Labour­ing to clear con­fu­sion

‘Pack­age’ of amended leg­is­la­tion sees pro­vi­sions for child labour, min­i­mum wages and tem­po­rary work­ers

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - JONATHAN GOLD­BERG & GRANT WILKIN­SON

MUCH has been said about the labour law amend­ment process, but un­for­tu­nately a num­ber of sources have proven to be in­ac­cu­rate. This has led to con­fu­sion in the labour mar­ket.

The Ba­sic Con­di­tions of Em­ploy­ment Act was re­cently gazetted and at this stage has no ef­fec­tive date. The most sig­nif­i­cant amend­ments pro­posed to the Ba­sic Con­di­tions of Em­ploy­ment Act are to bring the pro­vi­sions re­gard­ing child labour in line with in­ter­na­tional stan­dards and to im­prove the mech­a­nisms of en­force­ment of the ba­sic con­di­tions of em­ploy­ment, in­clud­ing min­i­mum wages.

Em­ploy­ers are to be pro­hib­ited from re­quir­ing or ac­cept­ing pay­ment from an em­ployee or a po­ten­tial em­ployee, in re­spect of their em­ploy­ment or in al­lo­cat­ing work to that em­ployee. This pre­vents em­ploy­ees from be­ing re­quired to pur­chase goods from the em­ployer or a busi­ness or per­son nom­i­nated by the em­ployer. How­ever, this re­stric­tion does not ap­ply to schemes to which em­ploy­ees re­ceive a fi­nan­cial ben­e­fit through the pur­chase of goods, prod­ucts or ser­vices at a fair and rea­son­able price.

There is a crim­i­nal­i­sa­tion of cer­tain of­fences, which in terms of sec­tion 93 in­clude the max­i­mum jail sen­tence for breach of child labour of­fences of six years. The con­di­tions of the ba­sic con­di­tions deal­ing with child labour are ex­tended to in­clude all work and not only chil­dren as em­ploy­ees. The con­cern is that the Depart­ment of Labour is at­tach­ing ridicu­lous in­ter­pre­ta­tions of “work”, for ex­am­ple chores.

An­other con­cern is Labour Min­is­ter Mil­dred Oliphant may is­sue an “um­brella” sec­to­rial de­ter­mi­na­tion.

There is a big push on en­force­ment with a sub­stan­tial in­crease in fines. The fines are to in­crease by 200%. The sub­stan­tial in­crease needs to be con­tex­tu­alised by the fact that there has been no in­crease since the in­cep­tion of the Ba­sic Con­di­tions of Em­ploy­ment Act in 1997. To­gether with this in­crease, dis­cre­tion is now pro­vided to in­spec­tors to re­quest the un­der­tak­ing and there is also a re­moval of the ap­peal process to the di­rec­tor-gen­eral.

In­evitably this re­moval of the ap­peal process and dis­cre­tion for un­der­tak­ings will put pres­sure on the labour courts, as this would force par­ties to lit­i­gate on is­sues that nor­mally would be re­solved out­side of the cor­ri­dors of jus­tice. There are also other de­vel­op­ments out­side of the bills that are in­ter­est­ing to note in the con­text of the new leg­is­la­tion. These in­clude the dis­cus­sion at the Em­ploy­ment Con­di­tions Com­mis­sion of a num­ber of new sec­to­rial de­ter­mi­na­tions, and the leg­isla­tive pre­rog­a­tive for a min­i­mum wage.

Labour Re­la­tions Amend­ment Bill: By far the most con­tro­ver­sial bill is the Labour Re­la­tions Amend­ment Bill. This bill has not yet been gazetted but it is im­mi­nent. The bill has made a num­ber of pro­posed amend­ments, sig­nif­i­cantly im­pact­ing the workplace.

The most con­tro­ver­sial as­pect of the Labour Re­la­tions Bill is the lim­i­ta­tion of util­i­sa­tion of tem­po­rary em­ploy­ment ser­vice em­ploy­ees cur­rently to three months, that is in­tro­duced by sec­tion 198 (1)(b) i and sec­tion 198 (2)(b)ii.

What is im­por­tant to bear in mind is that the three-month lim­i­ta­tion is not ap­pli­ca­ble to gen­uine re­place­ment em­ploy­ees, such as ma­ter­nity cover. The three-month lim­i­ta­tion, or the so­called “deem­ing clause”, ap­plies to sit­u­a­tions where the em­ployee is earn­ing less than the thresh­old, cur­rently set at R193,805 per an­num, and where they are placed with the client for a pe­riod ex­ceed­ing three months. In terms of the amend­ments the em­ployee, in essence, gets ex­tra pro­tec­tions. The ex­tra pro­tec­tions have led to the con­fu­sion in the labour mar­ket.

There is no trans­fer of an em­ployee af­ter three months. And be­cause the em­ploy­ees do not be­come “per­ma­nent” there is no need to get rid of the tem­po­rary em­ploy­ment ser­vice provider.

It is im­por­tant that we scru­ti­nise how em­ploy­ers utilise tem­po­rary em­ploy­ment ser­vice providers, most es­pe­cially that they work with providers who are prop­erly reg­is­tered and com­pli­ant, and to make cer­tain that busi­ness mod­els are de­signed to be ef­fec­tive and are im­ple­mented to re­tain costs and flex­i­bil­ity. The three-month lim­i­ta­tion and ex­tra pro­tec­tion does not only ap­ply to the tem­po­rary em­ploy­ment ser­vice providers though. Sec­tion 200B (3) places lim­i­ta­tions and re­stricts the util­i­sa­tion of fixed-term con­tract em­ploy­ees and the equal treat­ment pro­vi­sion is brought in on the fixed-term con­tracts front by sec­tion 200B (7), mean­ing that even those em­ploy­ees who work di­rectly with the em­ployer will be af­fected.

