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- CPE 11 –

LABOUR LEGISLATION UPDATE

FORWARD
The title of this CPE is “Labour Legislation Update”. The course material, as contained in this
handbook, is intended to serve as a reference guide for employers and managers on the practical
application of current labour legislation in the workplace. Accordingly the course material aims to be
current and includes updates and amendments with regards to the main labour laws in South Africa.

Since this CPE presentation is not aimed at legal and/or human resource practitioners but at
employers and managers in the Fasset Sector (particularly SMMEs), the developer of the course
material has worked on the assumption that not all attendees at this CPE intervention have an
understanding of basic labour law principles and rules as contained in original legislation. To ensure
that this handbook contains useful, holistic and “user-friendly” information and may serve as a
practical guide for SMMEs, it includes basic rules of implementation as well as updates, amendments
and reference to recent case law.

This course material is simply a guide, is not meant to be a complete summary of the legislation
and/or legal advice. It is not intended to replace professional advice. Should there be any doubt as to
rights and obligations in terms of labour legislation a lawyer or other professional should be
consulted.

© Copyright 2004 Bright Labour Solutions CC. All rights reserved. No part of this
publication/course material may be reproduced, used for commercial gain or transmitted in any form
by any means without the prior written permission of Bright Labour Solutions CC

Disclaimer: While every attempt has been made to ensure that the information published is accurate
the developer of this material takes no responsibility for any loss or damage that may arise out of the
reliance by any person upon any of the information contained herein.

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CONTENTS

1. INTRODUCTION TO THE 4 MAIN LABOUR LAWS IN SOUTH AFRICA,


BACKGROUND AND CONTEXT

2. THE IMPORTANCE OF IDENTIFYING AN “EMPLOYEE” AND DISTINGUISHING


BETWEEN AN “EMPLOYEE” AND AN “INDEPENDENT CONTRACTOR”

3. THE IMPORTANCE OF DISTINGUISHING BETWEEN DIFFERENT TYPES OF


EMPLOYEES

4. SALIENT FEATURES OF THE LABOUR RELATIONS ACT, NO 66 OF 1995 (as


amended)
4.1 Basic Distinction Between Individual Labour Law and Collective Labour Law
4.2 Aspects of Individual Labour Law
4.2.1 Dismissal and Unfair Labour Practice
4.2.1.1 Methods of terminating a contract of employment
4.2.1.2 Forms of Dismissal
4.2.1.3 Forms of Unfair Labour Practice
4.2.1.4 Fairness
4.2.1.4.1 Automatically unfair dismissals (S187)
4.2.1.4.2 Other dismissals (S188)
Misconduct
Incapacity
Operational Requirements of the Business
4.2.1.5 Forums and Procedures for resolving disputes about unfair dismissals and unfair
labour practices
4.2.1.6 “Con-Arb”
4.2.1.7 Remedies for unfair dismissal and unfair labour practices
4.2.2 Sections 197 and 197A: Transfer of contract of employment and Transfer of contract
of employment in circumstances of insolvency
4.3 Aspects of Collective Labour Law
4.3.1 Freedom of Association
4.3.2 Trade Unions – Registration and Representation
4.3.3 Organisational Rights
4.3.4 Collective Agreements
4.3.5 Industrial Action

5. THE CONTRACT OF EMPLOYMENT–TERMS AND CONDITIONS: PRACTICAL


IMPLICATIONS OF THE BASIC CONDITIONS OF EMPLOYMENT ACT, NO 75 OF
1997(as amended)
5.1 What the Act does
5.2 Employees who are covered by the Act
5.3 Minimum Terms only!
5.4 Basic Terms and Conditions of Employment
5.4.1 Working Time
5.4.1.1 Ordinary Working Hours
5.4.1.2 Overtime and formula for payment
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5.4.1.3 Compressed Working Week and Averaging Hours of Work
5.4.1.4 Meal Intervals and Rest Periods
5.4.1.5 Pay for Work on Sundays and Public Holidays
5.4.1.6 Night Work and Shift Work
5.4.2 Leave
5.4.2.1 Annual Leave
5.4.2.2 Sick Leave
5.4.2.3 Maternity Leave and the Protection of female employees before and after the Birth of
a child
5.4.2.4 Family Responsibility Leave
5.4.3 Particulars of Employment and Remuneration
5.4.3.1 Written Particulars of Employment (Contract of Employment or Letter of
Appointment)
5.4.3.2 Informing employees of their rights
5.4.3.3 Keeping Records
5.4.3.4 Payment of Remuneration, Information about Remuneration, Deductions and
payment of contributions to benefit funds
5.4.4 Termination of Employment
5.4.4.1 Notice, Severance Pay and Certificates of Service
5.5 Replacing or Excluding Basic Terms and Conditions of Employment
5.6 Monitoring and Enforcing Compliance with the Act

6. THE EMPLOYMENT EQUITY ACT, NO 55 OF 1998 AND ITS IMPACT ON SMMEs


6.1 The Purpose of the Act
6.2 The Prohibition of Unfair Discrimination
6.2.1 Forms of Unfair Discrimination
6.2.2 Interviewing applicants for employment in terms of the Employment Equity Act
6.2.3 Unfair Discrimination Disputes
6.3 Affirmative Action
6.3.1 Income differentials
6.3.2 Miscellaneous duties of designated employers
6.4 Monitoring, Enforcement and Legal Proceedings
6.5 Does not implementing Affirmative Action amount to Unfair Discrimination?

7. AN UPDATE OF SKILLS DEVELOPMENT LEGISLATION

8. EMPLOYMENT POLICIES AND INDUCTION

9. ANNEXURES: MISCELLANEOUS FORMS AND GUIDELINES

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TOOLKIT
Employers and/or managers are advised to obtain copies of the following
documentation for reference in the workplace:

Original Legislation
▪ Labour Relations Act, No 66 of 1995
▪ Basic Conditions of Employment Act, No 75 of 1997
▪ Employment Equity Act, No 55 of 1998
▪ Skills Development Act, No 97 of 1998
▪ Skills Development Levies Act, No 9 of 1999
You may also wish to obtain the following:
▪ Unemployment Insurance Act, No 63 of 2001
▪ Compensation for Occupational Injuries and Diseases Act, No 130 of 1993
▪ Occupational Health and Safety Act, No 85 of 1993
▪ Protected Disclosures Act, No 26 of 2000
▪ Promotion of Equality and Prevention of Unfair Discrimination Act, No 4 of 2000
Amendments
▪ Labour Relations Amendment Act, No 42 of 1996
▪ Labour Relations Amendment Act, No 127 of 1998
▪ Labour Relations Amendment Act, No 12 of 2002
▪ Basic Conditions of Employment Amendment Act, No 11 of 2002
▪ Skills Development Amendment Act, No 31 of 2003
Useful Codes of Good Practice
▪ Code of Good Practice on Dismissal
▪ Code of Good Practice on Dismissal Based on Operational Requirements
▪ Code of good practice on the arrangement of working time
▪ Code of good practice on the protection of employees during pregnancy and after the birth of
a child
▪ Code of Good Practice on the Handling of Sexual Harassment cases
▪ Code of Good Practice on Key Aspects of HIV/AIDS and Employment
▪ Code of Good Practice: Preparation, implementation and monitoring of employment equity
plans
▪ Code of Good Practice: Key Aspects of Disability in the Workplace
Other useful Regulations
▪ LRA: CCMA: Tariff of Fees, Regulations (Contains CCMA forms)
▪ LRA: Rules regulating the practice and procedure for resolving disputes through conciliation
and arbitration proceedings
▪ BCEA: Regulation No.R.1438 (contains some useful forms e.g. payslip, certificate of service)
Books and Posters
▪ Preparing an Employment Equity Plan: A User’s Guide
▪ Basic Conditions of Employment Act (Summary)
▪ Employment Equity Act (Summary)

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Useful Websites and contacts
▪ www.labour.gov.za (Dept of Labour)
▪ www.ccma.org.za (Commission for Conciliation, Mediation and Arbitration-CCMA)
▪ Govt Printing Works does not have a web address. The phone number of the head office in
Pretoria is (021) 334-4507/8/9/10. They will give you the local number
▪ www.fasset.org.za (Fasset)

NB: The Department of Labour and the CCMA websites have very useful forms, contract templates
and guidelines for practical application in labour relations

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1. INTRODUCTION TO THE 4 MAIN LABOUR
LAWS IN SOUTH AFRICA, BACKGROUND
AND CONTEXT
The introduction into South Africa of the “new” Political and Constitutional dispensations in 1994
completely changed the face of labour law. The spirit of labour and related legislation introduced and
amended over the past decade affords the employee greater protection and advancement than was
previously the case and seeks proactively to redress the imbalances of the past.

Our opinion is that while our current labour law does indeed empower employees it is a
misconception that it necessarily disempowers employers. The law is not aimed at undermining or
negating managerial prerogative nor is it intended to invoke feelings of threat for employers and
business or to harm small, medium or micro enterprises (SMMEs). The discomfort employers seem to
experience in relation to labour law stems possibly from a lack of knowledge and distorted
information.

The purpose of this Labour Legislation Update is to give employers and managers a working
understanding of the law, providing a practical guide to implementing current labour laws in the
workplace and to highlight the rules, policies and procedures, which should be adopted and followed
to align with the spirit of current legislation and to avoid future conflict and potentially costly
problems. An understanding of the salient features of the legislation, remaining abreast of legislative
and case law developments and getting to grips with the practical implications of the law will
contribute to maintaining stable and harmonious employment relations. Without this, money and
energy may be wasted by employers in trying to fend off litigation and discontentment in the
workplace.

Before embarking on a more detailed examination of current labour law the following is an outline of
the 4 main laws which affect labour relations in South Africa. Each law has a different purpose and
has a unique and important impact on the relationship between employers and their employees:

I Labour Relations Act, No 66 of 1995 (“LRA”)

This law was passed in 1995 at the beginning of the “new” political dispensation. It is the main
framework within which labour relations operates in South Africa. It governs and regulates all
employment and collective bargaining relationships in South Africa and it provides vital rules and
procedures governing individual employers and employees as well as trade unions and employer
organisations.
The LRA regulates, among other things, Trade Unions, Bargaining Councils, Collective Agreements,
Industrial Action, Discipline and dismissal, Poor Work Performance and dismissal, Dismissals based
on Operational Requirements of the Business (including retrenchments), Transfer of Businesses and
Forums and Procedures for resolving labour disputes.

II Basic Conditions of Employment Act, No 75 of 1997 (“BCEA”)

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The BCEA is aimed at preventing employers from imposing unreasonable terms and conditions of
employment, thereby exploiting employees. The BCEA prescribes minimum terms and conditions of
employment in South Africa and also lays down the instances in which these terms and conditions
may be varied, replaced or excluded. Working hours, leave, notice and overtime are a few of the
issues covered by this Act.

III Employment Equity Act, No 55 of 1998 (“EEA”)

Until the passing of the EEA there was much debate and speculation regarding the nature and
application of affirmative action in the South African context. Until this Act was passed employers
had no more than a moral obligation to implement affirmative action in the workplace. The EEA was
designed to redress the legacy of apartheid and it has a
2-fold purpose: Firstly it prohibits unfair discrimination by employers against employees and
applicants for employment. Secondly it seeks to proactively advance workers who were
discriminated against in the past, via affirmative action measures. The EEA sets out the forms which
unfair discrimination may take and also the penalties which may be imposed on employers in this
regard. The Act also provides a framework for implementing affirmative action, specifying which
employers are bound to implement affirmative action measures in the workplace.

It must be emphasised that the EEA does not only deal with affirmative action and with employment
equity plans. At least as important are its provisions dealing with unfair discrimination and the
application that these provisions have to all employers, regardless of size of workforce or turnover.

IV Skills Development Act, No 97 of 1998 (“SDA”) and


Skills Development Levies Act, No 9 of 1999 (“SDLA”)

Skills Development Legislation and the Employment Equity Act are inextricably linked. Both aim at
redressing the legacy of apartheid and look towards achieving a work environment that proactively
advances employees who were discriminated against in the past and one that creates equal
opportunities for employment and advancement. The main aim of Skills Development legislation is
to develop the skills of the South African workforce and to create a culture of learning in the
workplace. Although most employers are compelled to pay a skills development levy there are
financial incentives for employers who facilitate the skills development of their staff and who use the
workplace as a place of learning. Perhaps staff development via training and education may be
viewed as one of the most effective affirmative action measures.

Apart from the above-mentioned Acts there are other laws which impact on employment
relationships. The following is a non-exhaustive list:

Constitution of the Republic of South Africa Act, No 108 of 1996

The Constitution is the highest law of the land. It prescribes and regulates government power and
sets out basic fundamental human rights (in the Bill of Rights). Since our Constitution is the supreme
law of South Africa, every other law must be aligned with it. Naturally, the Constitution does not
deal solely with labour issues. However, it does, directly and indirectly, impact upon labour law.

S23 of the Bill of Rights contains fundamental human rights, which relate directly to the employment
relationship. These rights are:

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- every employee’s right to fair labour practices;
- the right of every employee to form, join and participate in the activities and
programmes of a trade union (freedom of association);
- the right of every employee to strike;
- the right of every employer to form, join and participate in the programmes and
activities of an employer’s organisation (freedom of association);
- the right of every trade union and employers’ organisation to determine its own
administration, programmes and activites, the right to organise and the right to form
a federation;
- the right of trade unions, employers and employers’ organisations to engage in
collective bargaining; and
- protection of trade union security arrangements such as the closed shop (where
employees are compelled to join a particular trade union) or agency shop (where
employees are compelled to contribute fees to a particular trade union).

Various other rights contained in the Bill of Rights indirectly affect the employment relationship.
The most important of these are the right to equality (including the right not to be discriminated
against), the right to privacy, freedom of expression and freedom of religion, belief and opinion.

Unemployment Insurance Act, No 63 of 2001

This Act provides for the payment of social benefits to unemployed employees and employees who
are on maternity leave. During employment employers and employees each pay 1% of salary towards
UIF (there is a maximum payment level) and employees may claim from the UIF during a period of
unemployment or while on maternity leave.

Recent Unemployment Insurance Amendments have included domestic employees and seasonal
employees under the coverage of the Unemployment Insurance Fund. The Amendments have also
excluded the jurisdiction of the CCMA over UIF appeals and appeals must now be made to the
Regional Appeals Committees. Another interesting amendment that has been introduced is that
pertaining to employees (mainly domestic workers) who work for more than one employer.
Employees who work for more than one employer and whose employment with one/more employer
is severed will still be entitled to unemployment benefits (even though they may still be employed by
the other employer/s).
Note: This CPE does not deal with UIF issues. Interested attendees may use the links to UIF on the
Department of Labour Website.

Compensation for Occupational Injuries and Diseases Act, No 130 of 1993

This law provides for compensation to an employee (or his/her dependent/s) in the event of the
employee sustaining injuries in the course of employment or contracting a work-related illness.

Occupational Health and Safety Act, No 85 of 1993

This provides for the safety and health of persons at work and of persons using dangerous plant and
machinery; it also regulates the protection of persons other than persons at work against hazards to
safety and health arising out of the activities of persons at work.

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South African Qualifications Authority Act, No 58 of 1995 (“SAQAA”)

This law has completely revised the system of education in South Africa. It has introduced the
National Qualifications Framework (NQF). There are 8 levels on the NQF and each nationally
recognised qualifications, depending on the complexity of the qualification will be at one of the levels
on the NQF (8 being the highest level). In as far as labour law is concerned, the SAQAA has
application in the context of skills development and training. Employers are encouraged under Skills
Development Legislation not only to train and develop staff but also to ensure, where possible, that
training can lead to formal NQF aligned qualifications and certificates. The South African
Qualifications Authority (SAQA) is a body that has been appointed by the Ministers of Education and
Labour to ultimately oversee both the development and implementation of the NQF. Learnerships
and skills programmes must be NQF aligned.

Protected Disclosures Act, No 26 of 2000

This Act protects employees who (provided that certain criteria are present and certain procedures
are followed) disclose information regarding unlawful or irregular conduct by their employers

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Promotion of Equality and Prevention of Unfair Discrimination Act, No 4 of
2000

Deals with the topics equality and unfair discrimination in detail. It is not specifically a labour law
and is intended to flesh out the parameters of the relevant human rights as contained in the Bill of
Rights

2. THE IMPORTANCE OF IDENTIFYING AN


“EMPLOYEE” AND DISTINGUISHING
BETWEEN AN “EMPLOYEE” AND AN
“INDEPENDENT CONTRACTOR”

Who is an employee?

The contract of employment (which forms the basis of the relationship between an employer and
employee) may be defined as “an agreement between two parties in terms of which one party (the
employee) places labour potential at the disposal of and under the control of the other party (the
employer) in exchange for some form of remuneration” (Essential Labour Law, volume 1 Basson et al)

At first blush the definition seems very clear on the issue as to who is an employee. However, the
concept of a person placing their “labour potential” at another’s disposal may in some instances refer
to a relationship other than that of employment. Over the past ten years there has been on-going
debate and dispute as to who is an “employee” and who is not an employee but rather an
“independent contractor” or some other type of worker.

The South African contract of employment has its roots in Roman-Dutch law.

The Romans viewed an agreement between two parties in terms of which one party rendered
personal services to the other party in exchange for remuneration as a contract of letting and hiring
(locatio-conductio).

The Romans distinguished between 3 types of letting -hiring contracts:

a) locatio-conductio rei (the letting and hiring of a thing in exchange for a sum of
money)

b) locatio-conductio operarum (the letting and hiring of personal services in exchange


for remuneration)
The forerunner of the contract of employment

c) locatio-conductio operis (the letting and hiring of a specific piece of work in


exchange for remuneration)
The forerunner of the contract of the independent contractor (“agency”).

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The following three examples illustrate the difficulty that may arise in trying to distinguish between
a contract of employment and a contract of an independent contractor (“agent”):

a) X, an attorney agrees to draft Y’s will in exchange for an agreed fee. Three days later, X
phones Y to advise him that his will is ready. Y collects the will and pays X her fee.

Is X an independent contractor or is she Y’s employee?

b) A and B enter into an oral agreement in terms of which B, a bookkeeper, will attend to
A’s books. His working hours will be 8:30am – 4:30pm daily, with a one hour lunch
break between 12:30pm and 1:30pm. A will have the right to tell B not only what work
to do but also how he must do it. B agrees that he will not work for anybody else and
that he will only take leave with A’s permission. In exchange for his services B will
receive R6500.00 per month and will be placed on A’s medical aid.

Is B an independent contractor or is he A’s employee?

c) S entered into a contract with an insurance company. S was remunerated on a


commission basis and could not perform certain acts without the company’s written
permission. Although he was not allowed to work for another company at the same time,
S did not have set office hours and was allowed to do other work in his free time. S was
given the use of an office and a company car (although he had to pay for servicing and
fuel). He had to report daily to a manager but the manager did not have the right to
supervise and control S. Furthermore, there was nothing to prevent S from seeking the
assistance of other people to help him in performing his duties.
(Based on the facts of Smit v Workmen’s Compensation Commissioner 1979(1) SA 51 (A))

What is the nature of the contractual arrangement between S and the insurance company
(contract of employment OR contract of an independent contractor?)

While a) and b) are straight-forward, the facts in c) point us in different directions.


Certain factors point at S being an employee, yet others create the impression that he is
an independent contractor.

In Smit v Workmen’s Compensation Commissioner 1979(1) SA 51 (A) the Appellate


Division concluded that S was not an employee. The lack of control and supervision over
S by the company, the remuneration by commission, the non-requirement of personal
performance of his duties by S and S’s position of independence were strong indicia that
the contract was one of an independent contractor.

The test used in our courts to determine whether a contract is one of employment or one of an
independent contractor is the multiple or dominant impression test. In terms of this test, the court
weighs up all the factors (multiple factors) in a given case and decides whether the dominant
impression created is that the worker is an employee or an independent contractor.
Factors which a court would consider include the following:
- the right to supervise the worker
- how dependent the worker is on the “employer” in the performance of his duties
- whether the worker is permitted to work for another person
- the manner in which the worker is paid (salary, commission, other)

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- whether the worker provides his own equipment and tools
- whether the worker is obliged to fulfill his duties personally
- whether the worker is required to devote a specific amount of time to his work.

Consider the following CASE STUDY:

(I) The department for Public works for Kwa-Zulu Natal decides to do extensive road works. It
envisages that the project will take ten years and enters into contracts for that duration with,
among others, ten highly regarded structural and civil engineers in the province. Each
contract is identical.
The following is agreed to between the parties:
- The contracts are part-time contracts and the engineers are free to attend to their
private practices when not fulfilling their contractual duties
- There will not be fixed hours of work
- The engineers must be ‘at the beck and call’ of the administration and must give
priority to official duties over their private practices
- The engineers are to be paid a contractual salary, which is payable at the end of every
month
- Although the engineers will remain independent in the performance of their work,
once a month they have to report to the relevant authority and submit progress
reports
- Each engineer is expected to supply his/her own equipment for the project, although
he/she will be reimbursed for all necessary expenses

Using the dominant impression test, decide whether the doctors are employees of the state or
whether they are independent contractors?

If it has been difficult to distinguish between an employee and an independent contractor the matter
has been further complicated by the recognition of other types of atypical workers such as so-called
dependent contractors, the self-employed and the informally employed.

NB: In an effort resolve the problem of identifying an employee and to shed greater clarity,
amendments to both the LRA and the BCEA have included provisions in this regard:

The following, almost identical provisions, taken from the Labour Relations Amendment Act, No 12
of 2002 and the Basic Conditions of Employment Amendment Act, No 11 of 2002 both introduce a
rebuttable presumption as to who is an employee.

