Labour law amendments Parliamentary briefing 9 October 2001

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.

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 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

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.

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 workers Amendments 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 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 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.

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.

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.

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

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.

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.

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 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.

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.

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 R per month NEDLAC to issue a Code of Good Practice on who should be regarded as an employee CCMA can issue advisory award.