REPORT OF THE NATIONAL ECONOMIC DEVELOPMENT AND LABOUR COUNCIL ON THE EMPLOYMENT EQUITY BILL

1. BACKGROUND

1.1. The Minister of Labour's "Programme of Action 1994-98" highlights the government's commitment to rectifying the racial and gender imbalances in the work place and promoting equity at all levels in the world of work through implementing measures such as affirmative action. The introduction of employment equity legislation is also addressed in the 5-year plan.

1.2. South Africa's Constitution describes affirmative action as measures designed to achieve the adequate protection and advancement of persons, groups and categories of persons disadvantaged by unfair discrimination, to enable their full and equal enjoyment of all rights and freedom.

1.3. The Comprehensive Labour Market Commission was established at the beginning of 1995 to investigate the development of a comprehensive labour market policy. Part of the commission's terms of reference was to examine and investigate mechanisms aimed at redressing discrimination in the labour market. In particular the commission was to consider a policy framework for affirmative action in employment with due regard to the objectives of employment creation, fair remuneration, productivity enhancement and macroeconomic stability. The commission recommended that employment equity legislation be promulgated as soon as possible and that such legislation contain, inter alia, the requirement that employers formulate comprehensive affirmative action plans.

1.4. The Minister of Labour requested the Department of Labour: Directorate of Equal Opportunities to draft a Green Paper identifying policy proposals for inclusion in a new Employment and Occupational Equity Statute. The green paper was published on 1 July 1996 for public comment and discussion. The Department interacted with the social partners and other organisations with an interest in the issue prior to drafting the employment equity bill.

2. PROCESS IN NEDLAC

2.1. The employment equity bill was published on 1 December 1997 and tabled in the Labour Market Chamber of Nedlac on 22 January 1998 for negotiations. The bill is attached as annexure A.

2.2. A negotiating committee was established under the auspices of the Labour Market Chamber.

2.3. The negotiating committee comprised of representatives from the business, government, labour and community constituencies.

2.4. The negotiating committee first met on 25 February 1998. At this meeting parties agreed on, inter alia, meeting procedures and dates for negotiations. The target date for concluding negotiations was 27 March 1998.

2.5. The Black Management Forum had requested representation on the negotiating committee. At the meeting on 25 February 1998 it was agreed that one representative from the Black Management Forum could participate in the negotiations but that it would have no official status as a Nedlac party.

2.6. Negotiations were held on the following dates:

2.6.1. 5-6 March 1998.

2.6.2. 12 March 1998.

2.6.3. 18 March 1998.

2.6.4. 20 March 1998.

2.6.5. 23 March 1998.

2.6.6. 26 March 1998.

2.6.7. 9 April 1998.

2.7. The negotiating committee agreed that the Department of Labour would redraft the bill in accordance with the agreements reached during the negotiations.

2.8. A progress report was tabled at the Executive Council meeting on 27 March 1998. At this meeting the Executive Council mandated the Labour Market Chamber and the Management Committee to finalise the Nedlac report on the employment equity bill.

2.9. The Nedlac report was tabled at the Labour Market Chamber meeting on 16 April 1998. At this meeting the chamber mandated the four chairpersons of the negotiating committee to finalise the Nedlac report before tabling it at the Management Committee.

2.10. The four chairpersons or their alternates met on 28 April 1998 to finalise the draft report.

2.11. The draft Nedlac report was tabled at the Management Committee meeting on 4 May 1998. The Management Committee mandated the Labour Market Chamber convenors to finalise the Nedlac report.

2.12. At the Labour Market chamber convenors teleconference meeting on 12 May 1998 labour was not in a position to ratify the report and undertook to revert thereon.

2.13. The report was adopted on 21 May 1998 by the Labour Market Chamber convenors.

3. AGREEMENTS

3.1. The employment equity bill is supported by Nedlac subject to the agreed amendments to the bill as captured below and the reservations recorded in point 4. of the report.

3.2. It is agreed that the agreements reached during the negotiations may require technical amendments to the bill during the legal drafting of the bill.

[( ) = deletion; _______ = insertion]

CHAPTER ONE: PURPOSE, APPLICATION AND INTERPRETATION

It is agreed that:

1. Section 1 will be amended as follows:

"The purpose of this Act is to achieve (equality) equity in the workplace by-".

