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AMENDMENTS TO LABOUR LEGISLATION: WHAT SHOULD EMPLOYERS BE DOING RIGHT NOW?
While the proposed amendments to labour legislation have attracted significant media attention, many refinements can still be introduced before the amendments reach the statute book. Even so, employers should be mindful that they will be facing far-reaching changes to the current labour law dispensation. So what could and should employers do at this stage to be better prepared for these changes?
Amendments to the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA) and the Employment Equity Act (EEA) will come into effect in the not too distant future. A new Employment Services Bill contains provisions that regulate the activities of labour brokers. While it is unlikely that we shall see the total demise of labour brokers, there will most certainly be extensive debate about the issue before the Bill is enacted.
Of the proposed amendments to the LRA, BCEA and EEA, several are cosmetic, others are technical, but some are of a more substantial nature. Of these substantial amendments, there are those that employers can do something about at this stage. Below are some of the steps employers can take in anticipation of the amendments..
Fixed-term contracts: The Labour Relations Amendment Bill proposes that an employer should only employ someone for a fixed term if the employer can justify it. If not, the employer should employ the person permanently. Employers should therefore be very particular about the operational reason for a fixed-term contract and to specifically include these in fixed-term contracts, for example linking it to a project of a temporary nature. Meaningless provisions such as “fluctuating operational needs” are unacceptable..
High earners excluded from protection: Employees earning more than the threshold determined by the Minister in the Government Gazette (presumably the current threshold referred to in the section 6(3) of the BCEA) will be excluded from referring dismissal and unfair labour practice disputes to the CCMA and Labour Court (with the exception of automatically unfair dismissals). When appointing senior managers or highly-paid staff, or renewing or extending their contracts, employers should pay more attention to the termination, breach and dispute resolution provisions in the contract of employment.
Liability of client company: Where an unfair labour practice is committed by a subcontractor, both the subcontractor and the client could be held liable. This means that a “client company” should be mindful of the labour practices of those who provide services to it. If not, the client company could be held liable. Employers should therefore give consideration to obtaining appropriate assurances/ indemnity from the service providers they contract with.
Benefits of equal value for fixed-term employees: The Basic Conditions of Employment Bill proposes that employers must contribute benefits of similar or equal value to employees employed on a fixed-term contract. They cannot be treated less favourably than permanent employees. Where it is not practicable to afford employees on fixed-term contracts certain benefits (e.g. pension and medical aid), the employer will have to pay them the cash value thereof. This should be taken into account in the financial planning of employers that make extensive use of employees on fixed-term contracts.
Enforcement procedures: Several of the current enforcement provisions (labour inspectors securing undertakings, compliance orders, objections and appeals against compliance orders) will fall away. While this might appear innocuous at first glance, it seems that, consequently, non-compliance issues can be referred directly to the Labour Court. Employers could therefore lose the opportunity they have at the moment to become compliant. In addition, non-compliance with most of the provisions of the BCEA that are currently not criminalised will become criminal offences. Furthermore, the penalties, even for minor transgressions, will include minimum fines and possible prison sentences. Employers are therefore encouraged to ensure that they are fully compliant with the provisions of the Basic Conditions of Employment Act. Otherwise they could suffer costly embarrassment..
Work of equal value: According to the Employment Equity Amendment Bill it could be regarded as unfair discrimination if there is a difference in terms and conditions of employment between employees of the same employer who perform the same or substantially the same work or work of equal value. The discrimination would be regarded as unfair if the differentiation is based on of the grounds of unfair discrimination listed in Section 6(1) of the Employment Equity Act or any of the additional grounds added. It is possible that some exceptions will be provided for in the proposed code of good practice referred to in the Amendment Bill. However, employers should re-evaluate their conditions of employment so that they do not fall foul of this form of discrimination.
