Labour law amendments

1. Labour law amendments Parliamentary briefing 9 October 2001

2. Objectives • 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.

3. 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.

4. Areas of amendments • Collective bargaining and bargaining councils • Dispute resolution • Rights and responsibilities of workers in the event of retrenchments, transfers of a business and insolvency • Conditions of employment and contractual relationships

5. Collective bargaining and bargaining councils

6. 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

7. 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.

8. Dispute resolution by CCMA and Labour Court

9. Background • LRA significantly improved dispute resolution yet application problems and unintended consequences have led to negative perceptions and problems for small employers and vulnerable workers • Amendments have been identified to: • improve system for small business and vulnerable workers • improve application • address abuse of the system.

10. Improvements for small business and vulnerable workers • One stop conciliation and arbitration • One stop final and binding disciplinary enquiry • 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.

11. Application problems • Labour Court judges to be judges of the High Court with life long tenure • 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.

12. Addressing misuse and abuse:1 • Minister can make regulations, after consulting NEDLAC and CCMA on: • 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.

13. 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.

14. Rights and responsibilities of employers and workers in the event of a retrenchment, transfer of business and insolvency

15. 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.

16. 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.

17. 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.

18. 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.

19. 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

20. 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.

21. 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.

22. Insolvency Act • To improve the position of workers in companies facing insolvency, amendments proposed to LRA, BCEA and Insolvency Act • Amendments 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.

23. 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.

24. Basic conditions of employment and contractual relations

25. 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.

26. Areas of amendment • 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.

27. 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.

28. 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.

29. 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.

30. 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.