NEDLAC REPORT ON THE LABOUR LAW AMENDMENT
BILLS
September 2001
See also the department of labour: LRA/BCEA
1. BACKGROUND
1.1. On 27 July 2000, the Minister of Labour tabled the Labour
Relations Amendment Bill, 2000, the Basic Conditions of Employment
Amendment Bill, 2000, and the Insolvency Amendment Bill, 2000, at
Nedlac.
1.2. The Minister of Labour indicated that the proposed
amendments were intended to improve the application of the laws,
address unintended consequences and ensure that the labour market
regulatory framework was sensitive to the imperative of job
creation.
1. PROCESS IN NEDLAC
2.1. The Nedlac parties set up a negotiating committee under the
auspices of the Labour Market Chamber and the Management Committee,
chaired by the Executive Director of Nedlac, to negotiate the
proposed amendments. The names of the negotiating committee and the
dates on which they and/or the convenors of the negotiating team
met are set out in Appendix A.
2.2. At the beginning of the negotiations there was little
agreement on any of the issues of significance covered by the
amendments.
2.3. At the meeting of 6 October 2000 an impasse was reached and
the parties agreed to set up a one-a-side Nedlac contact committee
to attempt to break the impasse. The names of the Nedlac contact
committee are set out in Appendix A.
2.4. At the same time, a series of bilateral meetings were held
between the parties to the negotiations, including between Business
and Labour at the Millennium Labour Council (MLC), which considered
possible principles for a settlement of some of the issues on which
an impasse had been reached.
2.5. The Nedlac contact committee met in December 2000 to
attempt to develop a framework for settling the areas of
disagreement on the proposed amendments. The contact committee
produced an unmandated framework document that set out proposed
principles of agreement on the amendments.
2.6. This unmandated document was introduced into the MLC and
formed a basis for discussion between the MLC parties between
January and May 2001. The MLC produced an in-principle agreement
between Business and Labour that was presented to the negotiating
committee at Nedlac on 01 June 2001 as the framework of a possible
agreement between all three parties, subject to negotiations at
Nedlac.
2.7. The parties to the negotiations each nominated one legal
drafter to form a legal drafting team. The names of the legal
drafters are also set out in Appendix A.
2.8. Negotiation then proceeded on the dates set out in Appendix
A. Agreement was reached on most issues and legal text drafted to
capture these agreements. In the report below, the areas of
agreement and areas of reservation are recorded.
1. OUTCOMES
The parties achieved the following in terms of agreements or
noted their reservations on the issues as listed below:
3.1. Amendments to the Labour Relations Act 66 of 1995
3.1.1. Bargaining Councils
Amendments were agreed to in relation to private and public
sector bargaining councils to ensure that they service employers
and employees better, through improving their efficiency, the
information required on their activities in relation to small
business, regulatory oversight, expanding the scope of their
functions to include provision of services to industries and their
coverage of the informal sector.
Amendments in the draft amendment Bill agreed include
to:
- Increase the functions of bargaining councils to include
providing support services to industry and extending their scope to
include the informal sector (s. 28);
- Shorten the processes to vary the scope of a bargaining council
in the event that there are no objections (s. 29 and s. 58);
- Revise the powers and functions of designated agents of
bargaining councils (s. 33);
- Improve the dispute resolution function of bargaining councils
(s. 33A);
- Enable a more efficient process of and criteria for checking
the representivity of parties to bargaining councils (s. 49 and s.
32);
- Oblige bargaining councils to provide a report to the Registrar
of Labour Relations on which basis it can be determined the extent
to which the bargaining councils cover small employers and take
small business interests into account (s. 54);
- Increase the power of the Registrar to investigate allegations
relating to the administration and functioning of bargaining
councils including the funds administered by councils (s. 53 and s.
54).
