Labour law amendments

Briefing to NCOP Committee

February 2002

Objectives of amendments

Improve application of LRA and BCEA

Ensure effective alignment of laws with changing labour market

Address unintended consequences

Increase the sensitivity of our legal framework to the imperative to create jobs.

Addressing policy imperatives

Amendments seek to address policy imperatives of Government to: create jobs improve labour market efficiency promote small business improve protection of vulnerable workers increase investment through inter alia reducing

negative perceptions of investors.

Areas of amendments

Collective bargaining and bargaining councilsDispute resolution Rights and responsibilities of workers in the event of retrenchments, transfers of a business and insolvencyConditions of employment and contractual relationships

Process

Bills published for public comment July 2000

Negotiations at NEDLAC concluded August 2001

Tabled Parliament October 2001

Public hearings included BSA, COSATU, AMMSA, other business organisations, disability and religious organisations.

Finalised by House of Assembly on 19 November.

Collective bargaining and bargaining councils

Proposed amendments: 1

To address concerns of small businesses councils obliged to provide a report to Registrar on

annual basis on their activities in respect of small business;

To improve enforcement of agreements more powers given to designated agents more expeditious process introduced

To ensure proper oversight of councils and benefit funds Registrar given powers to investigate irregularities and

non-compliance with Act Improved review of representativity

Proposed amendments: 2

To assist in rationalisation of public sector bargaining: Designation, establishment, variation of scope,

amalgamation and disestablishment of public sector councils clarified.

To prevent the abuse of workers and small employers by unscrupulous labour organisations; Registrar has to be satisfied that an applicant is

‘genuine’ before registering that applicant; Registrar has more effective powers to wind up and

deregister.

Portfolio Committee amendments

Technical amendments made to process of enforcement of collective bargaining agreements by bargaining councils arising out of representations of AMSSA. Amendments to S33A and S51 of LRA.

Others grammatical.

Dispute resolution by CCMA and Labour Court

Background

LRA significantly improved dispute resolution yet application problems and unintended consequences have led to negative perceptions and problems for small employers and vulnerable workersAmendments have been identified to: improve system for small business and

vulnerable workers improve application address abuse of the system.

Improvements for small business and vulnerable workers

One stop conciliation and arbitration

One stop final and binding disciplinary enquiry (called pre-dismissal arbitration).

Arbitration awards to be deemed orders of Labour Court

Probationary period during which time employer will have to meet a lower burden in establishing substantive fairness of dismissal.

Application problems

Commissioners have discretion as to the amount of compensation awarded for procedurally unfair dismissals

Powers of bargaining council arbitrators aligned with those of the CCMA

LRA aligned to new Protected Disclosure Act.

Addressing misuse and abuse:1

CCMA can make rules in respect of Representation Charging for services (fees)

CCMA commissioners to be able to: deal with contemptuous conduct issue costs awards, on basis of guidelines, when

frivolous and hopeless cases brought to CCMA.

Addressing misuse and abuse: 2

To address problem of labour organisations being set up with the purpose of seeking representation at the CCMA: Registrar of Labour Relations must be satisfied

that a trade union is genuine Increased powers to Registrar to wind up and

cancel registrations of unions & employer organisations.

House of Assembly amendments

Fees and representation to be decided by CCMA rules as opposed to Minister by regulation after consulting NEDLAC and CCMA.Change made to pre-dismissal arbitrations: Collective agreements can set up pre-dismissal

arbitrations Councils and private agencies must be accredited to

perform pre-dismissal arbitrations. Powers of arbitrators to decide on fairness of an

employer’s action defined.

Rights and responsibilities of employers and workers in the

event of a retrenchment, transfer of business and insolvency

Background

In present climate of high unemployment and large numbers of retrenchment, labour law needs to: provide maximum certainty of employers rights

and obligations; promote labour stability facilitate and encourage job retention and

constructive search for alternatives.

Background

Package of legislative measures planned in respect of: Retrenchments Transfers Liquidations or insolvency

Package includes gains for both organised labour and business.

NEDLAC negotiations used MLC agreement as basis.

Retrenchments (1)

Parties obliged to engage in a meaningful joint consensus seeking process

Process can be enhanced by facilitation by CCMA

If process fails, workers can choose to: Strike if in company of over 50 and number of

proposed dismissals is over a specified size Take their dispute to Labour Court.

