Millennium Labour Council Login

Forgotten Password
Origins of the Millennium Labour Council Contact the Millennium Labour Council Events of the Millennium Labour Council News from the Millennium Labour Council Members of the Millennium Labour Council Minutes of meetings of the Millennium Labour Council Subcommittees

Millennium Agreement
Eire and Holland visits
Labour Law Amendments		 Introduction Labour Law Amendments

VISION

Introduction

Over the past three years, business and organised labour have engaged each other to find solutions to some of the critical social and economic challenges facing the country. This engagement, involving senior leaders from both constituents, started with a joint study tour to Holland, Ireland and later to the ILO in Switzerland. Regular and intense discussions were held to reflect on experiences elsewhere and on local challenges, including on unemployment, economic growth and social inequities.

Founding objectives

These discussions led to the formation of the MLC and the Millennium Agreement, in which business and labour agreed inter alia:

... That current unemployment, job losses and lack of job creation constitute a deepening crisis in South Africa that requires urgent action
... That current levels of poverty and inequality are unacceptable and new initiatives are needed to promote improved quality of life and decent work for all
... The objective of the Council is to develop a shared analysis of the crisis and potential solutions to be pursued with government and Nedlac, as appropriate. The Millennium Labour Council furthermore agreed to contribute to the creation of an environment that will promote the growth of the South African economy and the raising of living standards for all.

Commitment

The Millennium Labour Council will strive to make South Africa the leading emerging market and the destination of choice for domestic and foreign investment where investments are secure and can earn a competitive return measured over an appropriate term. To achieve this, it is necessary to create a society with decent employment opportunities, committed to equity, fairness and human dignity in which people will have the opportunity to develop to their fullest potential; and with fair labour standards where workers can earn a living wage. We recognise it will take time and effort to forge a consensus on the practical steps required to achieve the goals outlined above and there will be differences in outlook and policy prescriptions. We are nevertheless committed to an effective dialogue and engagement that will explore solutions that will enable South Africa to achieve this vision.

On labour law amendments

This document sets out a package for consideration by constituencies, and if agreed, it shall be referred to Nedlac for consideration. In addition to the role set out for Nedlac in the statute, it shall be requested by the parties to:

... consider the package contained herein

… resolve areas set out in square brackets, or where alternative options are presented, or where a time period still has to be determined, and

… consider legal wording to give effect to the package.

Retrenchments

Following detailed discussions between the parties, the following core understanding has been developed: There must be a meaningful process of deliberation and interaction on proposed retrenchments between employers and trade unions/employees. Should the meaningful process not resolve the issue, then:

… employers will be entitled to proceed with retrenchment, and

… workers will be entitled to resort to strike action.

Should there be any disputes over whether the deliberation and interaction has been meaningful, then the aggrieved party shall have recourse to the Labour Court. The parties agree to work together to reduce any resort to retrenchment, to retain existing jobs, and to create new jobs, wherever possible.

Labour's concerns are that the current Labour Appeal Court interpretation of the statute results in employees being deprived of any remedy in instances where there is disagreement with the merits of contemplated retrenchment, i.e. where employees disagree with the reasons of the employer informing his decision to retrench.

In such instances, they are not able to test the merits of those reasons in court, nor can they exercise a right to industrial action on the matter. Business is concerned that the current system relating to retrenchments is cumbersome and uncertain, with a requirement of enterprise-level consultation, followed by statutory conciliation and thereafter resort to adjudication through the Labour Court, with this complete procedure taking up to two years in some cases to reach finalisation.

Both parties recognise that the current statutory system does not encourage a genuine engagement between employers and trade unions/employees in circumstances where retrenchments are contemplated.

To remedy this, the parties agree to develop a process of meaningful interaction, rights of participation and dialogue and to set these out in legislation. In the event that such meaningful process does not result in agreement on retrenchment, or alternatives to retrenchment, the parties will be entitled to resort to their rights as set out below.

Employers will only be entitled to retrench after they have given notice and followed the agreed procedure set out hereunder.