‘‘Presumption as to who is employee


200A. (1) Until the contrary is proved, a person who works for, or
renders services to, any other person is presumed, regardless of the form of
the contract, to be an employee, if any one or more of the following factors
are present:
(a) the manner in which the person works is subject to the control or
direction of another person;
(b) the person’s hours of work are subject to the control or direction of
another person;
(c) in the case of a person who works for an organisation, the person forms
part of that organisation;
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(d) the person has worked for that other person for an average of at least
40 hours per month over the last three months;
(e) the person is economically dependent on the other person for whom he
or she works or renders services;
(f) the person is provided with tools of trade or work equipment by the
other person; or
(g) the person only works for or renders services to one person.
(2) Subsection (1) does not apply to any person who earns in excess of
the amount determined by the Minister in terms of section 6(3) of the Basic
Conditions of Employment Act.
(3) If a proposed or existing work arrangement involves persons who
earn amounts equal to or below the amounts determined by the Minister in
terms of section 6(3) of the Basic Conditions of Employment Act, any of
the contracting parties may approach the Commission for an advisory
award on whether the persons involved in the arrangement are employees.
(4) NEDLAC must prepare and issue a Code of Good Practice that sets
out guidelines for determining whether persons, including those who earn
in excess of the amount determined in subsection (2) are employees.’’
(S 51 of the Labour Relations Amendment Act No 12 of 2002)

‘‘Presumption as to who is employee


83A. (1)A person who works for, or renders services to, any other person
is presumed, until the contrary is proved, to be an employee, regardless of
the form of the contract, if any one or more of the following factors is
present:
(a) The manner in which the person works is subject to the control or
direction of another person;
(b) the person’s hours of work are subject to the control or direction of
another person;
(c) in the case of a person who works for an organisation, the person is a
part of that organisation;
(d) the person has worked for that other person for an average of at least
40 hours per month over the last three months;
(e) the person is economically dependent on the other person for whom
that person works or renders services;
(f) the person is provided with tools of trade or work equipment by the
other person; or
(g) the person only works for or renders services to one person.
(2) Subsection (1) does not apply to any person who earns in excess of
the amount determined by the Minister in terms of section 6(3).
(3) If a proposed or existing work arrangement involves persons who
earn amounts equal to or below the amounts determined by the Minister in
terms of section 6(3), any of the contracting parties may approach the
CCMA for an advisory award about whether the persons involved in the
arrangement are employees.’’
(S21 of the Basic Conditions of Employment Amendment Act, No 11 of 2002)

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The effect of the above provisions is that where one person works for another and any of the factors
in (1)(a)-(g) are present, the presumption is that the person working is an employee, unless the
employer can prove why that person should not be treated as an employee.

In practice this means that if the employee shows that any of the factors are present in the work
relationship then s/he is immediately presumed to be an employee unless the employer can rebut this
i.e. the employer needs to discharge the burden of proving that a worker is not an employee of the
employer.

Note: This rebuttable presumption applies to persons who earn equal to or less than R115 572.00
per annum. A party may approach the CCMA for an advisory award about whether the person is an
employee.

Since the presumption is rebuttable the courts will probably have to continue to use the dominant
impression test to determine the status of a person who works for another.

Why is it important to distinguish between an employee and an independent contractor?

Determining who is an employee is the point of departure in Labour law. Labour law governs and
regulates the employer-employee relationship not the principal-independent contractor relationship.
The provisions of the LRA, BCEA, EEA, SDA, SDLA and other labour-related legislation offer
protection to employees but these protective provisions do not extend to independent contractors

Disguising a contract of employment as a contract of an independent contractor and the courts’


approach to this

In South Africa it has become fairly common for workers and “employers” to negotiate contracts of
independent contractor. There are two main reasons for this:
a) ‘Employers’ may prefer to structure the relationship with their workers in this way to avoid
the provisions of the LRA, the BCEA and other labour laws. Remember, independent
contractors are not protected by South African labour laws. In practice this means, for
example, that independent contractors are not protected against unfair dismissal, are not
entitled to strike and cannot demand minimum terms and conditions of employment.
b) ‘Employees’ often prefer to call themselves independent contractors in order to avoid/reduce
income tax liability in terms of the Income Tax Act of 1962.
Unfortunately, in disguising their contract of employment as a contract of an independent
contractor these workers are unwittingly exempting themselves from the protection of labour
legislation. This usually becomes apparent when they are ‘dismissed unfairly’ and have no
recourse.

Today, the courts are prepared to look beyond such an artificial arrangement to identify the true
nature of a work relationship. A person described in a contract as an “independent contractor” will
be protected by labour law if a court is of the opinion that the person is in fact an employee.
The case of Briggs v CMS Support Services (Pty) Ltd (1997) 1 BLLR 62 (IC) illustrates this point well.
The facts were briefly as follows.
Briggs had been an employee of the JSE. In order to avoid the high rate of tax imposed on married
women, Briggs formed a close corporation and appointed herself as the sole member. She then
concluded a new agreement with the JSE, in terms of which she would provide her services to the JSE
as an independent contractor and in exchange the JSE would pay her hourly-rate to the closed

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corporation. When Briggs left the JSE she concluded the same type of contract with her new
‘employer’, CMS Support Services (Pty) Ltd. When her contract was terminated without a valid
reason she sued CMS Support Services (Pty) Ltd for unfair dismissal. CMS alleged that since Briggs
was not an employee but an independent contractor she was not protected against unfair dismissal.
The industrial court found however that the contractual relationship between CMS and the close
corporation was a fictitious one and that the true intention of CMS had been to employ Briggs as ‘a
fully fledged employee’. Accordingly, the employer could not later hide behind the fictitious
agreement when it no longer required Briggs’ services.

In Shikwambana v Quantum Construction Holdings (Pty) Ltd (NH 11/2/2632) Quantum Construction
entered into a contract of agency with a closed corporation to perform certain work. The CC had one
member ,S, who was an ex-employee of Quantum Construction and who now provided exactly the
same services as as she did when she was an employee. When the contract was terminated by
Quantum Construction without good cause, S sued the company for unfair dismissal. Quantum
Construction’s defence was that the CC was an independent contractor and that dismissal was
therefore impossible.

In the interests of fairness the court pierced the “corporate veil” of the CC and held that the contract
of agency was in fact an artificial contract intended to disguise the real employment relationship
between QC and S. The court held that S was protected against unfair dismissal.

In the recent case of Bezer v Cruises International CC (2003) 6BLLR 535 (LC) the Labour Court
decided that an ex-employee who formed a close corporation for the purposes of avoiding liability for
income tax and who then concluded a contract of agency with her ex-employer, could no longer be
regarded as an employee and could not claim that she had been dismissed when her ex-employer
decided not to use her services any longer. In other words she was not entitled to the protection
offered to dismissed employees under the LRA.

Whereas the Briggs and Shikwambana cases indicate that the law will not allow employers and
employees to create fictitious contracts in order to avoid the provisions of the LRA or any other law
and that the court is prepared to look beyond the wording of the contract to discover the true nature
of the working relationship, the recent Bezer case indicates that the court still has discretion in this
regard.

When does the status of “employee” commence and when does it end?

Since labour laws protect employees it is critical to determine the point in time at which a person
may be regarded as an “employee” and when he/she no longer has this status.

The case of Wyeth SA (PTY) Ltd v Manqele & others (2003) 7 BLLR 734 (LC) concluded that it is not
only at the point that a person starts working that he/she may be regarded as an ”employee”. A
person becomes an “employee” and has protection under labour law once he/she has concluded a
contract of employment, even before he/she has commenced working. Employers should therefore
be cautioned that informing an appointed employee, before work has commenced that his/her
services will not be required constitutes dismissal.
(Note: Leave to appeal has been granted in the Wyeth case)

Employment terminates, in the case of a fixed-term contract, on expiration of the period or project
for which the employee was employed (unless there is renewal) and in the case of indefinite

15
employment, upon lawful termination of the contract by either the employer or the employee.
Regarding the status of “employees” who have been dismissed but who are challenging their
dismissal, the Labour Appeal Court decided in Transport Fleet Maintenance (Pty) Ltd v NUMSA
(2003) 10 BLLR 975 (LAC) that pending the outcome of a dispute regarding a dismissal, the dismissed
employees may remain “employees”.

3. THE IMPORTANCE OF DISTINGUISHING


BETWEEN DIFFERENT TYPES OF EMPLOYEES
We have established above that “employees” are governed and protected by labour laws in South
Africa and that a person who is not an “employee” but an “independent contractor” does not have
protection in this regard.

However, all employees are not equal! The extent to which employees are protected differs
depending on the type of employee and the specific piece of legislation that applies. While the
specific protections will be dealt with in greater detail in our discussion of the different laws, the
following is list of the main types of employees:

Fixed-term employee (temporary employee)

A temporary employee is one who is employed in terms of a fixed-term contract of employment for a
specific period of time or for the duration of a specific project. At the end of the fixed-term the
employment relationship automatically terminates. For this reason, many employers have preferred
fixed-term contracts of employment. They provide an easy way to terminate the relationship with a
worker at the end of a specified period.

In the past employers would employ a worker in terms of a fixed-term contract of employment and
would decide at the end of the period whether or not to renew the contract. This cycle would repeat
itself indefinitely without the worker having the security of permanent employment (“rolling over”
the contract). Each time the contract came up for renewal the worker would be at the complete
mercy of the employer and usually had no recourse if the employer decided not to renew the
contract. This problem has been addressed in the LRA under the chapter dealing with dismissal and
employers may no longer create such a pattern of insecurity for employees.

Permanent employee

This is an employee who is employed for an indefinite period of time, usually until either party
terminates the contract by giving notice. Permanent employment is the most common form of
employment and such employment may be full-time or part-time. An example of part-time
permanent employment would be the worker who works indefinitely for the same employer for 4
days every week (i.e. s/he is permanent but not full-time).

Probationary employee

This is where a person is employed for a trial period in order for the employer to assess the
employee’s skills and abilities and to find out whether they are sufficiently compatible to enjoy a
healthy, more permanent working relationship. Legislation does not dictate the specific duration for
which a person may be placed on probation but the LRA states that the probationary period should
16
be of reasonable duration, which will depend on the nature of the job and the time it will take to
determine the employee’s suitability for continued employment. If both parties are satisfied at the
end of the period of probation the employee may be offered permanent employment.

Senior managerial employee

A senior managerial employee is one who, by reason of his/her rank in the business, has powers and
functions, which are normally associated with those of the employer. S/he usually has the power to
hire and dismiss other workers and to take policy decisions on behalf of the employer.

It should be noted however that notwithstanding his/her status, a senior managerial employee is not
to be confused with an employer and s/he remains subordinate to the employer. Whereas a senior
managerial employee is excluded from certain labour legislation protections, such as being subject to
maximum working hours or having the right to form or participate in a workplace forum s/he is an
employee for the purpose of unfair dismissal.

Sales staff who travel to customers premises and who regulate their own hours

This type of employee is excluded from protections relating to working hours under the BCEA

An employee who earn in excess of the amount determined by the Minister in terms of Section 6(3)
of the Basic Conditions of Employment Act.

The amount is currently R115 572.00 per annum (ref: Dept of Labour)
This employee is excluded from protections relating to working hours under the BCEA

Employee who works less than 24 hours a month for an employer

This employee is excluded from many of the protections under the BCEA.

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4. SALIENT FEATURES OF THE LABOUR
RELATIONS ACT, NO 66 OF 1995 (as amended)
Note: The Labour Relations Act, No 66/1995 is the main Act. Since being passed it has been
amended 3 times:
▪ Labour Relations Amendment Act, No 42/1996
▪ Labour Relations Amendment Act, No 127/1998
▪ Labour Relations Amendment Act, No 12/2002

The LRA provides the general framework within which labour relations and labour law operates in
South Africa

Before embarking on a journey into the practical workings of the LRA it is important to define what
the term “labour law” means. For our purposes we can say that labour law is a system of legal rules
which govern and regulate various relationships in the work arena. This system of legal rules
provides a legal foundation for the following relationships:
. Employer – employee
. Employer – employees
. Trade union – member employees
. Employer/Employer organisations – trade unions

Without undermining the importance of any of the above relationships, only two are important for
our purposes:
1) The relationship between employer – employee (called the employment relationship)
2) The relationship between employer/employer organisation – trade union (called the collective
bargaining relationship)

4.1 BASIC DISTINCTION BETWEEN INDIVIDUAL LABOUR LAW AND


COLLECTIVE LABOUR LAW

Labour law may be divided into two main branches:

(A) Individual Labour Law

Individual labour law focuses on the relationship between the individual employer
and the individual employee (the employment relationship). This relationship is the
most basic and arguably the most important relationship in the workplace. It is
founded on the contract of employment.

The LRA regulates the following important aspects of the employment relationship
between employer and employee:

▪ Methods for terminating a contract of employment,


▪ Grounds for dismissal and procedures to follow
▪ Unfair Labour Practice

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▪ Forums and procedures for resolving alleged unfair dismissal disputes and unfair
labour practices
▪ Remedies for unfair dismissal and unfair labour practice

(B) Collective Labour Law

Collective labour law focuses on the relationship between an employer/employers’


organisation and a trade union. (An employers’ organisation is a collective entity
which represents the interests of a group of employers. It may be said that while
trade unions emerged to give greater bargaining power to workers, employers’
organisations emerged to give employers more leverage against increasingly more
powerful unions.)

As the term “collective labour law” denotes this branch of the law deals with the
relationship between collective entities. In a collective bargaining relationship,
employees will always be represented by a collective entity (usually a trade union).
The other party to this relationship, may however be a single employer

The LRA regulates the following important aspects of the collective bargaining
relationship between employer/employer organisation and employees/trade union:

▪ Freedom of association
▪ Organisational rights of trade -unions,
▪ Collective agreements (including closed-shop and agency shop agreements)
▪ Bargaining Councils
▪ Forms of industrial action (e.g strikes and lock-outs) as well as procedures to be
followed

Most provisions of the LRA focus on collective labour law and on the collective bargaining
relationship. Since most of the attendees at this CPE are from organisations that do not have trade
union participation, since there is no specific bargaining council for the sector and based on the needs
of the majority of SMMEs, this CPE and the course material does not deal with collective labour law
and developments in any great detail (although basic information in this regard will be included in
this practitioner’s handbook).

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4.2 ASPECTS OF INDIVIDUAL LABOUR LAW

4.2.1 DISMISSAL AND UNFAIR LABOUR PRACTICE

The LRA contains very important provisions regulating the fair treatment of an employee and the fair
termination of his/her contract of employment. Chapter VIII and Schedule 8 of the Act deal
specifically with Unfair Dismissal and Unfair Labour Practice. Since the majority of cases that come
before the CCMA are disputes concerning unfair dismissal (82% of disputes referred between 1 April
and 31 July 2004 concerned unfair dismissal) and since the majority of the awards made have been in
favour of the employee it is vital to turn our attention to the rules (including recent amendments)
that apply to dismissal and unfair labour practice.

Before discussing “dismissal” in detail it is important to remember that not every termination of a
contract of employment will amount to a dismissal.

There are several ways in which a contract of employment may terminate:

4.2.1.1 Methods of terminating a contract of employment

There are several ways in which a contract of employment may be terminated:

a) By Agreement

The employer and the employee may agree to terminate the contract. (unless there are elements of
duress or undue influence this will not amount to dismissal).

b) Completion of a fixed-term contract

In the case of a temporary employee, once the period or project specified in the fixed-term contract
expires or is completed, the contract automatically terminates. (Unless there has been a repeated
“rolling over” of the contract and the employee had a legitimate expectation that the contract would
be renewed, termination in this way will not amount to dismissal)

c) Termination on insolvency

A provisional order of insolvency of an employer will have the effect of suspending all contracts of
employment for a period of 45 days. Consultation with the provisional liquidator/trustee will
determine whether the business can be saved (in whole or in part) or whether employment contracts
need to be finally terminated or whether there will be a transfer of the business in terms of S197A.
S 197A of the LRA is important in this regard and is dealt with below.

An employee’s insolvency will generally not affect the continuity of his contract of employment.

d) Impossibility of performance

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If performance in terms of the employment contract was possible at the time that the contract was
concluded but later becomes objectively and permanently impossible, the contract will terminate.
This is referred to as supervening impossibility of performance and an example of this would be the
death of the employee or the banning of a work-related activity by government. (Termination of the
contract in this manner will usually not amount to a dismissal).
Note: if performance was impossible at the outset, no valid contract comes into existence.

e) Fundamental breach of contract

If either party commits a serious breach of contract, the aggrieved party has a right to cancel the
contract without giving notice (summary termination). A breach of contract occurs where either
party fails to perform in terms of the contract or does not perform properly. Only a
serious/fundamental breach of contract will justify summary termination of a contract. Whether a
breach is sufficiently serious to justify termination depends on the facts of a particular case. An
employer’s refusal to pay its employees’ wages or an employee’s gross insubordination or gross
dishonesty would in most cases justify termination.

Termination of a contract of employment after there has been a serious breach of contract usually
amounts to a dismissal. For example where the employer terminates the contract because of breach
of contract by the employee (e.g. theft, gross insubordination, assault, willful damage to property) this
is always dismissal. Where it is the employee who terminates the contract of employment because of
serious breach of the contract by the employer, this too may constitute dismissal (called “constructive
dismissal”-see below). An example would be termination of the contract by the employee because
the employer refuses to pay wages or to give the employee leave to which s/he is entitled.

f) Termination by giving notice

Generally, contracts of employment (with the exception of fixed-terms contracts) may be terminated
by either party giving notice of intention to terminate the contract. Giving notice does not
immediately terminate the contract. Rather it indicates a party’s intention to terminate the contract
at a given time in the future. The period of notice is usually specified in the contract yet if the
contract is silent on the period of notice, “reasonable notice” must be given. What is “reasonable”
depends on the circumstances and the nature of work which the employee performs. Remember, the
BCEA contains minimum terms with regard to notice.

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Dismissal occurs when a contract of employment is terminated by the employer (or in some
instances, where the employee resigns but because the employer has made continued employment
intolerable-so called “constructive dismissal”).

According to Roman-Dutch law (common law), a dismissal must be LAWFUL. This means that the
employer must either:
a) give the employee proper notice, or
b) summarily dismiss the employee (i.e without notice) if the employee has committed a
fundamental breach of contract.

For many years South African law adhered only to the rule relating to lawfulness. A dismissal would
be upheld by a court as long as the employer could show that it had given the employee proper notice
or that it had summarily dismissed the employee following a serious breach of contract.

The problem with relying solely upon the requirement of lawfulness meant that any consideration of
fairness was completely ignored. To illustrate this, an auditing firm could validly dismiss an
employee by giving him proper notice, even if the reason for the dismissal was that the employer did
not like the rugby team that the employee supported. In other words, in the past the employer did
not need to show that it had a good reason for dismissal. Moreover, even if an employer did have a
reason for dismissal, for example it suspected that the employee was stealing, it did not have to follow
any fair steps/procedures in dismissing the worker.

The LRA has fully addressed this issue and requires that in addition to being LAWFUL a dismissal
must also be FAIR.

The requirement of LAWFULNESS is exactly the same as the Roman-Dutch requirement, that is that
the employer must give the employee proper notice or, failing notice, must prove that the dismissal is
in response to a serious breach of contract by the employee.

The requirement of FAIRNESS has two components:


a) The dismissal must be grounded on a valid and fair REASON, and
b) The dismissal must be according to fair PROCEDURE/STEPS

The REASON for the dismissal must be valid and fair. Valid means that the reason upon which the
employer is relying to dismiss the employee must objectively exist and fair means that dismissal must
be the appropriate sanction under the circumstances. Fair PROCEDURE means that the employer
must follow the correct steps to dismiss the employee. If the reason for a dismissal is valid and fair,
we say that the dismissal is SUBSTANTIVELY FAIR, (i.e. it is fair in substance). If the employer has
followed the correct steps in dismissing the employee, we say that the dismissal is PROCEDURALLY
FAIR.

A dismissal must be both SUBSTANTIVELY and PROCEDURALLY FAIR. If a dismissal is either


procedurally or substantively defective, the entire dismissal will be found to be unfair.

The first section of chapter VIII states - “Every employee has the right not to be unfairly dismissed or
subjected to unfair labour practice” (S185). This basic right to which every employee is entitled
implies three questions:

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1) Who is an employee?
2) What is a dismissal or an unfair labour practice?
3) When is a dismissal fair or unfair?

1) Who is an employee?
(This has already been discussed above).

2) What is a dismissal or an unfair labour practice?

S186 of the LRA lists 6 forms of dismissal and 4 forms of unfair labour practice. Any action on the
part of the employer which does not fall within one of the following forms does not constitute a
dismissal or unfair labour practice:

4.2.1.2 Forms of Dismissal(S186)

(a) Termination of the contract of employment by the employer with or without notice;

(b) Not renewing a fixed term contract of employment of a temporary employee or renewing it
on less favourable terms, where the employee reasonably expected it to be renewed on the
same or similar terms;

(c) Refusing to allow an employee to resume work after she –


took maternity leave to which she was legally entitled; or
was absent from work for up to four weeks before the expected date, and up to eight weeks
after the actual date, of the birth of her child; (pregnancy);

(d) Selectively re-employing one or more employees who have been dismissed for the same or
similar reasons and refusing to re-employ another/others;

(e) Resignation from work by an employee because the employer has made continued
employment intolerable for the employee (constructive dismissal);

(f) Resignation from work by an employee after the transfer of the business in terms of S197 or
S197A because the new employer (the employer to whom the business was transferred) has
provided the employee with work conditions or circumstances that are substantially less
favourable to the employee than those provided by the old employer;

(b), (d) and (e) demand clarification.

In the past, fixed-term contracts of employment were an employer’s preferred type of employment
contract because they automatically expired at the end of a period or project. On the expiration of the
fixed-term the employer could simply part ways with the employee, arguing that by the nature of the
contract the employee had no expectation of continued employment. It was common practice for an
employer to enter into a fixed-term contract of employment with an employee and, when it expired,
decide whether or not to renew the contract. Each time the contract came up for renewal the
employee would be completely at the employer’s mercy. In other words the employee had no job
security. Moreover if the employer chose not to renew the contract the employee had no recourse.
S186(c) was enacted to redress this unfair practice. In terms of this section, if an employee has a
reasonable expectation that his employer will renew his fixed-term contract of employment, it will
23
constitute a dismissal if the employer does not renew the contract or renews it on less favourable
terms. The test of whether the employee’s expectation was reasonable is an objective test and looks
at whether the employer created the impression that it intended to renew the contract. Making
representations to the employee that the contract would be renewed, giving assurances that the
contract would be renewed or renewing fixed-term contracts in the past would create such an
impression.

Consider the following CASE STUDY:

X was employed on a one month, fixed-term contract of employment. His contract was renewed for
8 months successively. Thereafter X was advised that his contract would not be renewed in the
future. He alleges that he had been given assurances by his supervisor that his contract would be
renewed and that non-renewal therefore constitutes a dismissal. Does this constitute a dismissal in
terms of S186?

Selective re-employment in terms of S186(d) is a form of dismissal which creates confusion.


Effectively, if an employer has dismissed several employees for the same or similar reasons and then
offers to re-employ some of those employees, the employees who have been refused re-employment
have technically been ‘dismissed’ in terms of this section. For this form of ‘dismissal’ to take place,
there must have been a prior dismissal. This implies that the employees who have been excluded
from selective re-employment have been dismissed twice and this is problematic. In practice this is
not always the case and employers may at times re-employ dismissed employees.

