In November 2017, the National Assembly in South Africa passed several pieces of labour legislation that have important implications for employers and employees in South Africa. The National Minimum Wage Bill, the Basic Conditions of Employment Amendment Bill, and the Labour Relations Amendment Bill were passed by the National Assembly. These Bills will now be sent to the National Council of Provinces, the next step in the process of being enacted into law. Further, the Unemployment Insurance Amendment Bill, which will also impact the South African workforce, is also currently working its way through Parliament.
The National Minimum Wage
The National Minimum Wage Bill, the Labour Relations Bill and the Basic Conditions of Employment Bill all include amendments that govern the National Minimum Wage. Once implemented, the national minimum wage in South Africa will be R 20 per hour. This means an employee working 45 hours per week will earn approximately R 3 500 per month.
The initial national minimum wage agreement, reached in February 2017, between the parties at the National Economic Development and Labour Council, committed to avoid job losses that may arise. The agreement included a "code of good practice for collective bargaining, industrial action and picketing", as well as provided measures that aim to mitigate violent and lengthy strikes.
Up until now there has been no statutory national minimum wage. However, section 51 of the Basic Conditions of Employment Act, (BCEA) provides that the Minister of Labour may make a sectoral determination establishing basic conditions of employment for employees in a sector and area, which includes minimum wages. Sectoral determinations are in place in areas of economic activity where labour has been deemed vulnerable, such as Forestry, Agriculture, Contract Cleaning, Children in the Performance of Advertising, Artistic and Cultural Activities, Taxi Operators, Civil Engineering, Learnerships, Private Security, Domestic Workers, Wholesale and Retail and Hospitality. Once the Minimum Wage Act has been enacted, sectoral agreements, collective agreements, bargaining council agreements and employment contracts will need to comply and be aligned with the Act.
The Basic Conditions of Employment Amendment Bill also makes provisions for exemptions of up to 12 months from the national minimum wage for start-ups, small and medium-sized enterprises who would battle to pay the higher wage.
The national minimum wage is set to be reviewed annually by a new National Minimum Wage Commission, based on considerations such as cost of living, inequality, health and safety as well as considerations and inflation.
Labour Laws Amendment Bill
The Labour Laws Amendment Bill (the Bill) was also passed by the National Assembly in November 2017. It provides for unpaid paternity leave, adoption leave and surrogacy leave for all employees who do not qualify for maternity leave. This is the first private member bill ever to be passed by South African Parliament.
Previously, employees who did not qualify for maternity leave were only entitled to three days paid family responsibility leave for the birth of the employee's child, or if the employee's child was sick, or in the event of the death of the employee's child.
Under the Bill, all fathers are entitled to at least 10 days of paternity leave. Further, one adoptive parent who has adopted a child, who is less than two years old, will now be entitled to adoption leave. If there are two adoptive parents, one will be entitled to 10 consecutive weeks of adoption leave and the other will be entitled to at least 10 days of paternity leave. The new law also allows one surrogate parent to be entitled to surrogacy leave for a period of up to 10 weeks and the other parent will be entitled to at least 10 days of paternity leave. Leave will also be applicable in the event of a miscarriage or a still born during the third trimester; and fathers will be entitled to more family responsibility leave.
The Bill also provides for an increase in maternity leave benefits and now provides for payment of parental benefits and surrogate parental benefits from the UIF. Further, no collective agreements by bargaining councils may reduce an employee's entitlement to paternity leave, adoption leave or surrogacy leave.
This Bill is of great significance in terms of recognising the rights of the LGBTQI (Gay, Bisexual, Transgender, Queer and Intersex) community as the Bill is gender neutral.
The Bill also seeks to limit strike action in order to prevent violent strikes. It makes provisions for the resolution of strike disputes through arbitration awards at the CCMA. The Bill clarifies that strike ballots, undertaken by members of trade unions before a decision is made to strike, should be done by way of a secret ballot. A Code of Good Practice for picketing rules has been introduced. Further, the Minister of Labour will also be allowed to extend collective bargaining agreements to allow for greater representation.
The existing South African Labour Relations Act already sets out procedural and substantive limitations on the right to strike in South Africa, such as requiring the trade union to declare a dispute with the employment tribunal, conciliation of the dispute and providing prior notice of the strike. The right is further limited in that employees may not strike where they agreed, in a collective bargaining agreement, that they will not strike on the issues covered in the agreement - e.g. wages for that year. Employees are bound by an agreement where they agreed to refer the issue in dispute to arbitration; and they may refer the issue in dispute to the Labour Court or employment tribunal for adjudication.
Unemployment Insurance Amendment Bill
Lastly, the Unemployment Insurance Amendment Bill (UI Bill), which was first introduced into the National Assembly in 2014, was passed in January 2017, but has not yet come into effect.
The Unemployment Insurance Fund (UIF) is a vehicle for payment of benefits to employees who become unemployed, take maternity leave or otherwise become entitled to benefits. Employers and employees contribute to the UIF.
The UI Bill aims to improve service delivery by the UIF. Under the UI Bill, learnerships (contract of employment contemplated in the Skills Development Act), and their employers, government employees, and fixed-term workers required to leave South Africa on expiration of their term will also now benefit from the UIF. Exclusion of these categories of employees was deemed unconstitutional and the draft Bill seeks to cover these employees.
New maternity benefits will see payment made at a rate of 66% of the earnings of the beneficiary at the time of the application. This provision also provides for the income replacement rate of 20% payable after 238 days until 365 days. An interesting amendment to the Act is that a contributor who has a miscarriage during the 3rd trimester or bears a still-born child, is now entitled to a full maternity benefit of 17 to 32 weeks.
Currently the Act states that every employer must inform the Commissioner of any change which occurred during the previous month with regards their employees. The proposed amendment requires the employers to provide the Commissioner with all employment information not just changes only. The UI Bill will also enable the Minister of Labour to change/vary both minimum Income Replacement Rate and the maximum Income Replacement Rate without having to go to Parliament. The present position is that the Minister can vary the minimum Income Replacement Rate only. Once the amendment becomes law the Minister will simply use a regulation to vary either the minimum or maximum or both.
This UI Bill will create welcome relief for employees and former-employees seeking to claim benefits. During the tough economic times faced by many employers, redundancies are at high levels. Many retrenched employees rely on UIF benefits to tie them over until they find new employment. With new jobs being scarce, extending the benefits will permit many struggling families to remain afloat during the dark period following a job loss to an income earner or breadwinner. The additional maternity benefits are a great step in the right direction for many employers seeking to introduce more progressive policies to attract and maintain talented female employees
The primary aim of the changes to South Africa’s labour legislation appears to be the protection of South African workers, via increased minimum wages, access to unemployment insurance, more rights in terms of parental leave, and protection during violent strikes. However, critics argue that the changes will have the opposite effect, by, for example, weakening an employee’s right to strike, setting a minimum wage that is too low and removing the current protections afforded to vulnerable workers employed in low-wage sectors.
Written By Johan Botes, Partner and Practice Head, Lauren Salt, Senior Associate, and Thandoluhle Dladla, Candidate Attorney, Employment & Compensation Practice, Baker McKenzie Johannesburg