Trade unions will only be entitled to strike, after they have given notice and followed the agreed procedure set out hereunder.

The parties agree the procedure should set out clear and defined process, and create certainty for both parties in respect of their rights and obligations.

Recourse to industrial action will remain as regulated in Chapter 4 of the LRA, except as specifically set out hereunder.

The agreed procedure to give effect to will be as follows:

INITIAL PROCESS

1. When an employer employing more than 50 workers contemplates retrenchment, and the number of employees contemplated for retrenchment within a 12 month period is more than 10% of the workforce, or 50 people, whichever is smaller, the following shall apply:

1.1 the employer shall give notice in writing to both the trade union/employees and the CCMA, setting out (add 189 (3) provisions);

1.2 the CCMA shall appoint a facilitator from a dedicated panel of facilitators, if requested by either party within two weeks of the notice from the employer. This panel(s) will be constituted by agreement of the parties at Nedlac.

1.3 the facilitator shall ensure the convening of a meeting of the parties, which meeting shall take place no later than thirty days from date of notice by the employer, to address the following:

… ensure the parties address the proposed retrenchment in accordance with the law;

… deal with disclosure of information requirements, and make a determination where such is needed. In regard to disclosure of information in the LRA, the status quo shall remain on all matters, except in the event of retrenchment. In disputes on the disclosure of information during a retrenchment where the CCMA is required to decide as to whether or not the information is relevant, the onus will be on the employer to prove that any information that it has refused to disclose is not relevant for the purpose for which it is sought. For as long as the facilitator is used, his or her decisions shall be final and binding, subject to the normal process of review of decisions.

… make proposals on process to be followed by the parties.

1.4 After this first meeting, the parties shall interact meaningfully with a view to attempting to reach consensus on:

Appropriate measures to :

  • avoid the dismissals;
  • minimise the number of dismissals;
  • change the timing of the dismissals;
  • mitigate the adverse effects of the dismissals;
  • the method for selecting the employees to be dismissed;
  • the severance pay for dismissed employees.

1.5 The parties will address inter alia:

  • the reasons given by the employer;
  • the adequacy, sufficiency and relevance of the reasons;
  • disclosure of information requirements;
  • alternatives considered, or proposed;
  • procedures to be followed by the parties to address specific elements of the process;
  • other areas which are set out in the current section 189(2) and (3).

1.6 The parties may, by agreement, utilise the services of the facilitator throughout the process.

1.7 The process of facilitation or meaningful engagement must continue for no less than 30 (thirty) days from:

1.7.1 the date of the first meeting by the facilitator, if that meeting is held within 30 (thirty) days of notice in 1(1); or

1.7.2 the expiry of the initial 30 (thirty) days provided for in paragraph 1(3), subject to paragraph 1.8 below, [or such longer period as may be set out in a collective agreement]

1.8 The facilitator may make proposals on process to be followed by the parties. The parties will finalise in the Nedlac process one of the following two options to provide for flexibility in the time periods set out above.

OPTION 1: The facilitator may on good cause shown vary the time periods provided for above. Time periods may be reduced either by agreement of the parties, or for reasons of urgency, which shall refer to instances where a sudden and unexpected change in the commercial circumstances of a company require an immediate response, and where failure to act immediately will result in the closure of a company. Time periods may be increased for reasons based on the complexity, size or social impact of the retrenchment. Should either party seek to challenge the period determined by the facilitator, such application shall be deemed to be an urgent application to the Labour Court.

OPTION 2: The facilitator may on good cause shown make proposals to vary the time periods provided for above. Time periods may be reduced either by agreement of the parties, or for reasons of urgency, which shall refer to instances where a sudden and unexpected change in the commercial circumstances of a company require an immediate response, and where failure to act immediately will result in the closure of a company. Time periods may be increased for reasons based on the complexity, size or social impact of the retrenchment. Should an employer decide to act in disregard of the proposal by the facilitator, the employer shall advise the trade union/employees. Should the trade union challenge such action by the employer in court, the application will be deemed to be urgent, and the court shall use the facilitatorís proposals as guidelines in considering whether meaningful interaction has taken place.

