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GRANT WILKINSON

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Update on the labour legislation

MEET THE PRESENTER :

GRANT WILKINSON

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Grant Wilkinson – Executive

Grant matriculated at Muir College in Uitenhage and progressed to the University of Port Elizabeth, where he attained

his LLB degree.

At University he was involved in numerous activities and was awarded awards including holding office as Public

Relations Officer of the Law Committee (1999/2000); Vice – Chairman of Law Committee (2000/2001), AC Cilliers prize

for best performance in Civil Procedure ;Golden Key Academic Honours Society.

Grant completed his articles at Greyvensteins Nortier in Port Elizabeth, before staying on as a civil litigation attorney,

appearing in both the Magistrates and High Courts by the age of 24.

Grant then went on to work for an employer’s organisation, SEESA, where he worked in the EL and PE branches, before

settling with Global in Cape Town. He continues to study a variety of courses.

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Grant is a versatile individual whose career has been moulded in the hotbed of the Eastern Cape. Grant is a hardworking, dedicated individual

whose eye for detail has made him a contracts specialist. Grant belies the old saying of “Jack of all Trades and Master of None” and has utilised

his commercial law and psychology backgrounds to good effect in his roles as executive, attorney, mediator and facilitator. Grant is a Chartered

Professional of the SABPP and has been a contributory author in a multinational book on Drugs and Alcohol in the Workplace and his articles

have been published in numerous publications including HR Future and Business Day Tax & Law Review

Grant designed and implemented the GBS Labour Audit process and is also the anchor facilitator and Institute Liaison for GBS’s Diploma in

Labour Law and has lectured for various institutes including inter alia: Da Vinci Institute of Technology; Rhodes Investec Business School and the

University of Stellenbosch Business School(where he is a member of the Faculty for the African continent).

Grant has been the CAPES and a business representative at the Department of Labour’s consultation process as well as the Parliamentary

sessions on the Labour Law Amendment process

Index

1. Introduction

2. Steps to passing legislation

3. Basic Conditions

4. Labour Relations

5. Employment Equity

6. Employment Services

7. Way forward

INTRODUCTION

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Acts on the cutting table

• Labour Relations Act

• Basic Conditions of Employment Act

• Employment Services Act

• Employment Equity Act

• Broad Based Black Economic Empowerment Act

• Codes of Good Practice on Broad Based Black Economic

Empowerment (DTI)

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Where are we on amendments?

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18 Steps of passing legislation

BASIC CONDITIONS OF EMPLOYMENT

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• The most significant amendments proposed to the BCEA are to bring the

provisions regulating child labour in line international standards and to improve

the mechanisms for enforcement of basic conditions of employment, including

minimum wages.

• Employers are to be prohibited from requiring or accepting any payment from

an employee or potential employee in respect of their employment or the

allocation of work to the employee.

• Prevents employees being required to purchase goods from their employer or a

business or person nominated by their employer.

• NB : However, this restriction does not apply to schemes in terms of

which employees receive a financial benefit through the purchase of

goods, products or services at a fair and reasonable price.

Basic Conditions of Employment

• Criminalisation of certain offences introduced into the labour system

• The provisions in the BCEA dealing with the prohibition and regulation of child

labour are to be extended to cover all work by children and not only work by

children as employees.

• This could lead to ridiculous interpretations eg chores

• Section 93 is amended to increase the maximum jail sentence for a breach of

child labour offences to six years.


• Minister may issue an “umbrella” sectoral determination

• a sectoral determination may prescribe minimum increases in remuneration

• a sectoral determination may prohibit or regulate the subcontracting of work –

threat? Eg challenge under certain councils already. Process under review

• a sectoral determination may prescribe a threshold of representativeness for a

registered trade union


• Discretion given to inspector to request undertaking

• Removal of compliance order

• Application to Labour Court by DoL for enforcement

• No objections to compliance issues inspectors may have


• The jurisdiction of the Labour Court is clarified by specifying that it has

jurisdiction to grant civil remedies (such as interdicts) in respect of matters

which are criminal offences.

• This clarifies that the Labour Court can, for instance, interdict an employer from

requiring children to work in breach of the child labour provisions of the Act.