Policy statement
In addition to the statutory changes set out above, the
negotiations covered a policy statement on bargaining councils, and
acknowledged the following:
Bargaining councils are an important part of the collective
bargaining arrangements in South Africa, and there is a need to
strengthen their functioning. One feature is the number of
non-parties to the council. The parties agreed it would be
desirable to promote membership of small businesses of employers'
associations so that their interests may be represented more
effectively in bargaining councils where such bargaining councils
have jurisdiction. Membership of such employers' associations would
be voluntary.
To this end, the parties identified a number of possible means
to achieve the above:
- a political signal by the leadership of government, business
and labour to non-party employers that good practice will be
developed by bargaining councils to encourage better communication
and to achieve the objectives in the above paragraph; and
- an institutional environment within bargaining councils to
facilitate the achievement of the above.
3.1.2. Commission for Conciliation, Mediation and
Arbitration (CCMA)
The parties agreed that it was desirable to improve the
functioning of the CCMA through measures that will, inter alia,
simplify CCMA processes, shorten the time taken to process cases
and limit the scope for abuse of CCMA resources and processes.
Amendments in the draft amendment Bill include
to:
- Clarify the rule-making power of the Governing Body and give
the Minister the power to make regulations in respect of
representation at the CCMA and the charging of fees (s.115);
- Increase the scope of commissioners to make cost awards in the
event of abuse of the dispute resolution process (s. 138);
- Align the processes relating to subpoenas with the rest of the
justice system (s.142);
- Deem arbitration awards to be final and binding and to be
capable of being enforced in the same manner as a court
order(s.143);
- Clarify who can vary and rescind an arbitration award or ruling
(s. 144);
- Give CCMA conciliators the power to continue to conciliate a
dispute even after a certificate to strike has been issued
(s.150).
The parties agreed that:
- The CCMA Governing Body would receive a new mandate through
Nedlac to settle every dismissal dispute within a set period
determined after consultation with the CCMA management, with this
mandate accompanied by appropriate measures to ensure achievement
thereof.
Reservations
Reservations were recorded by both labour and business in
relation to the proposed amendments to Section 115 and Section
138.
Business and Labour proposed that rules in respect
of representation at the CCMA, charging of fees and the criteria
for cost awards by commissioners should be developed in
consultation with Nedlac.
The other amendments in relation to the CCMA were
agreed.
3.1.3. Labour Court
The parties agreed on measures relating to the status of Labour
Court judges and the appointment of acting judges.
It was agreed that:
- The LRA should be amended to provide for the appointment of
Labour Court judges simultaneously as judges of the High Court with
the same remuneration and terms and conditions (s.153 and
s.154);
- Transitional provisions should be included in relation to the
present Labour Court judges including that they are able to receive
a gratuity the same as other judges in similar situations (Sch.
7);
- Discussions should be initiated between the Nedlac parties and
the Judge President of the Labour Court in respect of a protocol or
similar arrangement or a statutory provision to guide the
appointment process of acting judges;
- The Nedlac parties should interact with the process of the
Department of Justice that is designed to rationalise the court
system to ensure their concerns relating to the Labour Court and
the Labour Appeal Court are taken into account in this
process.
3.1.4. Unfair dismissals and unfair labour practices
(including probation and formal hearings)
Amendments were effected which improve the resolution of
disputes in respect of unfair dismissals and unfair labour
practices. Amendments were agreed that would have the
effect of:
- Changing Chapter 8 to cover both unfair dismissals and unfair
labour practices (s.185, s. 86);
- Introducing an enquiry into allegations of an employee's
conduct and capacity by a council, accredited agency or the CCMA
(s. 188);
- Aligning the LRA with the Protected Disclosures Act (s.186,
s.187);
- Clarifying the date of dismissal and the time periods in which
an unfair dismissal and unfair labour practice dispute must be
referred (s.191);
- Introducing a single seamless (one stop) con-arb process for
resolution of disputes, in order to simplify and shorten current
procedures (s.191);
- Amending the Code of Good Practice in respect of dismissal to
include a more extensive section on probation. This section
provides guidelines as to the time period of probation, employer
and employee obligations during probation, the role of an
adjudicator and the criteria to be used when determining the
fairness of a dismissal in the case of probation (Sch. 8).