2. The provisions in 1 above shall not apply where a collective bargaining agreement exists between parties and which agreement was reached after the new amendments come into effect. This agreement must deal specifically with facilitation and set out appropriate and adequate alternatives.

DEADLOCK PHASE.

3. If no agreement is reached in the above phase the union or an employer may give notice of deadlock.

INDUSTRIAL ACTION, COURT ACTION AND RETRENCHMENT

4. The employer may not retrench, and the union may not resort to strike action, until the applicable process set out above has been concluded.

5. The employer shall be required, after final deadlock has been reached, to give individual employees notice in terms of section 37(1) [37(2)] of the Basic Conditions of Employment Act, before effecting the retrenchment.

6. The trade union shall be required, after final deadlock has been reached, to give the employer 48 hours notice of its intention to strike. The right to strike applies to companies employing 50 or more employees. The employment levels will be based on the companiesí national employment figures.

7. The parties agree that, in the event that secondary strike action on retrenchments is invoked, it should be the result of careful consideration. To this end, the parties agree that an additional procedure will be introduced to be followed by workers prior to engaging in a secondary strike on retrenchment. The proposed procedure is to increase the notice period in section 66(2)(b) of the LRA from 7 days to 14 days, and to ensure that either party may request resort to expedited conciliation within the fourteen day period. (This procedure will only apply to secondary strikes directed at retrenchments.)

8. It is agreed the procedure to be utilised for challenges to breach of the procedure herein, and applicable remedies, will be developed in the Nedlac process and set out in the legislation.

9. Where the union or employees seek to challenge in court the procedural fairness of a retrenchment or contemplated retrenchment, the applicant party shall be required to advise of intention no later than x period after written notice of deadlock has been lodged in terms of the above.

10. Nothing prevents the parties from agreeing to go to conciliation at any time during the process or after the giving of notice of intention to strike or notice of dismissal

11. Provision will be made for applications brought by trade unions challenging compliance with the meaningful interaction provision, to be deemed to be urgent.

12. The Labour court will consider whether parties have complied with the requirements of law, which refers to adherence to proper procedures, ensuring meaningful interaction has taken place, and ensuring the reason for the retrenchment falls properly within the definition of operational requirements. Resort to industrial action will be effected where parties disagree on the appropriateness of retrenchment as a remedy to address operational requirements.

13. The parties agree that appropriate mechanisms will be considered during the Nedlac process, to ensure that the CCMA will fulfil its statutory obligation to hold the meeting between the facilitator and the parties within a thirty day period, and this will include a statutory provision to ensure that Convening Commissioners are responsible to ensure such compliance, and a statutory reporting requirement on the extent to which individual cases have been dealt with within the prescribed timeframe.

14. For all proposed retrenchments not covered by the scope set out in 1 and 2 above, the current provisions in the LRA dealing with retrenchments shall apply. Probation For the first six months of employment, or the probation period of an employee, whichever is shorter, the following arrangements should apply:

… such employees should have access to the dispute resolution institutions, being the CCMA and Bargaining Councils;

… a narrower test of compliance with fairness will be set for dismissal for work performance, during the probation in relation to that which applies to the permanent employees;

… The CCMA will seek to determine or settle such dismissal disputes through a single ëconarbí hearing;

… The parties will develop guidelines for commissioners on the interpretation of the procedures relating to the probationary clauses of schedule 8. The parties agree that probation is a normal and acceptable mechanism to assess the performance of new employees. However, these provisions should not permit the emergence of a class of ëpermanent probationersí within a workforce, i.e. that an employer employs staff on probation, dismisses them at the end of the period and employs a new workforce simply to evade legal provisions, terms and conditions applying to permanent staff. All the amendments dealing with probations should be tested against the above principles.