2. In section 2(d):

The legal drafters should determine whether International Labour Office Convention (No. 111) or International Labour Organisation Convention (No. 111) is the correct terminology.

CHAPTER TWO: PROHIBITION OF UNFAIR DISCRIMINATION

It is agreed that:

1. The legal drafters should consider an amendment to the existing section 5(3) if the code of good practice on the handling of sexual harassment cases is issued in terms of the Labour Relations Act. The following wording should be considered:

Unfair discrimination includes the harassment of an employee provided that issues relating to sexual harassment will be dealt with in terms of the relevant provisions of the Labour Relations Act.

2. A new section 5(4) will be inserted as follows:

Psychometric testing of an employee is prohibited unless it has been validated and measures have been taken to ensure that it is culture fair and unbiased towards members of designated groups.

3. Section 5(4) will become section 5(5) and that the wording in the bill will remain provided that the concepts in the renumbered section 5(5)(b) are defined in section 61 of the bill in such a way that they do not undermine the purpose of the bill.

4. A new section 6 will be inserted as follows:

Where instances of unfair discrimination occur in relation to wage differentials employers must attempt to address these in a manner appropriate to their circumstances, which may include collective bargaining or other measures such as those provided for in the Basic Conditions of Employment Act, No. 75 of 1997.

5. Due to the insertion of a new section 6, the existing sections 6 and 7 will be renumbered as sections 7 and 8 consecutively.

6. The renumbered section 7(1) will be replaced with the following:

In this section, the word "dispute" excludes a dispute about an unfair dismissal, which must be referred to the appropriate body for conciliation and arbitration or adjudication in terms of Chapter VIII of the Labour Relations Act.

7. The renumbered section 7(2) will be replaced with the following:

Any party to a dispute concerning this Chapter may refer the dispute in writing to the CCMA within 6 months after the act or omission that allegedly constitutes unfair discrimination.

CHAPTER THREE: DUTIES OF DESIGNATED EMPLOYERS

It is agreed that:

1. Due to the insertion of a new section 6, sections 8 to 23 will be renumbered as sections 9 to 24 consecutively.

2. Every reference to positive measures in the bill will be replaced with affirmative action measures and therefore the renumbered section 11(1) will be amended as follows:

"Every designated employer must implement (positive) affirmative action measures for people from designated in terms of this Act, in order to achieve employment equity.".

3. The renumbered section 11(2)(d) will be amended as follows:

"(annually) report to the Director-General on progress made in implementing its employment equity plan, as required by section 19.".

4. The heading of the renumbered section 13 will be replaced with the following:

Affirmative action measures.

5. The renumbered section 13(1) will be amended as follows:

"(Positive) Affirmative action measures are measures designed to ensure that suitably qualified people from designated groups have equal employment opportunities and are equitably represented in all occupational categories and levels in the workforce of a designated employer.".

6. The renumbered section 13(2) will be amended as follows:

"(Positive) Affirmative action measures implemented by designated employers must include-".

7. The renumbered section 13(2)(d) will be replaced with the following:

affirmative action measures, subject to subsection (3)-

(i) to ensure the equitable representation of suitably qualified people from designated groups in all occupational categories and levels in the workforce; and

(ii) to retain and develop people from designated groups and to implement other appropriate training measures in terms of the skills development bill, 1997.

8. The renumbered section 13(2)(e) will be deleted as it is captured in the amendment to the renumbered section 13(2)(d).

9. The renumbered section 13(3)(a) to (d) will be deleted and a new renumbered section 13(3) will be inserted as follows:

The affirmative action measures referred to in 13(2)(d) include preferential treatment and targets, but exclude quotas.

10. A new renumbered section 13(4) will be inserted as follows:

Subject to section 39, nothing in this section requires a designated employer to take any decision concerning an employment policy or practice that would establish an absolute barrier to the prospective or continued employment or advancement of people who are not from designated groups.

11. The renumbered section 14(1) will be replaced with the following:

A designated employer must take reasonable steps to consult and attempt to reach agreement on the matters referred to in section 15-

(a) with a representative trade union representing members at the workplace and its employees or representatives nominated by them, or

(b) if no representative trade union represents members at the workplace, with its employees or representatives nominated by them.