• The maximum term of imprisonment for an offence involving child labour or

forced labour is increased from three years to six years, and the maximum term

of imprisonment in respect of an offence under section 33A is set at 3 years.

• The maximum penalties that may be imposed for a breach of the BCEA not

involving an underpayment are increased by 200%. These penalties have not

changed since the Act first came into effect.


LABOUR RELATIONS

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1. S198(1)(b)(i) and s198(2)(b)(ii) - A 3 month additional protection for employees

earning under the threshold(R205 433.30) is placed on temporary employment

(labour broker) employment after which employee is deemed to be employee of

the client and the labour broker for the purposes of the Labour Relations Act.

Some important facts from the proposed legislation amendments to interpret this:

If it is a legitimate replacement employee, it is not subject to 3 months

limitation.

198A. (1) In this section, a ‘‘temporary service’’ means work for a client by an

employee—

(a) for a period not exceeding three months;

(b) as a substitute for an employee of the client who is temporarily absent; or

(c) in a category of work and for any period of time which is determined to be a

temporary service by a collective agreement concluded in a bargaining council, a

sectoral determination or a notice published by the Minister, in accordance with the

provisions of subsections (6) to (8).

Further after the 3 months a deemed indefinite employment relationship with

the client is introduced unless there is a justification under section 198(B),

the fixed term contract provision.

Temporary Employment Services

(b) not performing such temporary service for the client is— (i) deemed to be the employee of that client and the client is deemed to be the employer; and (ii) subject to the provisions of section 198B, employed on an indefinite basis by the client. It is our opinion that if an employee earning less than the threshold were not allowed to be employed by labour brokers for a period exceeding three months, this would be a ban and be contrary to the Constitution. Further if this was so there would be no need for a deeming provision. It is trite that in South African law an employee can have more than one employer. It must be assumed that the drafters were aware of this principle. See for example: Board of Executors Ltd v McCafferty [1997] 7 BLLR 835(LAC). If the drafters had intended the employee to cease being an employee of the TES and become an employee of the client only, the clause could easily have said so in simple and plain language. For example, if the intention was to automatically substitute the TES for the client, words similar to those used in section 197(2)(a) of the Act could have been used.


To further support this see the additional amendment.

Section 198(4A) If the client of a temporary employment service is jointly and

severally liable in terms of section 198(4) or is deemed to be the employer of an

employee in terms of section 198A(3)(b)—

(a) the employee may institute proceedings against either the temporary

employment service or the client

This is the artificial deeming provision and how you give effect to it by

creating joint and several liability in (a) above.

As mentioned above “deeming” creates an artificial relationship to provide

“extra” protection to this class of employee (under the LRA only). The

employee is still paid by the TES and in effect there is a dual employment

relationship.


2. S198 (4F) Temporary employment service (TES) employee must be treated

on the whole not less favourably than an equivalent employee of the client

(after 3 months).

It is our opinion that there is plenty of options for differentiating temporary

employment service employees to other permanent employees. In the

section below some of those areas are listed and are not limited so long

as they are non discriminatory in terms of section 6 of the Employment

Equity Act. Some of these are listed in the proposed amendment Bill.

Section 198D (2) For the purposes of sections 198A (5), 198B(3) and

198C(3)(a), a justifiable reason includes that the different treatment is a result of

the application of a system that takes into account—

(a) seniority, experience or length of service;

(b) merit;

(c) the quality or quantity of work performed; or

(d) any other criteria of a similar nature,

and such reason is not prohibited by section 6(1) of the Employment Equity Act,

1998 (Act No. 55 of 1998).


PROPOSED SOLUTIONS

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Model 1 Business Risk Model Company ABC Temporary Employment Services 700 permanent employees 300 temporary employees 1. 300 employees are always going to be temporary. 2. The economic fall out model of the company does not allow more than 700

permanent employees. You need some back up information to justify this. 3. Engage TES on a 12 month contract. 4. TES engages its staff on a fixed term contract that matches that period 5. Each pay 12 month period. The staff requirements are relooked at based on the

operational requirements 6. Any of the 700 permanent employees that resign, are dismissed or die are

replaced by temporary employees 7. The permanent employees are recruited from the best temporary employees

based on performance. 8. Create liability transfer to TES in SLA for dismissals after 3 months (1) Note: there are a number of options with fixed term contracts these can include learnerships, seasonality, project, temporary employees on a business rationale, probation, training pools, and alike

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Model 2 Training Pool Model Company ABC Temporary Employment Services 700 permanent employees 300 temporary employees 1. 300 employees in a training pool on a fixed term contract (eg 18

months). 2. Ensure that all contracts end at the same time. If any of the 300

resign or are dismissed they all training go for another period (eg 18 months).