Retrenchments (2)

If dispute goes to Labour Court, Court can only consider whether : Dismissal is in fact a retrenchment Dismissal is operationally justifiable on rational

grounds Was a proper consideration of alternatives The selection criteria were fair and objective.

If workers strike, must be 14 days notice for a secondary strike.

Retrenchments (3)

Onus is on employer to prove that information that they refuse to disclose is not relevant

Workers can also ask Labour Court to compel employer to comply with procedures;

Individually retrenched employees can choose whether to go to Labour Court or CCMA for arbitration

House of Assembly amendments

Word “meaningful” inserted in S189 before “joint consensus seeking process”. SLA felt it would be difficult to establish what is meaningful.Disputes about disclosure of information can be heard by Labour Court or arbitrator at CCMA. All time periods can be varied by agreement.Either party can request facilitation by CCMA.Clarify that a party may not both call a strike and refer a dispute to Labour Court at same time. Other clarificatory amendments.

Contracts of employment when a business is transferred

Lack of clarity has led to revamping of provision

Section 197 to apply to going concerns and new 197A to insolvent businesses.

Employees are automatically transferred either on: Same conditions New new conditions which are negotiated with trade

unions Where no collective agreement, different conditions

provided the conditions are on the whole as favourable.

Transfer of contracts of employment (continued)

Obligations of new and old employer clarified in respect of:

Collective agreements Pension and provident fund contributions Outstanding claims Severance pay.

New obligation introduced on old employer to take reasonable steps to ensure new employer is capable of taking over the benefit obligations of old employer.

House of Assembly amendments

Clarify that includes public service

Re-instate footnote which makes a cross reference to the Pension Funds Act to ensure that when funds are transferred it is reasonable and equitable.

Allow for disclosure of information during transfers

Insolvency Act

To improve the position of workers in companies facing insolvency, amendments proposed to LRA, BCEA and Insolvency ActAmendments to BCEA: Workers whose contract terminated due to

insolvency are entitled to severance pay; Employer and employee contributions to

benefit funds must be paid over within 7 days.

Insolvency Act (cont)

Amendment to LRA: Employers must notify trade union or

employees of circumstances and legal proceedings that may result in insolvency.

Amendments to IA: Suspend employment contract in event of an

insolvency; Consultation process which may enable

employees to help save company.

Basic conditions of employment and contractual relations

Approach to amendments

Framework of BCEA is sound Refinement required in respect of: sensitivity to imperatives of job creation and small

business development increased casualisation and the protection of vulnerable

workers application especially enforcement.

Refinement can happen through legislative amendments and rolling out of Act through sectoral and Ministerial determinations.

Areas of amendments

Amendments have been made to: Substantive conditions Improve application Address problem of ‘disguised employment

relations’.

No change in respect of payment for work on Sunday.

Changes to conditions (1)

Notice periods Reduced to one week for workers who have only

worked for six months Collective bargaining can’t reduce below two weeks if

worker has worked for longer than one year

Collective agreements can increase number of overtime hours worked per week to a maximum of 15 hours for two months within a 12 month period.

Changes to conditions (2)

Minister can increase 45 hour week if resultant working time arrangements are more favourable and either where: there is a collective agreement it is necessitated by operational circumstances

of sector e.g. maritime in respect of agriculture or private security

sectors.

House of Assembly amendments

Domestic worker employers also obliged to provide written particulars and information on remuneration.

When 45 hour week can be more favourable: Should not ‘trade’ with ‘overtime’ and ‘meal intervals’ Only in respect of operational circumstances, if the

majority of employees in the sector are not members of trade unions.

Improved application

To improve the application of BCEA: Minister, after consulting NEDLAC, can determine

what should be regarded as remuneration for purposes of calculating notice, severance and annual pay;

Amendments proposed to strengthen and speed up the enforcement processes;

Business and labour can appoint alternate delegates to the Employment Conditions Commission.

Wage determinations are deemed to be sectoral determinations and the small business determination will supercedes wage determinations.

Addressing problem of abuse of contractual relations

To address practice of converting genuine employees into independent contractors BCEA and LRA: To create a series of reputable presumptions as to who

is an employee which will apply to all who earn below a threshold of approximately R90 000 per month

NEDLAC to issue a Code of Good Practice on who should be regarded as an employee

CCMA can issue advisory award.

House of Assembly amendments

Specify in the LRA that NEDLAC must develop a Code of Good Practice as to who should be regarded as an employee.