The form of dismissal referred to in S186(e) is termed constructive dismissal. In the past an employer
who did not want to be accused of unfair dismissal would construct an unbearable situation at work
for an employer, indirectly forcing the employee to resign. For example, it might not have given the
employee work to do or it would thwart the employee’s progress in the workplace or victimize the
employee. If the employee did finally resign for this reason s/he would usually have no recourse
against the employer. The injustice of this is clear.

Today, if an employee terminates or agrees to terminate his/her contract of employment but this
termination or agreement was prompted or caused by the conduct of the employer, the employee is
said to have been constructively dismissed and s/he may have recourse against the employer. A
crucial element of constructive dismissal is that the employer must have made continued
employment intolerable for the employee. Constructive dismissal is clearly highlighted in the case of
SALSTAFF v Swiss Port South Africa (Pty) Ltd (2003) 3 BLLR 295 (LC) . In this case, the resignation
by a pregnant employee after the CEO of the business had insulted, threatened and humiliated her
and had also drawn up her letter of resignation was found to constitute constructive dismissal.

It should be noted that in determining whether the employment situation was “intolerable”, the
court cannot rely solely on the subjective perceptions of the employee. For example in the earlier
case of Goliath v Medscheme (Pty) Ltd (1996) 5 BLLR 603 (IC) the court found, for example, that an
employee’s incorrect perception that she was a victim of malicious conduct did not constitute
constructive dismissal. The court uses the reasonable person test in terms of which it asks “would a
reasonable person in the shoes of the employee have found the situation to be intolerable”. The court
needs to view the employer’s conduct in its totality and determine whether it is conduct which a
reasonable employee cannot be expected to endure. In addition the court must be satisfied that the
“intolerable” conditions are within the employer’s control and that there is a causal connection
between the intolerable conditions and the employees resignation. In the case of Mafomane v

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Rustenburg Platinum Mines Ltd (2003) 10 BLLR 999 (LC) the court held that the employee who
claimed constructive dismissal on the basis of racial discrimination needed to prove that his
resignation was causally related to direct or indirect race discrimination.

The recent case of Mvamelo v AMG Engineering (MENT3853), seems to indicate that the approach
of the CCMA to cases where an employee is offered an opportunity to, and chooses to resign, rather
than face disciplinary action is more lenient than was previously the case and that it does not
necessarily amount to constructive dismissal.

In this case the applicant was presented with a tape of a conversation which implicated him in
stealing from the company. The applicant was offered an opportunity to resign or to face a
disciplinary enquiry. In order to ensure that his employment record remained clean he chose to
resign.

Since the applicant had the option to face disciplinary action and was not forced to resign the CCMA
decided that he had not been constructively dismissed.

Please remember that S186(a) – (f) lists the 6 forms of dismissal. Whether or not a dismissal is fair or
unfair is a separate enquiry. Do not assume that conduct which amounts to a dismissal is necessarily
unfair!

4.2.1.3 Forms of Unfair Labour Practice

The 2002 Amendment to the LRA has introduced 4 forms of unfair labour practice:

(a) An employer’s unfair conduct/behaviour in relation to the promotion, demotion,


probation or training of an employee or in relation to the provision of benefits to an
employee; (note: dismissals relating to probation are not dealt with under the provisions
of unfair labour practice but rather under dismissal);

(b) Unfair suspension or any other unfair disciplinary action (short of dismissal) against an
employee;

(c) An employer’s failure to reinstate or re-employ a former employee in terms of any


agreement;

(d) An occupational detriment (other than dismissal) in contravention of the Protected


Disclosures Act, No 26 of 2000, on account of the employee having made a protected
disclosure defined in that Act.

The last form of unfair labour practice refers to the situation where an employer victimizes,
intimidates or otherwise punishes an employee who has disclosed information which s/he is
permitted to disclose and in a manner in which is permitted in terms of the Protected Disclosures
Act. The recent case of Grieve v Denel (Pty) Ltd (2003) 4 BLLR 366 (LC) illustrates this form of
unfair labour practice. In this case Grieve, who was an employee of the defendant, disclosed
information regarding alleged wrongful conduct by his manager. Grieve was subsequently
threatened with disciplinary action. The court found that Grieve had not acted in bad faith and that
the threat of disciplinary action under the circumstances was an “occupational detriment”.

25
Conversely, in the case of CWU v Mobile Telephone Networks (Pty) Ltd (2003) 8 BLLR 741 (LC) the
suspension of an employee after he had accused his superiors of corruption was not held to be an
unfair labour practice. In this case the court found that the employee’s accusation (“disclosure”) was
not protected and that it was “mere rumours”.

4.2.1.4 Fairness

3) When is a dismissal fair or unfair?

Once it can be established that dismissal has occurred in any of the 6 forms listed in S186, the second
part of the enquiry is to establish whether the dismissal was fair or unfair. The employee must prove
that he/she has been dismissed, thereafter the onus shifts onto the employer to prove that the
dismissal was fair. For this reason it is critical for employers and managers to know the law on
fairness regarding dismissals.

4.2.1.4.1 Automatically unfair dismissals (S187)

S187 of the LRA lists the instances when a dismissal will be automatically unfair. If a dismissal
occurs based on any of the reasons listed in S187 the employee is automatically presumed to have
been dismissed unfairly and the employer will not have the opportunity to try and prove that the
dismissal was fair. Furthermore, the possible damages that an employer may be ordered to pay the
employee on account of an automatically unfair dismissal are the highest for unfair dismissal.

According to S187 a dismissal is automatically unfair if the reason for the dismissal is any of the
following:

(i) the employee has exercised freedom of association, or the employee is a member of a
workplace forum.

(ii) the employee participated in or supported, or indicated an intention to participate in or


support, a strike or protest action that complies with the provisions of Chapter IV (i.e.
protected / “legal” industrial action). Please note that while an employee may not be
dismissed for reason of participation in protected industrial action, he/she may legitimately be
dismissed for misconduct during the protected strike/protest action or based on operational
requirements of the employer’s business.

(iii) the employee refused, or indicated an intention to refuse, to do any work normally done by
an employee who at the time was taking part in a strike that complies with the provisions of
Chapter IV or was locked out, unless the work is necessary to prevent an actual danger to life,
personal safety or health.

(iv) to compel the employee to accept a demand in respect of any matter of mutual interest
between the employer and employee (this is referred to as a ‘dismissal lock-out’. A matter of
mutual interest would be any term and condition of employment. Please note the subtle
difference between a dismissal based on the reason that an employee refused to accept a
demand in respect of a matter of mutual interest and a dismissal based on the operational
requirements of the employer’s business).

26
(v) the employee took action, or indicated an intention to take action, against the employer by –
(i) exercising any right conferred by this Act; or
(ii) participating in any proceedings in terms of this Act
(An employer may not use the threat of dismissal to intimidate an employee or to punish
him/her for taking action against the employer)

(vi) the dismissal is for reasons of the employee’s pregnancy, intended pregnancy, or any reason
related to her pregnancy

(vii) the dismissal is based on unfair discrimination against an employee, directly or indirectly, on
any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin,
colour, sexual orientation, age, disability, religion, conscience, belief, political opinion,
culture, language, marital status or family responsibility

(viii) the dismissal relates to a transfer of business contemplated in terms of S197 or S197(A)

(ix) The dismissal is on account that the employee made a protected disclosure in terms of the
Protected Disclosures Act No 26 of 2000;

Despite (vii) above, a dismissal may be fair if the reason for the dismissal is based on an inherent
requirement of the job or if the dismissal is based on age and the employee has reached the normal or
agreed retirement age for persons employed in that capacity.

In the past year there have been several cases dealing with automatically unfair dismissal. The
following examples highlight the court’s views on dismissal for reasons listed above:

In NUMSA v Zeuna-Starker Bop (Pty) Ltd (2003) 1 BLLR 72 (LC) the dismissal of employees for
reason that they refused to accept their employer’s final wage offer was found to be automatically
unfair.

In Solidarity obo McCabe v SA Institute for Medical Research (2003) 9 BLLR 927 (LC) the non-
renewal of an employees fixed-term contract because of her pregnancy was found to be an
automatically unfair dismissal.

In SACTWU v Rubin Sportswear (2003) 5 BLLR 505 (LC) the court found that the dismissal of elderly
employees (for reason of age) before they reached “normal retirement age” constitutes an
automatically unfair dismissal.

4.2.1.4.2 Other dismissals (S188)

A dismissal which is not automatically unfair may still be unfair if it is not grounded on a valid and
fair reason or if the employer has not followed fair procedure.

S188 of the LRA lays down the requirements which must be met for dismissals (with the exclusion of
automatically unfair dismissals) to be fair. A dismissal which is not automatically unfair but which
does not comply with the requirements in S188 will be found to be unfair.

Our law recognises three grounds for dismissal (Schedule 8 of the LRA):

27
1) Misconduct

2) Incapacity

3) Operational Requirements of the Business

Misconduct refers to bad behaviour on the part of an employee. Whenever an employee breaks a
workplace rule, s/he is guilty of misconduct and this may in certain instances lead to dismissal
(depending on the severity of the misconduct or on the number of times that the offence has been
committed).

According to guidelines laid down in Schedule 8 of the LRA a dismissal based on misconduct may be
substantively fair if the following requirements are met:

a) The workplace rule which the employee has breached is a reasonable rule (for example, a rule
that employees may never use the bathroom except during lunchbreak would be regarded as
unreasonable and breach of the rule could never lead to dismissal).

b) The employee was aware of the rule or could reasonably be expected to have been aware of the
rule and must be further be aware that breaking the rule could lead to dismissal. For this reason
management is advised to distribute a copy of workplace rules (a disciplinary code) to those
employees who will be affected by them and to set out the possible consequences for breaking the
rules. This will avoid any uncertainty later.

c) The rule has been consistently applied by management


management must treat its employees equally and fairly – Employees should be treated the same
for commission of the same offence (unless the circumstances are different). Similarly, if the
employer has elected not to dismiss employees for theft in the past, it cannot dismiss Z for theft
now since by not proceeding against thieves in the past, the employer has created the impression
that it does not regard the crime of theft as misconduct warranting dismissal.

d) Dismissal is the appropriate punishment for the misconduct.


This would depend on several factors, inter alia, the form of misconduct (some are more serious
than others), the circumstances surrounding the misconduct (e.g. theft is serious but the stolen
item was of little value), the nature of the job, the employee’s circumstances (e.g he had no
previous disciplinary record or his child was very ill and he therefore stole money to pay for
medicine)

A dismissal must also be procedurally fair. Procedural fairness refers to the steps, which must be
followed to dismiss the employee.

Our courts have endorsed the concept of corrective or progressive discipline. This ensures that
dismissal is reserved as a drastic measure only. Efforts should first be made to correct an employee’s
behaviour through graduated disciplinary measures short of dismissal such as warnings. Warnings
may be oral or written, depending on the severity of the misconduct. In certain instances more than
one warning may be necessary to justify dismissal, in other instances one final warning may be
sufficient and in very serious cases of misconduct no previous warning is necessary to justify
dismissal. Although it is difficult to say with certainty when one or more prior warnings are
necessary to justify dismissal one may be guided by the following (note: this is only a guide and
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employers are encouraged to develop their own list of offences and possible sanctions, to be included
in an organisation disciplinary code)

For minor offences (e.g. late arrival for work, swearing at work, negligent, minor damage to company
property) –written warning by supervisor or manager for the first offence (a verbal warning may be
sufficient), final written warning by manager for the second offence, disciplinary enquiry and
possible dismissal by the general manager for the third offence.

For serious offences (e.g insubordination, insolence, intimidation or victimisation of co-workers,


intoxication, refusal to carry out a reasonable instruction) – final written warning by manager for the
first offence, disciplinary enquiry and possible dismissal by general manager for the second offence.

For very serious offences (e.g physical assault on the employer, a fellow employee, client or
customer gross dishonesty, theft, unauthorised possession or use of company property, fraud,
unauthorised possession of drugs, wilful damage to company property, willful endangering of the
safety of others, giving a false identity, gross insubordination, unauthorised possession of a lethal
weapon at the workplace, working against the company’s interests) the disciplinary code may specify
that an employee be dismissed by the general manager following a disciplinary enquiry after the first
offence.

(THE DISCIPLINARY CODE of a company must specify the penalty which a form of misconduct
may attract in relation to the number of occurrences).

The Disciplinary Enquiry/Hearing

An employee may not be dismissed for misconduct without first holding a disciplinary hearing. The
reason for this is to attempt to establish the employee’s guilt and to ensure that s/he is given a fair
opportunity to respond to the charges. The hearing is fairly informal and no legal representation is
allowed at the hearing (unless by agreement). The main purpose of a disciplinary enquiry is to
establish whether or not there are grounds for a dismissal. The following are procedural guidelines:

1 The employer must give the employee notice of the allegations and of the investigation.
This means that before the hearing the employer must inform the employee of the charge/s
against him/her.
–The charge/s are usually recorded in writing and the employee signs an acknowledgment of
receipt thereof.
–The employer must use a form and language which the employee can understand (e.g.
simple English)
NB: notification must take place before the investigation. How long before the investigation
depends on the circumstances (Approx 3 or 4 working days, unless employee committed a
very serious offence, in which case less notice would be required).

2 The employee must be given reasonable time to prepare his/her response.


This relates closely to no: 1) above, and again, what constitutes reasonable time depends on
the circumstances.

3 During the hearing the employee must be given an opportunity to state a case in
response to the allegations against him/her.
The employee may, for example, deny the charge or give a reason for the misconduct.

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4 The employee is entitled to assistance of a trade union representative or fellow
employee during the hearing. (No legal representation for either side, unless agreed!)
A trade union representative is a person who has been elected to represent employees in the
workplace (for example, a shop steward)

5 After the enquiry the employer must communicate the decision taken and preferably furnish
the employee with written notification of the decision.

6 The employer must inform the employee of the reason for dismissal.

7 If an employee is dismissed the employer must remind him/her that he/she can refer the
matter to the Commission for Conciliation, Mediation and Arbitration (the CCMA)

8 If the disciplinary code makes provision for appeal to a higher level of management, the
employee will be able to appeal to this level.

(The LRA provides that the only instances when the employer may dispense with a disciplinary
enquiry are in cases where it cannot reasonably be expected to hold an enquiry (e.g. during a violent,
unprotected strike where lives are endangered) or where the employee waives his right to a dismissal
enquiry)

The following people will be present at a disciplinary enquiry:


- Employer/manager
- Employee without or without a representative
- Chairperson (this is usually a member of management who must remain as impartial as possible)
(According to the LRA the above steps are not rules but guidelines. This means that if management
does not follow every step the dismissal will not necessarily be unfair. However, to avoid problems
later management should attempt to follow LRA guidelines as closely as possible).

Disciplinary records
The LRA suggests that employers keep records for each employee specifying:
- the nature of any disciplinary infractions;
- the action taken by the employer.
- the reasons for such action.
The disciplinary record will serve as proof of previous offences if the employee is later dismissed.

Incapacity is the second ground for dismissal. An employee may be dismissed for incapacity when
s/he is incapable of doing the work which s/he was employed to do. Like misconduct dismissals, a
dismissal based on incapacity must be substantively and procedurally fair (the reason must be valid
and fair and the employer must follow the correct steps).

There are various factors which may result in incapacity (inter alia):
- A terminal illness which renders the employee unable to perform his tasks e.g advanced stages of
cancer
- a severe medical condition which affects the employees capacity to work e.g a weak heart, severe
asthma, deteriorating eyesight.
- A motor-vehicle accident
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- Drug addiction
- Incompetence.

Unlike misconduct an employee who is incapable is usually not to blame for his/her incapacity and
there is therefore a greater onus on the employer to accommodate this employee. Dismissal should
really be the last resort. Efforts should be made for example to transfer an employee to an alternative
position in the company, to give him/her reasonable time off for treatment or to assist the employee
in whichever other way possible.

Essentially, incapacity is caused by two main factors:

A) Ill-health or injury
B) Incompetence / Poor work performance

A) INCAPACITY CAUSED BY ILL-HEALTH OR INJURY

In order to justify that the employer has a good reason (i.e. that the dismissal is substantively fair) the
employer will need to show that the employee’s illness or injury has rendered him/her incapable of
meeting the required work standard and that having regard to all the circumstances dismissal is the
appropriate sanction. According to the guidelines in Schedule 8 of the LRA the employer should
have regard to the following in making a decision to dismiss based on ill-health or injury:
▪ whether the illness or injury is temporary or permanent
▪ the period for which the employee is likely to be absent from work
▪ the nature and seriousness of the illness or injury
▪ the nature of the employee’s job
▪ the possibility of securing a temporary replacement for the employee
▪ whether the employer can accommodate the employee’s disability (for example by securing
alternative employment for him/her in the business or by adapting his work circumstances or
duties)

Please note that there is a greater onus to accommodate employees who are incapacitated by a work-
related illness or injury).

Procedural fairness
1. an investigation must be held to determine the extent of the incapacity. If an employee is
temporarily unable to work the employer should investigate the extent of the incapacity. If
the employee is likely to be absent for a time that is unreasonably long in the circumstances,
the employer should investigate all the possible alternatives short of dismissal. Where the
incapacity is permanent, the employer should ascertain the possibility of securing alternative
employment or adapting the duties or work circumstances of the employer to accommodate
the employee’s disability.
2. The employee must be given an opportunity to state a case in response and to be assisted by
a trade union representative or fellow employee.
3. If the employer cannot accommodate the employee’s incapacity he must investigate
whether alternative employment is available.
4. In the case of alcoholism or drug abuse the employer should consider whether counseling and
rehabilitation may be appropriate as a step short of dismissal.

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NOTE: The purpose of the enquiry/hearing is not to enable the employee to defend himself
(remember, this is a no-fault dismissal) but to give him a opportunity to tell his/her side of the story
and to establish facts.

B) INCAPACITY CAUSED BY INCOMPETENCE/POOR WORK PERFORMANCE

It may happen that an employee is incapable of performing his/her work, not because of illness or
injury but because he/she is simply incompetent or unable to meet the required work standard/s.
Where the incapacity is a result of poor work performance the employer should make sure that it
has given the employee in question reasonable/appropriate “evaluation, instruction, training,
guidance or counseling” (SS8(1)(e) and8(2)(a) of Schedule 8 of the LRA) before dismissing him/her.
(In other words, an employee cannot be dismissed for incompetence if it is found that the reason
for his/her incompetence is that the employer did not in fact give the requisite evaluation,
instruction, training, guidance or counseling.
If there is any doubt as to the competence of a prospective employee the LRA permits the employer
to employ the employee for a probationary period in order to assess his/her competence before
confirming the appointment.
In terms of S8(1) of the Schedule the period of probation must be “reasonable” with reference to the
nature of the job and the time it would take to evaluate the employee’s suitability. The Act is
insistent that probation must not be used to deprive employees of the status of permanent
employment or to create a situation of unnecessary insecurity for the employee.

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(1) Dismissal for poor work performance during probation

It is simpler to dismiss an employee for poor work performance during or immediately upon expiry
of the probationary period then it is once the employee becomes a permanent employee.
The following are guidelines:
Where an employer finds during or on expiry of a probationary period that the employee’s
performance is below standard (notwithstanding reasonable evaluation, instruction, training,
guidance or counselling) the employer needs to advise the employee of the aspects in which he/she
is failing to meet the required standards and if he/she believes the employee to be incompetent, the
respects in which the employee is not competent. The employer may then decide to either extend
the probationary period or dismiss the employee. Whether the employer decides to dismiss the
employee or to extend the probationary period he/she cannot make this decision without first
inviting the employee (or a trade union representative/fellow employee) to make representations
and considering those representations. If the employer decides to extend the probationary period
or to dismiss, it should advise the employee that he/she may refer the matter to the CCMA or
bargaining council (if one exists).

The purpose of the investigation is to establish whether in fact there is poor work performance (not
inadequate evaluation, instruction, training, guidance or counseling on the part of the employer), to
ensure that the employee was aware of the required work standard and to decide on the appropriate
action. The investigation may result in some form of corrective action being taken and/or the
period of probation being extended or it may be a pre-cursor to dismissal. The important thing is
that the employee or his/her representative must be given an opportunity to make representations.

(2) Dismissal for poor work performance after probation

After probation, once s/he becomes permanent, an employee may not be dismissed for poor work

performance unless:-

a) s/he has been given appropriate evaluation, instruction, training, guidance or counselling;
b) s/he was aware or could reasonably be expected to have been aware of the work standard;
c) he/she has been given a reasonable period of time for improvement and he/she continues
to perform unsatisfactorily;
d) an investigation is held in which the employee is given an opportunity to respond and in
which s/he may be assisted by a trade union representative or fellow employee;
e) alternatives to dismissal have been considered;
f) dismissal is the appropriate sanction for not meeting the work standard

It is clear from the above that after probation the requirements for dismissal based on poor work
performance become more stringent. The employer not only needs to establish, via an investigation,
poor work performance, ensure that the employee was aware of the required standards and received
appropriate evaluation, instruction, training, guidance or counseling but once this has been
established, the employer needs to give the employee a reasonable time for improvement and must
consider alternatives to dismissal more carefully. Giving the employee a reasonable time for
improvement will necessitate having another meeting at a later date with the employee to determine
whether his/her performance has improved and what the appropriate action is to take. The reason
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that the rules for dismissing an employee for poor work performance are more onerous after
probation is obvious. A permanent employee has an expectation of continued employment. A
probationary employee does not have this expectation.

The main differences between dismissal for poor work performance during/on expiry of probation
and dismissal for poor work performance after probation are two-fold:
i. once an employee is no longer a probationary employee, s/he may not be dismissed
without first being given a reasonable period of time for improvement after being made
aware that s/he is not meeting the required work standard. This is not necessary for
dismissal during/on expiry of the probationary period;
ii. S8(1)(j) of Schedule 8 indicates that reasons for dismissal during the probationary period
do not need to be as compelling than would be the case for dismissal based on poor work
performance after completion of the probationary period.

ESSENTIALLY: Where a dismissal is based on poor work performance, the essential questions to ask
are:-

a) Did the employee fail to meet the required work performance?


b) Did the employee know (or could s/he reasonably have been aware of) the required work
standard
c) Had the employer given adequate evaluation, instruction, training, guidance or counselling?
d) Was the employee given a fair opportunity to improve (this only applies for dismissals after
the probationary period)?
e) Was an investigation held
f) Is dismissal the only viable alternative?

Agreement for pre-dismissal arbitration - S188A

As we will see later, where an employee has been dismissed and s/he wishes to contest the fairness of
the dismissal s/he may take the dispute to the CCMA (or council, if applicable) for resolution.