3. Set performance criterion for the for these training employees. 4. Only eligible for permanent employment if vacancy exist, training

time period has been completed and performance criteria has been met

5. Create liability transfer to TES for dismissals after 3 months

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Model 3 Freeze Category Model Company ABC Temporary Employment Company

Category Permanent Category Temporary Employment Services R20000 pm Driver R10000 pm

(Frozen) (New appointments)

1. Freeze categories specifically equal treatment categories that are out of line with

the market. 2. Create liability transfer to TES in (SLA) for dismissals after 3 months 3. Ensure freezing through a policy equal treatment 4. TES to as far as possible engage employees of fixed term contracts if justifiable on

term contracts (1) Freeze all drivers at R20 000pm

5. Make new entry drivers at R10 000pm 6. Create a policy to reflect this

(1) Note: there are a number of options with fixed term contracts these can include learnerships, seasonality, project, temporary employees on a business rationale, probation, training pools , and alike

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Model 4 Outsource Category Model Company ABC Temporary Employment Company

Category Permanent Category Temporary Employment Services R20000 pm R10000 pm

1. Outsource categories to the TES. 2. Create liability transfer to TES in Service Level Agreement (SLA) for dismissals

after 3 months 3. Ensure equal treatment in that category (outsourced one) 4. TES to engage its employees on fixed term contracts if justifiable on term

contracts (1) 5. All to TES who works through the equal treatment over a period of time 6. Retrench permanent drivers 7. Transfer permanent drivers to TES

(1) Note: there are a number of options with fixed term contracts these can include learnerships, seasonality, project, temporary employees on a business rationale, probation, training pools, and alike

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Model 5 Functional Outsource Model Company ABC Temporary Employment Company

Category Permanent Category Temporary Employment Services R20000 pm R10000 pm

1. TES takes on all staff and manages all the staff 2. TES engaged on output model of payment – Not then a TES, a fully

functional outsource company (like logistics or contract cleaning) 3. All transfer to functional outsourcing company 4. Consider some or all of the rentals, software and equipment 5. Engage functional outsource company on a contract basis 6. Outsource company to engaged its staff on the basis of term contracts

linked to the terms of the contract with client.

Model 6 Combination of Business Risk & Training Pool

Model 1 Business Risk Model

Company ABC Temporary Employment Services

700 permanent employees 300 temporary employees

1. 300 employees are always going to be temporary.

2. The economic fall out model of the company does not allow more than 700 permanent employees. You need some back up information to justify this.

3. Engage TES on a 12 month contract.

4. TES engages its staff on a fixed term contract that matches that period

5. Each pay 12 month period. The staff requirements are relooked at based on the operational requirements

6. Any of the 700 permanent employees that resign, are dismissed or die are replaced by temporary employees

7. The permanent employees are recruited from the best temporary employees based on performance.

8. Create liability transfer to TES in SLA for dismissals after 3 months

Model 2 Training Pool Model

Company ABC Temporary Employment Services

700 permanent employees 300 temporary employees

1. 300 employees in a training pool on a fixed term contract (eg 18 months).

2. Ensure that all contracts end at the same time. If any of the 300 resign or are dismissed they all training go for another period (eg 18 months).

3. Set performance criterion for the for these training employees.

4. Only eligible for permanent employment if vacancy exist, training time period has been completed and performance criteria has been met

5. Create liability transfer to TES for dismissals after 3 months

MODEL FIXTED

TERM

CONTRACT

LRA

DEEMED

LIABILITY

TRANSFER OF

DEEMED

EQUAL

TREATMENT

PROTECTION

1 Business risk Yes Yes Yes Yes

2 Training pool Yes Yes Yes Yes

3 Freeze category Yes Yes Yes Yes

4 Outsource category Yes Yes Yes Yes

5 Functional category Yes Not

necessary

Not

necessary

Not

necessary

6 Combo 1 + 2 above Yes Yes Yes Yes

1. S200B(3) Fixed term contracts in excess of 3 months have numerous restrictions for employees earning below the threshold (R205 433.30 per annum).