Agreement was not reached on introducing a greater degree of
discretion for arbitrators, in the awarding of compensation for
procedurally unfair dismissals (s. 194).
Reservations
Labour recorded its reservation on the terms of the
compensation to be awarded in the case of an unfair dismissal. It
proposed compensation be at the rate of pay that the employee would
have been receiving at the time of the award being made, a minimum
compensation for unfair dismissals and no ceiling to apply to the
compensation awarded.
Labour expressed a reservation with the concept of
compatibility in relation to probation.
3.1.5. Retrenchments
The parties agreed to a substantial amendment to the current
provisions governing retrenchments and they agreed that saving jobs
and limiting retrenchments was desirable.
The parties considered a detailed text from the MLC agreement in
respect of proposed amendments to Section 189 that addressed this
principle as well as proposed measures requiring a meaningful
process of engagement, clarifying and streamling the process, and
spelling out the rights of parties in the event of no agreement
being reached. It was agreed that any amendment to this section
needed to be constitutional, practicable (implementable) and not
lead to increased litigation.
Arising out of the negotiations, the following amendments were
made to Section 189 and a new Section 189A was inserted to:
- Require the parties facing possible retrenchments to engage in
a meaningful joint consensus seeking process;
- Allow parties, if they agree, to request a facilitator from the
CCMA;
- Change the onus of proof in disputes regarding disclosure of
information;
- Permit industrial action by the parties in accordance with time
periods set out in the Act or refer a dispute about whether there
is a fair reason for the retrenchment to the Labour Court;
- Require employers to give 30 days notice of retrenchment to
individual workers with more than one year's service or a lesser
notice period for those with less than one year's service after the
time periods for meaningful engagement have been exhausted;
- Allow workers to refer a complaint about procedural fairness to
the Labour Court on an expedited basis and allow the Labour Court
to compel an employer to comply with a fair procedure;
- Define the grounds that the Labour Court can consider when
deciding on the substantive fairness of the retrenchment of workers
covered by s.189A.
Section 189A is only applicable to employers who employ more
than 50 employees; and a defined number of retrenchments in any
12-month period depending on the number of employees employed by
that employer.
Reservations
Business, although agreeing to the introduction of
the principle of a strike, cannot agree with s.189A as in the
current Bill. The areas of concern are fundamental to Business
agreeing to the entire section. These are:
- reference to s.37(2) should be included in paragraphs 7(a) and
8(b)(l) of s.189A;
- the employer should not be limited to a defensive lockout in
s.189A;
- the period of 30 days referred to in s.17 (a) of s.189A is too
long and should be reduced to 21 days.
Labour expressed reservations regarding the
operation of the proposed facilitation and proposes that
facilitation should be triggered at the request of either an
employer or a trade union/employees and that rules on facilitation,
including on variation of the periods of facilitation prescribed in
the Act, should be concluded in consultation with Nedlac. 3.1.6.
Transfers of contracts of employment (Section 197)
The parties agreed that the provisions relating to the transfers
of contracts of employment should be redrafted for greater clarity,
to ensure adequate protection for worker benefits in the event of
transfers, and to reduce possibilities for abuse of the provisions.
It was agreed that Section 197 should be amended to provide
for:
- the automatic transfer of the contracts of employment when a
business changes hands;
- the transfer of all rights and obligations as between old
employer and employee to new employer and transferred employee,
with provisions to protect collective agreements and the rights of
employees not covered by collective agreements. In this latter
case, an appropriate balance between flexibility and protection of
rights was crafted;
- the transfer of employees' pension, provident, retirement or
similar funds upon the transfer of the business provided that the
benefits of the new funds are reasonable and equitable;
- the new employer to be bound by the collective agreements and
arbitration awards that bound the old employer;
- the old employer to take reasonable steps to ensure that the
new employer can meet the obligations of leave pay, severance pay
and other monies owing to employees.