S188A has been introduced into the LRA. In terms of this section, the employer, upon payment of a
fee and with the employee’s consent, may request a pre-dismissal arbitration. An accredited agency, a
council or the CCMA will conduct an arbitration prior to dismissal into allegations about the conduct
or capacity of the employee.
Pre-dismissal arbitration will avoid duplication of hearings.

The outcome of a pre-dismissal arbitration is final but may be reviewed by the Labour Court.

Pre-dismissal arbitration has not been used frequently by employers.

The third ground for dismissal in South African law is Operational Requirements of the
Business

These dismissals are often referred to as “no fault” dismissals in that they are not related to any fault
on the part of the employee. The reason for dismissal here lies in the needs of the business (for
example, it is merging with another company, it is downsizing, it is implementing new technology
and does not need all its workforce, it is closing down, it cannot afford to keep all its workers).

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The most common type of dismissal falling under this heading is retrenchment. This occurs where
employee/s become redundant in the workplace.

An employer may only dismiss staff based on operational requirements if it can prove that a valid
reason exists for the retrenchment. In other words, the courts want to be certain that the employer
has a legitimate commercial rationale for these dismissals. If a bona fide reason does exist the
employer must follow the steps (procedure) laid down in S189 or S189A of the LRA:

S189 Deals with Dismissals based on operational requirements for employers with less than 50
employees or small-scale dismissals based on operational requirements by big employers

According to this section, where the employer’s business needs justify dismissal, it needs to ensure
that the following criteria are satisfied before dismissing any employees:

1. prior consultation

This means that at the earliest opportunity, once the employer contemplates dismissing one or more
employees based on operational requirements (before he/she has reached a final decision to dismiss!)
he/she must engage in a process of consultation about the possibility of the dismissal/s. Consultation
must take place between the employer and:
- Person/s with whom the employer is required to consult in terms of a collective
agreement (if one exists);
- (if no collective agreement exists), the workplace forum, (if one exists in the
organization) and any trade union, whose members are likely to be affected by the
proposed dismissals (if there is one);
- (if there is no workplace forum in the workplace), any trade union (if there is one)
whose members are likely to be affected by the proposed dismissals;
- (if there is no such trade union) then consultation must occur at the very least with
the employees who may be affected by the proposed dismissals or their
representatives that have been nominated for the purpose of consultation.

The meaning of “consultation” differs from “negotiation”. Whereas “negotiation” requires


compromise and a mutually acceptable arrangement, the Labour Court has suggested that the process
of consultation requires both parties to hear and consider the other’s suggestions and to act in good
faith. The Labour Court requires that the process of consultation be meaningful and exhaustive. It
should not be superficial or a sham and the other consulting party must have a fair opportunity to
make meaningful suggestions which must be considered in earnest by the employer.

2. Attempt to reach consensus on certain matters

The amended S189 requires that during consultation, the employer and the other consulting party
must “engage in a meaningful joint consensus-seeking process” and must “attempt to reach
consensus” on certain issues, inter alia, appropriate measures to avoid the dismissals, to minimise the
number of dismissals, to change the timing of the dismissals, to mitigate the adverse effects of the
dismissals, the method for selecting the employees to be dismissed and the severance pay for
dismissed employees.

The following are examples of measures that may be considered to avoid the dismissals:

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- the reduction of wages;
- the granting of paid or unpaid leave;
- the spreading of dismissals over a period of time to allow for a natural reduction in
personnel numbers to occur;
- the implementation of short-time;
- where a division needs to be closed down, the retraining of staff in that division to
enable them to be employed in other divisions of the business;
- The reduction or elimination of overtime, work on Sundays or work on Public
Holidays.

Where dismissals are inevitable, the following are examples of measures that may be considered to
minimize the number of dismissals:

- allowing employees to volunteer for retrenchment;


- where a division needs to be closed down, retraining employees to enable them to be
employed in other divisions of the business

Where dismissals are inevitable the following are examples of measures that may be considered to
mitigate the adverse (harsh) effects of the dismissals:

- giving employees access to a computer, telephone etc to enable them to update CVs
and/or apply for alternative employment;
- giving employees time off work without loss of pay to attend interviews;
- providing letters of reference to give employees a better chance of seeking alternative
employment;

Where dismissals are inevitable the following are examples of selection criteria that may be used for
deciding which employees will be dismissed:
- LIFO
- Early retirement
- Bumping
- Prior conduct
- Efficiency, ability, skills, capacity, experience, attitude to work and productivity

Using FIFO or the criterion of selecting employees for dismissal based on the fact that they are part of
a double income family is not permissible.

Severance pay is payable in the case of dismissals based on operational requirements of the business
and the parties must attempt to reach consensus on the amount payable. The minimum amount of
severance pay payable is 1 week for every completed year of service and is regulated by S41 of the
BCEA. The parties can agree to an amount greater than this, in which case the agreed amount
applies.

Severance pay is an amount over and above any other amount which is payable in law e.g. leave pay,
notice pay.

An employee who refuses a reasonable offer of alternative employment loses the right to severance
pay. If, for example, the employer offers the employee an alternative position which is similar in pay,
job security and status and this is refused the employee will not be entitled to severance pay. An

36
offer that amounts to a demotion may however not be deemed to be a reasonable offer of alternative
employment.
In Freshmark (Pty) Ltd v CCMA (2003) 6 BLLR 521 (LAC) the court decided that a retrenched
employee who refused her own position on new terms had refused a reasonable offer of alternative
employment and was therefore not entitled to severance pay.

The section of the Act indicates that the employer must not have made up his/her mind on the issues
and must consult meaningfully with the other party in a bona fide attempt to reach consensus.
Ultimately though the meaning of the word “attempt” to reach consensus indicates that if consensus
cannot be reached despite a meaningful joint consensus-seeking process then the employer will have
the final decision on the issues (Atlantis Diesel Engines (Pty) Ltd v NUM (1994) 15 ILJ 1247 (A)).

The requirement that the process of consultation be a meaningful joint consensus-seeking process
means that the employer and the other consulting party must, as far as is possible, try to reach
agreement on the above issues.

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3. written notice of invitation to consult and written disclosure of relevant information
The employer must notify the other consulting party in writing that it is contemplating dismissals
based on operational requirements and must, in the same written notice, invite the other party to
engage in consultation in this regard.
In order to prove the truthfulness of the need to dismiss based on operational requirements, and to
ensure that the process of joint consensus-seeking is meaningful, the notice must disclose all relevant
information to the other consulting party.
The type of information which the employer must disclose is information relating to; the reasons for
the proposed dismissals, the alternatives which the employer considered before proposing dismissals
and the reasons for rejecting these alternatives, the number of employees who are likely to be
affected as well as the job categories in which they are employed, the proposed method for selecting
employees to be dismissed (selection criteria), the time or period during which the dismissals are
likely to take effect, the severance pay proposed, assistance which the employer proposes offering the
affected employees, the possibility of future re-employment, the number of employees employed by
the employer and the number of employees that have been dismissed in the organisation due to
operational requirements in the past year. Effectively, the employer must disclose all relevant info
which will enable the other party to engage effectively in consultation.
The notice must be reasonable, giving the other consulting party sufficient time to prepare for the
consultation.
Information which is legally privileged, information which the employer cannot disclose without
contravening a law or a court order, information which is confidential and which if disclosed may
cause substantial harm to an employee or to the employer and information which is private personal
information relating to an employee need not be disclosed by the employer.
Where the employer and the other consulting party are in dispute regarding the relevance of
information and the need to disclose/not disclose it and the dispute is referred to Arbitration or to the
Labour Court the burden rests on the employer to prove that the information sought, which he/she
does not wish to disclose, is not relevant.
4. During the consultation the employer must afford the other consulting party an opportunity
to make representations.
(about any issue on which they are consulting or relating to the proposed dismissals).
5. employer must consider and respond to the representations made by the other consulting
party.
For example, if the trade union/employees make suggestions regarding the time of the retrenchments
or the selection of employees to be retrenched, the employer must listen to these suggestions and
respond to them. If the employer does not agree with the suggestions/representations he/she must
give a reason/s. If the representations have been made in writing then the employer must respond in
writing.

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6. A final decision must be made and communicated to the consulting party.
After consultation, consideration of and responding to the other party’s representations the
employer must make a final decision on whether or not to retrench. The employer must give
written notice of its decision to the other party, and if the decision is to retrench, the employer
must provide the reasons, advise of the selection criteria that will be used and of the severance pay
that will be paid.
With regards selection criteria, these must preferably be those that have been agreed to or, failing
agreement, selection criteria that are fair and objective.
With regards severance pay, the amount may not be less than that specified in S41 of the BCEA.

Note: A dismissal based on operational requirements of the business does not always amount to a
retrenchment. The following might also lead to dismissals based on operational requirements of the
business:

1. Special operational needs of the business ( for example during tax season in a large accounting
practice it may be essential for employees to work overtime, a refusal of which may justify
dismissal).

2. The employee’s action or presence negatively affects the business (for example, the
employee’s actions create disharmony amongst co-workers or s/he is antagonising the
customers or incompatibility exists between employer and employee). Please note: with
incompatibility, incapacity as a ground for dismissal may be used rather than operational
requirements of the business.

3. The employee’s conduct has led to a breakdown of the trust relationship

The facts of Food & Allied Workers Union & Others v Amalgamated Beverage Industries Ltd
(1994) 15 ILJ 630 (IC) illustrate dismissal based on a breakdown of the trust relationship:

AMI introduced a new delivery system, to which the drivers and assistants objected. These
particular employees showed their discontent by, among other things, refusing to do certain
deliveries and by arriving at work late. Upon request by the employer one of the drivers tried
to help the employer overcome the backlog in deliveries. This driver was then seriously
assaulted by his co-employees. AMI, despite a mass enquiry could not identify which of the
other drivers and assistants had committed the assault (they refused to give evidence) and
dismissed them all. Based on the finding by the court that the assault had the effect of
destroying the trust relationship between them and the employer, the dismissal based on
operational requirements was found to be fair

4. The business requirements demand that changes must be made to the employee’s terms and
conditions of employment ( for example a merger between two auditing firms may require
that changes be made to an employee’s terms and conditions of employment. If the employee
is unwilling to accept these changes s/he may be dismissed for operational reasons).

Naturally a dismissal based on operational requirements must be substantively and procedurally fair.
Substantive fairness means that the reason upon which the employer is relying to justify dismissal
must actually exist, is the real reason for dismissal (not a “smoke-screen”), has commercial rationale,

39
and indeed justifies dismissal. Procedural fairness means that the employer must follow the correct
steps.

S189A Deals with Dismissals based on operational requirements by employers with more than 50
employees (This section of the LRA was introduced by the 2002 Amendment to the Act)

According to the LRA


“189A. (1) This section applies to employers employing more than 50
employees if—
(a) the employer contemplates dismissing by reason of the employer’s
operational requirements, at least—
(i) 10 employees, if the employer employs up to 200 employees;
(ii) 20 employees, if the employer employs more than 200, but not
more than 300, employees;
(iii) 30 employees, if the employer employs more than 300, but not
more than 400, employees;
(iv) 40 employees, if the employer employs more than 400, but not
more than 500, employees; or
(v) 50 employees, if the employer employs more than 500 employees;
or
(b) the number of employees that the employer contemplates dismissing
together with the number of employees that have been dismissed by
reason of the employer’s operational requirements in the 12 months
prior to the employer issuing a notice in terms of section 189(3), is
equal to or exceeds the relevant number specified in paragraph (a)”

The section makes provision for a facilitation process.

The process is as follows:

S189A(3) Notice

In terms of Section 189A(3) the employer with more than 50 employees who contemplates dismissal
must give notice of its contemplation based on operational requirements and must invite parties to
consult.
The employer may, in its notice, request a facilitator from the CCMA to assist with the consultation
OR the consulting party representing the majority of employees who may be dismissed may, within
15 days of receipt of the S189(3) Notice, request a facilitator from the CCMA OR the parties can agree
to appoint a facilitator.

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Facilitation begins with the appointment of the facilitator

Unless the parties agree to vary the timeframe, at least 60 days must elapse from the date of the
employer’s notice inviting consulation to allow for proper consultation and facilitation. During this
period the procedures prescribed by the Act must be followed and the employer may not give notice
to terminate the contracts of employment. Similarly, during the 60 day period the registered trade
union or the employees may not give notice of a strike unless the employer gives premature notice of
termination of employment. (Doing either of the above would naturally sabotage the intended
process of consultation and facilitation).

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Expiration of the facilitation period

Once 60 days (from date of notice) have elapsed the employer may give notice to terminate the
contracts of employment and a registered trade union or the employees receiving the notice of
termination may either give notice of a strike or refer a dispute regarding the substantive fairness of
the dismissals to the Labour Court, in which case the employees may not call for strike action.

If a facilitator is not appointed

If a facilitator was not appointed then, provided that a period of 30 days have elapsed from the date of
the employer’s notice inviting consultation, a party may refer a dispute to the CCMA or bargaining
council. From date of referral of the dispute a further 30 days must elapse before the employer may
give notice to terminate any contracts of employment or the employees may give notice of a strike.

In terms of S189A(13) the Labour Court has the power to make an order where the employer does
not comply with fair procedure in terms of the Section.

Note: With regards to dismissals based on operational requirements, particularly retrenchments, our
courts have been careful to establish that there is in fact a reason based on operational requirements
of the business and that the “retrenchments” are not a
“smoke-screen” for dismissals based on any other reason, e.g. unfair discrimination. In the past
however, once the court was satisfied that the dismissal was based on the operational requirements of
the business, it was generally reluctant to question the commercial rationale of the employer’s
decision to retrench. The recent case of CWIU & Others v Algorax (Pty) Ltd 2003 11 BLLR 1081
(LAC) however indicates that the court is prepared to “second-guess” the employer’s decision to
retrench. In this case the employer introduced a new shift system, which the employees refused to
adhere to. Based on the operational requirements of its business the employer dismissed these
employees. The Labour Appeal Court, being of the opinion that there was an alternative to the
dismissals ordered that the employees be re-instated.

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4.2.1.5 Forums and Procedures for resolving disputes about unfair
dismissals and unfair labour practices
There are essentially three forums where labour disputes may be resolved and three possible
processes for resolving these disputes:

FORUM PROCESS

CCMA (Commission for Conciliation, Mediation and CONCILIATION:


Arbitration):
Conciliation is a process whereby a
The CCMA was set up in terms of the LRA to ease the commissioner of the CCMA or a member of the
bottleneck of labour disputes. Most disputes in terms of bargaining council hears both parties to the
the LRA need to be referred to the CCMA as a first stop. dispute and attempts to help them arrive at a
mutually suitable agreement. The person
conducting the conciliation may make
suggestions to the parties in an attempt to help
them resolve the dispute but s/he may not
BARGAINING (OR OTHER) COUNCIL:
impose a decision on the parties.
Certain sectors have their own bargaining (or statutory)
council. Apart from having the power to negotiate ARBITRATION:
collective agreements for their sector, bargaining councils
have similar powers to the CCMA to resolve disputes that In terms of this process after there has been an
arise within their sector. Where a dispute arises within a attempt at conciliation and this has failed an
sector and a council exists, the parties will need to refer arbitrator (a commissioner at the CCMA or a
the dispute to the council (not the CCMA) member of the bargaining council) hears both
parties’ evidence and after consideration of both
sides imposes a decision. Although arbitration
is not as formal as adjudication rules of evidence
do apply.

The decision of the arbitrator is final and there


is no right to appeal (although review of the
decision is possible if there was any irregularity)

Note: legal representation is not permitted at


conciliation. Although generally not permitted
at arbitration for common dismissal disputes
(i.e. misconduct or incapacity) the
commissioner does have discretion in this
regard, which s/he must exercise judicially.

CON-ARB:
There is usually a delay between conciliation
and arbitration taking place, but in terms of the
43
“new” process of con-arb, a party may request
that arbitration occur immediately after
conciliation has failed. Con-arb must be used
where the dispute concerns dismissal during
probation.

COURT: ADJUDICATION:
(i) Labour Court: hears matters falling This process only applies in a court. The parties
within its jurisdiction. to the dispute are both given an opportunity to
present their side of the dispute and a third
(ii) Labour Appeal Court: hears appeals party (judge), after considering the evidence,
from the Labour Court makes/imposes a decision.

Note: The Superior Courts Bill of 2003 provides for the During the process of adjudication disputing
abolition of both the Labour Court and the Labour Appeal parties are entitled to have legal representatives.
Court. If passed into law this law grants the High Court
jurisdiction in labour matters, whilst labour appeals will
be heard in the Supreme Court of Appeal. A panel of
specially selected judges will be appointed to hear labour
matters.

The provisions of the LRA dictate which forum and which process must be used. This is determined
with reference to the nature of the dispute:

(1) Automatically unfair dismissals and dismissals for operational requirements

(i) the dispute must be referred within 30 days of dismissal (or of receiving notice of
termination of employment) to a council or to the CCMA. The referral must be in
writing and a copy thereof must be served on the employer.

(ii) Within 30 days of receiving the referral, the council or CCMA must attempt to
resolve the dispute via conciliation. Although the employee is entitled to be
represented, neither party is entitled to legal representation. If conciliation fails, a
certificate must be issued to this effect.

(iii) Once a certificate that the matter has not been resolved via conciliation has been
issued or 30 days have elapsed from the date of referral, the employee may approach
the Labour court for adjudication on the matter. A dismissal dispute must be referred
to the Labour Court within 90 days after a certificate that the dispute remains
unresolved has been issued or within 90 days from the expiry of the 30 day period of
conciliation. Either party may be represented by a legal practitioner.

(iv) The decision of the labour court may be taken on appeal to the Labour Appeal Court

As an alternative to steps (iii) and (iv) above, the parties may agree to having the matter resolved by
the CCMA via arbitration. This is referred to as ‘voluntary arbitration’ .

(2) Dismissal for misconduct or incapacity or constructive dismissal

44
(i) the dispute must be referred within 30 days of dismissal (or of receiving notice of
termination of employment) to a council or to the CCMA. The referral must be in
writing and a copy thereof must be served on the employer.

(ii) Within 30 days of receiving the referral, the council or CCMA must attempt to
resolve the dispute via conciliation. Although the employee is entitled to be
represented, neither party is entitled to legal representation. If conciliation fails, a
certificate must be issued to this effect.

(iii) Once a certificate that the matter has not been resolved via conciliation has been
issued or 30 days have elapsed from the date of referral there will be compulsory
arbitration by a council or by the CCMA. An exception to this is where an employee
is being dismissed for participating in an unprotected strike. In this instance the
matter is referred to the labour court for adjudication, unless the parties agree to
arbitration (i.e voluntary arbitration).

Remember, where the dismissal is for any reason relating to probation the arbitration
must commence immediately after a certificate is issued that the dispute remains
unresolved (con-arb).

The arbitration award is final.

(3) Disputes concerning unfair labour practice

If there is a dispute regarding an unfair labour practice or the employee is alleging an unfair labour
practice then the following must occur:

(i) the dispute must be referred within 90 days of occurrence of the alleged unfair
labour practice(or of the employee becoming aware of it-if this is longer than 90
days) to a council or to the CCMA. The referral must be in writing and a copy
thereof must be served on the employer.

(ii) Within 30 days of receiving the referral, the council or CCMA must attempt to
resolve the dispute via conciliation. Although the employee is entitled to be
represented, neither party is entitled to legal representation. If conciliation fails, a
certificate must be issued to this effect.

(iii) Once a certificate that the matter has not been resolved via conciliation has been
issued or 30 days have elapsed from the date of referral there will be compulsory
arbitration by a council or by the CCMA. An exception to this is where an
employee is being dismissed for participating in an unprotected strike. In this
instance the matter is referred to the labour court for adjudication, unless the
parties agree to arbitration (i.e voluntary arbitration).

Remember, where the dispute concerns an unfair labour practice relating to


probation the arbitration must commence immediately after a certificate is issued that
the dispute remains unresolved.

The arbitration award is final.

Comply with an order of the Labour Court or the CCMA!

45
In the case of Bruckner v Department of Health (2003) 12 BLLR 1229 (LC) an employer who did not
comply with an order to re-instate a dismissed employee to her former position in the organisation
was held to be in contempt of court and was sentenced to 15 days’ imprisonment, suspended for 60
days to enable it to comply with the order.

4.2.1.6 “Con-Arb”
Ordinarily there is a delay between conciliation and arbitration. The procedure of Con-Arb is now
available whereby arbitration of a dispute takes place immediately after conciliation has failed i.e. on
the same day.

4.2.1.7 Remedies for unfair dismissal and unfair labour practices


In terms of S193(1) of the LRA there are three remedies for unfair dismissal or unfair labour practice.

(1) Reinstatement

A reinstatement order restores the contract of employment as if it had never been broken.
This means that the employee’s terms and conditions of employment are restored and s/he
retains any right s to which s/he was entitled under the original contract of employment (for
example the right to pension benefits). The employee may be reinstated from a date not
earlier than the date of dismissal.

46
(2) Re-employment

Re-employment implies that the employee be employed in terms of a new contract of


employment. The employee may be re-employed in the work in which he was previously
employed or he may be re-employed In other ‘reasonably suitable’ work.

(3) Compensation

An arbitrator or the labour court may order that the employer pay the employee
compensation for unfair dismissal. S194 of the LRA lays down the maximum compensation
which an employer may be ordered to pay:

a) If a dismissal based on misconduct, incapacity or operational requirements of the


business is found to be unfair because the employer did not prove that it had a fair
reason for dismissal or the employer did not follow fair procedure or both, the
compensation payable must be ‘just and equitable’ in the circumstances, but may not
be more than the equivalent of 12 months remuneration (calculated at the
employee’s rate of remuneration on the date of dismissal).

b) If the dismissal is automatically unfair the compensation payable must be ‘just and
equitable’ in the circumstances, but not more than 24 months remuneration
(calculated at the employee’s rate of remuneration on the date of dismissal).

c) The compensation payable to an employee who has suffered an unfair labour practice
must be ‘just and equitable’ in the circumstances but may not be more than the
equivalent of 12 months remuneration.

Although the judge or arbitrator does have a measure of discretion in determining what is
‘just and equitable’, the compensation may not be more than the stipulated maximum
amount.

Reinstatement and re-employment are the primary remedies for unfair dismissal. There are
four instances however when a court or arbitrator may choose not to order either of these
remedies in the case of unfair dismissal:

i) Where the employee does not wish to be reinstated or re-employed.

ii) Where the circumstances surrounding the dismissal would make a continued
employment relationship intolerable.

iii) Where it would not be reasonably practicable for the employer to reinstate or re-
employ the employee

iv) Where the dismissal is unfair only because the employer did not follow a fair
procedure.

