Kelly Group - Labour Law Changes August V2 LABOUR MARKET POLICY REVIEW NEDLAC UPDATE 2012

1. LABOUR MARKET POLICY REVIEW
NEDLAC UPDATE 2012
presented by
JONATHAN GOLDBERG

2. Index
1. Introduction
2. A-typical Employment
3. Dispute Resolution
4. Collective Bargaining
5. Compliance and Enforcement
6. Way forward

3. Introduction

4. The Bills
• Following negotiations in NEDLAC during 2009 and 2010 on the
Department of Labour’s (DOL) various proposals to amend the labour
laws, the DOL drafted the Labour Relations Amendment Bill, 2010, the
Basic Conditions of Employment Amendment Bill, 2010, the
Employment Equity Amendment Bill 2010 as well as the Employment
Services Bill, 2010.
• The DOL thereafter submitted these Bills to Cabinet who requested a
Regulatory Impact Assessment (RIA) to be conducted on the proposed
Bills. The Employment Promotion programme (EPP) subsequently
commissioned a multi-disciplinary team to conduct the RIA.
• The completed RIA was submitted to the DOL and the Presidency on 9
September 2010.

5. Process in NEDLAC
The Nedlac 6-a-side Task Team, (six from Business, six from Unions and six
from Government) also referred to as the Plenary, was established early in
2010.
At its first meeting, held on 20 January 2011, Government presented the
Bills to the social partners for engagement.
Business rejected the Bills as being unconstitutional and against the
recommendation in Government’s own Regulatory Impact Assessment
study

6. Process in NEDLAC
It was agreed that the process of engagements would be conducted under
six broad themes, in the following order of engagement,
Theme 1: A-typical Employment Relationships
Theme 2: Dispute Resolution
Theme 3: Collective Bargaining
Theme 4: Compliance and Enforcement
Theme 5: Employment Equity
Theme 6: Access to Employment
Only the first four themes have been debated. Negotiations at NEDLAC have
not started on themes 5 and 6.

7. Appointment of the Legal Drafting Team
Nedlac appointed three Labour Law experts to serve in the capacity as the
legal drafting team as follows:
• Prof Paul Benjamin for Government;
• Mr Anton Roskam for Labour; and
• Mr Chris Todd for Business.
Over 40 meetings were held in 2011.
Large disagreement between the parties exists. Enclosed are Government’s
final proposed amendments under each theme.

8. A-Typical Employment

9. Temporary Employment Services
1. S 198(1)(b)(i) and s198(2)(b)(ii) - 6 month threshold on labour broker
employment after which employee is deemed to be employee of the client and
the labour broker. Comment - The 6 month period should be longer, and joint and
several liability should apply rather than the deeming provision. Deemed is
referred to in the same manner as in the current Employment Equity Act. The
Labour Broker may continue as normal after six months. You the client would
need to look at indemnities with Broker specifically in regard to dismissal after 6
months.
2. S198(2) Application of Labour Broker provisions of deeming to the entire LRA,
rather than Chapter 8 only. This will deem the employee of the labour broker to
be an employee of the client and the labour broker for the purpose of
organisational rights, strike action and dismissal. Comment – Against a deeming
position. The rights should only be Chapter 8 (Dismissal of the LRA). Joint and
several liability is from day one on breaches of bargaining council agreements,
sectoral determination and collective agreements. The problem only will occur in
dismissals. See comments as above. No huge risk to the business if you are using
legitimate labour brokers.

10. Temporary Employment Services
3. S198 (4F) Temporary employment service (TES) employee must be
treated on the whole not less favourably than an equivalent employee of the
client (after 6 months). Comment - The whole absurd concept of equal pay
for equal treatment is problematic. In theme 5 it will reappear in relation to
all employees.
This has not worked anywhere in the world. In most cases there will be
differentiating factors and therefore unless there is an exact full time
comparative, you do not face high risk.
4. Justifiable reasons for different treatment would be:
• The employees seniority, experience or length of service
• Merit criteria
• Quantity or quality of work performance or
• Any other relevant criteria that is not prohibited in terms of section 6 of the
Employment Equity Act.

11. Temporary Employment Services
5. S21(8)(v) A person determining (eg. an arbitrator) whether a trade union
is representative must take into account the extent to which employees
are from TES, part time and fixed term employees. Comment - This will
make it easier for the union to gain organisational rights at lower
thresholds of representivity. Practically no effect. Atypical workers
difficult to organise as a rule.
6. Threshold of R183000 per annum generally agreed. It is only employees
earning less than R183000 per annum after 6 months that get the extra
protection.

12. Current Statutes & Liability Appropriation – Using a TES
Statute Client Joint & Several TES Liability
Liable Liability Severally
Severally
Labour Relations Act Yes - pending Yes
Employment Equity Act Unfair Yes
Discrimination
Skills Development Act Yes
Skills Development Levies Act Yes
Basic Conditions of Employment Act/ Yes Yes
Bargaining Councils/ SD’s
Unemployment Insurance Fund Yes
Compensation for Occupational Yes
Injuries and Diseases
OHSA Yes Yes

13. Legal Drafters’ Interpretation
1. Benjamin’s presentation acknowledged that the proposed
amendments were designed to provide additional protection for
employees earning below R183 000 a year and aimed to ensure that
“atypical” employees had the right to be treated “on the whole not
less favourably” than “standard” employees after six months.
2. Benjamin argued that the proposed legislation would see “the
structure and effect” of the existing legislation largely remaining in
place. The TES, not the client, would remain the employer. However,
the employee would have additional protection including the ability to
institute proceedings against either the TES or the client, and the
Labour Court can determine whether the employee’s contract
complies with the obligations of the law.

