Labour Bills: Department response to submissions

Meeting report

The Chairperson welcomed the Members and the delegation from the Department of Labour (DoL), and proposed the adoption of the agenda.

Mr M Bagraim (DA) was unhappy that Members had not been given sufficient time to prepare for the responses. The documents had not been furnished to the Committee and the Members in time. Therefore, he was not in support of the briefing.

Ms L Theko (ANC) suggested that the DoL should continue with the briefing, but could be re-invited after the constituency period to be engaged on the responses. She also felt that this whole process was being rushed.

Mr P Moteka (EFF) concurred with Ms Theko that it would have been ideal that the Committee to deal with the public submissions first as well as the Content Advisor’s document before the Department made any responses.

Mr Bagraim suggested that this could be dealt with the following week. The Committee would have a redraft of the legislation, and also receive comments on that redraft. Some of the sections in the Bill were referring to matters that did not exist, and which still needed to be redrafted. Someone still needed to refer back to the National Economic Development and Labour Council (Nedlac). The Committee would need to take into account the Commission for Conciliation, Mediation and Arbitration’s (CCMA’s) inputs, which were technical in nature.

The Chairperson said that during the oral submissions, the Department had been with the Committee the whole time and had recorded all the issues that were raised during the submissions. She urged Members to allow the Department to proceed and then fill in the gaps later.

Mr B Martins (DA) said it would be necessary for Members to deliberate with regard to all the submissions received, as well as for the Department to respond to the views articulated by the Members and the public inputs.

The Chairperson closed the matter, and informed Members that it would be referred to the Parliamentary principals. She would hand over to the Content Advisor to take the Members through the issues that were raised during the public submissions, clause by clause.

Minimum Wage Amendment Bill: Oral submissions

Mr Sibongiseni Ngcobo, Committee Content Advisor, for the Portfolio Committee took the Members through the labour reform summary of oral submissions.

National Minimum Wage (NMW) Bill

Clause 2

Forestry South Africa had recommended that subsection (e), which was “supporting economic growth”, be deleted.

Its reason was that the extension of collective bargaining agreements to third parties had been a cause of significant, yet avoidable, job losses in a number of industries. The textile industry was cited as a case in point.

Clause 3

The fishing industry had submitted that the absence of any reference to seafarers, the Merchant Shipping Act 57 of 1951 and the Merchant Shipping Regulations of 2013, in itself suggested the intended application of this Bill was not, in its current form, geared towards or suited to those persons employed on vessels at sea.

They recommended that any intention to apply a NMW to seafarers should be written within the legal framework applicable to seafarers.

Clause 4: National minimum wage

4(6) It was unfair labour practice for an employer to unilaterally alter wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage, and sections 191,193, 194(4) and 195 of the Labour Relations Act applied, unless the context indicated otherwise.

The Labour and Enterprise Policy Research Group of the University of Cape Town was of the view that by making the unilateral altering of wages, hours of work and other conditions of employment in relation to the introduction of the NMW an unfair labour practice, it removed the right to strike in such a situation. Section 64(4) of the LRA specifically provided for employees to pursue strike action over an employer’s unilateral altering of conditions of employment. Sections 191,193, 194(4) and 195 of the LRA provide that bargaining councils may hear “unfair labour practice” disputes within their jurisdiction. Bargaining councils had the same jurisdiction in respect of LRA section 64(4) disputes. However, this was at odds with the amended section 64(1)(dA) of the Basic Conditions of Employment (BCE) Amendment Bill, which grants the CCMA exclusive jurisdiction to hear disputes regarding non-compliance with the NMW.

These clauses would create confusion, and they should be made clear, through an explicit link to section 34 and 34A of the BCEA, as to what deductions were not permitted and what were permitted. This could be done simply by listing sections 34 and 34A in clause 4(7) or in clause 5.

4(7) Section 32 and 33 of the Basic Conditions of Employment Act apply to the payment of the national minimum wage to workers.

The Institute for Economic Justice had proposed the insertion of the provision:

“No wages or conditions of work prescribed by Sectoral Determination or Bargaining Council Agreement or private contract, which were more favourable than the national minimum wage, may be decreased after, or in anticipation of the introduction of the NMW.”

The NMW Commission should review after the first year whether the hourly provision was being abused and whether a weekly and/or monthly NMW should be introduced in addition to the hourly NMW, as was practised in some countries.

Clause 5

Forestry South Africa submitted that clause 5(1) should be amended, or alternatively a new clause added to allow for deductions to continue to be made in line with the provisions and criteria included in the sectoral determination.