Assessment of compliance with employment equity requirements: Currently the Employment Equity Act lists several factors that must be taken into account in assessing whether a designated employer is implementing employment equity in compliance with the Act. In terms of the proposed amendment, it is now stated that certain factors may be taken into account, but several of the existing factors have been left out and new ones added. The new ones are “reasonable steps taken by an employer to train suitably qualified people from the designated groups” and “….. to appoint and promote suitably qualified people from the designated groups”. Although the implication is that there may be several others factors (not listed) that the Labour Court can take into account, employers should at least take note of the (new) listed factors when drafting and implementing their employment equity plans.
What is of some concern is the removal of the words “national and regional” where reference is made to the demographic profile of the economically active population. The implication is that, when assessing compliance, the national (rather than regional) demographic profile will be taken into account by labour inspectors. The problem is that the regional profile can in some cases differ to a great extent from the national profile. It is our view that employers, when drafting their employment equity plans, should in fairness be able to argue that the regional demographic profile is a more important consideration than the national demographic profile.
There are other important changes that have not been discussed, as there is probably not much that employers can do in response to those at this stage -we shall have to wait until the proposed amendments in the Bills have been further refined and implemented.
Jan Truter of www.labourwise.co.za
www.labourwise.co.za is an on-line labour relations service aimed at assisting employers with the implementation of effective labour relations. They can be contacted via the website or info@labourwise.co.za
Comments
How will the ‘Work of equal value’ be applied on outsourced functions? Will a difference in terms and conditions of employment [especially working hours, leave entitlement and remuneration] between employees of two outsourcers, but for the same client, who perform the same or substantially the same work or work of equal value also fall under this category? And is there any difference in this between the client’s own employees and that of the outsourcer? I ask this because my employees [outsourced in a concern resolution centre] get less than the client’s own guys in the warehouse, packing supplies the whole day.
The EE Amendment Bill seems to envisage only differences in terms and conditions of employment between employees of the same employer who perform the same or substantially the same work or work of equal value. In your case we are dealing with different employers. Even if one considers the extension of joint and several liability (of employers and labour brokers) envisaged in the Labour Relations Amendment Bill and the Employment Services Bill, the EE Amendment Bill deals with certain arbitrary grounds of discrimination and I doubt that it would extend to your situation. However, we shall have to wait and see what the final legislative product looks like before adopting a firm view on the matter. Jan Truter for Labourwise
When are the proposed amendments being implemented?
The proposed amendments are very controversial and we foresee several changes. We don’t know when the amendments will be implemented, but indications are that this may take much longer than initially anticipated.
Smaller employers seem to faithful to legislation, its looks like the big guns are the ones who a in fear of the changes
Interestingly I notice no reference to the proposed 3 year grace period for existing TES contracts.
It is however interesting to note that BUSA withdraw from the NEDLAC process awaiting clarification on Government’s position –
“At our last meeting ,BUSA MANCO agreed that the four Bills are in essence an attack on the very foundations of management in Business and thus we will not be participating in NEDLAC until such time as Governments position is made clear. This decision was well supported by the MANCO members.”
Is it really difficult to remove the loophole? Why can Labour Brokers not be made responsible for payment facilitation and the actual client company that requests the workers service be held liable for enforcing employment rights/legislation. Qui mandate ipse fecisse vedetur,”he who orders an act to be done does the act most of all”
Jan I agree totally with you. I am an employer who has had trouble in the past with an employee that walked out and I was penalised for that. Now I am very careful about the person I am employing and on what conditions. Because of the ccma i am already concerned about employing somebody and this only makes it worse. Give jobs Zuma and make life miserable.
How will this new proposed legislation affect the employer, enployee, the employment and the unemployment in South Africa
Our view is as follows: As far as existing employees are concerned, the amendments will increase job security (at least for employees earning below a certain threshold). From an employer’s perspective there are a few positive points (e.g. more clarity on certain aspects; high earning employees can be held accountable without fear of disputes being referred to the CCMA). However, the overall effect of the amendments will be unnecessarily punitive, will increase the cost of doing business and will discourage employers from appointing new staff. All in all, the amendments are likely to impact negatively on employment creation. A detailed analysis can be found in the Regulatory Impact Assessment (referred to as “the RIA”) by the University of Cape Town, dated 9 September 2010.