Alternative means to enforce employer obligations

1. Alternative means to enforce employer obligations

2. Comprehensive legislation is no guarantee that employees will be treated fairly. • Ignorance of the existence of these rights. • Court procedures are too expensive. • Court proceedings can be traumatic and can drag on for months and even years. • Even though proceedings at the CCMA are free and one does not require legal assistance, employees often lack confidence and feel that they need legal assistance as they do not have the necessary legal knowledge and savvy to pursue their claims on their own. • Finally the outcome of CCMA arbitrations and court proceedings are uncertain and there are no guarantees of success.

3. Monitoring • In order to ensure compliance with the laws there must be both practical enforcement and monitoring mechanisms. • Given the inherent imbalance of power between the employer and employee that generally characterizes the employment relationship, employees are often unwilling to report and expose errant employers for fear of being victimised, prejudiced or even fired.

4. Purpose of paper • to explore the enforcement of the underlying policy considerations of the King Report II • to explore how the provisions of the PDA can help ensure the proper monitoring of unethical employers.

5. The Concept of Corporate Governance • “Corporate governance is about promoting corporate fairness, transparency and accountability”. J Wolfensohn, the president of the World Bank • The common denominator of all definitions is that ethical conduct is good for business. - See “The Irresistible Case for Corporate Governance” International Finance Corporation (World Bank Group) September 2005 where statistical evidence was quoted to support the view that “good corporate governance won’t just keep your companies out of trouble. Well-governed companies often draw huge investment premiums, get access to cheaper debt, and outperform their peers.”

6. The Employee as Corporate Governance Stakeholder • The King Report II acknowledged the necessity for good corporate governance in a developing economy such as South Africa in order to attract international investor capital and foreign aid so essential for economic stability and growth. • The need to remain competitive in the global economy has resulted in a quest for flexibility. The result is inter alia flatter management structures, an ever-increasing number of “atypical employees”, decentralization of collective bargaining, the individualization of the employer employee relationship and a general world-wide decline in union membership and power.

7. The Role of the Corporation in Society • Society is made up of ‘stakeholders’ of business. They include the community in which the corporation or business enterprise operates, its customers, employees and its suppliers. • Business and society are mutually dependent. In pursuit of wealth and profit maximization, companies utilize human and other resources and in doing so provide employment, investment, goods and services.

8. King Report and Stakeholder Theory It is the view of the King Commission that in this global economy no corporation can afford to run its business without due consideration of the interests of all the stakeholders.stakeholders have been defined as “those whose relations to the enterprise cannot be completely contracted for, but upon whose co-operation and creativity it depends for its survival and prosperity”.

9. Reputation • A company’s long term viability is dependent on its reputation. Reputation in turn is dependent on a company’s relationship with, and the way it treats anyone and everyone affected by it.This includes employees. • Relationships with all stakeholders, including employees must be actively managed in a manner that reflects integrity, trust and transparency, so that the company will gain the support and backing of its stakeholders

10. Employees are part of a company’s assets and competitive edge • The ability of an enterprise to remain productive in an increasingly competitive global economy is dependent inter alia on its ability to develop and retain human talent. • In short, if a company treats individual employees with dignity and respect, the human potential necessary for competitive advantage and productivity in a global economy will be unleashed.

11. Characteristics of good corporate citizenship - employee relations • Respect for the well-being of employees; • fair treatment of employees having due regard to cultural sensitivities; • development of employees’ potential through skill and technology transfer; • sharing of the company’s success with the employees; • recognition of international agreements with reference to the freedom of association and collective bargaining; and • elimination of all forms of forced labour.

12. King Report II and Ethics • Discipline • Transparency • Independence • Accountability • Responsibility and Social Responsibility • Fairness

13. Ubuntu -a guideline for the application of the ethical principles contained in King Report • Humility • respect (social obligation, personal dignity ancestral value and essence of a person • community and sense of belonging • responsibility and concern for others • respect for the social obligation/ contract; • respect for personal dignity • neighbourliness • spirit of inclusion and general consensus.

14. Monitoring and Enforceability of Good Corporate Governance Chief executive officer has the following responsibilities: • “develop and recommend to the board a long term strategy and vision for the company that will generate satisfactory levels of shareowner value and positive, reciprocal relations with relevant stakeholders; • ensure the company has an effective management team and to actively participate in the development of management and succession planning (including the chief executive officer’s own position); • maintain a positive and ethical work climate that is conducive to attracting, retaining and motivating a diverse group of top-quality employees at all levels of the company. • foster a corporate culture that promotes ethical practices, encourages individual integrity, and fulfills the social responsibility objectives and imperatives.”

15. Legal enforcement • Failure to adequately perform these duties amounts to incompetence or poor work performance and since the chief executive officer is an employee of the company, this could result in a valid dismissal. • A more direct and effective means of ensuring ethical conduct towards all stakeholders is the simple fact that failure to behave ethically is bad for business.

16. PDA • Indirect means of ensuring that employers abide by their legal duties. • Fear of untoward conduct being reported and the ensuing consequences alone may deter unethical conduct by employers. • PDA ensures that employees who blow the whistle on illegitimate employer conduct are protected against any “occupational detriment” as a result thereof.