The Labour and Enterprise Policy Research Group (LEPRG) of the University of Cape Town (UCT) and the Congress of South African Trade Unions (COSATU), the Federation of Unions of South Africa (FEDUSA) and the National Council of Trade Unions (NACTU) shared a similar view.

Subsection (2) could be read as directly contradicting the BCE Amendment Bill, thereby defeating its intention that workers be paid the minimum of four hours so as to cover travel and related costs. Clause 5(2) should be made subject to section 9A of the BCE Amendment Bill. Section 5(3) should also be amended accordingly.

Clause 16

The Wits NMW Research Initiative recommended that the Minister be instructed, under clause 16(1), to provide regulation on the collation and public dissemination of relevant statistics relating to exemptions applied for and granted.

COSAT/ FEDUSA/ NACTU proposed that an addition be made in clause 16(1)(a) as follows: “requirements for employers to submit financial statements in support of their applications.”

The Institute for Economic Justice proposed that the Minster must table draft regulations at Nedlac.

Basic conditions of Employment Amendment Bill

Clause 3: Insertion of section 9A in Act 75 of 1997

The Confederation of Associations in the Private Employment Sector (CAPES) submitted that employees earning the minimum wage or above should not be covered by this clause. COSATU/ FEDUSA/ NACTU had proposed the insertion of 9A (3) as follows:

“The minimum daily payment for hours worked would be subject to the investigation to be conducted by the NMW commission, as set out in section 17 of the NMW Act.

Clause 6: Amendment of section 64 of Act 75 of 1997

UCT’s LEPRG was of the view that this amendment created an anomaly in that bargaining council agents would likely be the ones to identify non-compliance, but only DoL inspectors may institute proceedings against non-compliant employers and only the CCMA had jurisdiction to hear these disputes.

The Casual Workers’ Advice Office (CWAO) asserted that the proposed shifting of responsibility for enforcement of a NMW on to the CCMA would undermine the CCMA’s ability to perform its current tasks.

Labour Relations Amendment Bill

Clause 1: Amendment of section 32 of Act 66 of 1995 as amended

The Free Market Foundation (FMF) was of the view that the proposed wording of this clause was certain to cause confusion, as it was seemingly contradicting the current section 32(5).

Clause 2: Insertion of section 32A in Act 66 of 1995

The FMF was of the view that insertion of 32A infringed on, amongst others, the constitutional and collective bargaining principles of majoritarianism and the voluntary nature of collective bargaining.

Clause 3: Amendment of section 49 of Act 66 of 1995, as amended by section 11 of Act 12 of 2002 and section 5 of Act 6 of 2014

UCT’s LEPRG submitted that it was anomalous that only the representatives of employers’ organisations were referred to in this clause.

Furthermore, they pointed out that section 32(5)(a) and 49(4A) referred to each other for authority, and neither provided criteria for the determination of representativeness. They found this confusing, and opened the issue of determining representativeness to challenge.

Clause 4: Amendment of section 69 of Act 66 of 199, as amended

The CWAO recommended that the proposed amendments on strike ballots, default picketing rules, extended conciliation and advisory arbitration be scrapped. Furthermore, it proposed that the LRA be amended to prevent employers from using scab labour during protected strikes. They proposed the reinstating into the LRA of the right of workers to strike over disputes of rights.

The National Union of Metalworkers of SA (NUMSA) was of the view that the introduction of balloting before a strike was nothing else but an imposition of the limitation on the right to strike.

DoL’s response to public comment on the NMW Bill

Mr Thobile Lamati, Director-General: DoL, said that at the time of preparing its response, the Department had available to it 50 submissions commenting on the three bills that had been submitted to the Parliament by the Department in November 2017. At the time of submitting the bills to Parliament, the Department had also published the bills for public comment. By the deadline for the submission of comment to the Department, on 10 January 2018, the Department had received comments from 39 individuals and organisations. Of these, 16 had also submitted comments to the Portfolio Committee.

The public interest in bills and, in particular, the proposed National Minimum Wage Bill, had been significant. The current responses should, however, be viewed in the context of the engagements between government, organised business, organised labour and the community constituencies that began in 2015 and resulted in the conclusion of a declaration on wage inequality and labour market stability, and the signing of an agreement on the introduction of a National Minimum Wage and an accord on collective bargaining and industrial action in February 2017. Further comment on the process leading to the submission of the bills to Parliament would be provided below.

