FINAL

BUSINESS SOUTH AFRICA

SUBMISSION TO PARLIAMENT REGARDING THE LABOUR RELATIONS AMENDMENT BILL AND THE BASIC CONDITIONS OF EMPLOYMENT AMENDMENT BILL

16 – 17 OCTOBER 2001

Business South Africa (BSA) wishes to express its appreciation to the Parliamentary Portfolio Committee: Labour (Committee) for the opportunity to make a submission to the Committee about the Labour Relations Amendment Bill 77 of 2001 (LRA Bill) and the Basic Conditions of Employment Amendment Bill 70 of 2001 (BCEA Bill).

BSA participated in the negotiations about the LRA Bill and the BCEA Bill at NEDLAC and is a co-signatory to the NEDLAC Report that was submitted to the Minister of Labour. It will accordingly restrict its submission to those issues that the NEDLAC Report reflects as not agreed to.

BSA's submission is divided into three parts. The first part deals with the issue of retrenchment, the second with premiums for Sunday work and the third part with the other issues that all parties did not sign off during the NEDLAC negotiations.

PART 1: RETRENCHMENT (SECTIONS 189 AND 189A OF LRA Bill)

For all but relatively small retrenchments, the LRA Bill introduces very onerous provisions. These provisions will firstly delay urgent restructuring of businesses, even where parties might agree on the urgency. Secondly, the amendments not only introduce forum shopping, but go against world best practice that a particular dispute has a particular remedy, and not a choice of remedies. Medium sized businesses are expected to be particularly hard hit by the LRA Bill.

The time delays introduced by various sections of the Bill might have serious consequences for employees not affected by retrenchments. Some businesses may go insolvent if they are unable to adjust rapidly, and this may happen even where the employer and trade union agree on the urgency of restructuring. This is because the Bill does not allow any alleviation of the long compulsory time periods, not even by agreement. An employer may only give notice of termination of service after 60 days, after which another 30-day notice period must be served. Employees have a further 90 days after the 60 day period within which to dispute the substantive fairness of the retrenchment in the Labour Court.

The Bill allows employees to either strike or to approach the Labour Court regarding the reasons for the retrenchment. Even though BSA reluctantly accepts the right to strike about large-scale retrenchment, it believes that the opportunity for forum shopping created by the Bill is fatally flawed – it contradicts all proper legal principles, and might lead to inter-union clashes and tension (or worse) between groups of employees.

    1. The elective right of employees to strike or to approach the Labour Court

In the case of all but small employers or very small retrenchments, the Bill affords employees a choice. They can either embark upon strike action or they can approach the Labour Court about the substantive fairness of their retrenchment (see section 189A(7)(b) and (8)(b) of the LRA Bill).

The problem

This elective right amounts to forum shopping, a principle that is avoided in legislation. The general principle in labour laws the world over, for instance, is that parties do not have a choice of instruments to resolve a dispute. In some cases parties may approach the Labour Court, in other cases they may strike. The principle is a very sound one and is applied worldwide in one form or another. To give a choice runs against the accepted principles of legal drafting and good governance, and is not in line with the original understanding between labour and business.

BSA is of the view that this elective right of employees will create great uncertainty for both the employer and the workers. This, in turn, might impact negatively on the exercising of the parties' legal rights. The original intention of the Bill, i.e. to narrow processes and to create more certainty, rather than more uncertainty, has not been achieved.

The argument used by the Department of Labour that it might be unconstitutional that some employees in large firms have the right to strike and others the right to go to Court, is not valid. The constitutional principle is that employees must have some remedy, whether it be the Court or the right to strike, and there is no requirement that employees should have all remedies at their disposal or that a remedy needs to be the same under all circumstances. International precedent also exists where employees' constitutional right to strike is restricted to large-scale retrenchments.

Proposed solution

    1. Provisions that delay restructuring of a business

The time delays introduced by a number of provisions in section 189A might have serious consequences for the rest of the employees in a troubled business, i.e. those employees not (yet) affected by retrenchments. Some businesses may go insolvent if they are not able to adjust rapidly. There is almost no provision for parties to deviate from the time limits imposed by the Bill, even in terms of a collective agreement.

