December 2013 and January 2014 saw the publication of two of the labour law amending acts that have been in the pipeline for some time: the Basic Conditions of Employment Amendment Act (20/2013), published on December 9 2013, and the Employment Equity Amendment Act (47/2013), published on January 16 2014.
Both amending acts are not yet in operation (the date on which they will become law is still to be pronounced by the president); but they are now in their final form, so employers can ready themselves for operating under the revised legal framework for which the amending acts provide.
The amendments to the act include:
- extending the scope of the prohibition and regulation of work by children;
- empowering the minister of labour to regulate a broader range of matters in sectoral determinations;
- changing the minister's powers in relation to sectoral determinations (of interest is that the minister is given the power to publish a sectoral determination to cover all employers and employees who are not covered by any other sectoral determination, which the minister might use to effectively legislate a general minimum wage);
- changing enforcement procedures (which are intended to simplify the Department of Labour's ability to take enforcement steps against non-compliant employers and to access the Labour Court for this purpose); and
- increasing penalties and maximum sentences for non-compliance (eg, the fine for a first failure to comply with a provision of the act is raised from $R100 per employee in respect of whom the failure occurs to $R300 per employee).
Section 33A was one of the amendments that caused some consternation when the draft amendments were being debated. Section 33A sought to prohibit conduct by an employer that, among other things, required an employee or potential employee to purchase goods, products or services from the employer or from any business or person nominated by the employer. The scope of the prohibition seemed broad enough to include compulsory employer occupational retirement funds, medical aid schemes and the like, and there was concern that the prohibition might unduly restrict the operation of such schemes at the workplace.
The draft amendments provided for an exception to the prohibition to the effect that the prohibition did not prevent an employment contract or collective agreement from requiring employee participation in a scheme involving the purchase of specific goods, products or services if:
- the purchase was not prohibited by any other statute;
- the employee received a financial benefit from participating in the scheme; and
- the price of any goods or services provided through the scheme was fair and reasonable.
While this exception provided scope for the operation of compulsory benefit schemes, such as occupational retirement funds and medical aid schemes, employers would have faced the not uncomplicated task of establishing that the price of any goods or services provided through the schemes was fair and reasonable.
However, the amendments that have been enacted have been revised from the initial drafts so that employers have to show only that:
- the purchase was not prohibited by any other statute; and
- either the employee received a financial benefit from participating in the scheme or the price of any goods or services provided through the scheme was fair and reasonable; with the result that if it can be shown that the employee receives a financial benefit from participating in the scheme, then it is not necessary to show also that the price of any goods or services provided through the schemes is fair and reasonable, and vice versa.
This will ease the burden on employers seeking to demonstrate that their compulsory schemes fall within the exception, which will be welcomed given that there is potential criminal liability for a contravention, with a fine or a three-year maximum prison sentence.
Some of the noteworthy aspects of the amendments to the Employment Equity Act are touched on below.
The definition of 'designated groups' (ie, the target groups identified for affirmative action) has been qualified so that employees who are black, female or disabled will count as part of the designated groups only if they:
- are citizens of South Africa by birth or descent;
- became citizens of South Africa by naturalisation before the democratic era (ie, before April 27 1994); or
- became citizens of South Africa by naturalisation after April 26 1994, if they would have been entitled to acquire citizenship through naturalisation before this date, but were prevented from doing so by apartheid policies.
The amendment act does not amend the term 'black people'. Accordingly, the term will continue to encompass Africans, mixed-race individuals and Indians, as well as people of Chinese descent.(1)
Therefore, black, female or disabled employees who are foreign nationals or who have obtained citizenship by way of naturalisation after April 26 1994 will not count as members of the designated groups, unless it can be established that they would have been entitled to citizenship by naturalisation before that date, but were prevented from acquiring citizenship due to apartheid policies.
Assessment of compliance
The factors that may be taken into account in determining whether an employer is implementing employment equity in compliance with the Employment Equity Act have been reduced under the amendment act to exclude:
- the pool of suitably qualified people from designated grounds from which the employer may reasonably be expected to promote or appoint employees;
- economic and financial factors relevant to the sector in which the employer operates;
- present and anticipated economic and financial circumstances of the employer;
- the number of present and planned vacancies that exist in the various categories and levels, and the employer's turnover; and
- progress made in implementing employment equity by other designated employers operating under comparable circumstances and within the same sector.
However, additional factors have been included that will be assessed when determining whether an employer is implementing employment equity in compliance with the Employment Equity Act, such as:
- reasonable efforts made by an employer to implement its employment equity plan;
- reasonable steps taken by a designated employer to train suitably qualified people from designated groups; and
- reasonable steps taken by an employer to appoint and promote suitably qualified people from designated groups.
