NEDLAC REPORT ON THE BASIC CONDITIONS OF EMPLOYMENT STANDARDS BILL

1. BACKGROUND

1.1. The Ministry of Labour's 'Programme of Action 1994 - 1988' outlines the need for a reform of labour legislation in South Africa. included in this reform process are two laws that set minimum employment conditions, the Basic Conditions of Employment Act, 1983, and the Wage Act, 1957.

1.2. A green paper entitled "Policy Proposals for a new Employment Standards Statute" was published in the Government Gazette of 23 February 1996.

1.3. A Basic Conditions of Employment Bill was published in the Government Gazette of 18 April 1997 and was tabled by government at a special Labour Market Chamber meeting on 21 April 1997.

2. THE PROCESS IN NEDLAC

2.1. Negotiations on the green paper on employment standards

2.1.1. The Green Paper on Employment Standards was tabled by government at the Labour Market Chamber meeting of 22 February 1996.

2.1.2. The Labour Market Chamber agreed, at a meeting on 11 April 1996, that a negotiating committee on employment standards would be established under the auspices of the chamber.

2.1.3. The negotiating committee met to consider the green paper and negotiate around the areas of difference between the parties on eleven separate dates spanning the period from 29 April 1996 to 18 October 1996.

2.1.4. A report on the employment standards negotiations was noted by the Executive Council on 28 February 1997. The report outlined the key areas for further negotiation.

2.1.5. At the Executive Council on 28 February 1997 Cosatu tabled a letter which set out the core issues in dispute. A copy of the letter is attached as an annexure.

2.2. Negotiations on the basic conditions of employment bill

2.2.1. The basic conditions of employment bill (hereafter referred to as 'the bill') was tabled by government at a special Labour Market Chamber meeting on 21 April 1997.

2.2.2. At this meeting it was agreed that the negotiating committee would meet to negotiate the bill. Three dates were scheduled for negotiations: 5, 6 and 10 May 1997. A further meeting was also held on 12 May 1997.

2.2.3. Negotiating committee meeting of 5 and 6 May 1997

(a) At the meeting business and labour tabled their responses to the bill. The responses centered on the issues that were of core concern to the parties.

(b) Issues that were of primary concern to labour as identified in the notice of 18 February 1997 were:

(i) The model of variation in the bill.

(ii) Maximum hours per week and the demand for a forty-hour week.

(iii) Paid maternity leave.

(iv) Sunday work.

(v) Minimum working age.

(c) Labour advised that there were a number of additional matters which were of concern, including the powers of the Minister to vary downward conditions of employment, but that these would need to be addressed once progress had been made on the "core" issues.

(d) Issues that were of primary concern to business were:

(i) The reduction of working hours.

(ii) The premium for overtime.

(iii) Family responsibility leave.

(iv) Notice-periods.

(v)    The powers of the Minister to determine conditions of employment.

(vi)    Sunday Work.

(e) Business stated that it had a number of secondary concerns which included but was not restricted to:

(i) Transitional arrangements.

(ii) Overtime arrangements under the averaging provision.

(iii) Night work.

(iv) Thresholds for application of the bill.

(f) Business and labour stated that there were also issues of a technical nature which were not raised at the meeting that were also of concern to them.

(g) The parties tabled their positions on each of the key issues listed above and there was discussion on each point.

2.2.4. Negotiating committee meeting of 10 and 12 May 1997

(a) At the meeting on 10 and 12 May 1997 the parties again worked through the primary and secondary issues tabled by business and labour.

(b) This meeting was adjourned without any dates for further meetings being scheduled.

2.3. Meetings of the overall convenors and members of the negotiating committee

2.3.1. A meeting of the overall convenors of Nedlac and members of the negotiating committee was convened on 13 May 1997 to consider Cosatu's notice of protest action.

2.3.2. At this meeting it was agreed that:

"The meeting of the overall convenors on 13 May 1997 considered the notice of protest action served on Nedlac by Cosatu on 9 May 1997, as well as the notices of 18 February, 21 April and 12 May 1997. This meeting also considered the issues giving rise to the action and noted that the matters giving rise to the protest action have been the subject of detailed negotiations on 5, 6, 10, and 12 May 1997 and that these issues remain unresolved.

In order to facilitate further consideration of the issues it was agreed to hold a meeting of the overall convenors and negotiating committee to be held, tentatively, on Friday, 16 May 1997."

2.3.3. A second meeting of the overall convenors and members of the negotiating committee was held on 16 May 1997 to further consider Cosatu's notice of protest action.