4.2.2 Sections 197 and 197A: Transfer of contract of employment and


Transfer of contract of employment in circumstances of insolvency
47
Both these sections were introduced into the LRA with the 2002 amendment.

S197 provides that where a business is transferred (in whole or part) the new employer is
automatically substituted for the old employer and the transfer does not interrupt an employee/s
continuity of employment. The rights and obligations between the employee/s and new employer
remain the same as they were between the employee/s and the old employer and terms and
conditions of employment may only be changed if they are not less favourable than they were
previously. The section implies further that if an employee resigns due to terms and conditions being
made less favourable it could amount to constructive dismissal. The new and old employer must
agree to values as at the date of transfer of leave pay, severance pay (that would have been payable to
the transferred employees had there been dismisals based o operational requirements of the business)
and any other payments that have accrued to the transferred employees but have not been paid. The
old and new employers must also enter into a written agreement specifying which employer is liable
for paying any amount/s (apportionment is possible). The section provides that for 12 months after
the date of transfer both employers are jointly and severally liable to any employee who becomes
entitled to receive any payments (mentioned above) as a result of the employee/s dismissal based on
operational requirements of the business or based on the employer’s insolvency.

S197A deals with transfer of contracts of employment where the old employer is insolvent or where a
scheme of arrangement or compromise is being entered into to avoid sequestration or liquidation. In
these instances the new employer is automatically substituted for the old employer and the
employee/s continuity of service is not interrupted but rights and obligations between the employee/s
and the old employer are not transferred.

4.3 ASPECTS OF COLLECTIVE LABOUR LAW


Because of the inequality in bargaining power between an employer and an individual employee,
employees form and join trade unions. The establishment of trade unions has gone a far way to
creating greater parity in the employment relationship and towards protecting the rights and interests
of workers. Employees pay a small percentage of their wages to the trade union to which they
belong. In exchange for this fee, the trade union undertakes to negotiate better terms and conditions
of employment on behalf of its members and to assist or represent its members in workplace disputes.

Negotiation which take place between an employer and a trade union/s is called collective
bargaining.

This handbook does not deal with issues of and developments in collective labour law in detail. The
following brief outline is included for the purpose of completeness and may be referred to as a basic
reference on the topics below:

4.3.1 Freedom of Association


In the context of labour law, freedom of association refers to an employee’s right to form, join and
participate in the lawful activities of a trade union as well as the right to elect or to stand for election
as a trade union official or representative.

Freedom of association is a prerequisite for collective bargaining and this right is protected in
Sections 4 & 5 of the LRA. S4 sets out what the right entails and S5 prohibits an employer from
discriminating against an employee for exercising freedom of association. Examples of discrimination
in this context would be dismissing an employee, refusing to give an employee a bonus or a

48
promotion or victimising an employee in any other way because of his trade union affiliation. S5
goes further than simply disallowing discrimination on this ground. It prohibits an employer from
taking any action that would undermine freedom of association. An employer may not for example
promise a reward to a prospective employee in exchange for not joining a particular trade union.
Any contract in which an employee undertakes not to join a trade union will be null and void.

The bottom line is that an employer may not prejudice an employee for trade union affiliation, may
not promise advantage to any employee in exchange for surrendering freedom of association and may
not prevent an employee from exercising any rights conferred by the LRA. (Remember dismissal for
trade union affiliation constitutes an automatically unfair dismissal).

So fundamental is freedom of association, that this right has been entrenched in the Bill of Rights in
Chapter 2 of our Constitution.

Employers also have freedom of association. The right of every employer to form, join and
participate in the lawful activities of employer organisations is guaranteed in S7 of the LRA.

4.3.2 Trade Unions – Registration and Representation

Registration: It is not essential for a trade union to register with the department of labour.
However, the LRA encourages registration by granting certain rights to registered unions only. For
example, only registered trade unions may exercise organisational rights (see below), conclude
collective agreements, apply for the establishment of a bargaining council or statutory council, apply
for the establishment of a workplace forum or authorise a picket. Every trade union draws up its own
constitution, which will set out its rules and regulations. The constitution will, for example, provide
who is eligible for membership to the union.

Representation: The representativeness of a trade union is determined by how many employees


that trade union represents in a workplace. A trade union is said to have majority representation in a
workplace if it represents 50%+1 of the total number of employees in that workplace. Similarly, if it
represents 50%+1 of a category of workers in the workplace it is said to have majority representation
in respect of that category. Where a trade union does not enjoy majority support in a workplace but
does enjoy substantial support, we say that the union is sufficiently representative in that workplace.
Unfortunately the Act does not define ‘sufficient representation’. This becomes particularly
problematic when we are dealing with rights which trade unions with ‘sufficient representation’
enjoy. Since the term is not qualified, it is possible for an employer to dispute that a union is
sufficiently representative. The Act provides for a dispute procedure via conciliation and arbitration
to resolve these disputes. It is also possible for a majority trade union and employer to conclude a
collective agreement establishing a specific threshold of representativeness. The following cases
illustrate the discretion which can be applied in determining the percentage of membership which
will qualify as ‘sufficiently representative’:

In SACTWU v WN Eachus & Co (Pty) Ltd it was held that 15.6% was not sufficiently representative
despite the union being very prominent in the industry and representing 83% of employees at
sectoral level.

In UPUSA v Komming Knitting the CCMA found that 22.5% representation was sufficient because
the union showed that it was capable of recruiting the majority of employees in the organization as
members but that many members had been lost as the business had a very high staff turnover.

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4.3.3 Organisational Rights
The right to belong to a trade union would be meaningless if trade unions had no power. An
important way in which trade unions are empowered is through them being afforded certain basic
organisational rights.

Only registered and representative trade unions may exercise the following organisational rights:

(i) Access to the workplace (S12)

A registered trade union that is sufficiently representative (or is a party to a bargaining council) has a
legal right –

▪ to enter the employer’s premises for recruiting and other union purposes

▪ to hold meetings with employees at the employer’s premises outside their working hours

▪ to hold a ballot at the employer’s premises.

This right is however subject to reasonable time and place conditions imposed by the employer. The
condition must be necessary to protect life, property or to prevent undue disruption of work.

(ii) Deduction of trade union subscriptions or levies (S13)

A member of a registered trade union that is sufficiently representative (or which is party to a
bargaining council) has a legal right to require an employer to deduct union subscriptions or levies
from its members’ wages. Once the authorisation has been received in writing, the employer must
start making the deductions and paying them to the trade union on or before the 15th of every
month. (No provision is made for an employer to retain a collection fee).

With each remittance an employer must supply the trade union with-

. the name of every member from whose wages it has made deduction

. details of the deducted amount and the relevant period

. a copy of every revocation notice it has received.

An employee may withdraw authorisation on one month’s written notice.

(iii) Election of trade union representatives (S14)

A registered trade union that enjoys majority representation and has at least 10 members in the
workplace may elect trade union representatives (shop stewards) in that workplace. The number of
shop stewards which it may elect per workplace is determine with reference to the number of
members it has in the workplace

Number of members Number of union representatives (shop stewards)

10 1

11-50 2

50
51-100 3

101-150 4

151-200 5

And so on…. (the maximum number of shop stewards which a union may elect is 20)

The functions of a trade union representative are set out in S14(4) of the LRA. A representative is
entitled to reasonable time off during working hours without loss of pay to perform these functions
and to receive training relevant to any of these functions. The employer may impose reasonable
conditions for paid time off. What constitutes a reasonable condition is not specified in the Act and
will depend on the circumstances.

(iv) Leave for trade union activities (S15)

This right applies to office bearers of registered, sufficiently representative trade unions. These office
bearers are entitled to “reasonable leave during working hours” for the purpose of performing their
functions. The number of days leave as well as the conditions attached to payment for such leave are
to be negotiated with the employer. Any dispute in this regard may be submitted for conciliation and
if necessary arbitration. An arbitration award will remain valid for 12 months.

(v) Disclosure of information (S16)

A trade union may need information from the employer. For example, a member may be facing
disciplinary action by the employer and the shop steward needs that member’s previous disciplinary
record. Another example would be where a trade union needs information from the employer to
enable it to engage in effective consultation with the employer. The information which the trade
union requests may be highly confidential or of a very sensitive nature. There may, in other words,
be a conflict of interests between the trade union’s need to access the information and the employer’s
concern about keeping it private. S16 attempts to reconcile these two considerations.

Only a registered trade union with majority representation in the workplace may require an
employer to disclose “all relevant information” that will enable a trade union representative to
perform its functions effectively. Inter alia, the functions referred to are:

- assisting and representing employees in grievance and disciplinary procedures

- monitoring employees’ compliance with statute, collective agreements and any law regulating
terms and conditions of employment

- reporting alleged contraventions

- performing any other functions

An employer is also required to disclose relevant information to a trade union to enable the trade
union to engage in effective consultation with the employer.

Information which is not relevant need not be disclosed. A clear link must be established between
the information and the function which the representative is performing.

S16(5) lists 4 types of information that an employer is not required to disclose:


51
a) information that is legally privileged

b) information which the employer cannot disclose without contravening a prohibition imposed
on the employer by any law or order of any court

c) information that is confidential and, if disclosed may cause substantial harm to an employee
or to the employer; or

d) information that is private personal information relating to an employee, unless that


employee consents to the disclosure of that information

Disputes about disclosure of information must be referred to the CCMA for conciliation and if
conciliation fails the CCMA must make an arbitration finding. The CCMA may never order
disclosure of information which falls under categories a) and b). The CCMA does however have
discretion to order disclosure of information which falls under categories c) or d).

A trade union can acquire organisational rights in one of three ways:

(i) via a collective agreement concluded with the employer

(ii) if it is a member of a bargaining council or statutory council

(iii) by using the procedure in S21 of the LRA

In terms of S21 a trade union that wishes to exercise organisational rights must take the following
steps:

a) notify the employer in writing and attach a copy of its registration certificate. The notice
must specify the workplace in respect of which the union seeks to exercise organisational
rights, the trade union’s representativeness, the rights which its wishes to exercise and the
manner in which it seeks to do so

b) the employer must meet with the trade union within 30 days of receiving the notice. The
parties must attempt to reach an agreement at this meeting.

c) If the parties deadlock, either party may refer the dispute in writing to the CCMA.

d) The CCMA must attempt to resolve the dispute via conciliation

e) If conciliation fails, the CCMA must make an arbitration finding. During arbitration the
commissioner must seek to minimize the number of trade unions in a workplace as well as
the financial and administrative burden incumbent on the employer. The commissioner may
make any inquiries in order to decide whether the trade union is representative

4.3.4 Collective Agreements


The process of negotiation between employer and trade union about terms and conditions of
employment or other matters of mutual interest is referred to as collective bargaining. The aim of
collective bargaining is for the parties to reach agreement on the issues under negotiation and to
record the agreement in a document called a collective agreement. Collective bargaining may be a
lengthy and sensitive process and it requires commitment, compromise and extreme good faith on the
part of both parties.
52
A collective agreement is defined in S213 of the LRA as-

‘a written agreement concerning terms and conditions of employment or any other matter of mutual
interest concluded by one or more registered trade unions, on the one hand and, on the other hand-

(a) one or more employers;

(b) one or more registered employers’ organisations; or,

(c) one or more employers and one or more registered employers’ organisations.’

who is bound by a collective agreement?

In terms of S23 of the LRA the parties to the agreement, the members of the parties to the agreement
and employees who are not members of the trade union that is party to the agreement may be bound
by a collective agreement. The third category of persons bound by a collective agreement demands
attention.

Consider the following example:

Trade union ABC concludes a collective agreement with company XYZ (Pty) Ltd in terms of which
the members of ABC who are employed by XYZ (Pty) Ltd will receive a 10% wage increase. In terms
of S23(1)(a) and (b) this agreement will bind the employer, the trade union and members of the trade
union who are employee of the construction Co. It will not cover employees who are not members
of ABC.

In the interests of maintaining uniformity and harmony in the workplace, XYZ (Pty) Ltd decides to
extend the 10% wage increase to its employees who are not members of ABC.

According to common law contractual principles this could present problems. Unless ABC agrees to
the extension, XYZ (Pty) Ltd would be guilty of breach of contract. However, if extending the
collective agreement to non-union members is advantageous to all the employees it is unlikely that
ABC would sue the employer for breach of contract. (ABC may however demand that an agency
shop agreement be concluded – see later).

Typically, extending a collective agreement to non-union members would create a problem where
the agreement imposes liabilities on employees. Non-union members may be unwilling to accept the
terms of the agreement.

S23(1)(d) provides that an employer may extend a collective agreement to non-union members
provided the following requirements are met:

a) the agreement identifies those employees

b) the agreement expressly binds those employees; and

c) the trade union enjoys majority support in the workplace.

The duration of a collective agreement

A collective agreement binds the relevant parties for the entire duration of the contract. If a trade
union is party to a collective agreement, any employees who were members of the trade union at the

53
time that the agreement becomes binding or who become members after the agreement became
binding will be bound by the agreement. An employee who is a member of a trade union which is
party to a collective agreement cannot escape the agreement by resigning from the trade union.
Similarly, an employer who withdraws membership from an employer organisation that was party to
a collective agreement remains bound by the collective agreement until the agreement lapses.

Where no time period is specified, the agreement remains in force until either party gives notice.
The agreement usually stipulates the notice period. If it does not, reasonable notice must be given.

The effect of a collective agreement which regulates terms and conditions of employment

If a collective agreement contains terms and conditions of employment, these terms and conditions
will be incorporated in the contracts of employment of employees who are covered by the collective
agreement. Employer and employee may not agree to lesser payment, benefit or treatment than that
prescribed by a collective agreement. A provision in a contract of employment permitting lesser pay,
benefits or treatment is invalid.

Specific collective agreements

There are three specific collective agreements, namely, closed-shop, agency-shop agreements and
collective agreements concluded in a bargaining council. Since no bargaining council exists within
the financial services sector, a discussion of this type of collective agreement will not be dealt with
(but note: there have been amendments to this area of law in SS 31-34)

Closed-shop agreements (S26)

A closed-shop agreement is an agreement between an employer or employer organisation and a


registered, majority trade union/s requiring all employees covered by the agreement to be members
of the trade union. The effect of this agreement is that all employees who are currently employed or
who become employed by the employer (or members of the employer organisation) have to join the
trade union, even if they do not wish to. Employees covered by the agreement who do not become
members of the union may face dismissal.

The purpose of a closed-shop agreement is to encourage strong, single union presence in the
workplace, to alleviate the burden that may be placed on employers in having to bargain with several
unions and to solve the problem of “free riders” (employees who derive the benefits of a collective
agreement negotiated by a trade union, without having to be a member of the trade union that
negotiated the benefits)

Because of the benefits which a closed-shop agreement has for employer and trade union alike,
government regards this type of collective agreement as a legitimate limitation on employees’
freedom of association.

A closed –shop agreement between a registered trade union and an employer will only be binding if a
ballot is held in which two-thirds of the employees who voted vote in favour of the agreement.
(Similarly, a closed-shop agreement between a registered trade union and a registered employer
organisation (in respect of an industry and area) will only be binding if a ballot is held in which two-
thirds of the employees who voted vote in favour of the agreement).

Once a closed-shop agreement has been concluded, a trade union that is party to the agreement may
not refuse an employee membership or expel an employee from the trade union, unless the reason for

54
the refusal or expulsion is fair and the refusal or expulsion is in accordance with the trade union’s
constitution. An employer may however dismiss an employee if the employee refuses to join the
trade union or if he is refused membership of the union (in terms of the unions constitution) or is
expelled from the union for a fair reason.

It is important to note that employees who were already in the employer’s service at the time the
closed-shop agreement came into effect may not be dismissed if they refuse to become members of
the union.

If one-third of the employees covered by the agreement sign a petition calling for the termination of
the agreement or if three years have elapsed since the agreement came into effect or the last ballot
was held, the trade union must conduct a ballot. If the majority of the voters vote to terminate the
closed-shop agreement, it will terminate.

Agency-shop agreements

An agency-shop agreement is an agreement between an employer or an employer organisation and a


registered majority trade union requiring all employees who are covered by the agreement and who
are not members of the trade union to pay an ‘agency fee’ to the trade union. Where there is an
agency-shop agreement the employer must make these deductions from the employee’s wages and to
pay them to the trade union. The agency fee, which is the same or less than the normal membership
fee, must be put into a separate account and used to advance the socio-economic needs of the
employees.

An agency-shop agreement does not force an employee to become members of a specific union.
However it forces employees who are not members of the trade union but are eligible for
membership thereof to pay a fee to the trade union who is party to the agreement. The reason for
this is to compel employees who are not members of the union and who benefit from collective
bargaining, to share the costs. A problem arises however where an employee is a member of a
minority union and is forced to pay agency fees to the majority union that is party to the agency-shop
agreement. This employee will effectively have to pay membership fees to his trade union as well as
an agency fee to the trade union which is party to the agreement (unless s/he resigns as a member of
the minority trade union).

An agency –shop agreement will end if the parties agree to terminate it or where the trade union no
longer complies with the requirements (for example where it loses majority support).

4.3.5 Industrial Action


The process of collective bargaining is not always smooth. Parties may reach a deadlock in
negotiations, where neither party is prepared to make concessions. Where this occurs, a party may
decide to embark on industrial action to back up it’s demand. In this way, industrial action may be
regarded as ammunition that is available to either party in the collective bargaining process. For
example, a trade union that is bargaining for better terms and conditions of employment for it’s
members may decide to strike or picket where the employer is not prepared to meet those demands.
Similarly, an employer may lock-out its employees if they do not heed its demand to work overtime.

Industrial action is usually drastic and has severe repercussions not only on an employer’s business
but also on the economy as a whole. For this reason, strict requirements must be met before
industrial action is permitted in terms of the law.

55
Strike and Lock-out

‘Every employee has the right to strike and every employer has recourse to lock-out’ (S64(1) of the
LRA)

What is a strike?

A strike is a form of industrial action where several employees act jointly in order to remedy a
grievance which they have with their employer or in order to resolve a dispute in respect of any
matter of mutual interest between themselves and their employer

▪ A strike may constitute a complete or partial work stoppage or a retardation of work (go-
slow) or an obstruction of work. (Reference to “work” includes overtime. Overtime bans are a
powerful forms of strike).

▪ A strike is always a collective action. It is not possible to have one employee on a strike. The
action must taken by two or more employees ‘who are or have been employed by the same
employer or by different employers’ (S213) and the strikers must have a common purpose.

▪ The purpose of the strike must be to remedy a grievance with the employer or to resolve a
dispute in respect of any matter of mutual interest between themselves and their employer.

Any action which does not comprise all above three elements does not constitute a strike.

Consider the following CASE STUDIES:

1) Employees A, B and C embark on a go-slow. A does so because she wants higher wages, B is
demanding longer annual leave and C is angry about recent retrenchments in the business.

2) 30 employees, who all work for the same employer are generally unhappy with the situation
in the workplace. They embark on an overtime –ban.

3) All the employees of XYZ(Pty)Ltd are angry about the government’s decision to increase the
price of bread. In support of their demand that the bread price not be increased they embark
on a complete work stoppage.

4) Employees employed by employer A take concerted action against A (in the form of
barricading the delivery area so that A’s suppliers cannot off-load stock) in support of a strike
by other employees who are striking for better wages against their own employer, B.

What is lock-out?

A lock-out is an employer’s exclusion of employees from its workplace to force them to accept a
demand concerning a matter of mutual interest between employer and employee.

A distinction should be drawn between a lock-out initiated by an employer during the collective
bargaining process to compel employees to accept a demand, and a lock-out which takes place after
employees have already embarked on a strike, to compel employees to accept a demand.

Prohibitions on the right to strike and recourse to lock-out

In terms of S65 of the LRA a strike or lock-out is not permitted under the following circumstances:-

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(i) Where a collective agreement prohibits a strike or lock-out in respect of the issue in dispute.

(ii) Where there is an agreement that requires the issue in dispute to be referred to arbitration.

(iii) Where in terms of the LRA, the dispute in issue must be referred to arbitration or the labour
court (the following are examples of such disputes:- disputes about the alleged unfair
dismissal of employees, disputes about alleged unfair discrimination or disputes about
freedom of association)

(iv) Where employees are engaged in an essential or maintenance service.

In terms of S213 of the LRA an essential service is ‘a service the interruption of which
endangers the life, personal safety or health of the whole or any part of the population’ . The
Parliamentary service and the South African Police Services also fall under essential services.
The Essential Services Committee decides which services are to be classified as essential
services. (The focus with regards an essential service is on personal safety and health)

Since the right to strike is an entrenched right and one of which an employee may not easily
be deprived, S72 of the LRA provides that employers and employees falling under an essential
service may conclude a collective agreement that provides for the maintenance of a minimum
service in a service classified as an essential service. If such an agreement is ratified by the
Essential Services Committee the employees in that essential service may strike or be locked-
out, provided that the employees who provide the minimum service may not strike or be
locked-out.

In terms of S75(1) of the LRA, a maintenance service is a service the interruption of which
has ‘the effect of material physical destruction of any working area, plant or machinery’.

If a service has been designated a maintenance service by the Essential Services Committee
or by agreement between employer and trade union, the effect is that employees in that
service may not be locked-out and will be required to provide maintenance if the rest of the
employees are on strike. The amended S75(5),(6) and (7) of the LRA set out certain rules
which the essential services committee should adhere to in arriving at a determination as to
whether the whole or part of the employer’s business or service is a maintenance service and
in referring any dispute to arbitration.

If a part of a business has been designated a maintenance service the employer is not
permitted to employ ‘replacement labour’ in any part of the business during the strike.

(v) Where a collective agreement or arbitration award regulates the issue in dispute. Strikes and
lock-outs are prohibited here so as not to undermine the arbitrator’s final decision or the
settlement agreed to in the collective agreement. Where a collective agreement or arbitration
award provides for minimum wages only, employees may strike in support of a demand that
the employer negotiate with them over a wage increase. In Black Allied Workers Union &
Others v Asoka Hotel (1989) 10 ILJ 167 (IC) the court held that since the agreement did not
make provision for actual wages to be paid by the employer to the employee, and since it
contained no prohibition against actual wages being negotiated between the employer and its
employees, the employees were not prohibited from striking.

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(vi) Where the issue has been resolved by a determination. A determination here usually refers
to a determination made in terms of the Wage Act, 1957 or a sectoral determination made by
the Minister of Labour on the advice of the Employment Conditions Commission.

