THE DRAFT UNEMPLOYMENT INSURANCE AMENDMENT BILL REPORT

1. BACKGROUND

1.1. Section 25 of the Basic Conditions of Employment Act, 1997, makes provision for at least four consecutive months' maternity leave.

1.2. Section 25(7) of the Act provides that the payment of maternity will be determined by the Minister subject to the provisions of the Unemployment Insurance Act, 1966.

1.3. A task team was constituted by the Minister of Labour to consider mechanisms of payment of the maternity benefit.

1.4. The task team agreed that the Unemployment Insurance Fund was the appropriate mechanism for the payment of maternity benefits as opposed to a separate fund.

1.5. In addition, the Department of Labour made recommendations to the Minister which gave rise to the draft unemployment insurance amendment bill.

1.6. The recommendations from the Department of Labour, referred to in point 1.4.2. above, were submitted to the Unemployment Insurance Board by the Minister seeking the advice of the Board thereon.

1.7. The draft unemployment insurance amendment bill was submitted to Nedlac on 13 August 1998.

2. PROCESS IN NEDLAC

2.1. The Labour Market Chamber agreed to establish a subcommittee to consider the draft amendment bill.

2.2. The subcommittee comprised of the following delegates:

2.2.1. Government: L. Seftel and S. Mkhonto.

2.2.2. Labour: R. Naidoo, C. Mofokeng and C. Milani.

2.2.3. Business: K. Kleynhans, B. Shipman and B. Hlongwane.

2.3. The subcommittee met on 18 September 1998 and 23 September 1998.

2.4. At the meeting on 18 September 1998:

2.4.1. Business and labour stated, inter alia, that they did not support an increase in the rate of employee and employer contributions to the fund as proposed in the draft bill.

2.4.2. Government undertook to consider ways of strengthening compliance, improving the collection of funds and reducing fraud without increasing the rate of employee and employer contributions as proposed in the draft amendment bill.

2.5. At the meeting on 23 September 1998:

2.5.1. Government tabled a revised draft amendment bill.

2.5.2. A further meeting was tentatively scheduled subject to confirmation by business.

2.6. On 30 September 1998 business submitted its position in writing to the Nedlac secretariat.

2.7. No further meetings were held.

2.8. The draft Nedlac report was circulated to the members on the subcommittee and the Labour Market Chamber convenors for comment.

2.9. The Management Committee at its meeting on 20 October 1998 ratified the Nedlac report subject to agreed amendments and apart from the wording of point 3.1.1. of the report which was refered to the overall convenors for finalisation.

2.10. The report was finalised on 23 November 1998.

3. RESPONSES TO THE BILL

The responses from labour and business to the revised draft unemployment insurance amendment bill, which is attached to this report, are captured below. Reservations tabled by labour are recorded in point 4 of this report.

3.1. Business's response to the bill is as follows:

3.1.1. Business' view is that the Unemployment Insurance Fund is in dire financial straits and that the amendments would simply compound the crisis. Business therefore does not support the amendment bill in its present form.

3.1.2. It supports the process to restructure the Unemployment Insurance Fund and supports a process whereby some of the amendments in the bill would form part of that broader process.

3.2. The proposed amendment to add subsections 11(a) and (b), 12, 13 and 14 to section 29 of the Principal Act and the proposed amendment to replace section 31 of the Principal Act refers:

3.2.1. These amendments are supported by labour.

3.2.2. Business supports the principle of strengthening compliance, improving the collection of funds and reducing fraud.

3.3. The proposed amendment to section 34 of the Principal Act to add a proviso to the end of subsection (4) refers:

3.3.1. Labour supports this amendment.

3.3.2. Business does not support this amendment.

3.4. The proposed amendment to section 34 of the Principal Act to add a proviso to the end of subsection (5) refers:

3.4.1. Labour:

(a) Supports the principle that the payment of maternity benefits should not adversely affect a contributor's right to receive unemployment or illness benefits.

(b) Does not support decreasing the maternity benefits from 26 weeks to 17 weeks and proposes that workers have the option of claiming the balance of 9 weeks maternity benefit under the existing qualifying system. These optional 9 weeks could be transferred from the other unemployment insurance benefits. This would mean that no woman worker would be worse off through the proposed amendment.

3.4.2. Business does not reject the principle that the payment of maternity benefits should not adversely affect a contributor's right to receive unemployment or illness benefits.

3.5. The proposed amendment to section 37 of the Principal Act to replace subsection (6) refers:

Labour supports the deletion of the "one third" rule and proposes that provision should be made for the maternity benefit ceiling amounting to 78% of gross earnings but not less than 100% of net earnings.

4. RESERVATIONS

Labour tabled reservations regarding the coverage of the provisions of maternity benefit and proposed that the provisions for maternity should be extended to inc domestic workers and high and middle income earners.

5. CONCLUSION

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

Read the Draft Unemployment Insurance Amendment Bill