14. Fixed Term Contracts
1. S200B(3) Fixed term contracts in excess of 6 months have numerous
restrictions for employees earning below the threshold (R183000 per
annum). Comment - Is the period should be longer (12 months).
Practical implication is that the onus then is placed on the employer
beyond 6 months.
2. S200B(7) Fixed term contract employees over 6 months to be treated
equally to indefinite employees. Comment - Again like 3 above. Same
comment – little risk if no full time comparatives.
3. S(10) One week remuneration per year of service to be paid to
employees engaged in a fixed term contract for a genuine project.
After 24 months. Comment - This just adds to the cost of doing
business. You will have to budget for this.

15. Part Time Employees
Part time employees earning under the earnings threshold and after 6
months of employment are to be treated equally to full time employees.
Same as above.
Comment - This is absurd and has not worked anywhere else in the world,
all you do is raise expectations. Can part time employees survive? We do
not believe this to be a major problem in your industry.

16. Dispute Resolution

17. Dispute Resolution
1. S145 24 months security required to be paid by an employer pending
review of a matter. All reviews now you will have to lodge security with
the Court. Comment - Especially small business an absurd additional
cost.
2. S187 Restriction on retrenchments for operational requirements by
expanding the grounds for automatically unfair dismissals. Comment -
Implication on cases like Fry’s Metal in changing conditions of
employment.
• Amendment to Section 187 (1)(c)
(c)[to compel the] a refusal by employees to accept a demand in
respect of any matter of mutual interest between them and their
employer [and employee];” The brackets are the deletions. The
underlined is the additions.

18. Dispute Resolution
Potentially far reaching implications for the Supreme Court of Appeals
decision of Fry’s Metal and the ability to retrench in order to change
conditions of employment.
3. S189A More onerous provisions in relation to large retrenchments. No
party, in a large scale retrenchment, may unreasonably refuse an
extension beyond the 60 day period. A licence given to a facilitator to
extend the 60 day consultation period. You can budget for a 90 day
period plus notice.

19. Collective Bargaining

20. Collective Bargaining
1. S21 Easier access to previously majority trade union rights under s21 on
trade union official, leave and access to information. Comment - This is a
problem messing with the principle of a majority union situation.
Workplace Example of 1000 employees ie union might get majority trade
union rights with say 400 members. Not like in the past 501.. Cosatu now
also has a problem with this clause.
2. S32(5A) When the Minister considers extension of Bargaining Council
minority agreements, the Minister can take into account the extent to
which employees are employed by labour brokers, on fixed term or part
time contracts. Comment Sufficiently representative is already a
problem.

21. Collective Bargaining
3. S43(3) Providing that any matter, including negotiation of wages and
terms conditions of employment, can now be agreed upon by a Statutory
Council and extended by the Minister. Comment Could be of major
impact for instance in the building industry who have battled to extend
statutory council agreements.
4. S55(1)(4)(b) of BCEA Sectoral determinations may provide for minimum
increases on actual rates of pay. Comment - This will result in much
higher wage costs where employees are paid above the minimum
prescribed rate.

22. Collective Bargaining
5. Watered down provisions by Government that fail to restrain strike
violence adequately. Comment – Government rejected a proposal that
dismissal of workers in essential services who go on strike should be
automatically fair. Unrestrained strike violence will be a continued
deterrent to employment and direct foreign investment.
6. S69(6)(a) Picketing rules may apply to third parties who are not
employers. Comment - For instance mall owners. Not applicable to
your sector.

23. Compliance & Enforcement

24. Compliance & Enforcement
1. S69 BCEA Removal of compulsory undertakings and removal of
employers’ right to object and engage upon compliance orders.
Comment - Inspectors now have a discretion. This could open the way
for bribery and corruption.
2. Schedule 2, table 1 of BCEA. Increase to fines for administrative non-
compliance. Proposed 200%. Comment - Increased cost of employment
for administrative obligations.
3. S55(o) of BCEA Provides for the ECC can set thresholds in a sector for
organisational rights of access and subscriptions in a sector, regardless of
the agreement in the workplace. Comment – Undermines the Labour
Relations Act but not relevant to your industry.

25. Way Forward
Employment Equity
Access to Employment
Still to be negotiated

26. Way Forward
Business has consistently argued during the NEDLAC negotiations that all
proposed amendments should be tested against the RIA report mentioned
in clause (1) above in order to determine whether the amendments would
not jeopardise job creation or even lead to job losses.
The 6-a-side Task Team started discussions on the Employment Equity and
Access to Employment Themes in April 2012. We as Business however had
pre-conditions to this engagement.
Latest Government’s position: Cabinet approved in on 22 March 2012 to
be submitted to Parliament.
Bills will now be subject to the Parliamentary process of parliamentary
hearings.
Expect the Bills to be law this year (2012). We are of the opinion that
Government will push forward with their amendments.