The amendment act also explicitly provides that an employer may raise any reasonable ground to justify failure to comply with the implementation of employment equity.
The amendment act also empowers the minister to make regulations dealing with the assessment of such compliance, including specifying the circumstances under which an employer's compliance should be assessed by reference to the demographic profile of either the national or regional economically active population. No regulations have yet been issued in this regard.
The amendment act introduces a much heavier fines regime for non-compliance with the legislation; the regime is linked in many instances to the annual turnover of the employer. For example, a contravention of Section 20 (which regulates the preparation and implementation of employment equity plans), 21 (reporting), 23 (preparation of successive employment equity plans) or 44(b) may attract a penalty, where there is no previous contravention, of the greater of $R1.5 million or 2% of the employer's turnover. These substantial fines make non-compliance a potentially expensive exercise.
Employment equity reports
Apart from removing the differentiation between small and large designated employers when it comes to frequency of submitting employment equity reports, the amendments also provide that where an employer is unable to submit a report by the first working day of October, it must notify the director general in writing before the last working day in August, giving reasons for its inability to do so. The director general can apply to the Labour Court to have a fine imposed if an employer fails to submit a report in a timely manner or fails to notify or give reasons to the director general on why it cannot comply with the reporting deadline, or where the employer has provided false or invalid reasons. As set out above, the possible fines that can be imposed are substantial and employers would be well advised to submit their employment equity reports in a timely manner in future.
The amendment act attempts to simplify the enforcement provisions of the Employment Equity Act by eliminating certain mandatory steps as well as mandatory criteria that must be taken into account in assessing compliance with the Employment Equity Act.
Prohibition of unfair discrimination
The amendment act extends the scope of Section 6(1) of the Employment Equity Act by providing that discrimination is prohibited not only on a ground listed in that section, but also on any other "arbitrary ground".(2)
In addition, a new provision in the prohibition of unfair discrimination section of the Employment Equity Act stipulates that a difference in terms and conditions of employment between employees of the same employer performing the same work or work of equal value which is directly or indirectly based on one or more of the grounds in Section 6(1) of the Employment Equity Act will amount to unfair discrimination, unless the employer can show that differences in wages or other conditions of employment are in fact based on fair criteria. Examples of such criteria may include experience, skill and responsibility. The minister of labour may also prescribe a methodology for assessing work of equal value.
Psychological testing and similar assessments
The existing regulation of psychological testing and other similar assessments of an employee in the Employment Equity Act (which prohibits such testing unless the test or assessment being used has been scientifically shown to be valid and reliable, can be applied fairly to all employees and is not biased against any employee or group) is extended to require that the test or assessment have been certified by the Health Professions Council of South Africa or any other body authorised by the law to certify those tests or assessments.
Arbitration of unfair discrimination disputes
Currently, unfair discrimination claims have to be adjudicated by the Labour Court, unless all parties to the dispute consent to arbitration of the dispute. The amendment to Section 10 now provides that that an employee may refer a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) for arbitration if the employee alleges unfair discrimination on the grounds of sexual harassment or in respect of any other case, where the employee earns less than the earnings threshold prescribed by the minister of labour under the Basic Conditions of Employment Amendment Act. As a result, CCMA arbitrators will begin to arbitrate some discrimination disputes that were previously the exclusive domain of the Labour Court. However, their arbitration awards will be subject to appeal (as opposed to review) to the Labour Court.
Burden of proof
The Employment Equity Act currently provides that whenever unfair discrimination is alleged, the employer against which the allegation is made must establish that it is fair. The amendment act revises the burden of proof in unfair discrimination disputes to distinguish between discrimination on 'listed grounds' and 'arbitrary ground':
- If unfair discrimination is alleged on a listed ground in Section 6(1), the employer against which the allegation is made must prove, on a balance of probabilities, that such discrimination did not occur as alleged or is rational and fair or otherwise justifiable.
- However, if unfair discrimination is alleged based on an arbitrary ground, the complainant must prove, on a balance of probabilities, that the conduct complained of is irrational and amounts to discrimination, and that the discrimination is unfair.
An amending bill to the Labour Relations Act has not yet been enacted. It remains much anticipated, but it is unclear whether it will be finalised and passed before the forthcoming general elections. Some media reports have indicated that it is among the bills regarded as being priorities to pass before the election, but other indications are that it may be held over.
For further information on this topic please contact Stuart Harrison or Pranisha Maharaj-Pillay at ENSafrica by telephone (+27 21 410 2500), fax (+27 21 410 2555) or email (firstname.lastname@example.org or email@example.com). The ENSafrica website can be accessed at www.ENSafrica.com.