditions of employment Act.

Mr Clelland asked if this meant that a 17-year old matriculant could not apply for employment benefits if he has worked for a period of six months.

Mr Manie replied that this matter would be revisited at a later stage.

Mr Mkhonto suggested that the definition of an "employee" be included. An employee is any natural person who receives remuneration or to whom any remuneration accrues.

This definition was agreed to.

Mr Mkhonto proposed a change to the definition of the word "employer" as contained in the current Bill. An employer is any person (excluding any person not acting as a principal, but including any person acting in a fiduciary capacity or in the capacity as a trustee in an insolvent estate, an executor or an administrator of a benefit fund, pension fund, provident fund, retirement annuity fund or any other fund) who pays or is liable to pay to any person any amount by way of remuneration, and any person responsible for the payment of any amount by way of remuneration to any person under the provisions of any law or out of public funds (including the funds of any provincial administration or undertaking of the state) or out of funds of any provincial administration or undertaking of the state) or out of funds voted by Parliament or a provincial administration.

Mr Manie commented that this is the manner in which the South African Revenue Services felt it appropriate to redefine the meaning of employer.

Mr Maphalala (ANC) remarked that this new clause is a little unprofessional because it makes it difficult to identify who the employer is. Furthermore, it appears to be moving away from identifying the employer as an institution but rather focuses on an individual person acting on a particular capacity. This is not a correct approach. A trustee cannot be an employer because he acts on behalf of a particular body and establishment. The current formulation is therefore a bit clumsy.

Mr Manie asked for a way forward.

Mr Mkhonto remarked that this definition is in line with the provisions of the Income Tax Act. The Department has had a discussion with the Revenue Department to ensure that this definition is accepted. He said that it has to be appreciated that there are people who are not in the state’s employ and who currently contribute to the Unemployment Insurance Fund. He further stated that the Department would not want to jeopardize their position by excluding them from the legislation.

Mr Clelland accepted the fact that there are people who are not employed by the State. He felt that the definition contained in the original Bill was more appropriate.

Mr Manie replied that this did not matter. It was only necessary that a person should provide remuneration to an employee either in terms of the law or otherwise and this was sufficient for a definition of an employer. He mentioned that the trustees are excluded from the definition of an employer. He however acknowledged that an amended definition of an employer may be complicated to a lay person. He inquired if there was not any easier way to define "employer" so that it could be better understood.
Mr Maphalala agreed that the definition was very confusing.

Mr Kettledas remarked that there was no problem with an amended definition because the definition as it stands arose from the inputs by the members of the public. The definition is consistent with the provisions of the Fourth Schedule of the Income Tax Act. He concluded that the Department would try to engage with the Revenue Services to formulate an easier definition of the word "employer".

Ms Botha attempted to suggest an easier way out of this situation. She said that this definition should be rephrased in the following fashion "Employer means any person acting in a fiduciary capacity … and does exclude any person not acting as a principal". The exclusion had to be put at the end of a paragraph and this would make it easier.

Mr Manie recommended that the Department’s proposal needed to be taken on board, i.e. that they needed to consult with the South African Revenue Services.

Mr Mkhonto proceeded with the consideration of the Bill. He noted that the definition of the word "remuneration" would mean remuneration as defined in the Unemployment Insurance Contributions Act of 2002. He mentioned that the South African Revenue Services did not agree with the Department of Labour on a definition in a manner that is consistent with the Income Tax Act.

Mr Manie was puzzled at the fact that the definition of remuneration is made dependent on the piece of legislation that has not yet even come into existence. What if the other committee that will frame this piece of legislation in 2002 came up with a definition that is not in line with the present Committee’s discussion around this Bill?

Mr Kettledas proposed that this issue be dealt with in the following meeting.

Mr Clelland said that it does not help to refer to acts of Parliament that do not exist.

Mr Manie agreed and said that this Bill cannot refer to an Act that has not yet been passed.

Mr Mkhonto proposed the inclusion of a "seasonal worker" into the Bill. A "seasonal worker" means any person, excluding an employee and a domestic worker, who is employed by an employer in agriculture for a period of at least four months over a 12 months period with that employer".

Ms Botha remarked that the proposed definition excludes a domestic worker. She required to know the reason behind the exclusion of a domestic worker. Secondly, seasonal workers are also required for other industries such as the transport industry. Therefore, this definition does not necessarily have to be tied only to the agricultural industry.

Mr Clelland noted that it also had been agreed that seasonal work would be for an aggregate period of four months.

Mr Manie asked him to make a formulation that would enable the Department to proceed with its work.

Mr Clelland in turn suggested that the clause should read "a seasonal worker means any person who is employed by an employer for an aggregate period of at least four (4) months over a twelve (12) month period with that employer". This was agreed to.

Clause 3
Mr Mkhonto replied that the Department has decided to retain Clause 3 as it stands in the current Bill save only two amendments. Firstly, to omit clause 3.1(e) on page 6 line 44. Secondly, to omit clause 2(a) on page 6 line 45 and substitute it with a new clause 2(a). This would read "The Minister must, as soon as possible after this section takes effect, designate or appoint a body which must seek to investigate and make recommendations regarding the application of this Act to domestic and seasonal workers".

Mr Maphalala remarked that the reference to "as soon as" was inappropriate in the circumstances, and that there was a need to redefine this clause in order to reflect the period envisaged.

Mr Clelland emphasised that the Minister should be able to finish his work within twelve months.

Mr Manie remarked that the phrase "as soon as" is something that means nothing as it can be subject to different interpretation by different persons. It would not matter even if the Minister commenced his work on the eleventh month, as long as he is able to have it finished by the end of the twelfth month.

Mr Kettledas replied that the Department is of the opinion that the provision as it stands is adequate. The operative part of this provision is that the investigation ought to be completed within twelve months, else if it is not completed somebody responsible would be transgressing the law. Furthermore, the phrase "as soon as possible" is consistently used in legislative drafting.

Mr Manie indicated that this would be re-discussed in the next meeting.

Clause 10
Mr Mkhonto said that the Department would like to retain the clause as it is but would like to make an addition to line 31 explaining why the budget must be amended or adjusted to ensure that it takes care of covering any deficit in the Fund. Accordingly the addition would be "in order to cover any deficit in the Fund".

Mr Manie commented that there was a general agreement at the last meeting that the word "may" should be changed to "shall" in under subsection (4) of clause 10. This remark was made by the Director General of the Department of Labour. He accordingly asked for a motivation for not having included the word "shall".

Mr Mkhonto replied that the State Law Advisors had expressed an opinion that the word "may" is sufficient.

Mr Manie alluded to the fact that this clause would have to be reconsidered. This would obviously include the views of the State Law Advisors.

Clause 13
Mr Mkhonto explained that the Department would to effect some amendments on page 9, 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".

Also on page 9 line 36 to omit "dividing the weekly remuneration by 7" and to substitute "multiplying the weekly remuneration by 52 and dividing it by 7".

Also 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.

Ms Botha asked what motivated a change from 238 to 243 days?

Mr Kettledas replied that this amendment is based on the submissions that were made during the public hearings. Professor Olivier raised a concern that 238 days was not correct and that it should have been 243 days instead. This is the reason for the change. It was only a rectification of a mathematical mistake that had been made.

Mr Mkhonto continued and pointed out an amendment on page 10, line 1, that the Department would like to omit "(5)" and substitute "(6)" and omit "(3)" and to substitute "(4)".

The Chairperson concluded that the Committee would revisit a majority of these amendments in its meeting the following week.

The meeting was adjourned.