Bargaining Councils

The parties acknowledge that bargaining councils are an integral part of the collective bargaining arrangements in South Africa, and the need to strengthen their functioning. One feature is the number of non-parties to the council. The parties agreed it would be desirable to promote membership by small businesses of employers associations so that their interests may be represented more effectively in bargaining councils where such bargaining councils have jurisdiction. Membership of such employers associations would be voluntary.

To this end, it identified a number of possible means to achieve the above:

… a political signal by the leadership of government, business and labour to non-party employers that good practice will be developed by bargaining councils to encourage better communication and to achieve the objectives in the above paragraph;

… an institutional environment within bargaining councils to facilitate the achievement of the above.

The parties agree to introduce a requirement on Bargaining Councils through section 54 of the LRA to submit an annual report to the Registrar reflecting the extent of activity of small businesses in the affairs of the Councils. This will reflect trade union membership of such employees and employer association membership of employers, the application of agreements to non-parties, and the nature and extent of applications for exemptions applied for and/or granted.

Nedlac should propose appropriate policy recommendations in respect of these areas, where applicable, on an annual basis. In regard to any possible legal amendment, it is agreed that any amendment to be considered by the committee should not be capable in any way to create greater vulnerability to litigation by non-parties in respect of extension of agreements than may be the case at present.

The parties agree to amend section 28(1) to provide two additional functions for bargaining councils, namely

… to develop industrial support services for industry;

… to provide services and appropriate coverage for workers in informal sector/home-based activities. It is noted that this provision is simply a legal entitlement for a bargaining council, and not a requirement on councils.

Variation by Minister

The Committee agreed that the current amendments in respect of section 50 of the BCEA should be redrafted. The amendment should provide: that the Minister be able, subject to section 50, to vary section 9 of the BCEA, in cases where the nature of the work organisation make any other option impracticable, such as maritime work. This must be subject to agreement by the representative trade unions and the employers concerned.

Section 197

The parties commenced discussion on section 197, and identified a number of concerns relating to transfers. One area was specifically addressed, namely transfers of employees to a new employer with the effect of evading retrenchment benefits that the old employer might otherwise have.

Three proposals were identified, and agreed, and these are:

… The employer who transfers a business or part of a business as a going concern will be required to take due care that adequate provision is made in the terms of the transfer to ensure viable capacity by the new employer, to carry out the payment of service obligations to transferred employees. These terms are to be made known to affected employees. Failure to take due care will make the old employer jointly and severally liable for a 12 month period, should the new employer be unable to meet those obligations in the event of retrenchment or insolvency. Service obligations refer to retrenchment pay, leave pay and bonuses accrued at the time of transfer. The Committee will develop proposals for legal process based on the same principles applicable in individual dismissal cases

… to prohibit any transfer aimed at avoiding collective bargaining or service obligations, and to provide for mechanisms to ensure this is given effect to;

… During a section 197 process, where employees are prejudiced by the transfer, the parties may through a collective agreement provide for the elective right to retrenchment for those employees who do not elect to take continuing employment with the transferred company. The committee will consider mechanisms to ensure this is provided for in the legislation. Prejudice will have to be determined by the CCMA in the event of a dispute. The Committee agreed to determine whether any changes are needed to the Companies Act to give effect to the above. The Committee agrees to return to a consideration of the remainder of proposed amendments to s197.

Independent contractors

The parties support the amendment introduced, subject to the following:

… that it is applicable only to persons whose annual/monthly income is below the threshold set out in the Unemployment Insurance Act/[BCEA];

… that disputes in regard to the status of persons be resolved at the CCMA through a seamless conarb process;

… any affected party may approach the CCMA to receive a declarator whether a proposed or existing arrangement constitutes a bona fide independent contractual arrangement. The parties further agree that guidelines be developed through Nedlac for the Labour Court and the CCMA regarding the question of independent contractors, which would be applicable to persons above and below the threshold.

Labour Court

The parties record that they will agree to a panel of acting judges at the start of the year, from which the Minister of Justice after consultation with the Judge President will appoint acting judges. To give effect to this, the parties agree that the LRA be amended to provide that the Minister of Justice, acting on the advice of NEDLAC and after consultation with the Judge President of the Labour Court may appoint persons to serve as acting judges from the above panel.