12. The renumbered section 14(2) will be amended as a result of the amendment to the renumbered section 14(1) as follows:

"The employees or their nominated representatives with whom an employer consults in terms of subsection (1(b) and (c),) 1(a) and (b), taken as a whole, must reflect the interests of-".

13. A new renumbered section 14(3) will be inserted as follows:

This section does not affect the obligation of any designated employer in terms of section 86 of the Labour Relations Act to consult and reach consensus with a workplace forum on any of the matters referred to in section 15 of this Act.

14. The renumbered section 18(2)(d) will be amended as follows:

"where under-representation of people from designated groups has been identified by the analysis, the numerical goals to achieve the equitable representation of suitably qualified people from designated groups within each occupational category and level in the workforce, the timetable within which this is to be achieved, and the strategies intended to achieve those goals;".

15. A new renumbered section 18(3) will be inserted as follows:

A person may be suitably qualified for a job as a result of any one of, or combination of, the following-

(a) that person's formal qualifications;

(b) that person's prior learning; and

(c) that person's relevant experience.

16. A person without previous experience should not be discriminated against and that the legal drafters should incorporated this principle in the bill, either by amending the new renumbered section 18(3) or by amending the definition of "suitably qualified" in section 61.

17. A new renumbered section 18(4) will be inserted as follows:

When determining whether a person is suitably qualified for a job, an employer must-

(a) review all of the factors listed in subsection (3); and

(b) determine whether that person has the ability to do the job in terms of any one of, or combination of, those factors.

18. The renumbered section 19 will be replaced with the following:

(1) A designated employer that employs less than 150 employees must-

(a) submit its first report within 12 months of the commencement of this Act or the date on which that employer became a designated employer, whichever is applicable;

(b) thereafter submit a report to the Director-General once every two years, on the first working day of October.

(2) A designated employer that employs 150 or more employees must-

(a) submit its first report to the Director-General within six months after the commencement of this Act or the date on which that employer became a designated employer, whichever is applicable; and

(b) thereafter submit a report to the Director-General once every year on the first working day of October.

(3) The reports referred to in subsections (1) and (2) must contain the information that is prescribed.

(4) A report prepared in terms of subsections (1) and (2) must be signed by the chief executive officer of the designated employer.

(5) Every report prepared in terms of this section is a public document.

19. The renumbered section 20(2) will be replaced with the following:

When a designated employer in the State has produced a report in terms of section 18, the Minister responsible for that employer must table that report in Parliament.

20. The existing section 24 will be deleted.

CHAPTER FOUR: COMMISSION FOR EMPLOYMENT EQUITY

It is agreed that:

1. Section 26(2)(c) will be amended as follows:

"two people nominated by those voting members of Nedlac who represent the State; and".

2. Section 26(2)(d) will be replaced with the following:

two people nominated by those voting members of Nedlac who represent the organisations of community and development interest in the Development Chamber in Nedlac.

3. Section 26(2)(e) will be deleted.

4. A new section 26(3) will be inserted as follows:

The parties who make nominations in terms of subsection (2) must have due regard to the promotion of the representivity of people from designated groups.

5. A reservation about section 27(2)(b) be noted which is outlined in section 4 of this report.

CHAPTER FIVE: MONITORING, ENFORCEMENT AND LEGAL PROCEEDINGS

It is agreed that:

1. The heading of chapter five part A will be divided into two parts as follows:
Section 31 will be under the heading "monitoring" and sections 32 to section 40 will be under the heading "enforcement".

2. Section 33 will become section 33(1) and a new section 33(2) will be inserted as follows:
In endeavouring to secure a written undertaking from a designated employer, the labour inspector must seek to obtain agreement with the employer as to that employer's compliance with any obligation referred to in subsection (1).

3. Section 38 will become section 49 in chapter six: general provisions.

4. Sections 39 to 49 will be renumbered as sections 38 to 48 consecutively.

5. The renumbered section 38(2)(d) will be replaced with the following due to the amendments to the renumbered section 14:

request a meeting with-

(i) any employee or trade union consulted in terms of section 14; or

(ii) workplace forum; or

(iii) any other person who may have information relevant to the review.

