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To date the EE statistics over the past 21 years reflect that there has been transformation, but not at a rate that would be justified. The reason for this is that the key ingredients of success in this regard are – transitioning through change (i.e. behaviour drivers); reasonable and achievable targets; liability management. The diagram below depicts the interplay between these three aspects and designated employers need a framework and model within which to ensure that they are adequately addressed. In addition, there is a requirement to be proactive in the sense that policies, procedures, awareness, training, risk assessments and targets are set, as well as responsive to the extent that when unfair discrimination or a deviation from the EE plan arises without justification, the employer takes immediate steps to remedy the situation. A zero-tolerance approach to any form of harassment is also mandatory. If once considers the facts, only 8% of designated employers identify organisational culture as a barrier to transformation, there is still a significant race and gender deficit in respect of the EAP and there is a 94% non-compliance rate across designated employers that have been subject to DG reviews. Join us on the 4-5 September for our Employment Equity workshop.

In the case of Percy v Two Rivers Platinum Mine and Others (JR1777/19) [2023] ZALCJHB 31 (6 March 2023 ) the employee was suspended after which he was charged with dishonesty. The employee had utilised company and contractor employees and facilities at the salvage yard for repairs and renovations to his private truck. He used the profile created for the “vendor bidding process” to purchase items instead of using his own profile. The employee was found guilty of the two charges and dismissed. The Commissioner at the Commission for Conciliation, Mediation and Arbitration (CCMA) found the employee’s dismissal both procedurally and substantively fair. The matter was referred to the Labour Court (LC) in an application to review and set aside the arbitration award issued by the CCMA. The LC found that the Commissioner understood the evidence of the witnesses and found there to be discrepancies between the employee’s witnesses. Regarding the fictitious profile created by the employee, it was testified that the employee was tasked to use the fictitious profile to ensure that collusion did not take place. The intention was not for the employee to use this account for personal purchases. The employee evidently knew the purpose of the creation of the account, however, he elected to utilise the account for purposes other than its intended purpose. As head of the salvage yard, the employee inherently had information that the other bidders did not have. The decision to purchase items at an auction with the fictitious profile was clearly to the employee’s advantage. The CCMA found that the grounds on which the employee challenged the procedural fairness of the disciplinary hearing held no merit. The LC agreed with the Commissioner. It held that the manner in which the employee conducted himself during his disciplinary hearing and arbitration was not compatible with that of a person who is remorseful. For instance, there were discrepancies in the evidence of the employee’s witnesses, and his own evidence indicated that he elected to deny any wrongdoing and blamed the subordinates. The employee took the posture of an innocent bystander. The evidence did not support this posture. In the circumstances of this case, it would have been both unfair and unreasonable to expect the employer to reinstate the employee. Dishonesty in the employment context is unacceptable. Dismissal is generally justified in all cases of serious dishonesty, not merely those in which employees enrich themselves materially at the expense of their employer. The LC found that the employee’s conduct was grossly dishonest, and dismissal was, therefore, an appropriate sanction. The LC found that the ruling of the CCMA was reasonable. The employee’s review application was dismissed and there was no order as to costs. Reach out to johnny@globalbusiness.co.za for all your labour law/relations matters.

In the case of South African National Blood Service v NEHAWU obo Mathobisa and Others (JR 654/2021) [2023] ZALCJHB 58 the employee was employed as an inventory technician. She was dismissed on 11 August 2020 after a disciplinary hearing, when she was found to have committed an act of gross negligence. The employee stacked a lab crate in an area designated for other purposes, which caused the fridge to switch off resulting in losses suffered by the employer. The arbitrator found that the dismissal was substantively unfair because while the employee had caused the switch to trip and the fridge to lose temperature, the employer should have treated the employee the same as her colleagues. These people were notified by SMS that the temperature of the fridge was out of range and neglected to address the situation. These colleagues were given a final written warning. The arbitrator considered the employee’s dismissal to be unfair because: The employer’s disciplinary code and procedure provided a penalty of a final written warning for an act of gross negligence; The dismissal was inconsistent with the lesser sanction of final written warning issued to other employees for the same or similar conduct; The evidence indicated that the employee had turned remorseful to the extent that the employer relied on a failure to show remorse as a basis to depart from the guideline offered by the disciplinary case and as a differentiating factor between the employee and her comparators. The matter was referred to the Labour Court (LC). The Court found that clause 2 of the disciplinary code as well as clause 8.8, stating that the penalties referred to are ‘ intended to serve as guidelines to management in implementing discipline’ . There was no basis therefore for the arbitrator to conclude that the penalty of a final written warning was a mandatory or the only appropriate penalty in circumstances where the employee had been found guilty of gross misconduct. The charges brought against the employee were different from those brought against the employees she named as comparators. The employee had been charged with gross negligence, whereas her named comparators had been charged with dereliction of duty. For these reasons, there was no inconsistency on the part of the employer. The employee’s misconduct was serious and had grave financial and other consequences for the employer. The LC found the employee’s dismissal to be substantively fair and her referral was dismissed. Contact Johnny@globalbusiness.co.za with regards to any labour relations or law matters.

