On Tuesday, 20 March 2012 Cabinet approved the submission of the amendment bill for the Labour Relations Act 66 of 1995 (“the LRA”) and the Basic Conditions of Employment Act 95 of 1997 (“the BCEA”) to Parliament where the bills will be considered by the Portfolio Committee on Labour. Once considered by the Portfolio Committee on Labour, these bills will be submitted to the National Assembly and the National Council of Provinces for adoption.
According to a press statement released by the Minister of Labour these two bills aim to protect vulnerable employees, ensure compliance with international labour standards, ensure that labour legislation gives effect to fundamental constitutional rights, enhance the effectiveness of labour institutions such as the Labour Court, the CCMA and to rectify historical anomalies and clarify uncertainties that have arisen from the application of these statutes.
Although the draft bills have retained certain of the amendments which appeared in the draft LRA and BCEA bills released in December 2010, many of the current amendments are presented to the public for the first time. Not surprisingly, the draft bills have already give rise to much debate and controversy.
Proposed changes to the LRA
The Minister has proposed amending the right to strike provisions in order to impose on trade unions an obligation to conduct a ballot of its members to determine whether the majority of those members are in favour of a strike. Notwithstanding the requirement that the majority of the trade union’s members in good standing must vote in favour of a strike, the amendments provide further that the failure by a trade union to comply with a provision in its constitution to conduct a ballot of those of its members in respect of whom it intends to call a strike, may not give rise to, or constitute a ground for any litigation that will affect the legality, or the protection conferred by the LRA, on the strike. If these proposed amendments are introduced into law the Labour Court may be required to determine whether these amendments are in fact contradictory.
In an effort to protect the employees of labour brokers, a category of employees which the Minister has identified as “vulnerable to abuse”, the Minister has proposed that arbitration awards dealing with organisational rights will be binding, not only on the employer of the affected employees, but also on the clients of labour brokers who are bound by such awards as well as on any other party who controls a workplace where affected employees work.
The Minister has also proposed substantial changes to the review proceedings brought before the Labour Court, being the only mechanism available to challenge arbitration awards. Although these proposed changes are aimed at curtailing delays often associated with review proceedings and preventing the misuse of the process by unscrupulous employers wanting to avoid complying with arbitration awards, the proposed amendments, if introduced into law, could have a detrimental impact on an employer’s right to challenge reviewable arbitration awards.
The amendments include a provision that review proceedings will not suspend the operation of an arbitration award, unless the applicant to the review proceedings provides security to the satisfaction of the Labour Court. Unless otherwise determined by the Labour Court the security to be furnished must be equal to twenty four months’ remuneration, if the award orders reinstatement or re-employment or must be equal to the compensation awarded by the arbitrator, in the case of the compensation order.
The furnishing of security equivalent to two years’ remuneration in order to prevent the enforcement of a reinstatement order, is a fairly substantial amendment. The obligation to furnish costly security may itself preclude a party to an arbitration award from exercising its legal right to review an award, even in circumstances where the award is obviously irregular, particularly in cases where the award involves multiple reinstatement order.
The Minister also proposed distinguishing between higher and lower income earners in cases of dismissal. In instances where an employee earning above the threshold prescribed by the Minister (likely to be in the region of R1 million) is dismissed, that dismissal shall be deemed to be for a fair reason and effected in accordance with a fair procedure if the employer gives the employee notice (being notice in writing equal to three months or a longer period as specified in the employee’s contract of employment) or pays the employee in lieu of such notice. Arguable, although this amendment will not deprive higher paid employees of the right to challenge their dismissals, it will mean that these employees, rather than their employers, will bear the onus to prove that the dismissal was unfair, potentially making it very difficult for higher earning employees to prove that they have been unfairly dismissed.
Arguable the most anticipated amendment to the LRA aims to regulate rather than ban the practice of labour broking. In terms of the proposed amendments, labour brokers will have to be registered as such in accordance with applicable legislation. Once registered, the labour broker and the client will be jointly and severally liable in the event that the labour broker contravenes a collective agreement, concluded in a Bargaining Council, that regulate terms and conditions of employment, a binding arbitration award that regulates terms and conditions of employment, the BCEA and any determination made in terms of the BCEA.
If the Minister’s proposed amendments dealing with labour brokers are introduced into law, an employee employed by a labour broker, earning below the threshold prescribed in the BCEA (currently R172,000), assigned to a client for more than six months could be deemed to be the employee of the client and must unless there is a justifiable reason for the differentiation, be employed on terms which are no less favourable than the terms applicable to the client’s other employees performing the same or similar work. This amendment, if introduced into law, may have the effect of indirectly banning the practice of labour broking.
The draft bill, however, contemplates that the Minister will categorise certain types of work as temporary services. Once specific work has been categorised as a temporary service, the employees engaged by a labour broker to perform such work will not be deemed to be the employees of the client. Although the Minister intends to invite representations from the public on the categorisation of temporary services, the lack of clarity as to what may constitute temporary services could make many labour brokers anxious.
In terms of the bill, employees who are employed on fixed term contracts for longer than six months in categories of work which the bill does not consider to be appropriate for such fixed term contracts, shall be deemed to have been engaged for an indefinite duration. Employees employed on fixed term contracts for longer than six months must be treated on the whole no less favourably than employees employed by the same employer indefinitely doing the same work, unless there is a justification for doing so.
An employer will also be required to provide its fixed term employees with the same opportunities to apply for vacancies as those employees employed indefinitely.
The bill also introduces an obligation on employers to pay fixed term employees employed for a period exceeding 24 months, a severance package calculated on the basis of at least one week’s remuneration for each completed year of service following the termination of the fixed term contract. As with indefinite employees, a fixed term employee shall forfeit his or her right to a severance package if he or she unreasonably refuses to accept the employer’s offer of employment with that employer or any other employer. Importantly, the payment of a severance package in these circumstances will not protect the employer from a claim of unfair dismissal should the fixed term employee hold the view that he or she had a legitimate expectation of continued employment, notwithstanding the termination of the fixed term contract.
Proposed changes to the BCEA
In an amendment aimed at assisting trade unions which have historically struggled to secure representivity in certain sectors due to, for example, the structure of the workplaces in those sectors, the Minister intends to prescribe thresholds of union representivity within industries which are subject to sectoral determinations. This will allow trade unions to automatically acquire organisational rights in all workplaces covered by the sectoral determination upon achieving a prescribed threshold of representivity in that sector.
Whereas the BCEA currently does not provide for minimum wages or minimum wage increases, the proposed amendments allow the Minister to make a sectoral determination for any employees not already covered by an existing sectoral determination. The Minister may in terms of such a general sectoral determination, set minimum wages or minimum wage increases which may therefore apply to all employees.
The BCEA amendments also aim to streamline the mechanisms used to enforce compliance with the BCEA. The amendments aim to do away with the current mechanisms which provide that an employer may, inter alia, object to a compliance order issued by the Department of Labour and may appeal against compliance orders made by the Director General of the Department of Labour. According to the draft bill, any failure to comply with a compliance order would constitute contempt of court.
The amendments also remain committed to the Minister’s stated intention to further criminalise BCEA contraventions. To this end, the Minister has proposed increasing the maximum terms of imprisonment to six years for specified contraventions. Maximum fines will also increase to between R300 and R1,500 for specified BCEA contraventions.
The publication of the much anticipated LRA and BCEA bills has not put to bed many of the debates which began in 2010 when the bills were first published for public debate, leaving many stakeholders wondering whether any of these debates will mature into a constitutional challenge.
Written by Anastasia Vatalidis and Bradley Workman-Davies, Directors at Werksmans Attorneys