The Training Layoff Scheme & CCMA Holistic Approach For Users of the Scheme

1. The Training Layoff Scheme & CCMA Holistic Approach For Users of the Scheme Advancing Job & Employment security Supporting Businesses in Distress CCMA Retrenchment Support & Training Layoff Project Office November 2010

2. This presentation covers: The context of job loss and the need for a holistic approach, including training layoff as a mechanism to save jobs. The meaning of the Holistic Approach. An outline of the Training Layoff Scheme & its key aspects. How the Scheme works. Eligibility for participation in the Scheme. Assessing business distress & the financial information required. A step-by step guide on how to participate in the Scheme. TLS & Holistic Approach for Users - Nov 2010 3

3. The job-saving imperative Long history of high unemployment, poverty, low skills & inequality. Exacerbated by the recent global economic crisis, resulting in business distress, closures, job insecurity & massive job losses. More than a million jobs lost & more still being lost. A tendency to resort to retrenchment to save costs where a more in-depth exploration of alternatives may have averted job loss. TLS & Holistic Approach for Users - Nov 2010 4

4. “Employers and labour will be encouraged to explore all possible alternatives to retrenchments” “They will be encouraged to utilize facilitation by the CCMA as provided for in section 189A of the LRA” “The parties agree to explore ways to strengthen the CCMA in regard to its role in avoiding retrenchments” Nedlac Framework Document TLS & Holistic Approach for Users - Nov 2010 5

5. “In addition to other measures to avoid retrenchment, one further option that the parties will consider is training layoffs, financed by the NSF and SETAs, for workers whose employers would ordinarily retrench them and which can be introduced on terms that would keep them in employment during the economic downturn but reskill them as an investment for the future economic recovery.” Nedlac Framework Document TLS & Holistic Approach for Users - Nov 2010 6

6. What is the holistic approach? The holistic approach informs Commissioners when dealing with retrenchment matters. It places emphasis on looking through the problem for sustainable solutions, & promoting mindset changes & innovative ideas. Includes the consideration of a wide array of alternatives to retrenchment. If retrenchment is inevitable, it involves facilitating access to survival and support services for retrenched employees. Also involves liaison with organisations involved in business improvement / rescue in appropriate circumstances. TLS & Holistic Approach – for Users - Nov 2010 7 TLS & Holistic Approach for Users - Nov 2010

7. What does the holistic approach mean to you, the user? Fundamental to the holistic approach: at the first sign of trouble / business distress, contact the CCMA. Closely examine reasons for retrenchment & financial information. Get assistance to understand financial information. Keep an open mind regarding alternatives, engage meaningfully. Be open to collaboration with other institutions in addressing business distress, eg Productivity SA, Independent Development Corporation. Assist retrenched workers by linking with other institutions, eg UIF. TLS & Holistic Approach for Users - Nov 2010

8. The Training Layoff Scheme The Scheme was launched on 21 September 2009. The CCMA & implementation partners have gone through a steep learning curve since then, with many valuable lessons learnt. It is important to see the Scheme as being one mechanism within a package of approaches to address job & employment insecurity (the holistic approach). It is the sum total of approaches applied that will have impact. Having an integrated strategy is thus the key to success. The TLS has recently been reviewed by the NEDLAC Leadership Group, with amendments to the Scheme’s rules put in place. Amendments are aimed at streamlining the Scheme’s rules & improving accessibility. TLS & Holistic Approach for Users - Nov 2010

9. What is a Training Layoff? “A temporary suspension of work of a worker or a group of workers that is used for training purposes who might otherwise be subjected to dismissal for operational requirements” Participation is voluntary – depends on agreement between the parties. Workers remain employed but forego their normal wage for a training allowance. TLS & Holistic Approach for Users - Nov 2010

10. Key Aspects of the Scheme Retain employment & avoid retrenchments. Enhance skills of workers – given training during the TL. Payment of a training allowance (financed by NSF and UIF) - 50% of basic wage up to R6,239.00 per month or R1,440.00 per week. Employer carries cost of a basic package of social benefits – UIF, provident/pension fund and death and disability cover. Support companies to survive the recession. Position workers and employers to take advantage of the next economic upturn. The TL may be combined with short time work arrangements during the period of training. TLS & Holistic Approach for Users - Nov 2010

11. How Does the Scheme Work? CCMA is the entry point: as a request arising out of an existing CCMA process or a workplace-based request. A TL Request Form is completed & the CCMA facilitates a Training Layoff Agreement. CCMA Advisory Committee evaluates eligibility for participation & makes a recommendation. If recommended, the affected SETA settles training arrangements with the parties. SETA & National Skills Fund (NSF) settle the budget for training allowances. TLS & Holistic Approach for Users - Nov 2010