The recent Constitutional Court finding that the AARTO Act is aligned with the Constitution adds another “to-do” item to the list of all organisations. The impact of AARTO is broad and deep, and as is the case with employment equity, organisations need to start identifying how to implement, monitor and evaluate AARTO. The potential impact of AARTO on business continuity, labour relations processes, and liabilities, as well as risk management, is significant. AARTO will require a range of interventions in order to ensure an integrated, comprehensive, and legally compliant approach. These will include – Conducting an impact assessment of the stakeholders, documents, capacitation requirements, processes, and systems required; Developing a comprehensive AARTO policy; Drafting employment contract clauses and annexures pertaining to rights, obligations, and acknowledgment of debt; Revisiting disciplinary codes and grievance procedures; Reviewing job profiles for positions where having an active driving license is material; Developing training material; Designing logbooks and related tracking systems; Appointing proxies; Appropriating costs and expenses associated with fines and penalties, as well as the costs of potential rehabilitation and re-application for a license; Remunerative arrangements while an employee may be suspended from driving; And much more. Specifically, organisations could adopt the following approach – Step 1: Create Awareness on AARTO and collaborate with key stakeholders Develop a change management process and assign responsible persons Inform employees of new legislation and its impact on the business Advise that changes in policies, contracts, and procedures are needed and why. Step 2: Amend policies and procedures Company vehicle policy; Disciplinary code; Implement a procedure to monitor infringements by staff (eNaTIS) and reporting of infringements. Step 3: Amend Contracts and draft addendums Consent to eNaTIS Disclosure of Infringements Liability for fine (AOD) No work no pay / potential incapacity – license suspended Step 4: Consult with Stakeholders on proposed amendments Workplace forums. Trade unions. Allow time for feedback. Not asking for permission – only consultation. Step 5: Address concerns and representations and provide feedback (context is always important) Step 6: Implement changes and train Set an effective date. Train all staff on changes. Obtain signatures on amended documents/policies. Develop memos and SOPs. If you need assistance in respect of AARTO, please email Justine Weddell at justine@kirchmannsinc.co.za or email cynthia@globalbusiness.co.za

Despite the fact that BBBEE Codes of Practice have been a key focus areas of organisations for some time, there remain barriers and interpretation areas that can and should be addressed more expediently and innovatively. This is particularly important in highly volatile environment. Our BBBEE Bootcamp will demystify, capacitate and enable you to make confident decisions in respect of BBBEE strategy and implementation, in areas such as those set out hereunder – Ownership: Achieving the required level of black ownership can be challenging, particularly for smaller businesses or those operating in capital-intensive industries. Access to financing and identifying suitable black investors or partners can pose difficulties. Skills Development: Businesses may struggle to allocate sufficient resources and implement effective skills development programs. Identifying appropriate training providers, ensuring the relevance of training programs, and tracking the impact of these initiatives can present challenges. Enterprise and Supplier Development: Identifying and developing viable black-owned suppliers can be a hurdle for businesses. Establishing mutually beneficial relationships with black-owned enterprises, ensuring their capacity and quality meet the organization’s needs, and tracking their progress can be complex. Socio-Economic Development: Determining impactful socioeconomic development initiatives aligned with the organization’s goals and the needs of the target communities can be challenging. Measuring the effectiveness and long-term sustainability of these initiatives can also pose difficulties. Employment Equity (EE): Achieving equitable representation at all occupational levels can be a struggle for businesses. Addressing historical disparities, implementing fair recruitment and promotion practices, and fostering a culture of inclusivity can be complex and require sustained effort. Compliance Monitoring and Reporting: Maintaining accurate records, tracking progress, and preparing the necessary documentation for B-BBEE verification can be time-consuming and resource-intensive. Businesses may face challenges in ensuring ongoing compliance and meeting reporting deadlines.