And what about fixed-term/part­time em­ploy­ees?

Sec­tion 200B (10) places an even greater bur­den on em­ploy­ers as em­ploy­ees em­ployed on a fixed-term con­tract for longer than 24 months need to be paid one week sev­er­ance for ev­ery year ser­vice. No ac­tual re­trench­ment process needs to be en­gaged on, how­ever the sev­er­ance pay needs to be

Prob­a­bly the big­gest chal­lenge is the in­crease in fines where fines rang­ing from R1.5m to 2% of your turnover for a first of­fence are cur­rently gazetted

paid. Part-time em­ploy­ees are also not ex­cluded from the three-month clause and equal treat­ment shall ap­ply to these cat­e­gories of work­ers as well.

It should be noted though that small businesses that ei­ther have less than 10 em­ploy­ees or who have less than 50 em­ploy­ees and have been in busi­ness less than two years are not limited by the fixed-term con­tract pro­vi­sions.

On the dis­pute res­o­lu­tion front, se­cu­rity equiv­a­lent to 24 months’ salary needs to be paid in terms of sec­tion 145 in or­der to pro­ceed with a re­view ap­pli­ca­tion and sec­tion 187 brings in un­nec­es­sary lim­i­ta­tions to op­er­a­tional dis­missals.

There is a new ad­di­tion to pick­et­ing in that pick­et­ing rules may have an im­pact on third par­ties. For ex­am­ple, a third party who is a land­lord to a busi­ness whose em­ploy­ees are about to strike may have pick­et­ing rules im­posed on them, restrict­ing their right to free trade. Un­for­tu­nately the in­evitable strike vi­o­lence is likely to con­tinue as there has been no at­tempt made to curb vi­o­lence in strikes.

The Labour Re­la­tions Bill is cur­rently back at the Na­tional As­sem­bly af­ter pro­posed changes were sug­gested by the Na­tional Coun­cil of Prov­inces to re­move ur­gent in­terim re­lief for trade unions and em­ploy­ers and to also al­low sup­port­ers to par­tic­i­pate in strike ac­tion.

Em­ploy­ment Eq­uity Act: The Em­ploy­ment Eq­uity Act has been gazetted and cur­rently finds it­self with no ef­fec­tive date as yet. One sus­pects that this, to­gether with the Ba­sic Con-

This re­moval of the ap­peal process and dis­cre­tion for un­der­tak­ings will put pres­sure on the labour courts, as this would force par­ties to lit­i­gate on is­sues that nor­mally would be re­solved out­side of the cor­ri­dors of jus­tice

di­tions of Em­ploy­ment Act, will be im­ple­mented as soon as the Labour Re­la­tions Act and the Em­ploy­ment Ser­vices Act are in place.

The Em­ploy­ment Eq­uity Act again em­pha­sises equal treat­ment and echoes the pro­vi­sions of the other acts. Prob­a­bly the big­gest chal­lenge is the in­crease in fines where fines rang­ing from R1.5m to 2% of your turnover for a first of­fence are cur­rently gazetted. One is in no way at­tempt­ing to jus­tify non-com­pli­ant busi­ness; how­ever, the in­crease in fines to­gether with the wide dis­cre­tion given to an in­spec­tor — who is of­ten un­der­e­d­u­cated, un­der­paid and un­der­re­sourced — could lead to po­ten­tial cor­rup­tion.

Other in­ter­est­ing changes are that the door is opened for sex­ual ha­rass­ment cases to be dealt with in the CCMA as well as other dis­crim­i­na­tion cases, un­der cer­tain con­di­tions. Some san­ity is brought in on the psy­cho­me­t­ric front in that psy­cho­me­t­ric tests now can only be utilised within the em­ploy­ment sphere if they are recog­nised by the Health Pro­fes­sions Coun­cil of SA. This lim­its Dr Google.

While re­cent court de­ci­sions in­di­cate that the re­gional de­mo­graph­ics, to­gether with the na­tional de­mo­graph­ics, must be taken into ac­count in de­ter­min­ing the need for af­fir­ma­tive ac­tion, the pro­posed act moves to the na­tional de­mo­graph­ics in isolation. Clearly the leg­is­la­ture and ju­di­ciary are at odds and it will be in­ter­est­ing to see how de­vel­op­ments oc­cur par­tic­u­larly in light of the fact that there is still a task team in­ves­ti­gat­ing equal treat­ment as we speak. One would have as­sumed that the re­port of the task team would have been taken into ac­count first, prior to im­ple­ment­ing these var­i­ous pieces of leg­is­la­tion.

Em­ploy­ment Ser­vices Bill: It is likely that the four pieces of leg­is­la­tion will be signed into law as a pack­age, seem­ingly ahead of the na­tional elec­tions, and al­though the sta­tus quo ap­plies now, we strongly urge businesses to un­der­stand the changes and po­ten­tial im­pact on their busi­ness and to make the nec­es­sary changes to en­sure not only their con­tin­ued com­pli­ance but prof­itabil­ity as well.

Pic­ture: THINKSTOCK

NEW DE­VEL­OP­MENTS IN LABOUR LAWS

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