The problem

BSA accepts that statutory time limits for parties to decide whether or not to exercise their legal rights are not only a common feature of legislation but also necessary, as time limits promote certainty and the finalisation of disputes. However, time limits are now introduced into section 189A not for this purpose, but rather to delay retrenchment for an unacceptably long period, or to allow parties an inappropriately long period of time to dispute the retrenchment.

The long time periods before an employer may terminate service, will result in unreasonably long delays of necessary and often urgent restructuring of businesses. Such long delays would impact extremely negatively on businesses' need to adjust quickly to changing market demands and thus remain competitive, both locally and globally. This might put further jobs at risk. This is compounded by the fact that the parties may not even among themselves agree to a shorter time period.

If businesses can only restructure with great difficulty and after long time delays, it will be a further disincentive to employment.

In addition, there might be devastating developments that might make it impossible for an employer to comply with a long facilitation period. For instance, should a tragedy similar to the one of 11 September strike South Africa (may this never happen), employers directly affected should be able to adjust staff levels rapidly in order to prevent insolvency. Similarly, a factory of a medium sized business might burn to the ground. And what if the business has a single client, and that client suddenly cancels all orders?

The current Code of Good Practice on dismissals already allows a "truncated" period for consultation if the business experiences an "urgent need" (see item 12(6) of the Code attached to the LRA as Schedule 8).

Unreasonably long periods within which to exercise legal rights after notice of termination of services (i.e. 90 days for substantive disputes) will be detrimental to both the employer and the employees that have been selected for retrenchment. For both parties, a long delay in obtaining certainty and closure about disputes concerning the procedural and substantive fairness of retrenchment will be unsatisfactory. It will also be detrimental to continued and future relations between the employer, the unions and the employees.

The LRA Bill prescribes a period of 30 days for the referral of procedural disputes to the Labour Court (see section 189A(7)(a) and (8)(b)). Prescribing the same time limits for the referral of both procedural and substantive fairness disputes would increase the chances of resolving the different disputes within the same timeframe. This would be beneficial to all as speedy and simultaneous closure of the different disputes will promote certainty. One timeframe for the different disputes would also eliminate possible confusion that different time limits for the two types of disputes might create.

The Minister may make regulations with regard to the time periods for facilitation (see section 189A(6)(a)). However, this is limited to extending the time periods and not reducing them. This one-sided approach is grossly unfair.

 

 

Proposed solution

BSA is of the view that the following amendments are required to address problems regarding time delays:

      1. 60-day facilitation period
      1. 30 days' notice of termination of services

 

1.2.3 90 days for referral of substantive fairness issues to the Labour Court

      1. Applications to Labour Court on an expedited basis

Disputes about procedural fairness

Disputes about substantive fairness

1.2.5 Regulations about time periods
The Minister should be able to make regulations to shorten or extend time periods for facilitation.

 

1.3 The size of retrenchments that would trigger a right to strike

In terms of section 189A, the right to strike about the substantive fairness of a retrenchment is subject to two conditions. Firstly, retrenchments by small employers are excluded. A small employer is defined as one that employs 50 or less employees (see section 189A(1)). Secondly, the retrenchment must be a so-called large-scale retrenchment. A large-scale retrenchment is defined as a retrenchment of at least 10 employees, if the employer employs up to 200 employees, and 10% or more of the workers where the employer employs more than 200 workers (see section 189A(1)(a)).

The problem

Giving the right to strike about retrenchments is a very dramatic step, and should only be done very judiciously. Excluding small businesses from this right is a step in the right direction. However, the cut-off point in terms of which a small business is defined, is too low. BSA is of the view that the size of a retrenchment that would trigger the right to strike in terms of section 189A(1) is so small that, practically speaking, there exists no real distinction between a small-scale retrenchment and a large-scale retrenchment. Furthermore, the definition of large-scale retrenchment is much too onerous.

Giving the right to strike and all the accompanying time delays, might just be enough to push a medium sized company into bankruptcy, thereby destroying even more jobs.

The rationale for restricting a right to strike to large-scale retrenchments is that the right should only be available in respect of those retrenchments that would have a severe and substantial economic and sociological impact on society as a whole and on the community to which the retrenched workers belong.