2. S200B(7) Fixed term contract employees over 3 months to be treated equally to indefinite employees.

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.only kicks off after 24 months. Comment - This just adds to the cost of doing business. You will have to budget for this.

Fixed Term Contracts

Section 198(3) An employer may engage an employee on a fixed term contract or successive

fixed term contracts for longer than three months of employment only if—

(a)the nature of the work for which the employee is engaged is of a limited or definite duration; or

(b)the employer can demonstrate any other justifiable reason for fixing the term of the contract.

(4)Without limiting the generality of subsection (3), the conclusion of a fixed term contract will

be justified if the employee—

(a)is replacing another employee who is temporarily absent from work;

(b)is engaged on account of a temporary increase in the volume of work which is not expected

to endure beyond 12 months;

(c)is a student or recent graduate who is employed for the purpose of being trained or gaining

work experience in order to enter a job or profession;

(d)is employed to work exclusively on a specific project that has a limited or defined duration;

(e)is a non-citizen who has been granted a work permit for a defined period;

(f) is engaged to perform seasonal work;

(g)is employed for the purpose of an official public works scheme or similar public job creation

scheme;

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Amendment of section 198 (B) of Act 66 of 1995:

(h)is employed in a position which is funded by an external source for a limited period; or

(i) has reached the normal or agreed retirement age applicable in the employer’s business.

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Amendment of section 198 (B) of Act 66 of 1995:

Part time employees earning under the earnings threshold and after 3

months of employment are to be treated equally to full time employees.

Same as above.

Part Time Employees

DISPUTE RESOLUTION

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1. S145 24 months security required to be paid by an employer

pending review of a matter. Employers will now be required to lodge

security in all review cases. Comment - Especially for small

business, this is a huge additional cost and in my opinion

unconstitutional.

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.

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.

Dispute Resolution

COLLECTIVE BARGAINING

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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. 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.

Collective Bargaining

3. No real provisions by Government that restrain strike violence

adequately. Comment – Government’s own proposal was the

strike ballot. The Portfolio Committee took this out. Unrestrained

strike violence will be a continued deterrent to employment and

direct foreign investment.

4. S69(6)(a) Picketing rules may apply to third parties who are not

employers. Comment - For instance mall owners.

Collective Bargaining

COMPLIANCE & ENFORCEMENT

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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

Compliance & Enforcement

OTHERS OF INTEREST

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1. Intervention in strikes

2. Award an order of court

3. Breach of picketing rules

4. Representation at CCMA – goodbye consultants

Others of interest

EMPLOYMENT EQUITY

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1. Extension of grounds of discrimination to include any other arbitrary ground

2. Equal treatment included

3. Psychometric tests to be certified by HPCSA or similar body

4. CCMA given jurisdiction in sexual harassment or if employee earns below the threshold or by consent

5. Burden of proof changed

Employment Equity Act

6. Aligned reporting period

7. National demographics pushed and now removed(Discussion of DCS case)


Employment Equity

Employment Equity is about ensuring equitable

representation according to EAP demographics:

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Employment Equity

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8. Discretion given ito assessment to be done by labour inspectors

9. Reason : Lost Comair case

10. This linked to ability to take straight to court (applying discretion) will pose a massive challenge iro corruption and increase litigation

11. Fines based on Competition Commission fines


Schedule 1 Amendment: Maximum Fines

Previous contravention Contravention of any

Provision of sections 16 (read

with 17), 19, 20, 21, 22, 23, 24,

25, 26, and 43(2)

Contravention of any

Provision of sections 20, 21,

23 and 44(b)