National Minimum Wage Bill

Two further issues were worth noting. The one related to the risk of job losses that may accompany the introduction of the national minimum wage. The Department was of the view that the international empirical evidence was mixed on this issue but, on balance, most commentators suggest that job losses had not been particularly high in countries that had introduced a national minimum wage. In South Africa, the minimum wages introduced through Sectoral Determinations had also not been associated with significant job losses, with the exception of the agricultural sector following the 2012 increase in the farm workers’ minimum wage. Both in South Africa and internationally, evidence suggested that while there may be job losses initially, employment recovered over time. Whether employment would recover to the levels seen prior to the introduction of minimum wages was very difficult to answer in general, as this would depend on sector characteristics, the state of the economy and other factors.

A critical aspect of the proposed NMW Bill was the provision for any employer to apply for an exemption. This was the most important mediating factor in relation to the risk of job losses. Another was the employment tax incentive which continued to operate to the benefit of young entrants to the labour market.

The second issue related to the high rate of unemployment in the South African labour market. A number of submissions had commented on this feature, either as a way of criticising the introduction of the NMW or by raising the objection that the unemployed had not been consulted -- and if they were consulted, they would say that they would be willing to work for any level of pay, simply to receive some income. The introduction of the NMW could not be held hostage to the fact of high and systemic unemployment in South Africa. The intervention was aimed at those who were active in the labour market and did not have as a policy objective addressing unemployment per se. Active labour market policies were the ones that aimed to assist the unemployed to re-enter the labour market. Clearly the NMW was not intended to make the problem of unemployment worse than it already is, but the real test of the impact of the NMW would come after its implementation, through careful monitoring and evaluation and evidence-based adjustments to the NMW in future years. It may also be that the prospect of higher earnings may stimulate job-seeking, especially among discouraged work-seekers.

The Department said that the NMW required payment of a minimum wage for hours worked. Employers of commission earners would have to comply with this requirement and adjust commission payments where necessary. The intention was to amend the definition of worker to apply a wider definition, which would include independent contractors. Independent contractors would be affected only where their payment was below or at the minimum wage and where they worked for another and were entitled to receive payment.

The Department would investigate whether there was any conflict between the current drafting of section 5 -- in particular, section 5(1) (d) -- and other legislation making provision for deductions for medical aids and pension/provident funds and any other statutory deductions. If appropriate, a further amendment would be made to provide greater clarity.

Basic Conditions of Employment Amendment (BCEA) Bill

In terms of the daily wage payment, the DoL responded that it was considering limiting the application of the guaranteed minimum hours to an hourly earning ceiling of between R40 or R60 per hour. This could be accommodated by amending clause 9A(2) to include the words; “…or as prescribed by the Minister.”

The investigation by the NMW Commission into the feasibility of raising the minimum hours to five need not be legislated, as it was required to advise the Minister on any matter on which advice was requested (s.11(e)).

The Chairperson said that Members would only flag out issues that were not responded to by the Department.

Discussion

Mr Bagraim said he would not comment on the points raised by the Department, because Members would need more time. Basically, this was an interim report on the DoL’s initial thoughts. Hopefully, the next report would be furnished prior to the meeting, but as the Department had pointed out, there were still redrafting processes to be conducted.

The Department had heard from the people who submitted input that they were concerned about compliance, and maybe the DoL could comment on this at a later stage. He felt that it had left out a dozen issues, but hopefully those would be highlighted in the next report.

Mr Moteka referred to how much was relevant to feed a family, and reminded the Department that Expanded Public Works Programme (EPWP) workers were also human beings that had families to be fed, so they needed to be included and referred to as workers. He wanted to know whether EPWP workers were excluded from the statistics of employment or unemployment. Some of these people were earning less than R1 500, so it appeared as if they were completely undermined and excluded. He suggested that they should be included, regardless of whether they were working for government.

He said that the community caregivers were excluded as a category of workers that should be included in the minimum wage bill. Although they may not be treated the same way as hospital workers, he suggested that they should be considered.

The minimum wage should be the living wage. COSATU had apparently indicated that the minimum wage was not a living wage that could feed a family. The Department must also consider the issue of workers who were earning more than the minimum wage level, but had been retrenched – how were they going to be protected from being exploited by employers?

Mr B Mashile (ANC) asked Members to pardon him if he raised any issues that may have been raised before because he had just joined the Committee as a new Member. He wanted to understand the trend of the submission starting from the executive level to the submission that have been made at Nedlac, as well as submissions on the Parliamentary process – were the majority of submissions repetitive? Or was there any significant change in the three different levels?

Mr Martins said that the DoL had stated that this was an initial input, and a more elaborate input would be submitted at a later stage. In his experience in Parliament with these processes, Departments tended to come up with information in a tabular form, including the stakeholders’ input and its response, and this format made the engagement much easier.