2.3.4. At this meeting it was agreed that:

"Nedlac met today to again discuss the core concerns involved in the negotiations around the basic conditions of employment bill.

Parties were unable to resolve the issues concerned.

Any resolution of the core issues concerned will require a serious revision of current mandates.

Despite the present impasse, the parties will continue to explore ways and means of reaching a resolution of the said core issues."

2.3.5. The meeting of 16 May 1997 was adjourned without any further meetings being scheduled.

2.4. Management Committee meeting of 27 June 1997

2.4.1. The Management Committee noted that since the meeting held on 16 May 1997 no party had given an indication that it had anything new to table.

2.4.2. It was agreed that:

(i) The issues remained at an impasse and that a serious revision of current mandates was necessary to resolve the matter.

(ii) Despite the impasse the parties remained open to exploring ways of reaching a resolution of the issues. In this regard government indicated that it would seek to meet separately with business and labour to explore ways of reducing the areas of difference.

(iii) In view of the above, it was agreed that the Nedlac report would be prepared and finalised in time for the submission of the bill to Parliament in the 1997 parliamentary session.

3. THE POSITIONS OF THE PARTIES ON THE BASIC CONDITIONS OF EMPLOYMENT BILL

The positions of the parties, as recorded at the last meeting of the negotiating committee on 12 May 1997, are set out below.

The comments below are not inclusive of business' concerns on the proposed bill. Business has noted that a subsequent draft bill is to be published.

3.1. Section 8 - Ordinary hours of work

Labour: Labour wants a schedule to the bill outlining a commitment to the goal of a forty-hour week in five-years through a one-hour statutory reduction in ordinary hours per week each year.

Business: Business does not support the further statutory reduction of hours of work below 45 ordinary hours per week. Particular concern was raised with respect to the reduction of hours in industries currently at 48, or more, ordinary weekly hours.

Government: The bill provides that an employee may not work more than 45 ordinary-hours in any week.

Government stated that it was prepared to append a schedule to the bill that sets a goal of a forty-hour week that would to be achieved through collective bargaining and sectoral determinations with a review of progress by parliament.

3.2. Section 9(2) - Payment for overtime worked

Labour: Labour supports the provision in the bill for an overtime rate of time-and-a-half for overtime worked.

Business: Business wants to retain the rate for overtime worked provided in the current BCEA of time-and-a-third.

Government: The bill provides for a rate of time-and-a-half that must be paid for overtime worked.

3.3. Section 10 - Extended ordinary daily hours of work

Labour: Labour does not support the provision for extended ordinary daily hours of work.

Business: Business supports this section of the bill.

Government: The bill provides that by agreement an employee may work up to 12 hours in a day without receiving overtime pay.

3.4. Section 11 - Averaging of hours of work

Labour: Labour does not support the provision for the averaging of hours of work.

Business: Business supports the averaging of working hours. Business proposed wider scope for individual and collective agreements to average working hours. In this regard, business proposed:

(i) Averaging of working hours by individual agreement over a one-month period with additional safeguards for workers.

(ii) More flexibility in the averaging provision particularly with regard to the relationship between ordinary hours and overtime. Averaging of working hours by individual and collective agreements over one month or less should allow the maximum permissible overtime per week to be retained at 10 hours.

Government: The bill provides that a collective agreement may permit hours of work to be averaged over a period of up to four months provided that the average hours per week does not exceed 45 ordinary hours and five hours of overtime.

Government indicated that it could consider averaging of hours of work over a period of between four-months and one-month but that it was not in favour of averaging by individual agreement.

Government indicated that it could accept another formulation if business and labour agreed thereto.

3.5. Section 12 - Determination of hours of work by the Minister

Labour: Labour supports the provision in the bill.

Business: Business proposed the following amendment to section 12(1):

"Despite the provisions of this Chapter, the Minister on the grounds of health and safety and (after consulting the Commission and the relevant health and safety authority) on the advice of the relevant health and safety authorities and after consultation with the Commission, may determine by regulation, the maximum permitted hours of work, including overtime, for any employee.".

Government: The bill provides that the Minister on the grounds of health and safety after consulting the Employment Conditions Commission and relevant health and safety authority may determine by regulation the maximum permissible hours of work, including overtime, for any employee.

Government was prepared to accept the business proposal and draft an amendment to this section.

3.6. Section 15 - Pay for work on Sundays

Labour: Labour wants double pay for all work on Sundays or time-and-a-third plus a day's paid leave in the following week. Labour preferred the wording in section 10(2) of the current Basic Conditions of Employment Act to the wording in section 15(2) the bill as it believed it was not as clearly formulated.

