Welcome to this edition of the Labour Law Newsflash.
It’s been an eventful two weeks in South African labour law. On 29 May, Parliament passed a number of amendments to pieces of legislation and an entirely new Bill which are – and will be – responsible for defining our labour law:
- The Basic Conditions of Employment Amendment Bill,
- The Labour Relations Amendment (LRA) Bill, and
- The National Minimum Wage (NMW) Bill.
These Bills are waiting to be signed into law by President Ramaphosa. Only once this happens will these become law.
On 30 May, in Government Gazette No. 41663, the regulations to the NMW Bill were published for comment. (Click here to download the regulations.) The deadline for any feedback, to reach the Department of Labour, is 20 June.
The majority of the NMW Regulations deal with the process of applying for exemptions from the NMW:
- Firstly, the delegate authority – in other words, the Director General of Labour or a public services employee who the Minister has given the power to grant exemptions to the NMW – must be satisfied that the employer making the application is unable to afford to pay the NMW .*
- After it has been seen that the employer is unable to pay, said employer must inform employees of the application that will be lodged. If the employees disagree with this application for exemption, they are allowed to oppose the application.
- If the application for exemption is granted, the employer must clearly display the exemption notice so that all employees have the opportunity of reading it.
I will be unpacking the NMW Regulations as well as how other labour law changes may affect your business, at the eagerly awaited 2018 MID-YEAR LABOUR LAW UPDATE.
The sessions in Durban and East London have already taken place. Some of the hot topics emerging were:
- The utilisation of Temporary Employment Services (TES) and the law around that.
- There are also some great cases in the update around fixed-term contracts which show that there is a lot of flexibility in terms of how to use them.
- The Fourth Industrial Revolution regarding artificial intelligence is also a theme arising (spurred on by the Uber case and the debate around that).
- The proposed amendments to the Employment Equity Act.
As always, I will also be showcasing the most recent and important labour law cases coming out of the CCMA, Labour Court and the Labour Appeal Court. I will share my 20-odd years’ experience in terms of the impact – or potential impact – these decisions could have on your business today.
The remaining MID-YEAR LABOUR LAW UPDATE sessions will take place on the following dates:
- 13 June in Port Elizabeth. For more information contact Robyn Evans on firstname.lastname@example.org
- 14 June in Cape Town. For more information, please contact Barbara on email@example.com.
- 21 June in Johannesburg. For more information, please contact Priscilla on firstname.lastname@example.org.
- 6 July in George. For more information, please contact Renshia on email@example.com.
As mentioned above, we only have until 20 June to comment (15 June to BUSA) on the regulations which is an extraordinarily short period of time. We should object to this as business. There is no way that we can get these regulations on 1 June and comment on them as business by 20 June 2018. We need to get as many businesses to put submissions in even if the content it similar. I believe we need to do that as Parliament counts such submissions.
Below are draft comments on the regulations published. Follow this link to review the regulations:
• Section 1. The fact that “any” employee, even a clerk can be appointed, keeping in mind the complicated financial measurements required in exemptions.
• Regulation 2(1). Regarding application for exemptions from paying the NMW, this allows a registered employers’ organisation to assist its members in applying for exemption. This however requires exactly the same detail for every single organisation that it represents. It therefore does not allow for an employers’ organisation to apply for a sector or on behalf of an industry which they do represent. This undermines collective and centralised bargaining.
• Regulation 2(3)(b). “Representative trade union” is not restricted to unions that are recognised as contemplated in LRA:
– So, employers have to “meaningfully consult” with how ever many unions claim to have even one member in the workplace. Further, in terms of “representative trade union” the fact that the union has to only represent ‘one’ employee does not make it representative. This is contrary to the principles of collective bargaining and a recognised definition in the LRA.
– Open doors for any union now to come apply for a granted exemption to be cancelled because they were not “meaningfully” consulted as they were given less attention than the organised consultation structures in a workplace. Effectively the NMW Act would result in enterprises where exemptions applied for would become the wage negotiations at these workplaces.
– Employers would be forced to disclose information to unions with whom it has no relationship as well as no disclosure or recognition agreements. This is compounded by the fact that this could affect bargaining council arrangements where employers and employees have even agreed on a wage rate over the next 2 to 3 years which is under the national minimum rate.
– Following on the above there is no exemption or phase-in for bargaining council rates that are below the NMW rate. Trade unions would want to see this to mitigate on job losses. Although union and business proposed this it has been omitted and should be included.
• Regulation 2(5). For first year of implementation the regulation will not work. Legislation cannot operate retrospective (only in very limited instances) and exemptions apply from the day of submission only [Reg 2(6)(a)]:
– Union/employees to be ‘meaningfully consulted’ [Reg 2(3)(b),
– Regulation 2. There is no provision for appeal process for exemption that are rejected. So, if rejected it becomes a court application in terms of the Promotion of Administrative Justice Act (PAJA) – The automated exemption process is a good innovation but it does not allow for representation which might require a more detailed analysis. Many sectors have analysed their industries and have a projection going forward which shows extensive job losses at these rates. There should be some type of process to allow such and an appeal from the automated system.
• Regulation 5(1). Means the same person grants and withdraws exemptions:
– There should be a proper body to consider such withdrawals. This ‘one-man’ system opens the door for all sorts of abuse and potential corruption.
– Wording such as “which include the-“ creates a restriction. “Including, but not limited to” would allow for additional factors. Neither Cabinet or Parliament indicated in memoranda that it is their intention that the Minister has the power to limit.
– The threshold set at 90% for the NMW of general workers, farm workers and domestics ignores the fact that there might be certain sectors which need a greater level exemption. That is really problematic. Employers would most probably have to include additional information for justification. This would:
o Amount to an infringement of the Protection of Personal Information (POPI) Act,
o Be a potential violation of Constitutional rights,
o Be anti-competitive as it will make available commercial information to competitors,
o Damage and be harmful to the employers applying,
– There can absolutely no justification for publishing of private household information in this manner. The Employer is already obliged to disclose the entire application to employees and unions so what can the need possibly be for this level of public accessibility. As it is employers are already forced to disclose confidential information to parties, such as unrecognised unions, with whom it has protective agreements.
• Regulation 6. Regarding the definition of ‘profitability’ the fact that depreciation is added back is incorrect. Depreciation is part of the calculation of profitability and therefore should never be added back in a calculation.
• Regulations 7. Section 16(1)(a) sets the limits in terms of the regulations for exemptions. The wording does not allow for additional factors such as limiting the exemption.
• Regulations 8 and 9 as well as 6(4). Requiring information to be made public and publicly accessible, particularly taking into account the details of information required in the regulations and the schedules thereto.
Please submit your comments to Mathilda Bergmann (HQ) Mathilda.Bergmann@labour.gov.za on or before 20 June 2018. Alternative submit your comments to us by 15 June and we will incorporate them in ours.
* The Draft NMW Regulations set out very stringent criteria against which an employer’s ability to pay the NMW will be judged. The effect of this is that any chancers – in other words, those who want to use the NMW as a means of reducing their salary and wages bill – are weeded out.