Department’s response

Mr Lamati welcomed the suggestion by Mr Martins, and said that was the initial plan. The Department would develop the matrix and it would be submitted to the Committee.

With regard to the issues that had been raised with various stakeholders, it was noted that there were quite a number of submissions that were similar -- in fact, most of them were similar. There were a few that were peculiar, but they were issues that the Department was already familiar with. There had been extensive consultations, and the DoL was currently running road shows as well. All inputs received along the way would be considered.

With regard to EPWP workers, this had been a contentious issue from the beginning. The genesis of the concept had been a skills development programme -- it was never an intention to provide full employment. There had therefore been a ministerial determination which excluded certain applications of the provisions that one would find in normal basic conditions of employment in order to facilitate skills transfer and training development. EPWP workers were paid a stipend, but he assured Members that this would not be the last time this issue would be discussed. The Department was considering the issue, and it would ensure that everybody that worked was protected by the law. The Department would take the direction instructed by the Committee, which was why the law had been brought before Parliament.

The community caregivers had come to Parliament, but the DoL had not yet responded to their issues in the document. It would provide a response in due time in the matrix as proposed by Mr Martins.

Whether the minimum wage should be a living wage or not, could be discussed perpetually due to different and vast rules. The intention of the Bill was to ensure that collective bargaining was not undermined. If government set a living wage for workers, the Department was of the opinion that it would go a long way to undermining collective bargaining, because labour relations was based on two things, which included the government setting a minimum floor wage and a strong collective bargaining system. If all the powers of the unions to engage with the employers were taken away, then that would kill collective bargaining and trade unionism in the country. The government’s role was to set a minimum floor wage, below which no worker should be paid.

Workers who were earning more than R20 were already protected by the law, and if there was a sectoral determination, they were already protected, and if there was also a collective bargaining agreement, they were also protected.

The Department guarded against issues where employers exploited workers through retrenchment and re-hiring, but it was also relying on the good will of employers to work together with government to improve the livelihoods of ordinary South Africans and workers. The Bill already regulated retrenchment. If, for instance, an employee had been retrenched and then re-employed at a lower rate to do the same job, that meant that the dismissal was unfair, and that was regulated. Employers were aware that there was robust regulation to ensure that they did not take such steps.

Mr Moteka reiterated a point on the employee who was now getting paid R60 per hour and got retrenched, and then three or four months down the line was employed again at the minimum wage of R20, even though he previously earned R60 per hour.

The Chairperson interjected that the Department had responded to that already.

Mr Moteka said currently there was nothing in the legislation that prevented employers from reducing the previous hourly wage now that there was a minimum wage.

Mr Mashile said that the Department should consider attaching the particular sections the matrix was going to apply to so that Members could have a point of reference while considering the matrix. He suggested that perhaps Mr Moteka could go through the bill and see where he could slot in the proposal he was making, and have the legal advisors comment on it and find a way to incorporate it.

The Chairperson said the Department would come back for further responses. She was in consultation with the principals of Parliament and had requested that the proposals should be formalised and then submitted to be noted, particularly in meetings during the constituency period. She asked Ms Theko to formally propose meeting during the recess.

Mr Moteka said the EFF was not in a hurry, and was in fact against the fast-tracking of the Bill. The matters could be dealt with after the constituency period.

Mr Bagraim did not support the proposals because it was constituency period and Members had constituency obligations. He indicated that the bill was half-baked as it stood, and still needed to go through redrafting. He suspected even after 17 April, things would still not be finalised. He said he would not be present, and it appeared that the EFF would also not be present.

The Chairperson indicated that Members should vote on the matter, and the majority of the Members voted in favour of meeting during the constituency period.

Mr America said that Members were not compelled to be in Parliament during that time because of the Chairperson’s principles.

Mr Mashile said that even though he understood the DA Members’ sentiments, Members needed to take note that the redrafting of the Bill would be informed by the Committee. The Department had to wait for the Committee to agree on the clause by clause deliberations, and the it must be assisted in redrafting the bill. The sooner this was done, the better.

The majority of the Members voted to meet with the DoL during the last week of the constituency period.

Mr Moteka said that the Department had indicated earlier that it could not address or respond to certain issues due to undue pressure, but now it appeared that Members wished to place pressure on the Department and that could harm the workers – the very same people the bill sought to assist.

The Chairperson interjected and indicated to Members that the matter had already been decided on by a way of a vote.

The meeting was adjourned.