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South Africa – New employment legislation rankles employers

18 September 2013

Key labour law amendments have been adopted in principle by South Africa’s Parliament portfolio committee on labour. This has been done in total disregard of objections from business, which have warned that they will not only complicate the labour market but may also be unconstitutional, according to Business Day Live.

The ‘in-principle’ approval of the Employment Equity Amendment Bill, with only a few changes made by the committee on Tuesday, follows closely in the wake of the passing of the controversial Labour Relations Amendment Bill, which also reportedly failed to address business’s concerns.

Both bills largely reflect the views of the Congress of South African Trade Unions, which believes tougher enforcement of employment equity law is necessary because of what it views as the corporate sector’s dismal failure to transform the economy over the past 15 years.

In terms of the Employment Equity Act, employers are required to prepare, implement, and report on their employment equity plans, which aim to ensure that the workforce is demographically representative.

Business Unity South Africa (Busa) executive director for social and transformation policy Vanessa Phala said the trend of the labour committee passing bills without considering the views of business was "very, very worrying".

She said it called into question why business should make comprehensive and lengthy submissions on legislation during parliamentary hearings when its views were then totally ignored.

"It is quite a setback for business," she said, adding that the bill would be administratively burdensome for small business and impede job creation.

Labour expert Andrew Levy also said he was left with a "deep sense of dissatisfaction and frustration" when the government went through elaborate processes of consultation in both the National Economic Development and Labour Council (Nedlac) and Parliament, and yet it appeared that nothing was heard and everything went through.

Some are claiming that the consultation exercise was a charade.

Mr Levy said: "Government seems to be blind to the needs of business when it comes to the labour market", as it persisted in putting up barriers to investment.”

Ms Phala believes that the bill’s removal of the right of companies to appeal against the compliance orders issued by the Department of Labour was a violation of the principles of administrative justice and was probably unconstitutional. Busa members would have to decide what action to take on the amendments once they were adopted, she said.

Busa also argued that the too rapid recourse to the Labour Court to deal with cases of noncompliance would be costly and time-consuming. It believed there should be scope for conciliation and for companies to have the opportunity to make undertakings on the implementation of their equity plans.

Ms Phala said this was in line with a convention of the International Labour Organisation.

However, Department of Labour chief director Thembinkosi Mkalipi justified the measure on the grounds that it would "fast-track enforcement as the present legislation is long and cumbersome".

He said he could not understand what business was "crying about" in not having its views incorporated into the bill.

"The committee has respected the Nedlac process. There have been public hearings and the committee has to evaluate what is in front of it. The committee has to be convinced," he said.

Business strongly opposed the imposition of heavy fines linked to turnover for non-compliance, but Mr Mkalipi justified this on the grounds that stiff penalties would be more effective. "Those employers who comply have nothing to fear," he told MPs recently.

For more substantial offences; such as the failure to draw up an equity plan, report on the progress of its implementation, or implement the labour director-general’s recommendations, the bill proposes a fine that is between ZAR 1.5 million (USD 152,450) and ZAR 2.7 million (USD 274,410), or anything from between 2% to 10% of company turnover, whichever is greater. These fines depend on the number of contraventions to the law.

Committee chairman Elleck Nchabeleng rebuffed these concerns, saying that the law had to protect vulnerable workers. “Breaches of the law [can] not be condoned,” he said.

Regarding the limitation on the right to appeal, Mr Nchabeleng noted that in the past appeal procedures had been used by companies to delay settlements and worked against the interests of workers. "Justice delayed is justice denied," he said.

Mr Levy’s view was that employment equity would not be achieved overnight and not by using a "big stick" approach.

Formal voting on the proposals is scheduled to take place on October 15. The committee also has to finalise its deliberations on the Employment Services Bill.

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