4 November 1999
Introduction
Tomorrow, 5 November 1999, a Ministerial Determination for small business will be published which will vary some of the conditions in the Basic Conditions of Employment Act for employers who employ less than 10 employees.
There is widespread recognition of the tremendous contribution that small business can and must make to the growth of our economy and the creation of jobs that is so central to the better life that we are seeking to achieve in our country. Indeed, government has set the development of small, medium and micro enterprises as a top priority. It is within the context that I am pleased to announce this Small Business Determination.
The publication of this determination is the product of a long but meaningful process of research, consultations and deliberations. It arises out of a commitment which we made as far back as 1997 to investigate the possible impact of the Basic Conditions of Employment Act on small businesses.
In the process, an impact assessment has been conducted, a Ministerial Task Team has deliberated on the matter, public comment has been solicited, the social partners have had opportunities to present their views and I have been advised by the Employment Conditions Commission.
I am convinced that this process has delivered a result which strikes the appropriate balance between the protection of the rights of workers in small businesses on the one hand and government's imperative to enable small businesses to emerge and flourish on the other.
The Ministerial Determination on small business is in line with the commitment I made in my 15-point programme to create a supportive environment for small businesses so as to facilitate employment creation through this sector. This call has also been raised in my consultations with various stakeholders on possible amendments to our labour laws.
I am of the strong view that labour legislation does not constitute the most significant obstacle to employment creation by small businesses. Recent studies, and evidence in the impact assessment done by Ntsika, reveal that areas such as access to credit, training and markets need to be effectively addressed to promote the growth of the sector.
However, as reflected in the Job Summit agreements, small businesses have been identified as an area of employment growth since in a relatively short period of time they can generate a more inclusive base of entrepreneurship and employment.
It is for this reason that we are committed to putting in place a regulatory framework that can promote and support small businesses. In addition to the Ministerial Determination that I am announcing today, our various laws do already contain special provisions and cut-offs for small business. For example:
Our initiatives are being complemented by the implementation of the Jobs Summit agreements so that other obstacles to the development of small businesses are removed and support mechanisms strengthened.
Contents of the Small Business Determination
The Small Business Determination, which I have made in terms of Section 50 (1) of the BCEA, will affect all employers who employ less than 10 employees, unless that employer is covered by a bargaining council agreement or a sectoral determination. The Determination will be binding as from 15 November 1999.
It is estimated that this determination could affect as many as half a million employees and 200 000 employers.
The determination varies four conditions of the Basic Conditions of Employment Act.
The reasons for the variation
Why, you may ask have I agreed to vary these four conditions of employment? Allow me to outline the approach that has informed the Small Business Determination.
The impact assessment done by Ntsika, the small business promotion agency linked to the Department of Trade and Industry, concluded that the overall impact of the BCEA on small business would be minimal, but that certain sectors would be adversely affected by certain provisions.
I concluded, as did the Ministerial Task Team, that to amend the Act for small business or to do a blanket determination for small business would be inappropriate. This would have reduced obligations on employers to comply with certain basic conditions, even where these obligations were not onerous. It would have created unsubstantiated divisions between different groups of workers.
The issue that needed to be addressed was which groups of employers would be adversely affected and what relief would be appropriate to ensure that labour legislation would not impose an undue burden?
Firstly, the Ministerial Task Team argued that smaller, in fact micro business, would require a special dispensation and recommended this for enterprises which employ less than 10 employees. This, they argued was in line with the definition of micro enterprises in the National Small Business Act as well as international experience to support this numerical threshold. I concur with this approach.
Secondly, it would be inappropriate to grant such employers a blanket exclusion from the Act. This would deny workers in such enterprises rights. The challenge was to identify those conditions to be varied which would constitute the appropriate balance between the need to improve employees' conditions on the one hand and the need to enable small businesses to conduct their business effectively on the other.
For example, in constructing this balance, I have taken cognisance of the needs of the general dealers and other small shop owners in townships to keep their businesses open for longer hours. This is why I have been advised, and have accepted the advice, to consider variations in respect of the overtime provisions.
On the other hand, I am also mindful of the insecurity that often faces workers in small businesses. For this reason, we have made no changes to conditions that relate to termination of employment or the right to maternity leave.
The proof of the pudding as to whether we have created the right balance or not lies in the eating. However, I will not be eating the pudding alone. In fact, the challenge to make this Determination work in practice lies with employers, trade unions and workers. It is to this area that I now turn.
Call to small employers and trade unions
I wish to make a call to small employers and trade unions. To small business owners: I believe that the Small Business Determination is a tool to assist and enable you to comply with the Basic Conditions of Employment Act as a whole. As emerging business persons, it makes good business sense to have good relations with your employees. You should make your human resources the key to your success.
To this end, it is critical that your employees are protected by basic conditions of employment, that you and they contribute to the Unemployment Insurance Fund and you contribute to the Compensation Fund. Denying workers such protection is a recipe for labour insecurity, conflict and lack of commitment to making the enterprise work.
Despite the conventional wisdom that all small businesses do not like labour laws, many of the small business people interviewed as part of the Ntsika study supported this approach. They welcomed the laws because they provided security and certainty for their workers. In fact, ignorance was a bigger problem than opposition.
From the side of the Department of Labour, we are mindful of this potential problem of ignorance and will in the next couple of months be conducting a publicity campaign to inform affected stakeholders of this Determination.
I encourage employers, trade unions and workers to make use of the resources of the Department. Our inspectors are available to provide you with assistance, briefings and even training. We also have a Strengthening Civil Society Fund which can provide funding for training.
However, claiming ignorance of the law will not prevent us from taking decisive action when we find that these laws are being deliberately flouted and the human rights of workers abused.
Which brings me to my second call. Workers in small businesses need to be informed about their rights and how to exercise them. Trade unions are best placed to do this and it is indeed fundamental to their role. Let this Ministerial Determination be a tool for you too, to assist you to intensify efforts to organise workers in small businesses.
Conclusion
In conclusion, I would like to return to the point I made at the beginning.
The process we embarked on in arriving at this Ministerial Determination has been a long one. But it has also been thorough and has produced a result that we can all be proud of.
I would like to thank the producers of the Ntsika study, the members of the Ministerial Task Team, the chair and members of the ECC and the staff of the Department of Labour's Directorate of Minimum Standards for the efforts, energies and work that they devoted to this exercise, to bring us where we are today.
Thank you.