Similar amendments in respect of section 197A that regulates the
transfer of employees of an insolvent company were also
agreed.
3.1.7. Independent contractors
The parties recognised that abuse of contractual relationships
was occurring on an increasing scale in the labour market including
the phenomenon of disguised employment relationships. An amendment
to the LRA (s.200A) and BCEA (s.83A) was agreed
which:
- Creates a rebuttable presumption of an employment relationship
should any of a number of conditions hold, for all persons who earn
below a threshold of approximately R90 000 per year (as determined
in s.6 (3) of the BCEA);
- Enables Nedlac to issue a Code of Good Practice on guidelines
in respect of the existence of an employment relationship;
- Allows parties to approach the CCMA for an advisory award as to
whether persons involved in the above mentioned arrangements are
employees.
3.1.8. Public service amendments
The parties recognised the need for amendments to align the LRA
with changes in the regulation of public service councils and
changes to laws that govern the public service. The parties
agreed amendments which:
- Clarify the processes of designating, establishing,
amalgamating and varying the scope of public sector bargaining
councils (s.29, s.37, s.61);
- Give the CCMA the power to resolve jurisdictional disputes
between public sector councils (s.38);
- Amend the definition of public service, workplace and
registered scope in respect of the public service.
Reservations
Labour recorded its reservation in relation to the
definition of a workplace in the public service (section 213) and
proposed that workplaces should be defined by the Public Services
Co-ordinating Bargaining Council.
3.1.9. Other amendments
The parties agreed to a number of other amendments,
some technical and others more substantive that are aimed at
improving the application of the law.
Among those that were agreed are:
- Giving the Registrar of Labour Relations the power to refuse to
register labour organisations that are not genuine (s.95);
- Giving the Registrar greater oversight over the effective
functioning of bargaining councils (s.53, s.54);
- Simplifying the processes of de-registration of labour
organisations and increasing the powers of the Registrar to wind up
and de-register defunct organisations (s.103, s.105, s.106).
A further proposal was tabled extending the power of the Labour
Court to make an order in the event of an unprocedural strike or
lock out to any conduct in contemplation or in furtherance of the
strike or lock out (s.68).
Reservations
Labour indicated that the amendment to section 68
was receiving careful consideration and it would revert with a
position on the amendment during the parliamentary process.
3.2. Amendments to the Basic Conditions of Employment Act 75 of
1997
Government's proposed amendments focused on two areas:
- Changing of substantive conditions of employment
- Improving the application and enforcement of the Act
3.2.1. Changing of substantive conditions of
employment
The parties agreed amendments which:
- Enable employers and trade unions to conclude a collective
agreement to extend the weekly limit on permissible overtime to 15
hours for two months in any 12 month period (s.10);
- Require employers to pay over their contributions as well as
deductions made from employees' salaries for benefit funds within 7
days of the deduction being made or the contribution becoming due
(s.34A);
- Reduce the minimum notice period to one week during the first
six months of employment and provide that a collective agreement
may not reduce the notice period below two weeks (s.37);
- Ensure that workers whose contracts of employment are
terminated when their employer is sequestrated or liquidated are
entitled to severance pay (s.41).
Reservations
Reservations were expressed in relation to the following
amendments:
- Payment for work on Sundays
Labour did not agree to an amendment that would remove the
premium for work on Sundays.
Labour expressed a serious reservation to the proposal that the
premium be removed for work performed on a Sunday, for the
following reasons:
- the compromise reached in 1997 during negotiations on the BCEA
had a clear trade-off that organised labour drop a general
opposition to Sunday work in return for the retention of a premium
for Sunday work;
- the argument of constitutional problems with a Sunday premium
was facile since the premium was based on the social inconvenience
of work on a Sunday;
- the architecture of the Act recognises that work at socially
inconvenient times (e.g. night work) should carry a premium.
Labour further noted that the test of an unintended
consequence did not apply to the 1997 amendments, since a premium
similar to the current premium had been in the old Act. Labour
supported the formulation agreed to at the MLC on Sunday work that
proposes to vary the premium in respect of certain businesses, but
would not support the removal of the premium.