Procedural requirements for a “protected” strike or lock-out

A strike or lock-out will be “protected” if it complies with the following procedures (S64 of the LRA).

Step 1 The issue in dispute must be referred to the CCMA or to a bargaining or statutory
council for conciliation.

Step 2 If conciliation fails (either 30 days have elapsed since the date of referral and the issue
remains unresolved or a certificate has been issued by the council or the CCMA,
stating that the dispute remains unresolved) 48 hours written notice of the
commencement of the strike or lock-out must be given.

In the case of a proposed strike, notice must be given to - the employer or to the
council, if the dispute relates to a collective agreement concluded in the council or to
the employers’ organisation, if the employer is a member of an employers’
organisation that is party to the dispute.

In the case of a proposed lock-out, notice must be given to the trade union or to the
employees, if there is no trade union. If the dispute relates to a collective agreement
concluded in a council, notice must be given to the council.

Notwithstanding the above, there are five circumstances in which a strike or lock-out does not have
to comply with the prescribed procedures (S64(3)):

(i) Where the parties to the dispute are members of a council and the dispute has been dealt
with by the council in accordance with its constitution

(ii) Where a strike or lock-out complies with procedures in a collective agreement

(iii) Where a strike is in response to an unprotected lock-out

(iv) Where a lock-out is in response to an unprotected strike

(v) Where a strike takes place after the employer has unilaterally changed the employees’ terms
and conditions of employment or proposes to do so.

Where an employer changes, or indicates an intention to change it’s employees’ terms and
conditions of employment without their consent (unilateral amendment), the employees or
their trade union may refer the matter to the CCMA or council for conciliation. Within 48
hours of receiving notice of the referral, the employer is required to restore or maintain the
status quo for a period of 30 days. If the employer fails to do so, the employees may strike,
without following the prescribed procedures. (The 30 day period referred to above is used to
try resolve the dispute through conciliation).

Consequences of a “protected” strike or lock-out (S67, LRA)

• Employees and employers who take part in or who contemplate a “protected” strike or
lock-out does not commit a delict or a breach of contract and cannot incur liability in this
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regard. This protection does not however cover offences committed in anticipation of or
during a “protected“ strike or lock-out. For example, employees who vandalise property
and who assault co-workers during a protected strike, may be interdicted and sued for
damages. A criminal charge may also be laid.

• Employees may not be dismissed for participating in or supporting a “protected” strike.


Employees may however be dismissed for misconduct during the strike (for example
assault, malicious damage to employer’s property, intimidation of co-workers) or for a
reason based on the employer’s operational requirements (where, for example, the strike
continues for a considerable length of time, causing extreme damage to the employer’s
business).

• An employer is not obliged to remunerate an employee for services that the employee
does not render during a “protected” strike or lock-out. An exception to this is that if the
employee normally receives payment in kind in respect of accommodation, food and
other basic amenities of life, the employer must continue to provide this payment in kind
on the employee’s request. At the end of the strike or lock-out, the employer has a claim
against the employee for the monetary value of the payment in kind made at the request
of the employee.

Consequences of an “unprotected” strike or lock-out (S68, LRA)

• The Labour Court has exclusive jurisdiction to grant an interdict restraining the
employees from striking or the employer from locking-out.

• The Labour Court has exclusive jurisdiction to order the payment of just and equitable
compensation for any loss caused by the strike or lock-out or conduct. (Note: The 2002
Amendment to S68 ensures that employees are not only liable for loss caused by the
unprotected strike but also for loss that is attributable to conduct during the strike).

• Employees may be dismissed for participation in or for certain forms of conduct in


contemplation of or furtherance of an “unprotected” strike.

The case of FAWU v Earlybird Farm (Pty) Ltd 2003 1 BLLR 20 (LC) confirmed that the ordinary
principles of fairness (as laid down in Schedule 8) apply to the dismissal of unprotected strikers.

Replacement labour during a strike or lock-out (S76, LRA)

- An employer may not employ replacement labour during a lock-out, unless it is a defensive lock-
out

- An employer may not use replacement labour during a protected strike, if the whole or part of
the employer’s business has been designated as a maintenance service

“Replacement labour” includes engaging the services of a temporary employment service or an


independent contractor.

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5. THE CONTRACT OF EMPLOYMENT–TERMS
AND CONDITIONS: PRACTICAL
IMPLICATIONS OF THE BASIC CONDITIONS
OF EMPLOYMENT ACT, NO 75 OF 1997(as
amended)

Note: The Basic Conditions of Employment Act, No 75/1997 is the main Act. Since being passed it
has been amended once:
▪ Basic Conditions of Employment Amendment Act, No 11/2002

The BCEA, which came into effect at noon on 1 December 1998 has tremendous practical
implications for all employers and employees in South Africa.

5.1 WHAT THE ACT DOES

- establishes basic terms and conditions of employment


- regulates when and how basic terms and conditions may be varied, replaced or excluded
-
prohibits the employment of children (under 15 years) and forced labour 1
- sets out the manner in which the compliance with the Act will be monitored and enforced
- sets out procedures for the progressive reduction of maximum working hours to 40 hours per
week
- Contains transitional provisions
- Contains other general provisions

1the BCEA does permit the employment of children in the performance of


advertising, sport, artistic or cultural activities, but to protect them against
exploitation, the Employment Conditions Commission has recommended that
employers should obtain a permit to employ children for this purpose

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5.2 EMPLOYEES WHO ARE COVERED BY THE ACT

a) Unlike its predecessor the Act covers all employees in South Africa, except:
- members of the NDF, the NIA and the SASS,
- unpaid volunteers working for charity organisations and
- persons employed at sea and who are covered by the Merchant Shipping Act.

Most notably, domestic workers, farm workers, apprentices and other labourers, previously not
covered by the BCEA, were promised basic terms and conditions of employment with the
introduction of the 1997 BCEA. (Please note: on 1 September 2002 a
Sectoral Determination was published, establishing minimum wage for domestic workers and also
including other minimum terms and conditions of employment for domestic workers. Sectoral
Determinations are explained and discussed below). The practical implication of all employees being
covered by the Act is that many employees who were previously excluded from the ambit of the Act
are now entitled to minimum or pro rata terms and conditions of employment. These employees
must therefore be factored into the additional costs which the Act creates for employers. For
example, employees, who work even one day a week for an employer must be given written contracts
of employment and are entitled to pro rata paid annual leave and sick leave, notice pay, severance
packages and other employment benefits.

b) Not all employees are equal! Certain minimum terms and conditions of employment do not
apply to certain categories of employees. For example, senior managerial employees,
travelling salespersons and employees working less than 24 hours per month are excluded in
certain instances.

c) Employees who earn in excess of R115 572.00 gross per annum are excluded from most of the
provisions regulating working time. (Note: in terms of S6(3) of the BCEA the Minister of
Labour has the power, on the advice of the Employment Conditions Commission to make a
determination excluding employees earning more than a certain amount from the application
of basic conditions of employment relating to working hours. The amount is currently R115
572.00) This earnings threshold is significantly higher than was previously the case and
means that many more employees are now protected by maximum working hours, overtime
pay, compulsory meal intervals, rest periods, night work and higher pay for work on Sundays
and Public Holidays.

5.3 MINIMUM TERMS ONLY!

A basic condition of employment as contained in the BCEA will constitute a term of an employment
contract, unless another law, a collective agreement, a sectoral determination or the contract itself
provides a more favourable term. This means that if an employment contract is silent on a specific
term or provides a term which is less favourable than the BCEA, the term in the Act will
automatically fill in or replace the agreed term. Parties are however free to agree to terms and
conditions that are more favourable to the employee and these will take precedence over the Act.

5.4 BASIC TERMS AND CONDITIONS OF EMPLOYMENT

5.4.1 WORKING TIME


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NB: The following minimum standards do not apply to:
- senior managerial employees (employees who have the power to hire and fire and who are
authorised to represent the employer internally and externally)
- travelling salespersons, who regulate their own hours of work
- employees who work less than 24 hours per month for an employer
- employees who earn more than R115 572.00 gross per annum

5.4.1.1 Ordinary Working Hours

Maximum 45 hours per week: maximum 9 hours per day for a 5 or less day week
maximum 8 hours per day for a 6 or more day week
Note: According to Schedule 1 of the BCEA the ultimate aim is to reduce working hours to a
maximum of 40 hours per week via collective bargaining and sectoral determinations. In practical
terms this means that when an employer is negotiating with a trade union about terms and conditions
of employment and the trade union raises the topic of reducing maximum working hours, the
employer must negotiate on this issue (This is strange, since the LRA explains that employers do not
have a duty to bargain). The Employment Conditions Commission and the Department of Labour
are also compelled to investigate ways in which the maximum weekly working hours may be reduced
in particular sectors and areas.
Prior to the BCEA of 1997 the maximum working week was 46 hours. The obvious cost implication
associated with the reduced working week is that overtime “kicks in” for most employees 1 hour
earlier than under the “old” BCEA.
Working hours for security guards are governed by the Sectoral Determination for the private
security sector.

5.4.1.2 Overtime and formula for payment

By agreement only and is limited to 10 hours per week or 3 hours in any day. The 2002 Amendment
to the BCEA stipulates that an agreement to work overtime may not permit an employee to work
more than 12 hours on any day (this is calculated with reference to ordinary hours of work plus
overtime).
Pay for overtime is currently 1,5 times an employee’s ordinary wage (under the “old” BCEA it was 1-
and-a third)
OR
the employer and employee may agree to give the employee paid time off for overtime worked. In
this regard the BCEA stipulates the following time off work for overtime worked:
▪ at least the ordinary hourly wage for each hour of overtime worked plus 30 minutes paid time
off work for each hour of overtime worked, or;
▪ 90 minutes paid time off for each hour of overtime worked (in which case the employee is
not paid at all for overtime worked)
When opting to give an employee paid time off work in exchange for overtime worked, this must be
given within 1 month of the employee becoming entitled to it (although this may be extended to 12
months by written agreement)
Government is hoping that the increase in overtime pay will lead to employees doing less overtime
and will be an incentive to employers to employ more workers rather than pay them for overtime.

5.4.1.3 Compressed Working Week and Averaging Hours of Work


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Notwithstanding the law regulating ordinary working hours and overtime, the BCEA makes
provision for employees to work, by written agreement, and subject to certain conditions up to 12
hours per day without receiving overtime. The practical implication here is that on a given day an
employee may, by work up to 12 hours without receiving overtime pay, as long as his/her ordinary
weekly working hours do not exceed 45 hours, he/she does not work more than 10 hours overtime in
a week and he/she does not work more than 5 days in a week (this may be useful for organisations
during tax period or when working on a short, pressured deadline).
It is also possible, subject to certain conditions for an employer and a trade union to conclude a
collective agreement that provides that ordinary working hours and overtime be averaged over a
period of up to 4 months. Furthermore, by collective agreement an employee may work in excess of
45 ordinary working hours in a week as long as he/she does not work more than an average of 45
hours a week and more than an average of 5 hours overtime in a week over the agreed period.
(Averaging hours of work over a 4 month period will not apply in the financial services sector due to
no trade union presence in the workplace and hence no possibility of concluding a collective
agreement).

These provisions certainly do promote greater flexibility for the employer.

5.4.1.4 Meal Intervals and Rest Periods

Employees are entitled to daily lunch break of 1 hour, after 5 hours of work. During this hour they
may not be asked or permitted to work, unless the work cannot be left unattended and no other
employee can do the work (in which case the employee must be remunerated).
The lunch break may be reduced to 30 minutes by written agreement between the employer and
employee. In addition, if an employee works less than 6 hours on a day, a written agreement
between him/herself and the employer may dispense with the lunch break altogether.
Furthermore, employees are entitled to a daily rest period of 12 hours between ending and
recommencing work and a weekly rest period of 36 hours, which unless otherwise agreed to, must
include a Sunday.
These compulsory rest periods are a departure from the past when employees could be required to
work endlessly without rest. Employees can also not be forced to give up their Sundays.

5.4.1.5 Pay for Work on Sundays and Public Holidays

An employee who occasionally works on a Sunday is entitled to double his/her hourly wages for each
hour worked and is deemed to work overtime on this day. An employee who ordinarily works on a
Sunday must be paid 1,5 wages for each hour worked. Paid time off in exchange for working on a
Sunday may be agreed upon.
Employees must be paid for any public holiday that falls on a working day. An employee who agrees
to work on a public holiday must be paid double wages. A public holiday is exchangeable by
agreement.

5.4.1.6 Night Work and Shift Work

The Act is extremely sensitive to the plight of shift workers and employees who work at night
(between 18:00 and 06:00). Employees who perform regular night work are afforded even greater

63
protection. (An employee who works longer than 1 hour after 23:00 at least 5 times a month or 50
times a year is deemed to do regular night work).

In addition to the provisions in the Act, the Minister of Labour has issued a Code of
good practice on the arrangement of working time and this code is particularly concerned with the
health and safety of and with the family responsibilities of shift and night workers. The practical
implications of the Act and the code is that employees who work between 18:00 and 06:00 must be
compensated by an allowance or by a reduction of working hours and transport must be made
available between the employees’ places of residence and the workplace at the beginning and at the
end of the shift. Employees who regularly work between 23:00 and 06:00 must, in addition to the
above, be informed of any health and safety risks associated with the work and have the right to
undergo a medical examination before or within a reasonable period of starting the night work and at
regular intervals thereafter. The examination should include counselling on the health risks
associated with night work and coping strategies that may assist the employees concerned. If an
examination shows that an employee has a health condition associated with regular night work the
employer must, if possible, transfer the employee to suitable day work. Psychological, emotional and
social stresses, including irritability and chronic fatigue are relevant in this regard.

When designing a shift roster, an employer must be sensitive to the impact of the roster on the
employees and their families and must consult with the employees as much as possible. An employer
must consider how the roster may affect the health and safety of its workers as well as their childcare
needs. The availability and cost of transport between the workers’ residences and workplace as well
as the personal security of the workers while commuting must be considered. Employers must
attempt to limit the frequency of night work, weekend work and work on public holidays as much as
possible and should take account of the difficulties that employees may have in adapting to night
work. Shifts should be rotated in a forward direction (morning, afternoon, night) and where possible
employees should be given a long period of rest after long spells of night shifts. A night shift should
not be longer than morning and afternoon shifts and if this is not possible, employers should
investigate ways to avoid extreme fatigue. Shift workers should have rest periods that fall on
weekends a certain minimum number of times in a given period. (The Code does not offer any
guidelines on how often and over what period). Shift schedules should be displayed or distributed to
all workers and workers should be able to exchange a shift with each other. A worker should be
given reasonable notice of a change in the schedule and the employer should attempt to consider the
special needs of workers; particularly pregnant or nursing mothers, elderly workers and workers with
special family responsibilities. Overtime and double shifts should be avoided where the work
involves special hazards or heavy physical or mental strain. The Code highlights that shift workers
should not perform safety-critical tasks when they are fatigued, especially when the tasks have a
direct impact upon the public.
Employers should also make the following services and amenities available to employees who work
outside ordinary hours:
- first aid services, safety supervision, health services to cope with nutrition and fatigue-related
problems and emergency services in the event of accidents
- security at the workplace, eating facilities, rest-rooms and change-rooms and safe, affordable
transportation between home and work
- administrative services, such as the wages or personnel department should be made available
to employees at the start or end of their shifts where employees regularly work night and do
not have access to these services during the day

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Regular rest periods should also be given to workers who are involved in physically and mentally
strenuous work, repetitive work, monotonous work and shifts that are longer than eight hours.

Shift workers and employees who work at night should be counselled on strategies that may assist
them both at home and at work. Coping strategies may include ways to maintain a regular sleeping
routine, a healthy diet, exercise and relaxation strategies and taking steps to block out noise and light
for employees who sleep in the day.

Clearly, the cost and other implications of this code are tremendous. Employers will have to bear the
costs of the medical examinations as well as the costs associated with setting up infrastructures to
provided the services and amenities referred to in the code. The time factor involved in consulting
with employees and in designing and revising shift rosters cannot be ignored nor can employers
ignore the duty incumbent on them to accommodate employees who for whatever reason are found
to be unfit for regular night work.

PLEASE NOTE: THE CODE OF GOOD PRACTICE ON THE ARRANGEMENT OF WORKING


TIME APPLIES TO ALL EMPLOYEES COVERED BY THE BCEA BUT HAS PARTICULAR
SIGNIFICANCE TO SHIFT AND NIGHT WORKERS AND HAS THEREFORE BE DEALT WITH
UNDER THIS HEADING.

5.4.2 LEAVE

The following provisions apply to all employees, except employees who work less than 24 hours per
month for an employer

5.4.2.1 Annual Leave

In respect of each annual leave cycle (a period of 12 months) an employee is entitled to 21


consecutive days’ annual leave on full remuneration OR, by agreement, 1 day leave on full
remuneration for every 17 days worked OR, by agreement, 1 hour leave on full remuneration for
every 17 days’ worked. This ensures that temporary, part-time and domestic employees also have pro
rata annual leave on full remuneration.

Leave should be granted no later than 6 months after the end of a leave cycle and an employer may
not pay an employee instead of granting leave (except on termination of employment). The employer
may stipulate when an employee may take annual leave, but may not grant annual leave during any
other period of leave to which the employee is entitled. An employee may not be permitted or
required to work for the employer during annual leave.

Public holidays which fall within annual leave are additional to the annual leave entitlement.

Any occasional leave that may be granted is deductible from the annual leave entitlement.

The following two cases dealing with annual leave are worth noting:

In Jardine v Tongaat-Hulett Sugar Ltd (2003) 7 BLLR 717 (LC) the court held that the employer has a
duty to ensure that employees take their annual leave and that employees will not forfeit leave that is
not taken in a particular period.
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Conversely, in Jooste v Kohler Packaging Ltd (2003) 12 BLLR 1251 (LC) the court held that an
employee must take annual leave in the period to which it corresponds, failing which, s/he loses the
right to take that leave. Moreover the court held that if an employee resigns s/he is not entitled to
receive payment for leave that has accumulated but not been taken.

The Jooste case is controversial and bound to invoke debate since nowhere in the BCEA does it state
that after the expiry of a certain time period will an employee forfeit unused annual leave, nor does
the Act permit employers to adopt a “use it or lose it” policy in relation to annual leave.

An employee must be paid annual leave pay before going on leave or, by agreement, on the
employee’s usual pay day.

REMUNERATION for the purpose of calculating annual leave pay S35 of the BCEA and the “new”
Schedule which came into operation with effect from 1 July 2003 must be considered:

“remuneration” covers more than an employee’s basic wage and includes the following:
▪ any cash payments made to an employee (except those excluded below);
▪ the value of a housing or accommodation allowance or subsidy or housing or accommodation
received as a benefit in kind;
▪ the value of a car allowance, except to the extent that the car is provided to enable the
employee to work;
▪ employer’s contributions to medical aid, pension, provident fund or similar scheme;
▪ employer’s contribution to a funeral or death benefit scheme;
▪ any other payment in kind received by the employee (except those excluded below).

The value of a payment in kind must be determined with reference to either the value agreed to in
the contract of employment (or the collective agreement, if applicable), as long as the agreed value is
not less than the cost to the employer of providing the payment in kind or the cost to the employer of
providing the payment in kind.

Essentially when calculating the employee’s “remuneration” to be paid during the annual leave
period, the employee’s cost-to-company is utilised. However the Schedule contains the following
proviso: “(If) the employee received the payment or enjoyed, or was entitled to enjoy the payment in
kind during the relevant period then these will not form part of the calculation of remuneration”.
This seems to indicate that if the employee has or is entitled to use/enjoyment of the payment in kind
during his/her annual leave then its value for this period is not included in the calculation of
remuneration. So, for example, if the employee has use of the car (to which the car allowance relates)
during the annual leave period then the car allowance will not be applied in the calculation of
remuneration.

The Schedule also excludes the following items for the purpose of calculating remuneration:
▪ Any cash payment or payment in kind provided to enable the employee to work (for
example, a tool of trade/equipment (such as a laptop) which the employee uses to perform
his/her work, the provision of transport or the payment of a transport allowance to enable the
employee to travel to and from work);
▪ A relocation allowance;
▪ Gratuities (e.g. customer tips) and gifts from the employer;

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▪ Share incentive schemes;
▪ Discretionary payments not related to an employee’s hours of work or performance (e.g. a
discretionary profit sharing scheme);
▪ An entertainment allowance;
▪ An education or schooling allowance.

(Note: “remuneration” has the same meaning for the purposes of calculating an employee’s notice pay
or severance pay. For the purpose of calculating annual leave pay it applies to annual leave which
accrued from 1 July 2003).

5.4.2.2 Sick Leave

An employee is entitled to paid sick leave. In respect of each 36 month cycle, s/he is entitled to the
number of days that s/he works in a 6 week period. This means that an employee who works 5 days a
week will be entitled to 30 days paid sick leave each 3 years under the “new” Act. (an employee who
works a 6 day week will be entitled to 36 days paid sick leave each 3 years). Employees become
entitled to their full sick leave quota after only 6 months of work (under the “old” Act, employees
had to be employed for a year before they were entitled to the sick leave quota). In the first 6 months
of employment an employee is entitled to 1 day’s paid sick leave for every 26 days worked, but the
sick leave granted to an employee during this time may be deducted from the quota.

If an employee is absent for 3 or more consecutive days or 3 or more times in 2 months and does not
produce a medical certificate on the employer’s request, the employer is not required to pay the
employee sick leave for those days.
Note: Absence on a Friday and a Monday is not “consecutive”.

The pay that an employee is entitled to receive when on sick leave is the wage that the employee
would ordinarily have received if s/he had worked on that day. The calculation of remuneration as
defined above does not apply to sick leave. (Pay for sick leave only includes the amount of money
paid or payable to an employee in respect of ordinary hours of work, i.e his/her basic wage only).

The employee must be paid for sick leave on the usual pay day.

At the end of a 3 year cycle, any unused sick leave is forfeited and the cycle starts afresh.

5.4.2.3 Maternity Leave and the Protection of female employees before


and after the Birth of a child

Women are entitled to 4 months maternity leave (previously 12 weeks under the “old” Act). Unless
employer and employee agree otherwise an employee need not be paid while on maternity leave.
The rationale is that she will receive social benefits from UIF during this period.

Maternity leave may commence any time in the month preceeding the expected birth date or earlier
if a medical practitioner or midwife deems it necessary. Under the “old” Act a pregnant employee
was compelled to commence maternity leave a month before the expected date of birth. A mother
may not work for at least 6 weeks after the birth, unless a medical practitioner or midwife certifies

67
that she is fit to do so. Women who miscarry in the last trimester or who give birth to a stillborn
baby are, unlike before, allowed 6 weeks to recover.