The parties support those amendments to the LRA that have the effect of:

… Granting Labour Court Judges appointed in future, the same status as High Court Judges, i.e. in regard to terms and conditions of employment, except that their appointment to the Labour Court and Labour Appeal Court will be for a fixed period. They should be appointed to other divisions of the High Court in the event that they are not re-appointed to the Labour Court and Labour Appeal Court.

… Entitling Judges of the Labour Court who are currently not judges of the High Court, on expiry of their current contracts, to apply for a new term in the Labour Court, or a post in the High Court. If no such appointment is made the unsuccessful candidate is to receive benefits not less favourable that those accruing to judges of the Land Claims Court. The parties recommend that the current provision in the LRA that requires Nedlac to be part of the process of determining the number of judges in the Labour Court, be retained. (See section 152(1)(c)).

The parties agree to delete the provision in the amendments that provide for representation of parties by candidate attorneys in the Labour Court. Workplace Forums Both business and labour agree that the status quo in the LRA be retained.

CCMA

The parties agree to simplify and shorten the process of considering the fairness or otherwise of dismissals. The CCMA Governing Body will receive a new mandate from Nedlac to achieve settlement of every dismissal dispute referred to it within a set period determined after consultation with the CCMA management from the point of entry of the case to the CCMA. This mandate will be phased in within a set timetable. This will be accompanied by incentives for achievement above or at targets on the CCMA at regional level for each case dealt with in the period. The CCMA Governing Body will work out details of these. To further narrow the ambit of uncertainty, and having regard to the provisions of section 138(6) of the LRA, the CCMA Governing Body will develop guidelines for Commissioners in all areas of procedure where Commissioners, or the Commission, are required to exercise discretion.

Examples of these include jurisdiction, postponements, condonation, failure by a party to attend a hearing, the form of arbitration/advisory awards and recommendations, strike and lockout rules, issuing of certificates, the format of settlement agreements, conciliation during an arbitration process and use of plain language in awards. To promote simplicity and certainty, the LRA should be amended to combine processes of conciliation and arbitration. At conciliation, Commissioners should be entitled to set a date immediately for arbitration, without resort to any new application or paperwork. By agreement of the parties, disputing parties can go straight to conarb. The participation of a Commissioner in both conciliation and arbitration of the same dispute will be subject to written guidelines, to be developed by the CCMA Governing Body. Measures should be introduced to ensure that standards of service delivery and quality controls that apply internally to full-time Commissioners equally apply to part-time Commissioners. The parties agree that representation at the CCMA should remain as currently conceived in the statute.

Accordingly, proposals to introduce candidate attorneys, lawyers and labour advisors into the proceedings at the CCMA, are not supported. The CCMA Director will, after consultation with the parties, be empowered to require that a Commissioner continue to conciliate interest disputes beyond the issuing of the certificate as provided in section 135 of the Act. This will mean a Commissioner may be involved in attempting to find a resolution to a dispute even during a strike or lockout. The parties support the status quo in respect of the basis on which costs may be awarded in arbitration proceedings.

Instead, the parties agree that the CCMA Governing Body should develop guidelines on cost awards for frivolous and vexatious behaviour. The parties do not support the introduction of a new basis for fees to be charged in respect of any arbitrations. The parties agree to the amendment to section 158(1)(g) to narrow the grounds for review of CCMA awards, but propose that mechanisms be developed to improve the quality and consistency of arbitration awards, including through peer group consideration of draft awards, and improved training of Commissioners. The parties do not believe it desirable to require prior membership of bona fide trade unions and employer organisations, before such associations may represent a party at CCMA arbitration hearings. The status quo should remain. However, the parties support the provisions in the amendments that grant greater powers to the registrar in respect of registration of trade unions and employer organisations, in terms of guidelines developed by the Minister in consultation with Nedlac, and published by the Minister. The parties agree to support amendments to the representation sections of the Act, to permit directors and employees of holding or subsidiary companies, and officials and office bearers of trade union federations and employer federations to represent parties at the CCMA. In the case of federations, the party to the dispute should be a member of the affiliate of the federation. The parties support the proposed amendment in section 33A to grant arbitrators powers to impose fines, provided that in the event of non-payment of the fine within a prescribed time, the fine will be considered by the Labour Court.