Business: Business stated that its position was that Sunday work should not attract a special premium in the legislation and that premiums for Sunday work should be determined through collective bargaining or sectoral determinations. The statutory prohibition on Sunday work also should be lifted.

Government: The bill provides that an employee who works on a Sunday must receive double pay, although, an employee who normally works on a Sunday must be paid a 1.5 times the employee's normal wage.

The bill also provides that an employee must be granted a weekly rest period of at least 36 consecutive hours which, unless otherwise agreed, must include a Sunday.

Government agreed to reword this section to make the intention of section 15(2) clearer. Section 15(2) provides that an employee who works on a Sunday must receive at least his or her daily wage.

3.7. Section 16 - Night work

Labour: Labour wants the bill to provide for a 20% premium for work performed at night.

Labour also raised concerns about the wording of section 16:

(i) Section16(3)(a) did not focus on those inherent health hazards associated with night work.

(ii) Section 16(3)(b) did not provide for compulsory medical examinations for employees who regularly performed night work and that the confidentiality of these workers' medical records would be safeguarded.

Business: Business stated that the provisions for night-work were too wide, especially in respect of shifts where a minority of hours fell inside the definition of night-work. Business said that the requirements for transportation and medical examinations were too open to misinterpretation and possibly abuse. Business stated that its position was that any premium for night-work should be determined through collective bargaining, and not in the statute.

Business proposed that:

(i) Section 16(3)(b) should require a test of "reasonable cause" before a medical examination was requested.

(ii) Section 16(3)(c) should include a requirement that the transfer of an employee who suffered from a health condition associated with night work to suitable day work should be "reasonably practicable".

Government: Government explained that it supported premiums for night-work but that this was often the subject of collective bargaining and that for unorganised sectors a premium could be introduced through sectoral determinations.

Government tabled an amended section 16(3)(a) and (b).

Government indicated that it had considered amending section 16(3)(c) to include the test of "reasonably" practicable" as it acknowledged the problem raised by business, however, such a formulation would be too wide.

3.8. Section 26 - Maternity leave

Labour: Labour wants the bill to provide six-months maternity leave for pregnant employees. Labour wants four-months thereof to be fully paid.

Business: Business accepts the four-month maternity leave provided for in the bill, with a number of specific reservations regarding the terms: business believes that a qualifying period of service should be retained, business was concerned with regard to the extension of leave provisions, business was also concerned about the content of a yet to be disclosed code of practice. Financing of leave was yet to be considered.

Government: The bill provides for four-months maternity leave and is silent on the question of payment. However, a ministerial task-team was appointed to consider mechanisms for financing paid maternity leave.

Government supports the principle of payment for maternity leave.

3.9. Section 28 - Family responsibility leave

Labour: Labour supports the provisions in the bill.

Business: Business does not support the provision in the bill, and proposed that this section be deleted.

Government: The bill provides for 3-days paid family responsibility leave per annum. Additional annual leave should suffice for this purpose.

3.10. Section 34 - Notice of termination of employment

(a) Notice period

Labour: Labour supports the provisions in the bill.

Business: Business does not support the section on notice of termination of employment, and objected to the related accommodation requirements and it was also not clear whether the notice period referred to days or calender months. Business proposed that existing law be retained in this area.

Government: The bill provides that a contract of employment may only be terminated on notice of not less than:

(i) One week - where the employee has been continuously employed for four weeks or less.

(ii) Two weeks - where the employee has been continuously employed for more than four weeks but not more than one year.

(iii) 30 days - where the employee has been continuously employed for one year or more.

(iv) 1 month - where the employee is a farmworker or domestic workers who has been continuously employed for more than four weeks.

(b) Severance pay

Labour: Labour stated that it would need to consider the implications of the removal of section 196 from the Labour Relations Act, 1995 and would revert on the issue.

Business: Business wanted to revert on the transference of section 196.

Government: Government stated that it would transfer section 196 of the Labour Relations Act, 1995, dealing with severance pay, to the basic conditions of employment bill. The technicalities of this could be addressed further.

3.10. Section 44 - Prohibition of employment of children

Labour: Labour wants the bill to provide that no person may employ a child under 16 years of age.

Business: Business supports the provisions in the bill.

Government: The bill provides that no person may employ a child who is under 15 years of age or under the minimum school-leaving age in terms of any law, if this is 15 or older.

Government stated that it was prepared to agree on a process to discuss increasing the school-leaving age with the education authorities.