Female employees should notify their employers at least 4 weeks before intending to go on maternity
leave of the date they intend commencing maternity leave as well as the date they intend returning
to work.

Note: It may be argued that annual leave does not accrue to an employee while she is on maternity
leave.

As with children, shift and night workers, pregnant and nursing mothers are placed high on the
agenda of employees who must be protected. Accordingly, the Minister of Labour has issued a Code
of good practice on the protection of employees during pregnancy and after the birth of a child. In
terms of his guidelines, the Minister emphasises that no person may be discriminated against or
dismissed on account of pregnancy. Employers are required to protect pregnant and nursing mothers
by ensuring that they do not perform work, during pregnancy or for 6 months after the birth, that
may harm herself or her child. Employers should identify potential physical, ergonomic, chemical
and biological hazards in the workplace and should take steps to eliminate or control such hazards
and to inform affected employees of the risks and the measures taken to eliminate or minimise them.
Potential physical hazards include – noise, vibration, radiation, radioactive substances, electric and
electromagnetic fields as well as extreme hot or cold conditions.
Potential ergonomic hazards include – heavy physical work, static work posture, frequent bending
and twisting, lifting heavy objects and movements requiring force, repetitive work and standing or
sitting for long periods.
Potential chemical hazards that may cause infertility or foetal abnormalities include – anaesthetic
gases, carbon monoxide, antimitotic drugs, ehylene oxide, lead , mercury, PCBs, alcohol, tobacco
smoke and pesticides.
Potential biological hazards include – cytomegalovirus, hepatitis, HIV, German measles and chicken
pox.
The code of good practice highlights the risks associated with exposure to these hazards and suggests
measures to prevent or control them.
Where appropriate, pregnant and nursing mothers should be transferred to other work or their
working arrangements should be adapted. Alternative employment must be on terms that are no less
favourable than the employee’s ordinary terms and conditions of employment.

Employers should give nursing mothers at least 2 breaks twice a day of 30 minutes each to feed or
express milk and efforts should be made for employees to attend pre-natal and post-natal clinics
during pregnancy and after the birth. Employers should anticipate morning sickness and be sensitive
to this, not exposing pregnant employees to nauseating smells. Employers should also be sensitive to
the fact that pregnant employees may need the toilet regularly and that they may become tired
during pregnancy. Pregnant employees should, where possible, not have to work on wet or slippery
floors (balance may be affected) or have to work in confined spaces or do work which requires speed
agility or co-ordination if these abilities are affected by her pregnancy.
Employers’ should also attempt to keep records of an employee’s pregnancies and of the outcome of
the births and whether there were any complications during the birth.

As with shift and regular night workers, the onus on an employer and the financial, time and social
costs associated with accommodating pregnant and nursing employees may be tremendous.
Notwithstanding these practical implications employers must be advised not to lightly refuse

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employment to women or to dismiss them for any reason associated with their pregnancies. In terms
of the Employment Equity Act employers should be attempting to improve the representation of
women in their workforce and are at risk of being accused of an unfair labour practice or
automatically unfair dismissal if they discriminate unfairly against women.

5.4.2.4 Family Responsibility Leave

The Act has introduced 3 days’ paid family leave per year for employees who wish to be present
when their child is born or ill or on the death of immediate family members.

Employees may request this leave if they are employed at least 4 days per week with an employer and
have been so employed for at least 4 months.

Before paying an employee his/her wage for family responsibility leave an employer may request
reasonable proof of the event for which the employee needs leave.

Unused family responsibility leave falls away at the end of the year.

Since an employee must work at least 4 times a week for an employer to qualify for this leave many
employees will be excluded from this provision.

5.4.3 PARTICULARS OF EMPLOYMENT AND REMUNERATION

The following provisions apply to all employees except employees who work less than 24 hours per
month for an employer

5.4.3.1 Written Particulars of Employment (Contract of Employment or


Letter of Appointment)

When an employee commences employment the employer must furnish him/her with written
particulars of employment. Effectively, this means that all employees must be supplied with written
letters of appointment or contracts of employment, which contain specific details of employment as
listed in S29 of the Act. The list of particulars in S29 is not an exhaustive list and employers are free
to include additional particulars of employment, for example a restraint of trade.
If an employee’s employment terms change, particulars must be revised accordingly.

NOTE: THE 2 SUB-TOPICS BELOW DO NOT APPLY TO EMPLOYERS THAT EMPLOY LESS
THAN 5 EMPLOYEES.

5.4.3.2 Informing employees of their rights

Employers must display a statement of employees’ rights at the workplace in the official languages
used at the workplace. This statement should inform employees of their rights under the Act with
regard to working time, leave, their entitlement to written contracts of employment, when and the
manner in which they will be remunerated, how the employment contract may be terminated and
the amount and circumstances under which notice pay and severance pay may be claimed. The
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statement should also highlight that it is a criminal offence to employ children under 15 years or
require children under 18 years to do work which places them at risk or which is inappropriate for
their age. Employees should also be notified of the circumstances under which their basic terms and
conditions of employment may be replaced or excluded as well as of the ways in which the
employer’s compliance with the Act can be monitored and enforced. It is also extremely important
that employers notify employees that they may not be discriminated against for exercising any of
their rights under the Act.

A POSTER SETTING OUT THE INFORMATION TO BE DISPLAYED IS AVAILABLE FROM THE


GOVERNMENT PRINTERS (COST APPROX R4)

5.4.3.3 Keeping Records

Employers must keep records for each employee, detailing the employee’s name, occupation, time
worked, remuneration paid and date of birth (if the employer is younger than 18 years). The records
must also comprise (i) a wages register, which must be filled in by the employer and which must set
out how the employee’s wages are calculated and any authorised deductions and (ii) an attendance
register
Records must be kept for 3 years

Note: time-cards may be used in place of attendance registers.

5.4.3.4 Payment of Remuneration, Information about Remuneration,


Deductions and payment of contributions to benefit funds

Employees must be paid in S.A currency in cash, cheque or by direct deposit. Cash and cheque
payment must be made during working hours and employees must be paid no later than 7 days after
the completion of the period for which the remuneration is payable.

S33 sets out that the information must be presented to an employee every pay day:
▪ Employer’s name and address;
▪ Employee’s name and occupation;
▪ The period for which the payment is made;
▪ The employee’s remuneration in money;
▪ The amount and purpose of any deduction made from the remuneration;
▪ The actual amount paid to the employee, and
▪ If relevant to the calculation of that employee’s remuneration-
- The employee’s rate of remuneration and overtime rate;
- The number of ordinary and overtime hours worked by the employee during the
period;
- The number of hours worked during the period by the employee on a Sunday or
Public holiday;
- If there is an agreement to average working time, the total number of ordinary and
overtime hours worked by the employee in the period of averaging

In terms of S34 employers must be warned not to make any deductions from an employee’s
remuneration unless this is legally authorised or the employee has consented to the deduction in
writing. An employer may not, for example, loan money to an employee and then simply deduct this

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from the employee’s next pay cheque. Trade union dues may be deducted if there is a collective
agreement to this effect. The Act also lays down requirement for deducting amounts from an
employee’s salary in respect of loss or damage to goods or in relation to goods purchased by the
employee.

The recently introduced S34A compels an employer to pay any contributions that are to be made to a
pension, provident, retirement, medical aid or similar fund within 7 days. In the case of the
contribution being deducted from the employee’s remuneration, the payment must be made to the
fund within 7 days of the deduction being made and in the case of any contribution that is not
deducted from the employee’s remuneration the payment must be made to the fund within 7 days of
the end of the period in respect of which the payment is made.

An employer’s duties to supply written contracts of employment to all employees, to keep records
and to keep employees informed of their rights under the Act increases the administrative burden for
employers. The cost implications involved in having formal letters of appointments drafted for all
employees is especially relevant for domestic, farm, mine and casual workers who in most instances
do not currently have written employment contracts. Essentially, the Act ensures that relationships
with all workers be formalised.

5.4.4 TERMINATION OF EMPLOYMENT

The following provisions apply to all employees, except employees who work less than 24 hours per
month for an employer.

5.4.4.1 Notice, Severance Pay and Certificates of Service

Notice – must be in writing (unless the employee is illiterate). In accordance with the 2002
amendment to the BCEA the periods of notice are as follows:
▪ In the first 6 months of employment, the minimum period of notice is 1 week;
▪ After the first 6 months but within the first year of employment, an employer must give or is
entitled to receive at least 2 weeks’ notice;
▪ After a year of employment the period of notice is at least 4 weeks.

Notice of termination may not be given by an employer during any other period of leave to which
the employee is entitled (e.g. annual leave), except sick leave.

Employees may be paid the remuneration they would have received had they worked the notice
period, in lieu of notice (NB: remember the calculation of remuneration for the purpose of
remuneration in lieu of notice is the same as for annual leave pay - discussed above)
.
Severance Pay – must be paid to an employee who is dismissed for operational requirements of
the business or whose contract of employment is terminated in terms of S38 of the Insolvency Act.
The minimum severance pay is 1 weeks’ remuneration for each completed year of continuous service
with the employer.

(NB: remember the calculation of remuneration for the purpose of severance pay is the same as for
annual leave pay - discussed above)

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Note: that an employer is only released of the duty to pay severance pay if it offers alternative
employment to the employee and the employee unreasonably refuses this. (the offer of alternative
employment may be with that employer or any other employer).

Certificate of Service – must be presented to an employee on termination of a contract of


employment and must set out:
▪ the employee’s full name;
▪ the name and address of the employer;
▪ (if any) the council or sectoral employment standard that covers the employer’s business;
▪ the date of commencement and date of termination of employment (the length of service
with the employer);
▪ the job performed by the employee;
▪ the employee’s earnings (remuneration) at the date of termination.

Note: The reason for termination should only be given if requested by the employee.

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5.5 REPLACING OR EXCLUDING BASIC TERMS AND
CONDITIONS OF EMPLOYMENT

▪ Since the terms and conditions of employment as laid down in the BCEA (and as described
above) are minimum terms and conditions any terms and conditions may be replaced by
agreement between an employer and an employee with more favourable terms and
conditions;
▪ Where an employer’s workplace falls under the jurisdiction of a bargaining council and a
collective agreement has been concluded in the bargaining council, terms and conditions of
employment in that workplace will be governed by the collective agreement, not the BCEA.
( employers/managers who are interested may consult S49(1) for a list of criteria with which
the collective agreement must comply);
▪ The Minister may make a determination to replace or exclude a basic condition/s of
employment in respect of a category of employees or employers OR any employer or
employee in respect of whom an application is made in terms of S50(1).
▪ Where a sectoral determination has been published in respect of a specific sector terms and
conditions of employment for employees who fall within the sector will be governed by the
sectoral determination, not the BCEA. The Sectoral Determination for Domestic Workers is
an example of this. Domestic workers will be subject to terms and conditions of employment
as set out in the Determination, not the BCEA. S57 of the BCEA states clearly “if a matter
regulated in this Act is also regulated in terms of a sectoral determination, the provision in
the sectoral determination prevails.”
▪ Schedule three of the BCEA (which was amended in 2002) states that any wage
determination that was in force immediately before the 2002 Amendment is deemed to be a
sectoral determination and employees covered by it will be subject to the terms and
conditions of employment included in the wage determination.

5.6 MONITORING AND ENFORCING COMPLIANCE WITH THE


ACT

Like all Acts of Parliament, the Act would be “toothless” if it did not provide for mechanisms for
monitoring and enforcing compliance.

In terms of the BCEA the Minister of Labour has appointed Labour inspectors who must advise
employers and employees of their rights and obligations in terms of employment laws. Labour
inspectors are empowered to enforce compliance with the Act and have reasonable rights of access to
an employer’s premises to conduct investigations, question employers and/or remove records and/or
other documents. These labour inspectors may be contacted by phone at the Dept of Labour.
Where a labour inspector has reasonable grounds to believe that an employer is not complying with
any provision of the BCEA s/he must try to secure a written undertaking from the employer to
comply with the relevant provision/s. The inspector may do this either by meeting with the
employer (or a representative) or by serving a document on the employer.
An inspector is also authorised to serve an employer with a compliance order where he/she has
reasonable grounds to suspect that an employer is contravening the Act. The compliance order will
state the Sections of the Act or sectoral determination that the employer has not complied with and
may state that the employer failed to fulfill it’s previous undertaking. In terms of the 2002
Amendment to the BCEA the inspector must serve a copy of the compliance order on the employer

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and on each employee affected by it (unless it is not practical to do so) and on a representative of the
employees. A compliance order may compel an employer to pay a fine which will increase each time
the employer contravenes the law.

An employer has 21 days from receipt of the compliance order to object against it to the Director-
General: Labour, who may then confirm, modify or set aside the order.
If a compliance order is confirmed, an employer has 21 days to appeal to the Labour Court against the
order. Similarly, the Director-General may apply to the Labour Court to have the order made an
order of court where the employer does not comply with it and does not object or appeal against the
order.

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6. THE EMPLOYMENT EQUITY ACT, NO 55 OF
1998 AND ITS IMPACT ON SMMEs
The EEA 55 of 1998 was designed to redress the legacy of unfair discrimination left behind by
Apartheid. The Act and its practical implications for employers are discussed in detail below.

6.1THE PURPOSE OF THE ACT

The purpose of the EEA is two-fold:

1. Eliminate unfair discrimination in the workplace, thereby promoting equal opportunity and
fair treatment.

2. Proactively advance workers who were discriminated against in the past via affirmative
action measures. The aim of this is to ensure that these workers are equitably represented in
all job categories and at each level in the workplace.

It must be stressed that whereas the prohibition on unfair discrimination applies to all employers in
respect of every employee, the obligation to implement affirmative action measures to advance
employees in the workplace only applies to certain employers in respect of certain employees.
Put another way, the prohibition on unfair discrimination applies to every employer and employee in
South Africa while affirmative action only applies to certain employers (“designated employers”) and
certain employees (employees from “designated groups”).

The Act is divided into 6 Chapters, set out as follows:

 Chapter I – Definitions, Purpose, Interpretation and Application (as the title denotes, this Chapter
defines certain terms in the Act, explains the purpose of the Act as well as how it is to be
interpreted and applied)

 Chapter II – Prohibition on Unfair Discrimination (NB!)

 Chapter III – Affirmative Action (NB!)

 Chapter IV – Commission for Employment Equity (this Chapter establishes a Commission for
Employment Equity (“CEE”) to advise the Minister of Labour . The CEE will play a role in the
drafting of Codes of Good Practice and Regulations and in monitoring that there is speedy
progress in South Africa in the area of employment equity. The CEE may also make awards
recognising employers’ achievements towards achieving employment equity in South Africa)

 Chapter V – Monitoring, Enforcement and Legal Proceedings (this Chapter is divided into 3 parts
and deals with the ways in which employment equity progress will be monitored and enforced by
the authorities as well as the jurisdiction and powers of the various bodies and the procedures to
be followed in the event of a dispute)

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 Chapter VI – General Provisions

Note: Because of their practical implications, Chapters II and III will be dealt with in detail. Chapter
V and certain general provisions in Chapter VI will also be addressed in this seminar.

6.2 THE PROHIBITION OF UNFAIR DISCRIMINATION

Chapter II prohibits all employers from discriminating unfairly against any worker or applicant for
employment. The prohibition on unfair discrimination extends to any employment policy or practice
and therefore extends to virtually every aspect of the employment relationship. In practice this
means that the following must be free of unfair discrimination:- recruitment procedures, advertising
and selection criteria, interviewing applicants for employment, appointments and the appointment
process, job classification and grading, remuneration, employment benefits and terms and conditions
of employment, job assignments, the working environment and facilities, training and development,
performance evaluation systems, promotion, transfer, demotion, disciplinary measures other than
dismissal and dismissal.

6.2.1 Forms of Unfair Discrimination

According to Chapter II the following forms of unfair discrimination are identified and prohibited:-

Direct or indirect discrimination against an employee in any employment policy or practice


on grounds, including; race, gender, sex, pregnancy, marital status, family responsibility, ethnic or
social origin, colour, sexual orientation, age, disability religion, HIV status, conscience, belief,
political opinion, culture, language and birth.

Note: unfair discrimination means differential treatment of employees on an arbitrary ground (on a
ground that is capricious and without commercial rationale).
Note: It is irrelevant that the employer does not have intention to discriminate.
Note: indirect discrimination is often difficult to recognise. Indirect discrimination occurs where
the employer imposes an apparently neutral criterion to all employees but the application of that
criterion has a disproportional effect on a certain group of employees. For example, a minimum
height or weight as a condition of employment will have a disproportionate effect on women as a
group and therefore constitutes indirect discrimination.
Note: discrimination in the form of affirmative action is not regarded as unfair, nor is it unfair to
discriminate against an employee on the basis of an inherent requirement of the job

Harassment of an employee (in particular sexual and racial harassment)

Note: A Code of Good Practice on the Handling of Sexual Harassment cases was published to
supplement the bare statutory prohibition in the EEA. The objective of the Code is to eliminate
sexual harassment in the workplace and states that sexual harassment covers sexual attention that is
(a) persisted in, (b) that the recipient has clearly indicated is offensive and that (c) the perpetrator
should have known is unacceptable.

The court, recognising that sexual harassment may be subtle and often in the eye of the beholder has
stated that evidence in such cases must be carefully weighed.

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The following forms of conduct are covered by the term “sexual harassment”:-
Physical contact, verbal innuendoes, suggestions, hints, comments with sexual overtones, sex-related
jokes or “unwelcome graphic comments about a person’s body made in their presence or directed at
them”, inappropriate inquiries about a person’s sex life, unwelcome gestures, indecent exposure and
the unwelcome display of sexually explicit pictures and objects.

The following forms of sexual harassment are unique to the workplace:-


(i) “quid pro quo harassment” - refers to the situation where an employer, supervisor,
manager or co-employee “undertakes or attempts to influence the process of employment,
promotion, training, discipline, dismissal, salary increment or other benefit of an
employee or job applicant in exchange for sexual favours.

(ii) Ignoring an employee – this can constitute sexual harassment where a person in authority
rewards only those who respond to his/her sexual advances with promotion or increases
and ignores those who don’t.

(iii) Dismissing an employee once an affair is over on the ground that the employee’s presence
is a source of embarassment to the other person

The Code emphasises that employers and employees should not only refrain from sexual harassment
in any of the above forms but should also discourage such conduct by others who have any dealings
with the workplace (e.g customers, suppliers, job applicants etc). Notwithstanding this, employers
do not have authority to take disciplinary action against non-employees for sexual harassment.
Customers, suppliers, job applicants and contractors have a right to be treated with human dignity
and may however be included as possible victims of sexual harassment.

Management must take active steps towards eliminating sexual harassment in the workplace by
issuing policy statements and procedures on sexual harassment. A policy statement on sexual
harassment must state that all employees, job applicants and other persons who have dealings with
the business have a right to be treated with dignity and due respect for their privacy and integrity
and that sexual harassment is prohibited. The statement must state further that victims of sexual
harassment have a right to raise a grievance with the guarantee that appropriate action will be taken
and that managers are obliged to take disciplinary action against any employee who does not comply
with the policy.

Management should also implement orientation, education and training programmes to communicate
the policy and procedures to employees and to state that grievances will be treated seriously,
sensitively and quickly.

WHAT ACTION SHOULD AN EMPLOYER TAKE WHEN A CASE OF SEXUAL HARASSMENT IS


BROUGHT TO HIS/HER ATTENTION?

The Code of Good Practice suggests that the company should appoint a person in the company to
whom victims can turn on a confidential basis (e.g. a shop steward) or if there is no such suitable
person, an outside professional. A complainant must be given two options:-

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(i) An informal attempt to resolve the problem – this procedure involves explaining to the
perpetrator that his/her conduct is unwelcome and is offensive, making the victim feel
uncomfortable at work.
(ii) Formal proceedings – this involves an investigation into the conduct of the perpetrator, and if
necessary, disciplinary action against the perpetrator. (The only difference between this
disciplinary action and other disciplinary action is that special steps must be taken to ensure
confidentiality. Accordingly, only the victim, the offender, witnesses, an interpreter (if
necessary) and an “appropriate member of management” should be present).

If the victim is not satisfied with the outcome of the internal disciplinary proceedings, he/she may
refer the dispute to the CCMA for conciliation. In the event of settlement not being reached the
Labour Court will resolve the matter and has the power to order the employer to compensate the
aggrieved employee, and / or to take steps to ensure that the situation is rectified.

Testing an employee for any medical condition is prohibited unless either legislation
permits or requires the testing or if it is justifiable to do so “in the light of medical facts, employment
conditions, social policy, the fair distribution of employee benefits or the inherent requirements of a
job.” Furthermore, the Act prohibits HIV testing unless the Labour Court in a given case determines
such testing to be justifiable. In making a determination, the court may make any order that it deems
appropriate in the circumstances and may impose conditions relating to counselling HIV+ employees,
maintaining confidence, the period during which testing is permissible and the categories of
employees that may be tested.

Notwithstanding that the EEA prohibits HIV testing without authorization from the Labour Court,
the case of Irvin & Johnson Ltd v Trawler & Line Fishing Union (2003) 4 BLLR 379 (LC), heard
before the Labour Court concluded that the Labour Court’s permission is not required where the HIV
test/s are both voluntary and anonymous

Note: A Code of Good Practice on Key Aspects of HIV/AIDS and Employment and the HIV/AIDS
Technical Assistance Guidelines have been produced to assist employers in the area of HIV/AIDS
testing and in implementation of an HIV/AIDS policy and programme. Organisations who do not
have an HIV/AIDS policy should utilize the guidelines laid down in the documentation towards this
end.

Psychological testing and other similar assessments have been prohibited unless it can
be shown that the test or assessment is valid and reliable, can be applied fairly to all employees and is
not biased against any employee or group. It follows that the test or assessment may not be racially
or culturally unfair.

6.2.2 Interviewing applicants for employment in terms of the


Employment Equity Act
Applicants for employment are also protected under the EEA against unfair discrimination. This
implies that recruitment and interviewing processes must be free of unfair discrimination. Several
cases brought before the CCMA and the Labour Courts have been instigated by unsuccessful
applicants for employment who allege that they were discriminated against unfairly in the
recruitment and/or interviewing process.

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Employers/managers need to understand the provisions of Chapter II of the Act, in as far as it relates
to interviewing candidates for employment.

Applicants may never be discriminated against on any arbitrary ground such as race, gender, sex,
pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orentation, age,
disability, religion, HIV status, conscience, belief, political opinion, culture, language or birth.