In the case of Coldset (Pty) Ltd v Singh DA 1 2021 2022 ZALACD 8 2 June 2022, an employee exited the premises by driving down a one-way lane. To avoid colliding with an oncoming vehicle, he drove his vehicle backward. A fellow colleague’s son told the employee it was a “no-entry zone”. In response, the employee drove his vehicle at an aggressive speed toward him and swore. At a disciplinary hearing, the employee admitted guilt. The employee had 33 years of clean service. The Chairperson factored in that the employee was coming off a night shift, was tired, and may have been in shock. The employee expressed his intention to reconcile with his fellow employee. The Chairperson found that a final written warning was appropriate on condition that he issued a personal apology to the colleague and son. During the meeting, where he was expected to tender his apology, the employee refused. The employee indicated he would be challenging the outcome. The employee was charged with further misconduct for his subsequent actions. At the second hearing, the employer contended that the employee’s conduct breached the trust relationship. The Chairperson found that the employee had contravened the employer’s standard of trust and that, given his supervisory role, he was aware of the conduct required of him and the importance of upholding the image of the employer. Dissatisfied with his dismissal, the employee referred an unfair dismissal dispute to the CCMA. The Arbitrator found that the employee was the “author of his own fate”. The dismissal was, therefore, found to have been substantively fair. The employee sought a review of the arbitration award by the Labour Court (LC). The LC found there was no evidence that the other parties were dissatisfied with the employer or that the situation impacted negatively on the employer. The failure to render an apology did not bring the employer into disrepute. The sanction imposed was found to be “unnecessarily harsh”. The employer approached the Labour Appeal Court (LAC). The LAC found that the LC had treated the review application, which came before it, as an appeal and not a review. The LC failed to have regard to if the decision of the Arbitrator was one to which a reasonable Arbitrator could not reach. The LAC found that the employee had conducted himself in a patently unacceptable, unwarranted, threatening, abusive, and intimidatory manner towards a woman and her son within the confines of the employer’s premises without any justification. Far from taking heed of the final written warning, the employee chose not to comply with the terms and engaged in misconduct similar to that previously committed. For these reasons, the appeal must succeed. This is where I believe that amendments need to be made to the Labour Law system. An employee acting in this way should be dismissed regardless of his or her years of service. Actually, years of service could be aggravating.

In 2017, the Minister of Finance issued detailed Preferential Procurement Regulations in terms of the Preferential Procurement Policy Framework Act (Number 5 of 2000). Among others, these procurement regulations laid down the criteria for the adjudication of tenders. Criteria included price, the Broad-Based Black Economic Empowerment status of the entity completing the tender, and matters such as local production and sub-contracting. Other details included the criteria for breaking deadlocks in scoring, the award of tenders not scoring the highest points, and cancellations. In February this year, the Constitutional Court found that these regulations were inconsistent with the Preferential Policy Framework Act and ordered the Ministry of Finance to develop new practices within one year. On 4th November 2022 the Minister of Finance, Minister Godongwana, promulgated the Preferential Procurement Regulations, 2022 in Gazette 47452. This Gazette has stripped away most of the requirements from the previous regulations. The new regulations require the tender documents to state the applicable preference point system to be applied, any specific goals that are relevant to the tender must be specified in the invitation to tender, the points which points are to be awarded for achieving these goals, the calculation of the points to be awarded and evidence that will be required in support of these points. The preference point systems are: 80/20 for the acquisition of goods or services with an of R50 million or less and for tenders for income-generating contracts with an award value of equal to or less than R50 million 90/10 for the acquisition of goods or services with a value above R50 million round and for tenders for income-generating contracts with award value of more than R50 million. Under the 2017 regulations, taking the 80/20 preference point system as an example, 80 points were used when measuring items such as the efficacy of the product supplied, the price, any local content, and other requirements specified in the tender documents. The remaining 20 points were allocated based on the tenderer’s BEE status. Under the 2022 regulations, the 20 points are no longer based upon the tenderer's BEE status but are awarded based on goals specified for the tender. In terms of the regulations these specific goals “… means special specific goals as contemplated in section 2 (1) (d) of the Act which may include contacting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender, and disability including the implementation of programmes of the Reconstruction and Development Programme as published in Gazette 16085 dated 23 November 1994.” The 2017 regulations gave tables showing how the points were to be allocated to the tenderer based on their BEE status. Because of the Constitutional Court finding, these tables are no longer in the regulations. Instead, the Invitation to tender must state how the points are going to be allocated. Section 30 (1) (b) of the regulations requires the organ of state to indicate the specific goals that will be applied in the adjudication of the tender, the number of points that will be awarded to each goal, and proof of the claim for such goal. Tender documents will need to be very detailed. Irrespective of which preference point system is applied, the contract must be awarded to the tender scoring the highest points. When there is a deadlock in scoring, this will be resolved initially by reference to scores achieved for the specific goals with the tenderer receiving the highest points winning the contract. If the tenderers score the same points for everything, it will be awarded by the drawing of lots. A large number of the requirements laid out in the Preferential Procurement Regulations, 2017 have been removed in the Preferential Procurement Regulations, 2022. The Preferential Procurement Act is also being amended and from a review of the draft bill, it appears the Preferential Procurement Act will become the vehicle to drive and protect procurement. Some Brief Comments On This Draft Bill National Treasury and the Public Procurement Office, which will be housed in the Treasury, will be given teeth in terms of corruption and loss of public funds. The Public Procurement office has wide-ranging powers. In fact it appears almost like a law enforcement agency. The question that arises is how will it be staffed and whether it will have a watchdog to prevent abuse? Offenses (section 61) range from fines to imprisonment for up to 10 years in terms of this bill but other Acts are brought in such as the Prevention and Combating of Corrupt Activities Act. These are welcomed. There are a large number of things that “must” be done. The implementation and policing of such matters are not necessarily dealt with in the Regulations. Examples where steps “must” be taken are S27 (Rejection of Bids), S29 (Awards Deviating from Committee Recommendations), S32 (conclusion of Contracts), and S12 (disclosure of interest by officials). The Minister must publish regulations in terms of S64 and this section gives details of the matters these regulations must deal with. Two examples of S64 requirements not included in the Procurement Regulations are security vetting for procurement officials in the supply chain and at the Public Procurement office as well as procedures and fees for lodging objections.