The Government's definition of a large-scale retrenchment in its original proposed amendments published for comment in 2000 was underpinned by the rationale that a severe socio-economic impact should be avoided. This definition was "500 or more employees" (see section 189A in the Labour Relations Amendment Bill, 2000 published in Government Gazette 21407 of 27 July 2000). It was also this rationale which led Government to define a large-scale retrenchment in its draft Mineral Development Bill, 2000 as "more than 500 employees or more than 10% of the workforce, whichever the greater" (see section 23(1)(b)), and the drafters of the Social Plan as "500 workers or 10% of the workforce, whichever is the greater" (see clause 7.3.1).

Proposed solution

1.4 Sympathy strikes and lock-outs

1.4.1 Sympathy strikes in respect of retrenchment

Employees will be entitled to embark upon strike action in sympathy with those workers who have been retrenched by another employer (see section 189A(11)(c)). The procedural requirements for workers to embark upon sympathy strike action in the case of retrenchment are slightly more onerous than in the case of other sympathy strike actions (they must give 14 days' notice of intended sympathy strike action instead of 7 days - see section 189A(11)((c)).

The problem

 

Proposed solution

1.4.2 Lock-outs

An employer will only be entitled to lock workers out in response to a strike by the workers (see section 189A(11)(a)(ii)). (This is commonly referred to as a defensive lock-out).

The problem

Proposed solution

 

1.5 Definition of substantive fairness

As mentioned in paragraph 1.1 above, BSA is against an elective right for workers to either strike or approach the Labour Court about the substantive fairness of a retrenchment. However, should the Committee be supportive of the elective right, BSA would like to raise a number of concerns about the issue of substantive fairness.

Substantive fairness, or the fairness of the reason for a retrenchment, is defined in section 189A(19) of the LRA Bill. The purpose of the definition is to ensure that the Labour Court, when determining whether a retrenchment was substantively fair, does not second-guess the business decision of the employer to retrench.

 

The problem

Proposed solution

The definition of substantive fairness in section 189A(19) should explicitly state that it is applicable to all retrenchments.

 

 

PART 2: PREMIUMS FOR SUNDAY WORK (SECTION 16 OF THE BCEA)

As part of its proposed amendments to the Basic Conditions of Employment Act 75 of 1997 (BCEA) that Government published for comment in 2000, it proposed the scrapping of section 16 of the BCEA which regulates the payment of premiums for Sunday work. The Bill submitted to Parliament retains the status quo, i.e. double pay for Sunday work.

The problem

Proposed solution

 

(Note: In regard to Sunday work, an anomaly exists in that mining is the only industry that is still statutorily prohibited from working on Sundays. The prohibition is a remnant of the old order in South Africa. In order to be able to work on Sundays, the mining industry must obtain prior written permission from the Minister of Minerals and Energy. (See section 9 of the Mines and Works Act 27 of 1956.)

 

 

PART 3: OTHER ISSUES THAT ALL PARTIES DID NOT SIGN OFF DURING NEDLAC NEGOTIATIONS

 

3.1 Variation by the Minister of ordinary hours of work (section 50 of BCEA Bill)

3.1.1 Ministerial right to vary restricted to two industries

The problem

The Minister’s right to vary the ordinary hours of work is restricted to two industries namely the agricultural and private security sectors (see section 50(2A)(b)(iii)). The Minister is thus prohibited from varying ordinary hours of work of businesses operating in other industries.

Proposed solution

BSA is of the view that the Minister's right to vary ordinary hours of work should not be restricted but left open-ended as there could be other industries where operational circumstances make such a variation critical.

3.1.2 Terms and conditions must be "more" favourable that BCEA basic terms

In terms of the proposed amendment, the Minister may only vary ordinary hours of work if terms and conditions of employment will "on the whole [be] more favourable" than the basic terms in the BCEA (see section 50(2A)(a) of the BCEA Bill).

The problem

 

Proposed solution

3.2 The CCMA’s right to make rules in respect of cost orders (section 115(2A)(j) and (k) of the LRA Bill)

Subsections (2A)(j) of section 115 of the LRA Bill affords the Commission for Conciliation Mediation and Arbitration (CCMA) the right to make, amend or repeal rules regulating cost orders in arbitrations.

The problem

BSA has continually argued that the exercising of these rights should be subject to prior consultation with the National Economic Development and Labour Counncil (NEDLAC) or at the CCMA between the three social partners.