Formal hearings

The parties believe the current Schedule 8 allows a range of appropriate approaches to administer discipline fairly in the workplace. The parties support the status quo, subject to a guideline being developed for CCMA Commissioners to ensure an appropriate application of Schedule 8.

Employment Conditions Commission

The parties agree to the representation on the Employment Conditions Commission being expanded to provide for an alternate delegate each for organised business and organised labour.

Labour Market Institutions

The committee discussed ways of improving the functioning of the labour market, and of ensuring the benefits of the new labour dispensation impacts positively on the economy and the society. The parties propose that the relevant Nedlac constituencies through the relevant Nedlac structures review the operation of all labour market institutions to ensure that these function effectively and efficiently, as set out in the LRA and other legislation.

These institutions include the CCMA, the Labour Court, Nedlac, the NPI, Employment Conditions Commission, Employment Equity Commission, the Unemployment Insurance Fund and the Compensation Fund.

Insolvency Act

The committee considered the concerns about the workings of the Insolvency Act, particularly the inadequate protection of workers and of employment in the process of provisional and/or final liquidation.

The parties agree that the proposed amendments to legislation, and the Insolvency Act, be audited against the following principles:

… Unions and employees should be informed timeously of any financial difficulties that could result in possible liquidation, and a copy of any application for provisional or final liquidation should be given to the union/workers at the same time that it is served on creditors. [Legal advice will be sought on the possibility to ëserveí notice on the union.]

… Any application for liquidation should satisfy the court that there are no viable alternatives to the liquidation that would keep the business as a going concern and would save jobs.

… Section 38 of the Insolvency Act must be amended to provide that workers contracts of employment are not terminated by operation of this law, and do not relieve an employer or provisional liquidator from compliance with the LRA, or the BCEA (including the severance pay provisions).

… Workers and employer contributions to benefit funds should not form part of the liquidated businessí estate, and these contributions should be held in trust, separate from the businessí current account, and upon liquidation should be paid over to the respective funds. Directors or persons responsible for acting in breach of this provision should be held criminally and civilly liable for any employee and employer contributions not kept in trust accounts.

… It is recognised that the risk to employees in the event of insolvency is inequitable, and it is therefore agreed that the risk should either be alleviated, or shifted [to a combination of the state, secured creditors and employers].

To this end, the parties agree that one of the following three options, or a combination thereof, will be considered as options to address the current state of affairs:

  • First, to classify a carefully circumscribed portion of worker claims concurrent with secured creditors, and to limit the proportion of total secured claim value exposed to this arrangement; or
  • Second, to ensure that a statutory fund guarantees payment of a portion of worker claims, and then to seek to recover such payments from the insolvent estate as the highest ranking creditor in the preferred creditor category, or
  • Third, to grant the fund referred to above the right to recover carefully circumscribed claims up to a specified proportion of total secured claim value, and to propose that the rates and taxes claim in the secured creditor category be limited to a specified period of arrears and to a narrower definition of claims that so qualify.

Other Basic Conditions of Employment Act amendments

Remuneration: the committee agreed that Nedlac should give comment prior to the Minister finalising the schedule on remuneration.

The parties discussed the issue of a premium for work performed on a Sunday, and recommend the following:

… a premium of 1,5 would apply for work performed on a Sunday in all companies employing 20 [30] or fewer employees. (The definition of establishments will be based on the national employment of a company, not the employment in each workplace);

… the status quo pertaining to payment for work performed on a Sunday in the retail and hospitality industries, as set out in the applicable Wage Determinations, would continue until revised by the ECC. Accordingly, the Sunday payment will not change in these sectors simply as a result of the current amendments to the BCEA.

… These provisions set out above will not affect collective bargaining agreements