Retrenchment Policy Retrenchment Policy- For a dismissal ( be it for misconduct, incapacity or operational reasons ) to be fair, it has to be substantively as well as procedurally fair. In other words, there has to be a fair reason for the dismissal (substantive fairness) and how the dismissal takes place needs to be fair as well (in other words, it needs to be procedurally fair). Large-scale vs Small-scale Retrenchments Labour law for retrenchments states that there is a distinction drawn between large-scale and small-scale retrenchments. However, before the distinction between these two is drawn one needs to look at what a small employer is versus a big employer: A small employer employers 50 or less employees. A big employer employs more than 50 employees. A big employer can undergo a large-scale or a small-scale retrenchment. A large-scale retrenchment at a big employer is a dismissal of a specified minimum number of employees in relation to the size of the employer. If the employer retrenches: 10 employees, and they employ between 50 and 200, this is a large-scale retrenchment 20 employees, and they employ between 200 and 300, this is a large-scale retrenchment 30 employees, and they employ between 300 and 400, this is a large-scale retrenchment 40 employees, and they employ between 400 and 500, this is a large-scale retrenchment 50 employees, and they employ over 500, this is a large-scale retrenchment If a big employer retrenches fewer employees than the numbers listed above, this may still be considered as a large-scale retrenchment. This is if the number of employees to be retrenched – together with the number of employees who have been tretrenched in the last 12 months before the proposed retrenchment – is equal to the numbers listed above. The heart of procedural fairness in retrenchment: the consultation procedure At the heart of procedural fairness in retrenchments is the consultation procedure. The first step in any retrenchment procedure is for an employer to consult with: Any party that they are required to consult with owing to a collective agreement A workplace forum or registered trade union if there is no collective agreement The employees themselves, who may possibly be affected by the retrenchment Employers need to make sure retrenchment proceedings in their company are both procedurally and substantively fair as – if not – they risk a negative outcome at the CCMA.

