Trans­for­ma­tion is given a rapid boost

Non-com­pli­ant busi­nesses have lit­tle time to get their house in order

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

dif­fer­ent from the 10.8% Coloured and 74.9% African na­tional de­mo­graphic.

As in­di­cated above, the reg­u­la­tions were met with much crit­i­cism and were sent for a re-look. The re­drafted reg­u­la­tions were pub­lished on Au­gust 1. There are strong in­di­ca­tions that the re­vised reg­u­la­tions may re­vert to re­gional de­mo­graph­ics (in line with re­cent case law).

In pre­vi­ous edi­tions of this pub­li­ca­tion we high­lighted the per­ti­nent amend­ments to the four pieces of leg­is­la­tion — the Labour Re­la­tions, Ba­sic Con­di­tions, Em­ploy­ment Eq­uity and Em­ploy­ment Ser­vices bills.

The Em­ploy­ment Eq­uity Act has raised a num­ber of ar­eas of con­cern or dis­agree­ment and has led to its fair share of emo­tive de­bate in Par­lia­ment and other con­sul­ta­tive fo­rums.

Some of the per­ti­nent is­sues raised by the act are: 1. The amend­ment of sec­tion 42 to al­low a dis­cre­tion for a labour in­spec­tor when as­sess­ing a com­pany’s com­pli­ance with the act; 2. The less­en­ing of en­force­ment re­quire­ments, which would en­sure an eas­ier and quicker path to the Labour Court; 3. The sub­stan­tial in­crease of fines from R500,000 for first of­fences to R1,500,000, or 2% of turnover, de­pend­ing on the na­ture of the breach. This amount es­ca­lates up to 10% of turnover at the fourth of­fence. The con­cern with this point is that linked to the dis­cre­tion given to in­spec­tors listed above, it may open the door to lit­i­ga­tion and, un­for­tu­nately, the pos­si­bil­ity of the spec­tre of cor­rup­tion rais­ing its head; 4. The rel­a­tively new con­cept of equal treat­ment is also in­cluded in this leg­is­la­tion and is fur­ther re­flected in the pro­posed Labour Re­la­tions Amend­ment Bill. The con­cept of “equal treat­ment” means that un­less you have jus­ti­fi­ca­tion for dif­fer­en­tial treat­ment (not only on “equal pay”) on the grounds listed, you will be in breach of the act; 5. The ex­ten­sion of grounds of dis­crim­i­na­tion to in­clude “any other ar­bi­trary ground”. In the past the grounds for dis­crim­i­na­tion were lim­ited to is­sues such as age, race, gen­der, etc. While this was not an ex­haus­tive list, the ex­ten­sion bars un­fair dis­crim­i­na­tion on any ar­bi­trary ground. To­gether with the ex­tended def­i­ni­tion, the bur­den of proof in such cases has also changed with the onus now shift­ing to em­ploy­ers to prove that dis­crim­i­na­tion did not take place and, if it did, that it was fair; and 6. Other changes that will be of in­ter­est, but are less con­tro­ver­sial, are the fact that psy­cho­me­t­ric tests are to be cer­ti­fied by the Health Pro­fes­sions Coun­cil of SA or a sim­i­lar body and the in­evitable bur­den on small busi­ness hav­ing now also to re­port on an an­nual ba­sis rather than bian­nu­ally.

There is very lit­tle time for busi­nesses to get their houses in order. In­spec­tors are cer­tain to come down hard on non-com­pli­ance. The de­part­ment has thrown down the gaunt­let to busi­ness to en­sure rapid com­pli­ance, fail­ing which they will face size­able fines and days in court.

Busi­nesses should have been alive to the fact that trans­for­ma­tion needs to be a clear strate­gic goal. Now is the time for non-com­pli­ant busi­nesses to take the lead from those who are com­pli­ant and to align their trans­for­ma­tion strat­egy to the over­all busi­ness one and to take up this chal­lenge as an op­por­tu­nity to de­fine their fu­ture, to ad­dress equal­ity and en­sure a bright, com­pli­ant fu­ture for their busi­ness and gen­er­a­tions of South African busi­nesses and so­ci­ety at large to come.


OFF TAR­GET FOR IN­VESTORS In SA, there is no dis­tinc­tion be­tween do­mes­tic and in­ter­na­tional ar­bi­tra­tion For­eign in­vestors can­not in­de­pen­dently re­fer a dis­pute to an in­ter­na­tional ar­bi­tra­tion fo­rum with­out the con­sent of the South African govern­ment

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