17. Purpose of PDA • “create a culture which will facilitate the disclosure of information by employees relating to criminal and other irregular conduct in the workplace in a responsible manner by providing comprehensive statutory guidelines for the disclosure of such information and protection against any reprisals as a result of such disclosures; • Promote the eradication of criminal and other irregular conduct in organs of state and private bodies.”

18. The provisions of the PDA • In order for a disclosure to be protected it must contain information about “impropriety” and it must be made to the right person in terms of the Act • In terms of s 1 (iv) “impropriety” means the commission of a crime, a breach of a legal obligation, a miscarriage of justice, endangering the health and safety of individuals, damaging the environment, unfair discrimination and the deliberate concealment or cover-up of any of these.

19. To whom can a PD be made? • Legal adviser ( a legal adviser in terms of this section is a legal practitioner or any person whose occupation involves the giving of legal advice). • The employer, • A member of Cabinet or Executive Council, • Certain persons or bodies. These “certain persons or bodies” include the Public Prosecutor and the Auditor General. • Finally, the Act provides for wider disclosures. This includes disclosures to the police, to members of Parliament and even the media.

20. Requirements for protection • Legal adviser-disclosure must have been made in order to obtain legal advice. • Cabinet or Executive Council- good faith and the employer must be:] • “a) an individual appointed in terms of legislation by a member of Cabinet or of the Executive Council of a province; • b) a body, the members of which are appointed in terms of legislation by a member of Cabinet or of the Executive Council of a province; or • c) an organ of state falling within the area of responsibility of the member concerned.”

21. Public Prosecutor or the Auditor General- good faith and the employee making the disclosure must have a reasonable belief that the concern falls within the mandate of the body to whom the disclosure is made and that the allegations are substantially true.

22. General disclosures • The disclosure must be made in good faith. • There must be a reasonable belief on the part of the employee that the information disclosed and the allegations contained in the disclosure are substantially true. • The allegations must not be made for personal gain. This excludes any reward payable in terms of the law. • It must be reasonable to make the disclosure given all the circumstances of the case.

23. Furthermore, at least one of the following requirements must be met: • The impropriety is of an exceptionally serious nature. • The disclosure has been made to the employer or to the Public Protector or Auditor general and no action has been taken within a reasonable period. • If there is no regulatory body prescribed, the employee has reason to believe that the evidence will be concealed or destroyed if the disclosure is made to the employer. • The employee has reason to believe that he or she will be subjected to an occupational detriment if he or she makes a disclosure to his or her employer.

24. Remedies • If the employee has been dismissed for reason of the protected disclosure it will be considered an automatically unfair entitling the employee to re-instatement or re-employment or alternatively compensation of up to 24 months’ salary. • Any other occupational detriment is deemed to constitute an ULP. Compensation must be “just and equitable in all the circumstances, but not more than the equivalent of 12 months’ remuneration. • If the employee who has made a protected disclosure reasonably believes that he or she may be adversely affected on account thereof, the employer must at the employee’s request, if reasonably possible and practical, transfer that employee. The terms and conditions of the post to which the employee is transferred may not without the written consent of the employee, be less favourable than the terms and conditions applicable to the original post.

25. The Tshishonga Case The Labour Court found the following: • T had reasonable grounds to believe that the disclosures were substantially true as his belief was substantiated by two independent reports and by his personal knowledge. • T had complied with the obligations in the PDA by making the disclosure to the public Prosecutor, Auditor General and Cabinet Minister and had allowed seven months to pass before making the disclosures public. • The disclosures were not made for personal gain. Pillay J concluded on the evidence that: “The purpose of the disclosures was intended for the greater good of the department and society and not for personal gain. His disclosure was socially responsible. Employees who prefer silence over whistle- blowing leave consumers, shareholders, communities and the employer itself at risk.” • T had reason to believe that he would be subjected to an occupational detriment if he made a disclosure to his employer. This was proved inter alia by the fact that in his anger, the Minister had removed T from his position.

26. T had reason to believe that the impropriety would be concealed or destroyed if he made the disclosure to the employer. This was proved by the Director-General’s reluctance to investigate the allegations and his efforts to discourage T from provoking the Minister by asking for reasons for removing him from his position as managing director. • The impropriety was exceptionally serious. It goes without saying that allegations of corruption against a Minister is an exceptionally serious matter. • It was reasonable to make the disclosure to the media since the “media is one of the pillars that promote and uphold democracy. Whistle-blowers depend on the media and other organs of civil society to help level the playing fields as they are often lonely voices against powerful interests. As an employee the isolation and vulnerability are even more acute…”

27. Conclusion • Unfair treatment of employees is bad for business and the best means of enforcement of ethical conduct towards employees are the forces of the market. • In order for the forces of the market to be effective in enforcing fair treatment, there needs to be knowledge of employer breaches of both ethics and the law. The provisions of the PDA have the potential (albeit in an indirect manner) to ensure that the public becomes aware of foul play on the part of enterprises. • The fact that employees are protected in cases of disclosure in itself renders the threat of exposure real. This threat alone could generate sufficient motivation to deter unethical conduct on the part of employers.