12. How Does the Scheme Work? Inter-ministerial Project Evaluation Committee (PEC) considers the recommendation & approves participation. NSF pays training allowance to SETA who pays it over to the employer. Employer pays training allowances to the workers involved. The SETA pays costs of the training. A maximum of six months worth of training allowances is provided. The training may be spread over an indefinite period if combined with short time & other mechanisms. No salary ceiling for eligibility, though the maximum training allowance remains at R6,239 per month. TLS & Holistic Approach for Users - Nov 2010

13. How Does the Scheme Work? Request to Participate in TL Scheme Form (s150) Facilitation to conclude Training Layoff Agreement Training Layoff Agreement CCMA Advisory Committee evaluates eligibility SETA settles training arrangement & budget with parties & applies to NSF NSF forwards to PEC for authorisation Delivered to SETA & NSF with Request to Participate Form & TL Agreement Advisory Award TLS & Holistic Approach for Users - Nov 2010 14

14. Who is eligible for participation? The training layoff is not suitable in all situations of distress, & the CCMA Advisory Committee assesses eligibility for participation in the Scheme. To be eligible for participation in the Scheme: The business must be in distress or be facing distress The distress must impact on the employees of the business by way of reduced working hours or intended retrenchment Short term financial relief, obtained through a reduction in payroll costs, should assist in alleviating the distress In determining eligibility, emphasis is placed on the CCMA Advisory Committee having a flexible approach. TLS & Holistic Approach for Users - Nov 2010

15. What financial information is needed? The employer needs to supply financial information to enable the CCMA Advisory Committee to assess business distress: Annual financial statements – balance sheet, income statement & cash flow statement (most recent & audited if applicable); Management accounts – balance sheet & income statement to cover period from the date of the last annual financial statements to date of request where this period is more than 3 months; Any other information to support the TL Request, such as order books, production schedules & notice of cancellation of orders. TLS & Holistic Approach for Users - Nov 2010

16. How is business / worker distress assessed? The Advisory Committee determines business distress by examining the change in the business’s turnover, with a reduction of 10% or more being accepted as indicating distress. Where not in distress but facing distress, a reduction in total orders / production output of 10% or more is accepted as material. Employee distress determined by examining reduction in working time or intended retrenchment. In determining whether the short term financial relief could assist in alleviating business distress, the labour costs in relation to total operating costs are examined. TLS & Holistic Approach for Users - Nov 2010

17. Is the Scheme an effective mechanism for Job Saving? Every job saved counts. So far, potentially 6,519 jobs will be saved. TL gives employers in distress an opportunity to recover & retrenchments can be avoided. Workers come out of training with additional skills. The international experience over the past 3 years points towards the TLS being an effective mechanism for job saving & skills development. TLS & Holistic Approach for Users - Nov 2010

18. Is the Scheme an effective mechanism for Job Saving? Vision of a redesigned training layoff scheme as a permanent feature of the South African labour market. It is essential to integrate the TLS into the CCMA’s holistic, multi-faceted strategy. The CCMA has implemented this approach with significant successes. TLS & Holistic Approach for Users - Nov 2010

19. How to participate - A step by step guide Contact CCMA regional office and ask for the Training Layoff Co-ordinator. The TL Co-ordinator will make arrangements to give a presentation on the Scheme to the employer and workers / union. If the TLS seems viable and the parties agree, the TL Facilitator will ask the parties to complete Request to Participate Form. TLS & Holistic Approach for Users - Nov 2010

20. How to participate - A step by step guide The TL Facilitator will then: Assist the parties to conclude a TL Agreement. Take the parties through the Terms and Conditions document & sign as required. Request the employer to complete the list of workers to participate, as well as the allowance claimed for each worker. Advise the employer on the financial information required. TLS & Holistic Approach for Users - Nov 2010

21. What to expect – A step by step guide A complete set of documentation is then forwarded to CCMA Project Office, who processes & submits to the CCMA Advisory Committee: Request to Participate Form TL Agreement Terms & Conditions document List of workers participating Financial information to assess eligibility The CCMA Advisory Committee assesses eligibility & makes an advisory award recommending (or not) participation in the Scheme. TLS & Holistic Approach for Users - Nov 2010

22. What to expect – a step by step guide The documents, plus advisory award, are then forwarded to the SETA involved & the NSF. The SETA engages with the employer to settle the training – type of training, dates, etc & applies for funds from NSF. The NSF settles all documents, including the SETA application, & forwards to the PEC. PEC approves participation and authorises payment from NSF/UIF to SETA. SETA pays over the training allowance to the employer & pays for costs of training. TLS & Holistic Approach for Users - Nov 2010