6. The renumbered section 39 will be amended as follows:
"In determining whether a designated employer is implementing employment equity in compliance with this Act, the Director-General and any person or body applying this Act, in addition to the factors stated in section 13, must take into account all of the following-".

7. The renumbered section 39(a) will be replaced with the following:

the extent to which suitably qualified people from and among designated groups are equitably represented within each occupational category and level in that employer's workforce in relation to the-

(i) demographic profile of the national and regional economically active population;

(ii) pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees;

(iii) economic and financial factors relevant to the sector in which the employer operates;

(iv) present and anticipated economic and financial circumstances of the employer; and

(v) the number of present and planned vacancies that exist in the various job categories and levels and the employer's labour turnover.

8. The renumbered section 40 will be amended as follows:
"Subsequent to a review in terms of (section 39) section 38, the Director-General may-".

9. The renumbered section 41 will be amended as follows:
"If an employer fails to comply with a recommendation made by the Director-General in terms of (section 41(b)) section 40(b) the Director-General may refer the employer's non-compliance to the Labour Court.".

10. Consequential amendments to the renumbered section 42 under part B of chapter five may be required due to the deletion of section 24.

11. The renumbered section 46(1)(f) will be amended as follows:
"ordering compliance with any provision of this Act, including a recommendation made by the Director-General in terms of section 40;".

12. A new renumbered section 46(1)(i) will be inserted as follows:
in an appeal under section 36, to confirm vary or set aside all or part of any order made by the Director-General in terms of section 35;

13. A reservation about the renumbered section 46(2)(b) be noted which is outlined in section 4 of this report.

14. The renumbered section 46(3) will be deleted as a result of the amendments to the renumbered section 7.

CHAPTER SIX: GENERAL PROVISIONS

It is agreed that:

1. Section 38 will become section 49 in chapter six: general provisions and will be replaced with the following:

(1) Every employer that makes an offer to conclude an agreement with any organ of State for the furnishing of supplies or services to that organ of State or for hiring or letting of anything-

(a) must-

(i) if it is a designated employer, comply with Chapters II and III of this Act; or

(ii) if it is not a designated employer, comply with Chapter II of this Act; and

(b) attach to that offer either-

(i) a certificate in terms of subsection (2) which is conclusive evidence that the employer complies with the applicable chapters of this Act; or

(ii) a declaration by the employer that it complies with the applicable chapters of this Act, which when verified by the Director-General, is conclusive evidence of compliance.

(2) An employer referred to in subsection (1) may request a certificate from the Minister confirming its compliance with Chapter II, or Chapters II and III, as the case may be.

(3) A certificate issued in terms of subsection (2) is valid for 12 months from the date of issue or until the next date on which the employer is obliged to submit a report in terms of section 18, whichever period is longer.

(4) A failure to comply with the relevant provisions of this Act is sufficient ground for rejection of any offer to conclude an agreement referred to in subsection (1) or for cancellation of the agreement.

2. Consequential amendments to footnote 13 will be required due to the amendments to the renumbered section 49.

3. Section 50(1) will be amended as follows:

"The Minister, (after consultation with the Commission) on the recommendation of the Commission and after consultation with Nedlac, may-".

4. Section 51 will be replaced with the following:

(1) The Minister, may, on the recommendation of the Commission and after consultation with Nedlac make any regulation by notice in the Gazette, consistent with this Act regarding-

(a) any matter that this Act requires or permits to be prescribed; and

(b) any administrative or procedural matters that may be necessary or expedient to achieve the proper and effective administration of this Act.

(2) Regulations issued in terms of subsection (1) must provide separate and simplified forms and procedures in respect of the obligations created by sections 16, 17, 18, 22 and 23 for employers that employ 150 or fewer employees.

5. There should only be a definition of "council" in section 61 of the bill if it is referred to in the bill and that the existing definition should be amended as follows:

"means a bargaining council or statutory council as either of these terms are defined in the Labour Relations Act;".

6. The definition of "designated employer" in section 61 will be amended by inserting a new subsection (b) as follows:
a person who employs less than 50 employees but has a total annual turnover that is equal to or above the minimum annual turnover of a small business in terms of the Schedule to the National Small Business Act, No. 102 of 1996.