Subsection (2B) of section 115, which regulates representation in the CCMA and the right of the CCMA to charge a fee in respect of conciliation and arbitration proceedings, has been made subject to prior consultation by the Minister with the CCMA and NEDLAC. There is no legal basis to treat cost orders differently.

 

Proposed solution

 

POSSIBLE WORDING FOR RETRENCHMENT PROVISIONS

 

 

 

ELECTIVE RIGHT TO STRIKE OR APPROACH THE LABOUR COURT

Replace SECTION 189A(7)(b) with:

"a registered trade union or the employees who have received notice of termination may give notice of a strike in terms of section 64(1)(b) or (d)."

Replace SECTION 189A(8)(b)(ii) with:

"a registered trade union or the employees who have received notice of termination may give notice of a strike in terms of section 64(1)(b) or (d)."

 

 

FACILITATION PERIOD

Replace Section 189A(7) with:

"If a facilitator is appointed in terms of subsection (3) or (4), then

once 45 days have elapsed from the date on which notice was given in terms of section 189(3) or the period to which the parties have agreed has elapsed"

Replace Section 189A(8)(a) with:

"no party may refer a dispute to the council or Commission unless a period of 15 days from the date on which notice was given in terms of section 189(3) or a period to which the parties have agreed, has elapsed; and"

Replace Section 189A(8)(b) with:

"once the time periods in section 64(1)(a) or the periods to which the parties have agreed have elapsed –"

Add Section 197B(3):

"If an event causes the conditions contemplated in subsection (1), then an employer may, notwithstanding section 64(4), introduce measures to prevent the winding-up or sequestration of the employer during the periods referred to in section 189A(7) or (8)(a)."

 

 

NOTICE PERIOD

Replace Section 189A(7)(a) with:

"the employer may give notice of termination in accordance with section 37 of the Basic Conditions of Employment Act; and"

Replace Section 189A(8)(b)(i) with:

"the employer may give notice of termination of employment in accordance with section 37 of the Basic Conditions of Employment Act; and"

 

 

REFERRAL OF SUBSTANTIVE DISPUTES TO LABOUR COURT

Add a new par (b) to Section 191(11)(a)

(b) (i) The referral, in terms of subsection (5)(b)(ii), of a dispute to the Labour Court for adjudication, that concerns the dismissal of at least the number of employees specified in section 189A(1), must be made within 30 days from the date on which the employer has given notice of termination of services in terms of section 189A(7)((a) or (7)(b)(i); and

    1. An application in terms of (i) must be enrolled by the Labour Court on an expedited basis and an appeal against the Labour Court's finding must similarly be enrolled on an expedited basis."

 

 

PROCEDURAL DISPUTES ENROLLED ON AN EXPEDITED BASIS

Add a new par (c) to Section 189A(17)

"(c) An application made in terms of section 189A(13) must be enrolled by the Labour Court on an expedited basis and an appeal against the Labour Court's finding must similarly be enrolled on an expedited basis."

 

 

SIZE OF RETRENCHMENTS

Replace Section 189A(1) with:

"(1) This section applies to employers employing more than 250 workers if the employer contemplates dismissing by reason of the employer's operational requirements:

      1. more than 50 employees or 10% of the workforce, whichever is the greater; or

(b) a number of employees, who together with the number of employees that have been dismissed by reason of the employer's operational requirements in the twelve months prior to the employer issuing a notice in terms of section 189(3), exceeds the number specified in paragraph (a)."

 

 

SECONDARY STRIKES

Add par (d) to Section 66(2) of the LRA:

"(d) in the case of a secondary strike contemplated in section 189A(11)(c), the secondary employer has lost its neutrality vis-à-vis the primary employer by taking over orders and production at the request of the primary employer."

Replace Section 189A(11)(c) of the LRA Bill with:

"section 66 except that written notice of any proposed secondary strike must be given only after the primary strike had commenced and at least 14 days prior to the commencement of the strike."

 

 

LOCK-OUTS

Scrap paragraph (ii) of Section 189A(11)(a).

 

 

DEFINITION OF SUBSTANTIVE FAIRNESS

Replace Section 189A(19) with:

"In any dispute referred to the Labour Court in terms of section 191(5)(b)(ii), irrespective of the number of employees involved in the dismissal, the Labour Court must find that the employee was dismissed for a fair reason if -"