Broad-based black economic empowerment: pressures build on employers

The broad-based black economic empowerment (“B-BBEE”) framework in South Africa is progressively becoming more regulated and stringent. As part of this movement, our legislature and Government have over the last eighteen months criminalised fronting practices, established a B-BBEE Commission and promulgated new B-BBEE Regulations which came into force on 6 June 2016. For more on ‘fronting’, read our briefing.

The criminal penalties and sanctions for fronting practices include a fine and/or a prison sentence of up to 10 years. If a juristic person is guilty of fronting practices, it could face a fine of up to 10% of its annual turnover.

The B-BBEE Commission has been established to monitor adherence with the B-BBEE Act and enforce compliance with same.

The Regulations require, amongst other things, all companies listed on the Johannesburg Stock Exchange and government entities to file compliance reports with the B-BBEE Commission on an annual basis. The report must detail the state of compliance with the B-BBEE elements and detail how each element contributes to the outcome of the scorecard in terms of the Codes.

Court steps in during controversial dismissal process

On 26 May 2016, the South African Broadcasting Commission (“SABC”) issued a controversial editorial edict, known as the Protest Policy, prohibiting the broadcasting of violent protest action carried out by members of the public. This Policy was implemented as a result of protest action in the country’s capital, Pretoria, involving looting and the destruction of property.

The broadcaster is a state owned enterprise and the violent protests arose due to dissatisfaction with the state’s ruling party’s (the African National Congress) decision to promote a certain mayoral candidate for the Pretoria mayoral position. The grounds for the controversial Protest Policy were, therefore, extremely political. The effect, it is alleged, was to suppress the coverage of protest action which may reflect negatively on the President or the ANC.

Eight employees of the SABC were unhappy with the policy and committed some or other act in demonstration of their displeasure with the policy (for example, by failing to comply with or merely expressing their displeasure with the Protest Policy). The employees were suspended from duty and subsequently dismissed.

Five of the employees approached the Labour Court on an urgent basis seeking to be reinstated to their positions. The Labour Court held that the employees were entitled to proper disciplinary hearings in conformity with their employment agreements and the SABC’s disciplinary policies.

Ultimately, the Labour Court held in favour of the employees and found their dismissals to be unlawful and void ab initio. Four of the employees were entitled to return to work and the SABC was interdicted from proceeding with the disciplinary proceedings.

As a show of the Court’s discontent, it ordered the SABC’s General Manager and Acting Group Executive to file affidavits within five days of the court order showing cause as to why they should not be personally liable for the costs of the application.

In addition to its great interest value, this is one of the first instances where a Court has granted urgent relief in relation to the dismissal of employees. The value of this judgment is that employees can now approach the Labour Court on an urgent basis when their impending or actual dismissal is contrary to the employer’s own policies and procedures.