7. A reservation about the definition of "designated employer" in section 61 be noted which is outlined in section 4 of this report.

8. The legal drafters should ensure that where bargaining councils have concluded collective agreements with employers that fall below the thresholds in the definition of a designated employer that they would be required to report to the Director-General as if they were a designated employer.

9. The definition of "organ of State" in section 61 will be extended to include parastatals.

10. The definition of "reasonable accommodation" in section 61 will be amended as follows:
"means any modification or adjustment to a job or to the working environment that will enable a person (with a disability) from a designated group to have access to, participate or advance in employment;".

11. A definition of "Representative trade union" will be inserted in section 61 as follows:
means a registered trade union, or two or more registered trade unions acting jointly, that are sufficiently representative of the employees employed by an employer in a workplace.

12. The definition of "suitably qualified" in section 61 will be replaced with the following:

means a person who has the ability to perform a particular job, as determined by section 18(3) and 18(4).

13. A definition of "affirmative action" will not be inserted in section 61 of the bill as the concerns raised are addressed by the amendments to the renumbered section 13 of the bill.

SCHEDULE ONE: MAXIMUM PERMISSIBLE FINES THAT MAY BE IMPOSE FOR CONTRAVENING THIS ACT

It is agreed that consequential amendments to the relevant sections listed in schedule one will be required.

SCHEDULE TWO: DISPUTE RESOLUTION: FLOW DIAGRAMS

It is agreed that:

1. Flow diagram 1 will require consequential amendments due to the amendment to the renumbered section 7(2).

2. Flow diagram 2 will require consequential amendments due to the amendments to the renumbered sections 7(1) and 7(2).

3. Flow diagram 3 will require consequential amendments due to the deletion of section 24.

4. The flow diagrams must reflect the role of the labour inspectors.

SCHEDULE THREE: LAWS REPEALED

It is agreed that:

1. Section 187 of the Labour Relations Act, 1995, can no longer be repealed due to the amendments to the renumbered section 7.

2. Item 4(a) is incorrect and will be changed to item 3(4)(a).

SCHEDULE FOUR: TRANSITIONAL ARRANGEMENTS

It is agreed that consequential amendments to schedule four will be required due to the amendments to the renumbered section 7.

4. RESERVATIONS

It is noted that:

1. There is a reservation on the wage gap as follows:

1.1. Labour expressed a reservation that the agreement to insert a new section 6 as captured in point 3 of this report would not adequately address its concerns regarding the wage gap and proposes the following amendments to the bill:

1.1.1. Insert a new section 1(c) as follows: Reducing wage disparities induced by the legacy of apartheid.

1.1.2. Insert a new section 6 as follows:

Reduction of wage gap

All employers must take steps to promote a more level national income distribution particularly in the workplace, and to this end, reduce the wage gap between levels of income earners in any employment policy or practice.

1.1.3. Insert a new section 12(2)(f) as follows: measures to reduce the wage gap between all employees and all levels of management in the workplace.

1.1.4. Insert section 16(c) as follows: An analysis conducted in terms of subsection (1) must include a profile, as prescribed, of the designated employer's workforce and all levels of management in order to determine the wage gap differentials in the workplace.

1.2. Community supports the above proposal tabled by labour.

1.3. Business and government do not support the above proposal.

2. There are reservations about section 27(2)(b) as follows:

2.1. The negotiating committee agreed that section 27(2)(b) will be amended as follows:

"research and report to the Minister on any matter relating to the application of this Act, including appropriate and well researched norms and benchmarks for the setting of numerical goals in the various sectors; and".

2.2. Subsequent to legal drafting the following amendment was made to section 27(2)(b):

"research and report to the Minister on the appropriate basis on which numerical goals in any sector might be established and on any matter relating to the application of this Act; and".

2.3. Business supports the agreement of the negotiating committee and government, labour and community supports the reformulation by the legal drafters.

3. Business expressed reservations on behalf of its small business components that do not support the amendment to the definition of "designated employer" in section 61 and propose the deletion of the turnover threshold.

4. Business proposed that the reference to punitive damages in the renumbered section 46(2)(b) be deleted.

It is agreed that the legal drafters should determine whether the payment of punitive damages is consistent with South African Law and amend the bill accordingly.

5. CONCLUSION

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