No Previous Contravention R500 000 R1 500 000 The greater of R1 500 000 or

2% of the employer’s turnover

A previous contravention in

respect of the same provision

R600 000 R1 800 000 The greater of R1 800 000 or


A previous contravention within

the previous 12 months or two

previous contraventions in


within three years



Three previous contraventions

in respect of the same provision

within three years



Four previous contraventions in


within three years



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FORBES RANKINGS: LARGEST SA

COMPANIES IN 2010 (JSE LISTED) Company Turnover

Bill

Profit

Bill

Scenario

1

2%

Scenario

2

4%

Scenario

3

6%

Scenario

4

8%

Scenario

5

10%

1 Standard

Bank Group

R120,9 R11,3 R2,4 R4,8 R7,3 R9,7 R12,1

2 Sasol R129,9 R12,9 R2,4 R5,2 R7,8 R10,4 R13,0

3 FirstRand R79,6 R6,6 R1,6 R3,2 R4,8 R6,4 R8,0

4 MTN Group R79,6 R12 R1,6 R3,2 R4,8 R6,4 R8,0

5 Investec R36,5 R2,9 R0,7 R1,5 R2,2 R2,9 R3,7

6 Sanlam R35,8 R2,2 R0,7 R1,4 R2,1 R2,8 R3,6

7 Impala

Platinum

Holdings

R24,8 R5,8 R0,5 R1,0 R1,5 R2,0 R2,5

8 Bidvest

Group

R106,6 R2,9 R2,1 R4,3 R6,4 R8,6 R10,7

9 AngloGold

Ashanti

R30,7 R-2,9 R0,6 R1,2 R1,8 R2,5 R3,1

10 Telkom R50,4 R7,2 R1,0 R2,0 R3,0 R4,0 R5,0

TURNOVER THRESHOLD APPLICABLE TO DESIGNATED BODIES

Sector or subsectors in accordance with the Standard Total annual turnover

Industrial Classification

Agriculture R6,00m

Mining and Quarrying R22,50m

Manufacturing R30,00m

Electricity, Gas and Water R30,00m

Construction R15,00m

Retail and Motor Trade and Repair Services R45,00m

Wholesale Trade, Commercial Agents and Allied Services

R75,00m

Catering, Accommodation and other Trade R15,00m

Transport, Storage and Communications R30,00m

Finance and Business Services R30,00m

Community, Special and Personal Services R15,00m Taken from Schedule 4 of the Employment Equity Act 1998, (Act 55 of 1998)

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EMPLOYMENT SERVICES

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1. Press misconstruing position

2. They are working off old Bill

3. No need to report vacancies within a specified period

4. To provide for public employment service

5. To provide for the establishment of schemes to promote the employment of young work seekers and other vulnerable persons

6. To provide for schemes to assist employees in Protected Employment

Enterprises in distress to retain employment

7. To facilitate the employment of foreign nationals in a manner that is consistent with the objects of this Act and the Immigration Act, 200

8. To provide for the registration and regulation of private employment agencies

9. To provide for the establishment of the Employment Services

• Board ;Productivity South Africa; Protected Employment Enterprises;.

Employment Services

1. Must register

2. May be declined

3. Strict measures on foreign labour

4. Minister may make regulations in certain sectors for vacancies to be reported eg of DG of exemption app on farm and then foreign labour hired

5. Funds used from UIF for this purpose

Employment Services

CONCLUSION

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Basic Conditions of Employment Act, no. 20 of 2013

Assented to on 4th December 2013

Gazetted on 9th December 2013 (GG37139)

Promulgation expected early September.

Employment Equity Act, no. 47 of 2013

Assented to on 14th January 2014

Gazetted on 16th January 2014 (GG37238)

Effective date announced one week before – 1 August.

Employment Services Act, no. 4 of 2014

Assented to on 3rd April 2014

Gazetted on 7th April 2014 (GG37539)

Promulgation was targeted for June or July.

No firm indication as to expected date

Conclusion

Labour Relations Act, no 6 of 2014

Assented to on 15th August 2014

Gazetted on 18th August 2014 (GG37921)

Promulgation expected early October.

Conclusion

THE END

THANK YOU

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GRANT WILKINSON Cell : 082 570 8595

E-mail :[email protected] Twitter : Wilkinson_SA

Linkedin : za.linkedin.com/pub/grant-wilkinson/36/49a/795/

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