Conflict of Interest in Business Ethics Examples The case of De Beers Consolidated Mines Ltd (Venetia Mine) v National Union of Mineworkers and Others (JA83/18) [2019] ZALAC 72; [2020] 3 BLLR 251 (LAC) (11 December 2019) unpacks the issue of disclosing conflicts of interest to one’s employer. Facts of the case The appeal to the Labour Appeal Court (LAC) was against the judgment of the Labour Court which dismissed the review application of the award of the commissioner. This award had found the dismissal of the employee substantively unfair and ordered her reinstatement. The employee was employed by the employer for over 15 years without a blemish to her record. At the time of her dismissal, she held the position of procurement clerk responsible for contract management and procurement of outside service providers. The employee was found to have contravened a code of business conduct and ethics by failing to disclose or avoid a conflict of interest. The employer held that such conduct amounted to a failure to perform her duties conscientiously, honestly, and in the interest of the employer. She was accordingly dismissed. A complaint was raised by Grace Security’s (Grace) proprietor. The employer had contracted with Genesis Electric Services (Genesis) – one of its service providers – to fix an alarm at one of its properties. Genesis was unable to provide the service and subcontracted the work to Grace. The technicians indicated that they required a loan of R20 000 to purchase the alarm kit and to set up an office for Grace. It was agreed that the money would be lent and it was agreed that this would be deposited into the employee’s bank account. The two technicians were her tenants and did not have a banking account so she allowed them to use hers. After the dispute arose between two contractors the employee made a disclosure to the employer to the effect that two persons (being the technicians) were tenants on her property. The employer has a strict rule requiring employees to disclose any possible conflict of interest they may have. The employee had taken the stance that since she had no business interest in the venture, and the money deposited into her account was not for her benefit but that she merely accommodated her tenants, there was no duty on her to disclose that information. The employee gave evidence that she was not under any obligation to declare the deposit of R20 000 into her bank account because the source of payment was not linked to the employer’s business. In addition, the transaction between the contractor and the sub-contractor had nothing to do with the business of the employer. The question here is whether the employee was under the duty to disclose the transaction and her dealings with the two employees of Grace. The commissioner took the view that the employer could not prove that the employee had any business interest in either Genesis or Grace and, as such, found that the employee did not commit the misconduct with which she was charged. The Labour Court, like the commissioner, found that the employer failed to prove that the employee broke the rule relating to the duty to disclose. The Labour Appeal Court found that the employee was present when the R20 000 loan was negotiated between the employees of Grace (her tenants) and Genesis, and that part of the loan was for Grace to purchase the alarm kit that was necessary to render the service that Genesis had contracted to render to the employer, could be disregarded when this evidence was not challenged. Added to this is the unchallenged evidence that she was present at the meeting at which the employer’s service provider agreed to make the loan to Grace for, among other things, to purchase items needed to provide a service required by the employer. Whether she received any benefit or not was totally irrelevant as she had a duty to inform her employer about her involvement with the two companies. The LAC has now confirmed that if you have a high level of disclosure, specifically in positions such as procurement, employees should learn that they should rather disclose more rather than less. If they are in any doubt they should disclose. The LAC would not stand for a situation where a person in procurement offered the excuse that they did not think there was a conflict of interest and therefore did not make any disclosure. It is not for the procurement person to decide if there is a conflict of interest. They are obligated to make such a disclosure to the company as a part of their duty of good faith.

As an employer, you are entitled to institute policies – which do not infringe the rights of your employees – in your workplace to govern employee behaviour. However, when employees organise an action against your policy this could be considered a strike. The case of T iger Brands Limited v African Meat Industry & Allied Trade Union (AMITU) and Others (D1267/19) [2019] ZALCD 12 (25 October 2019) shows a similar situation. Facts of the case The employer, in response to the obligations in compliance with the Occupational Health and Safety Act 85 of 1993, implemented its Drug and Alcohol Policy (“DAP”) which entailed that all persons entering the premises of the employer were to be subjected to an alcohol breathalyser test. The implementation of the DAP resulted in an increase in misconduct dismissals related to the abuse of alcohol. The union and its members repeatedly expressed their disapproval of the use of the breathalyser as it was resulting in so many dismissals. At a union-management meeting held on the 16th of September 2019, the union recorded that employees were proposing to ban overtime until the breathalyser test was removed or stopped. On 25 September 2019, the union emailed correspondence signed by its General Secretary to the applicant worded as follows: “RE: Notice of Stopping Overtime – Snacks Treats & Beverages”. On the same day (25 September 2019) the employer replied to the union pointing out, inter alia, that if the respondents were to proceed with the threatened overtime ban the employer would immediately approach this court to interdict such conduct. The employer further urged the union to carefully consider the wisdom of its actions. The employer approached the Labour Court on urgent basis to interdict the imminent overtime ban on the basis that it constituted an unprotected strike as the procedural steps set out in s 64 of the LRA had not been followed by the union. The Court found that the strike would have been an unprotected one and it was interdicted.