3.11. Section 50 - Variation of basic conditions of employment

Labour: Labour proposed that a list of core issues be identified, which would not be capable of variation. All other issues would be capable of variation through bargaining councils, provided that the variation was, on aggregate, more favourable to employees. Labour further set out detailed provisions on the way in which such a variation model would work, to provide for clarity in the law.

The labour proposal entails:

1. The core standards would include provisions such as:

-maternity leave

-payments for public holidays

-notice periods

-child labour

-health and safety standards

(Note: This is not a comprehensive list)

2. Matters subject to variation in individual agreement would be strictly limited and set out in the bill, and would be superseded by a collective agreement, which in turn would by superseded by a bargaining council agreement.

3. All other matters would be subject to variation at bargaining council level, provided that the agreement "traded off" rights in the bill against each other. This means that an averaging of working hours (which results on reduced overtime payments for workers) may be traded for reduced hours of work. These provisions should, on aggregate, be more favourable to employees ("the prescribed test").

4. Once an agreement on variation has been agreed, it should be publicised two months prior to the intended date of implementation to permit an opportunity for objections, and for the CCMA to consider such objections.

5. A prescribed period would be set for the CCMA to determine, only if an affected party lodges an objection whether the variation meets the prescribed test. A finding would be made before the proposed date of implementation.

Business: In principle, business supported a "hierarchy" of variation, but disagreed with the details of variation at the different levels.

Business agreed that bargaining councils should have full rights of variation, save for the core rights set out in government's position, points (i)a to (i)c.

Business proposed that an additional tier be introduced of "mature" or "established" bargaining forums, which would be permitted the same rights of variation as bargaining councils. "Mature" forums would need to be accredited for this purpose upon application to the Minister.

Collective and individual agreements should be permitted appropriate rights of variation within limits that should be defined in the bill. The present bill did not permit sufficient rights of variation. Individual agreements could not be concluded where collective agreements applied.

Business opposed the concept of variation being permitted only on more favourable terms. This was an abrogation of collective bargaining and an unreasonable limitation on its scope.

Government: The bill provides for a model of variation of certain standards through collective bargaining, with bargaining councils have greater ability to vary standards than other collective and individual agreements. The bill also sets the following parameters for the variation of standards:

(i) A collective agreement concluded by a bargaining council, or between an employers' organisation and a trade union, may replace or exclude any basic condition of employment except-

(a) The requirement to arrange working time with due regard to employees' health and safety.

(b) The provisions concerning child labour, forced labour and maternity leave.

(c) The provisions concerning sick-leave, except to the extent permitted by the Bill.

(d) Other collective agreements and individual agreements may only replace or exclude basic conditions of employment to the extent permitted by the Bill.

(ii) A collective agreement may-

(a) Permit employees ordinary hours of work and overtime to be averaged over a period of up to four months (s.11 (1)).

(b) Vary the number of days and the circumstances under which family responsibility leave may be granted (s.28).

(c) Permit a shorter notice period for contracts of employment than is prescribed by section 34(1) (s.34(2)).

(d) Provide for the resolution of disputes arising out of the Act by arbitration. A labour inspector may not issue a compliance order in respect of any employer who has concluded an agreement containing such a procedure (s.72(a)).

(iii) A collective agreement or an individual agreement may-

(a) Permit an employee's ordinary hours of work to be extended by up to 15 minutes in a day, but not More than 60 minutes in a week, to permit employees to continue serving members of the public after the completion of ordinary hours of work (s.8(2)).

(b) Permit an employee to work three hours overtime in a day and ten hours overtime in a week (s.9(1)(a)).

(c) Permit employees to be compensated for overtime work by the employer granting paid time off (s.9(3)).

(d) Permit employees to work up to twelve hours in a day without receiving overtime pay (s. 10 (1)).

(e) Provide that the meal interval of employees is reduced from 60 minutes to no less than 30 minutes and that an employee may work six hours per day without receiving a meal interval (s 13(6)).

(f) Provide that an employee's weekly rest period does not include a Sunday (s 14(1)(b)).

(g) Provide that employees have a rest period of 60 consecutive hours every two weeks instead of a weekly rest period or that that the rest period in one week be reduced by eight hours if the rest period in the following week is increased equivalently (s 14(3) and (4)).

(h) Permit employees to be compensated for Sunday work by the granting of paid time off (s 15(3)).

(i) Vary the provisions for sick-pay by providing that the employee's sick pay for any day is reduced to not less than 75% of the employee's entitlement, provided the number of days of paid sick leave is increased at least proportionately (s 24).