Business advised that it can accept the proposal as
set out by Government although this did not form part of the MLC
text as tabled at the negotiations.
- Power of the Minister to vary the 45 hour week
The Bill provides for an amendment which would enable the
Minister, through a ministerial or sectoral determination, to
increase the ordinary hours of work above 45 if the resultant
working time arrangements are more favourable, and in the following
circumstances:
- where there is a collective agreement;
- where it is necessitated by the operational circumstances of
the sector; or
- in respect of the agricultural or private security
sectors.
Labour expressed strong opposition to the
formulation in the Bill. Labour agreed that provision should be
made to vary hours of work in an industry such as the maritime
industry (and after substantial negotiations labour was prepared to
accept that this list be expanded to include agriculture and
private security) provided that the resultant package of hours and
leave are more favourable to employees and that the variation
carried the support of the representative trade union/s, but it was
opposed to hours of work (a core right in the BCEA) being capable
of being increased above 45 hours for every other sector or
workplace. It was further opposed to:
- the wide remit of the formulation, 'the resultant working
arrangements', (which may permit, for example, a normal working
week in excess of 45 hours simply in return for double overtime
pay);
- the provision that any collective agreement may vary hours of
work (which would permit progress to a 40 hour working week to be
seriously undermined in every sector of the economy, even in
sectors where it is practicable to retain the current 45 hour week
and decrease it over time to 40 hours a week);
- the abuse possible through reference to 'operational
circumstances of the sector' (a formulation likely to be used by
every sector of the economy as a justification to move away from
the 45 hour week);
- the absence of a provision that agreement by a representative
trade union was required for any variation on hours of work, albeit
variation on the more limited basis as set out in labour's
submission;
- the inclusion of agriculture and private security in the
provision unless the concerns of labour were adequately
addressed.
Business expressed a reservation with reference to
the determination only being able to be made where the conditions
"are on the whole more favourable". Business proposes that the
conditions should be " not less favourable than those applicable in
the BCEA". This reservation must also be read together with the
reference to section 50 and section 55(6)(d). Business also
proposes that a variation should be possible in any industry and
not be restricted to specific industries.
- Civil and criminal liability of company
executives
Business and Labour proposed that directors of
companies should be held criminally and civilly liable if they do
not pay over their and employee contributions to benefit funds and
the affected workers are thereby prejudiced as a result.
Government argued that remedies already exist in criminal law
and other legislation.
There was no agreement in this regard.
3.2.2. Improving the application and enforcement of the
Act
The parties agreed to amendments which:
- Clarify the definitions of 'day' and 'daily' (s. 8);
- Remove the daily limit on overtime while making provision that
employees are not permitted to work more than 12 hours in one day
(s.10);
- Give the Minister the power, after consultation with Nedlac to
determine what kinds of payment should be included or excluded from
the calculation of remuneration (s.35);
- Provide for alternate delegates from organised business and
labour to the Employment Conditions Commission (s.60);
- Improve the enforcement mechanisms in the Act (s.69, s.70,
s.73, s.74 and s.77A)
- Broaden the scope of Codes of Good Practice to all employment
laws (s.87);
- Deem wage determinations to be sectoral determinations (Sch.
3).
3.3. Amendments to statutes regarding Insolvency
At present the Insolvency Act does not cover all instances of
insolvency. Aspects of insolvency are dealt with in several
different statutes.
The parties agreed that the statutory arrangements
currently covering insolvency should be audited against the
following principles:
- timeous notification of possible liquidation and notice of
applications for liquidations should be given to trade unions;
- workers' contracts of employment should not be terminated
simply by the act of provisional liquidation, and severance and
other payments due should be recovered from the insolvent
estate;
- worker and employer contributions to workers' benefit funds
(pension, provident or medical funds) should be managed in such a
way that workers are not prejudiced in the event of
insolvency;
- the risk to workers in the event of insolvency is inequitable
and this risk should be alleviated or shifted.