3.12. Section 51 - Variation by the Minister

Labour: Labour expressed concern at the powers afforded to the Minister in the bill, particularly in respect of sections 51(a), 51(b)(ii) and 51(7)(a) in the bill.

Business: Business is concerned at the powers afforded to the Minister in the bill, particularly in respect of sections 12 51, 52, 54, 84, 86, and 87. Business proposed that the Minister's powers be balanced against an appropriate role for the ECC and that his powers of delegation be reasonably circumscribed.

Government: The powers that the bill gives the Minister are in line with constitution and the generally accepted powers or the executive arm of government.

It was agreed that a technical committee should look at sections 51(a), 51(b)(ii) and 51(7)(a). Such a committee never met.

Government circulated new wording on section 51(6):

"An employer or employers' organisation that makes an application in terms of subsection 1(b) must set out the grounds on which the application is made and must satisfy the Minister-

(a) that a copy of the application has been served on any registered trade union whose members are likely to be affected by the application; and

(b) if the majority of employees are not represented by a registered trade union, that reasonable steps have been taken to bring the application to the attention of employees who are not members of a registered union."

3.13. Chapter 8 - Sectoral determinations

Labour: Labour supports the provisions in the bill, provided that the powers of the ECC were increased..

Business: Business expressed concerns about the manner in which sectoral determinations would be developed. Particularly, that investigations leading to such determinations would be conducted by the Department of Labour rather than the Employment Conditions Commission. Business felt that the Employment Conditions Commission should be able to convene their own inquiries and direct the Department of Labour's investigations.

Business also wanted the Minister to make sectoral determinations only upon the advice of the Employment Conditions Commission.

Sectoral determinations would only have application where collective agreements did not apply.

Government: The bill provides for sectoral determinations establishing basic conditions of employment for employees in a sector and area. The bill provides that an investigation must be conducted before making a sectoral determination and regulates the collection of information and preparation of the report which would be conducted by an authorised person in the public sector.

Government stated that it would:

(i) Clarify relationship between the "authorised person" referred to in section 53(1) and the Employment Conditions Commission.

(ii) Clarify that the Employment Conditions Commission could direct the research undertaken by the Department of Labour.

(iii) Clarify what "the advice of the Commission" means in section 57(1).

3.14. Chapter 9 - Employment Conditions Commission

Labour: Labour supports some of the provisions in the bill but expressed concern about section 60(1)(c). Labour would table a set of additional proposals separately.

Business: Business accepts a role for the Employment Conditions Commission as an independent, expert body, but believes that its role, function and powers are too circumscribed by the powers of the Minister. Business believes that a better balance needs to be found between the powers of the Minister and the Commission. Business expressed concern about section 60(1)(c).

Business expressed concern that wording of section 62(1)(g) should be altered to change "possible" to "likely" and to change "and" and "and/or".

Government: The bill provides for the establishment of an Employment Conditions Commission.

Government indicated that it would consider:

(i) The concern raised by business and labour on section 60(1)(c).

(ii) Changing "possible" to "likely" in section 62(1)(g).

(iii) Changing "and" to "and/or" in section 62(1).

3.15. Section 85 - Deeming of employees

Labour: Labour supports the provision in the bill.

Business: Business expressed concern about the powers afforded to the Minister to deem persons as employees in order to extend provisions of the bill to persons who are not employees. The determination of employee and employment are appropriately left to the courts.

Government: Government agreed to amend the bill to address problem raised by business.

3.16. Schedule 3 -Transitional provisions

Labour: Labour supports the transitional provisions in the bill, but proposed that the first tranche in the reduction of working hours should come into effect immediately..

Business: Business believes that the transitional provisions are inadequate in respect of the proposed invalidation of all existing employment contracts on commencement of the Act. Business wants at least a twelve-month phasing-in period for mining, security and agriculture additional to that agreed for the Bill as a whole.

Government: The bill provides for the phasing-in of the working time provisions for security guards as follows:

(i) After 6-months maximum ordinary hours per week of 55-hours.

(ii) After a further 12-months maximum ordinary hours per week of 50-hours.

(iii) After a further 12-months maximum ordinary hours per week of 45-hours.

Government stated that it was prepared to consider increasing the transitional period for phasing-in the working time provisions in mining and agriculture.

Government stated that it was considering a 12-month transitional period for the phasing-in of the entire bill in the public service.

4. CONCLUSION

 This report therefore completes consideration of the issue in Nedlac, and the report and attached bill are hereby submitted to the Minister of Labour in terms of section 8 of the Nedlac Act, No. 35 of 1994.