The constituencies agree that abuse of insolvency should be
curbed. Labour and Business are of the view that provision should
be made for the court to examine whether there are viable
alternatives to liquidation that would keep a business as a going
concern and save jobs.
The parties agreed to address certain of the above areas through
amendments to be introduced in the current sitting of Parliament,
and these are set out in 3.3.1 and 3.3.2 below
3.3.1 Amendments proposed to the LRA and BCEA
The following amendments were agreed to the LRA and
BCEA that address the problems of workers facing insolvency:
- Requiring that employers notify trade unions or employees of
circumstances and legal proceedings that may result in insolvency
(LRA, s.197B);
- Requiring employers to pay over their contributions as well as
deductions made from employees' salaries for benefit funds within 7
days of the deduction being made or the contribution becoming due
(BCEA, s.34A);
- Ensuring that workers whose contracts of employment are
terminated when their employer is sequestrated or liquidated are
entitled to severance pay (BCEA, s.41).
3.3.2. Amendments proposed to the Insolvency
Act
The following amendments were agreed for inclusion
in the Insolvency Amendment Bill:
- Obliging a petitioner to give notice of a provisional
liquidation to a trade union or employee (s.4 and s.9);
- Suspending (as opposed to terminating) the contract of
employment of an employee in the case of an insolvency (s.
38);
- Providing for a process of consultation with trade unions that
may be able to assist in saving a company facing insolvency (s.
38).
3.3.3. Further amendments
The parties noted the current process by the Department of
Justice to undertake a comprehensive review of insolvency
legislation with the intention of producing an all-encompassing
Insolvency Act. The parties therefore agreed that the
remainder of the issues listed previously should be taken up as
amendments to be addressed in the proposed comprehensive Insolvency
Amendment Bill.
Labour noted a reservation that should the process
of finalising the comprehensive Act be delayed beyond 2002, it
would reconsider support for the process and may seek to have the
matter dealt with more immediately in Nedlac.
3.4. Labour market institutions
The parties agreed that institutional performance
is critical to the successful performance of the labour market and
accordingly agreed to institute, through Nedlac, a review of the
performance of a range of labour market institutions.
The parties further agreed to have social dialogue
on their different positions regarding Workplace Forums.
1. CONCLUSION
4.1. The negotiation on amendments to the three statutes has
been completed with a significant contribution to the final outcome
by all three parties involved. As is evident from the above, a very
high level of agreement was reached on a wide range of difficult
and complex amendments. The fact that substantive agreement was
reached demonstrates yet again the value of social partnership. It
also bodes well for the subsequent processes of implementation of
the legislation.
4.2. This report therefore completes consideration of the
Amendment Bills in Nedlac and the report and the Amendment Bills
are hereby submitted to the Minister of Labour in terms of section
8 of the Nedlac Act, No. 35 of 1994.
APPENDIX A
Labour Law Amendments Negotiating
Committee
|
Government
|
Labour
|
Business
|
|
R. Ramashia
L. Kettledas (Convenor)
L. Seftel
T. Mkhaliphi
T. Cronje
|
E. Patel (Convenor)
T. Ehrenreich
B. Mthombeni
J. Maqhekeni
C. Milani
K. Moleme
|
V.van Vuuren (Convenor)
F. Barker
F. Ernst
E. Strydom
G. Mathewson
T. Cohen
|
Contact committee
|
R. Ramashia -
|
Government
|
|
V. van Vuuren -
|
Business
|
|
E. Patel -
|
Labour
|
Legal drafters
|
P. Benjamin -
|
nominated by Government.
|
|
A. Roskam -
|
nominated by Labour.
|
|
A. van Niekerk -
|
nominated by Business.
|
Dates on which the negotiating
committee met
14 September 2000
06 October 2000
01 June 2001
12 June 2001
19 June 2001
27-28 June 2001
08-09 July 2001
29 July 2001
Further dates on which the Convenors
met
13 July 2001
01 August 2001
03 August 2001