According to the Act the only lawful grounds for differential treatment of applicants are the
following:

• Affirmative action. Employers may choose a black person over a white person, a woman over a
man or a disabled person over a physically fit person if the employer has identified in his/her
employment equity analysis that he/she does not have a sufficient number of these employees in
the workplace. (NOTE: this does not preclude employers from employing white males if they
are more competent for the job!)
• Age. If an employee/applicant has reached retirement age, an employer need not employ such a
person.
• Inherent requirements of the job NB!! An employer may choose one applicant over another if
the chosen applicant displays competencies more suitable to the job. This means that an
employer must identify the required competencies for the job and may then choose the applicant
who would be most competent to perform the job description. An employer who chooses one
applicant over another based on this, would not be guilty of unfair discrimination and would be
able to justify the appointment based on commercial rationale and the inherent job requirements.
Consider the following hypothetical example
An auditing firm wishes to employ a qualified accountant to join the firm
The employer identifies the following competencies which are required for the job:
- Bilinguilism, since the firm has many Afrikaans and English speaking clients
- Accreditation with a professional body or other requisite qualification/accreditation
- A technical understanding of tax, accounting and auditing principles
- Ability to liase with clients and to get on with people
- Good administration, organizational and time-keeping skills
- A driver’s licence, since the chosen candidate may be required to drive to clients
premises
- Computer skills
- ETC ETC

Once the employer has identified that the chosen candidate would need to have the above
competencies the employer will phrase the questions during the interview in such a way as to find
out whether the applicant has these competencies. Any arbitrary questions, which in no way relate
to the above competencies would be considered arbitrary and discriminatory. In the above example
it would be discriminatory to ask a woman applicant whether she is married or has children as this in
no way relates to the competencies identified. Asking her if she has a driver’s licence or a car
however is not discriminatory as being able to drive is a competency identified (i.e. the question has
commercial rationale).

THEREFORE: asking questions during the interview which are not relevant to the job will be
discriminatory. However, asking questions which may be aimed at finding out whether a candidate
will be competent to do the job is not discriminatory and must be done.

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DO:

• Before interviewing, identify the competencies required for the job (i.e. what the ideal candidate
will need to display in order to do the job properly)
• Identify competencies, which although a candidate may not fully have, would be relatively easy
to train him/her in. For example it would be relatively easy to develop a trainee accountant’s
competency to return client phone calls promptly. If a competency is identified for the job which
would be relatively easy to train the applicant to do, then questions in this regard should be asked
to the candidate simply to find out whether he/she is trainable in that competency. Certain
competencies are however non-negotiable and not easy to train a candidate for (e.g. fluency in
Spanish or a mathematical aptitude). With these, an employer cannot be expected to train the
candidate and the candidate either has the competency or not!
• Once competencies have been identified for the job the employer must identify the level of
competency needed for the job. For example although computer literacy may be a competency
identified for a secretarial position, the level of competency required would not be as high as for
the position of a software engineer.
• The employer/interviewer must now prepare a set of questions, which will be put to the
candidate. Remember, the questions must be aimed at finding out whether the candidate
possesses the competencies required for the job and also to determine his/her level of
competency. Using our original example: The employer has identified that the chosen candidate
(trainee accountant) must have computer skills (a competency identified above). The question
“have you ever worked on caseware /excel before?” would let the interviewer know whether the
candidate possesses the I.T competency or not and should be asked. Inviting the candidate to
share his/her past experiences regarding use of the computer software would also be relevant
because it would help the interviewer assess the level of competence the candidate has.
• During the interview ask only questions which are related to the identified competencies and
which will help the interviewer assess the candidate’s level of competence.
• Questions should, as far as possible, be open-ended. It is better, for example, to ask a candidate to
relate his/her past experience regarding relationships with clients then to ask him whether he/she
regularly argued with clients. This relates more to the style of interviewing than strictly to the
law but punchy, direct questions may be threatening and may be perceived as discriminatory. Of
course direct questions are often necessary and may be used, depending on the circumstances.
(simply a word of caution).
• Job application forms (if used) should only pose questions that relate to the identified
competencies.
• If an unsuccessful applicant asks why his/her application was refused, the employer must be able
to provide a reason based on the applicant’s competency in relation to the inherent requirements
of the job. In other words, any refusal should be based on commercial rationale and not on an
arbitrary, discriminatory ground.

DO NOT:

• The interviewer should not pose questions that do not relate to the identified competencies. This
is often problematic and may lead to a very sterile interaction. It is understandable to have a
measure of informality during an interview, especially if interviewer and candidate have a
comfortable connection. However, a friendly, affable candidate may become unhappy or even
resentful if his/her application is refused, especially if he/she feels discriminated against. It is
therefore advisable that the interviewer not ask irrelevant, potentially discriminatory questions

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that do not relate to the job (e.g. relating to the candidate’s religion, ethnic background, marital
status or sexual orientation).
• The Act prohibits both direct and indirect discrimination. Be careful therefore not to ask
questions, which are either directly or indirectly discriminatory. For example, asking a candidate
about the area in which he/she lives, may be perceived as indirect discrimination based on ethnic
background, religion or race.

The interviewer should be cautioned that an employer may incur liability where discriminatory
questions are asked, even if the interviewer did not intend to discriminate or did not think that the
questions were discriminatory. The interviewer must not be unprepared. He/she must prepare
questions carefully, having regard to the competencies identified for the job.

6.2.3 Unfair Discrimination Disputes

Disputes about alleged unfair discrimination under the EEA must be referred to the CCMA within 6
months of the act or omission that allegedly constitutes unfair discrimination. The CCMA must
attempt to resolve the dispute via conciliation. If conciliation fails, either party may refer the dispute
to the Labour Court for adjudication, unless all parties consent to arbitration of the dispute. The case
of NEHAWU v Charlotte Theron Children’s Home (2003) 8 BLLR 781 (LC) decided that there is a 90-
day time limit for referring unfair discrimination disputes to the Labour Court.

It must be noted that disputes about unfair dismissal are excluded from the ambit of the Act. This
means that if a dismissal constitutes an act of discrimination it must be dealt with under the LRA.

6.3 AFFIRMATIVE ACTION

Chapter III compels “designated employees” to implement affirmative action measures to redress the
employment disadvantages experienced by “designated groups”

Designated employer means:

▪ “an employer who employs 50 or more employees” OR


“an employer who employs fewer than 50 employees, but has a total annual turnover that is
equal to or above the applicable annual turnover of a business in terms of Schedule 4 to this
Act” (the annual turnovers listed in the Schedule range from R2 million to R25 million). The
turnover requirement was probably included in the Act to ensure that employers do not
escape responsibility under the Act by bogus outsourcing and hiring through labour brokers
to avoid employing 50 employees
▪ “a municipality, as referred to in Chapter 7 of the Constitution”
▪ “an organ of state as defined in section 239 of the Constitution, but excluding local spheres of
government, the NDF, the NIA and the SASS”
▪ “an employer bound by a collective agreement in terms of section 23 or 31 of the Labour
Relations Act, which appoints it as a designated employer in terms of this Act, to the extent
provided for in the agreement”

Note: An employer who is not a designated employer may notify the director-general of Labour that
it wishes to comply with Chapter III (voluntary compliance).

Designated groups means – black people, women and people with disabilities
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Note: Black people includes Africans, Coloureds and Indians
Note: People with disabilities means people who have a long-term recurring physical or mental
impairment that substantially limits their prospects of entry into or advancement in employment.

The Act envisages that every designated employer must do the following towards achieving
employment equity:

1. Conduct an analysis of its existing policies, practices, procedures and the working environment.
The analysis should identify any employment barriers, which adversely affect people from the
designated groups (i.e. which create obstacles to the employment and/or promotion of black
people, women, people with disabilities) . The analysis must include a profile of the employer’s
workforce within each occupational category and at each level to determine the degree of under-
representation of workers from the designated groups within those categories and at those levels.

2. Prepare and implement an employment equity plan that will achieve “reasonable progress
towards employment equity in that employer’s workforce” . The equity plan must state the
following:
 The objectives to be achieved for each year of the plan
 The affirmative action measures that will be implemented in the workplace. The Act defines
affirmative action measures as “measures designed to ensure that suitably qualified people
from designated groups have equal employment opportunities and are equitably represented
in all occupational categories and levels in the workplace of a designated employer”.
“Suitably qualified people” are persons who are qualified for a job because of any one of, or
any combination of formal qualifications, prior learning, relevant experience, or capacity to
acquire within a reasonable time, the ability to do the job. When determining whether an
employee is suitably qualified to do the job an employer may not unfairly discriminate against
a person only on the ground of that person’s lack of work experience.
The following affirmative action measures must be implemented by a designated employer:-
(i) measures to identify and eliminate employment barriers, which adversely affect
people from the designated groups;
(ii) Measures to further diversity in the workplace based on equal dignity and respect of
all people;
(iii) Reasonable accommodation for people from designated groups in order to ensure that
they enjoy equal opportunities and are equitably represented in the workforce;
(iv) Measures to ensure equitable representation of people from the designated groups in
all occupational categories and levels in the workforce and to retain and develop
people from designated groups and to implement appropriate training measures
It must be stressed that in implementing affirmative action measures, a designated employer
is not required to take any decision about an employment practice or policy that would
establish an absolute barrier to the employment or advancement of people who are not from
designated groups. Note also that while designated employers are required to adopt
preferential treatment of people from the designated groups, the Act does not lay down any
quotas.
 Where the analysis identifies underrepresentation of people from designated groups, the plan
should state the numerical goals to achieve equitable representation of people from designated
groups in each category and at each level in the workplace. The plan must also state the
timetable within which these goals are to be achieved and the strategies intended to achieve
these goals. In setting numerical goals, a designated employer must aim to ensure that
representation of people from the designated groups reflects the demographic profile of the

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national and regional economically active population, taking into account the pool of
“suitably qualified” people from designated groups from which the employer can reasonably
be expected to appoint of promote. The economic and financial factors in the sector in which
the employer operates, the present and anticipated financial circumstances of the employer,
the number of present and planned vacancies in the employer’s workplace and the employer’s
annual turnover will be taken into account by the Director-General of Labour in assessing the
employer’s numerical goals.
 The timetable and plan for the achievement of goals other than numerical goals;
 The duration of the plan. This may not be less than 1 year or more than 5 years;
 The procedures that will be used to monitor the employment equity plan and whether
progress is being made towards achieving employment equity;
 The internal procedures that will be used to resolve disputes concerning the interpretation or
implementation of the plan;
 The persons in the workforce who will be responsible for monitoring and implementing the
plan

3. Report to the Director-General on progress made in implementing its employment equity plan.
The period within which a designated employer needed to submit its first report depended on the
number of employees employed by that employer. Those who employ fewer than 150 employees
had to submit the first report within 12 months after the date of commencement of the Act (1
December 2000), or within 12 months of the date on which the employer became a designated
employer. Subsequent reports must be submitted once every two years on the first working day
of October. Designated employers who employ 150 or more employees had to submit the first
report within 6 months of commencement of the Act (1 June 2000), or within 6 months of the
date on which the employer became a designated employer. Subsequent reports must be
submitted once every year on the first working day of October.
The CEO must sign the report and, if the designated employer is a public company, a summary of
the report must be included in the company’s annual report.
Note: The first report must refer to the initial development of and content of an employment
equity plan. Subsequent reports must give details of progress made in implementing the
employment equity plan.

The Act requires that in taking the above steps towards achieving employment equity a
designated employer must consult and attempt to reach consensus with a representative trade
union representing a sufficient number of employees at the workplace and its employees or
representatives or if there is no representative trade union, with the employees or their
representatives (nominated by them).
The consulting group must represent the interest of all workers in the workplace. Therefore it
must be made up of employees from all occupational categories and levels of the employer’s
workforce (both from designated and non-designated groups). The rationale behind this is that
all employees must be considered and consulted with.
The Act does not afford a workplace forum the right to be consulted by the employer in this
regard.
In consulting with a trade union and/or employees or their representatives the employer has a
duty to disclose all relevant information to the consulting group that will permit effective
consultation.
The requirement of consultation is not intended to deprive employers of their power but to
ensure that all involved parties are committed to workplace transformation and to foster
democracy and productivity in the workplace.

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6.3.1 Income differentials

Designated employers are also required to submit a statement to the Employment Conditions
Commission on the remuneration and benefits received in each occupational category and level
of the employer’s workforce and to take steps progressively to reduce “disproportionate”
differentials (a term that the Act has left to the Employment Conditions to define).

The Employment Conditions Commission must advise the Minister on appropriate measures for
reducing disproportional incomes.

6.3.2 Miscellaneous duties of designated employers

1. Before the end of term of its current equity plan an employer must prepare a subsequent
equity plan.
2. A designated employer must assign one or more senior managers whose responsibility it will
be to implement and monitor the plan.
3. A designated employer must display the following at its workplace:-
(i) a statement informing employees of the provisions of the Act. (A poster is available
from the Govt Printers, cost approx R4)
(ii) A copy of the most recent report sent to the Director-General.
(iii) Any compliance order, arbitration award or order of the Labour Court issued in terms
of this Act
4. A designated employer must keep records of its workforce and of its employment equity plan.

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6.4 MONITORING, ENFORCEMENT AND LEGAL PROCEEDINGS

Compliance with the EEA will be policed at various levels:

a) Within the workplace

The designated employer must consult with the consulting parties and must attempt to reach
consensus on the analysis of existing policies and procedures, the preparation of an
employment equity plan and reports thereon. The employment equity plan must be
displayed at the workplace.

b) By the Department of Labour


(A)
- Labour inspectors have powers of entry into an employer’s workplace and may
question and inspect any relevant documents.
- An inspector may secure a written undertaking from the employer to comply with
any duty under the Act (see S36).
- An inspector may issue a compliance order if the employer refuses to sign the
undertaking or does not comply with the written undertaking. The compliance order
must set out what the employer is required to do, when he/she must comply as well as
the fine that may be imposed if the employer does not comply. (Schedule 1 sets out
the maximum permissible fine).
- The employer must display the compliance order at the workplace. If he wishes to
object to it he must do so to the Director-General within 21 days after receiving the
order.
- The director-general may confirm, cancel or vary the order (whole or part) and must
specify a date for compliance.
- After receiving the director-general’s order the designated employer must either
comply with it or appeal against it to the Labour Court.
- If the employer appeals to the labour court, the operation of the compliance order
will be suspended, pending the decision of the labour court.
- If the employer does not comply with or appeal the order, the director-general may
apply to the Labour Court to have the order made an order of court.

In assessing whether a designated employer is implementing employment equity in the


workplace, the director-general or any person applying the Act must take the following into
account:
 The extent to which suitably qualified people from the designated groups are represented in
the workplace in relation to:
- The nationally and regionally economically active population
- The pool of suitably qualified people from designated groups from which the employer
can reasonably be expected to appoint or promote people
- Financial factors relevant to the particular sector in which the employer operates
- The employer’s present and anticipated financial circumstances
- The employer’s present and planned turnover with regard to vacancies
 Progress made in implementing employment equity by other designated employers operating
under comparable circumstances and in the same sector.

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 Reasonable efforts made by the designated employer to implement employment equity
 The extent to which the designated employer has eliminated employment barriers

(B)
- In terms of S43 the director-general may conduct a “review” to determine whether an
employer is complying with the Act.
- The director-general may ask the employer to submit a copy of its current analysis or plan
and may also invite the employer to meet with him. The purpose of the review is to
ascertain whether the employer is complying with the Act.
- After reviewing the situation, the director-general may approve the designated
employer’s equity plan or he may make a “ recommendation” to the employer stating the
steps he must take and the period within which the steps must be taken.
- If a designated employer does not comply with the director-general’s recommendation
the director-general may refer the matter to the Labour Court.

6.5 DOES NOT IMPLEMENTING AFFIRMATIVE ACTION AMOUNT TO


UNFAIR DISCRIMINATION?

We have established that designated employers must take appropriate steps towards achieving a
workplace that is more equitably representative of employees from the designated groups (including
the implementation of Affirmative Action). We have established that employees (including
applicants for employment) have a right not to be unfairly discriminated against and we have
established further that affirmative action is not regarded as unfair discrimination.

The question that all this poses is whether a black employee can argue that s/he has been unfairly
discriminated against where the employee does not implement affirmative action measures.

Over the past year the Labour Court passed two conflicting decisions in this regard:

In Harmse v City of Cape Town (2003) 6 BLLR 557(LC) the Court held that since a designated
employer has a duty to implement affirmative action measures, failure to do so violates “the right of
an employee who falls within one of the designated groups not to be unfairly discriminated against”.

Conversely, in the more recent case of Dudley v City of Cape Town Tip AJ indicated that unfair
discrimination dealt with in Chapter II of the EEA must be seen separately from the duty of a
designated employer to implement affirmative action measures, which is dealt with in Chapter III of
the Act. Accordingly he concluded that failure to implement affirmative action measures does not
amount to unfair discrimination.

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7. AN UPDATE OF SKILLS DEVELOPMENT
LEGISLATION

Note: In relation to skills development in South Africa there are 3 distinct but interrelated, relevant
laws:
▪ The Skills Development Act, No 97 of 1998
▪ The Skills Development Levies Act, No 9 of 1999
▪ The South African Qualifications Authority Act, No 58 of 1995
▪ The Skills Development Act (a labour law) has been amended recently by The Skills
Development Amendment Act, No 31 of 2003

The Skills Development Act is also aimed at redressing the legacy of apartheid. The Act was designed
to develop the skills of the South African workforce and the main purpose of the Act may be
summarised as follows:
• To improve the quality of working life for workers, their prospects of work and labour mobility
• To improve productivity in the workplace
• To promote self-employment
• To improve the delivery of social services
• To encourage employers to use the workplace as an active learning environment and to provide
opportunities to new entrants to the labour market to gain work experience
• To improve the employment prospects of previously disadvantaged persons through education
and training
• To promote the quality of learning in and for the labour market (via alignment with the SAQA
Act and via giving employers and workers greater responsibility for ensuring the relevance of
training)
• To assist workers to find work, retrenched workers to re-enter the labour market and employers
to find qualified employees (via the establishment of employment services)

To fully appreciate and understand the practical implications of the SDA, the Act must be viewed in
the context of the “new” system of education in South Africa and the South African Qualification
Authority Act of 1995 (SAQAA).

Unlike the Skills Development Act, which was initiated by the department of labour, the South
African Qualifications Authority Act was initiated by the department of education. Notwithstanding
the difference of focus in each Act, the Acts share common objectives, namely to
• facilitate access to and mobility and progression within education, training and career paths
• redress past unfair discrimination in education, training and employment opportunities
• improve the overall skills of South African learners and workers, thereby aligning South Africa
with international standards in this regard.

The department of education recognised that the “old” system of education in South Africa did not
suit the needs of post-apartheid South Africa. The “old” formal system of education was not easily
accessed by the majority of South Africans and this resulted in many workers and other persons in
South Africa, who fell outside the formal education structures, being thwarted in career development
and employment opportunities.
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The SAQAA provided for the establishment of an eight level National Qualifications Framework
(NQF) which covers all types of learning and achievement in South Africa by setting standards for
learning and establishing a quality management system. In terms of the system every qualification in
South Africa fits into one of the 8 levels, depending on complexity of the qualification. The
“currency” of learning is unit standards, which combined in different ways, depending on the needs
of the learner, form recognised qualifications. Each unit standard is quantified in terms of credits
(each credit based on 10 hours of notional learning). The more difficult a unit standard, the more
credits needed by a learner to meet and achieve the standard. A system of credit accumulation allows
for flexibility of movement and progression through the system. Unit standards are developed by
Standards Generating boards (SGB’s) who decide how many credits make up each unit standard,
depending on how long it thinks the average learner would take to acquire the skills and knowledge
specified in each unit standard. The standard setters are expected to conduct research and interviews
with key-players in each field of learning, including employers to identify learning outcomes and
assessment criteria for jobs and career opportunities. Developed unit standards need to be endorsed
by a National Standards Body (NSB), after which the unit standard is registered by SAQA on the
NQF and is then advertised in the public domain

Learners can work towards credits, unit standards and indeed qualifications in the formal education
system or on-the-job in the workplace. Education has become accessible and inclusive. It can be
accessed through the formal education system and in the workplace, it recognises prior learning
(RPL), it recognises formal education as well as skills and qualifications may be obtained at any time
and at any age. To ensure quality of education, the “new” education system requires and provides for
the accreditation of education providers. Responsibility for quality assurance and quality control
vests in Education and Training Quality Assurers (ETQA’s). Having regard to the fact that learning
towards credits and unit standards will often occur on-the-job rather than in the “classroom”, there
have to be assessors in the workplace to assess and award credits for units and qualifications. These
assessors have to be accredited to ensure that the standard and quality of education is maintained.

The Skills Development Act establishes the National Skills Authority (NSA), which is an advisory
body to the Minister of Labour and is responsible for ensuring that national skills development
strategies, plans, priorities and targets are adhered to. 27 Sector Education and Training Authorities
(SETAs) e.g. Fasset have been set up which are responsible for developing sector/industry skills plans
that align to the national skills strategies and plans. Each SETA also has an ETQA function within
the sector in which it operates and has to ensure that workplace training providers, assessors and
moderators are accredited. SETAs are also responsible for the development and registration of
learnerships and
Skills Programmes. Learnership programmes incorporate traditional apprenticeships and include
structured learning and work experience that will lead to nationally registered qualifications. They
are intended to assist unemployed persons to enter employment and help existing employees to
improve their skills level. A learnership agreement is entered into between a learner, employer and
an accredited training provider. The agreement obliges the employer to employ the learner for the
period specified in the agreement, to provide the learner with the requisite practical experience and
to release the learner to attend the education specified in the agreement. The agreement obliges the
learner to work for the employer and to attend the specified training. The agreement obliges the
training provider to provide the education and training specified in the agreement
Skills programmes are programmes that are occupationally based and when completed will constitute
a credit towards a registered national qualification. A skills programme uses accredited training
providers.

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In terms of the Skills Development Levies Act A compulsory monthly levy equal to 1% of the payroll
of every organisation is collected by SETAs and a national collection agency. 20% of the funds
collected is paid into the National Skills Fund and the remaining 80% is paid to the relevant SETA.
Save for 10%, which a SETA may retain for operational costs, SETAs are obliged to use the remaining
portion of levy collected inter alia, to develop skills within the Sector, to register learnerships and to
refund organisations that carry out (accredited) training that meets the requirements of a sector’s
skills plan.

The Skills Development Amendment Act, No 31 of 2003 was passed to strengthen skills development
and gives the Minister of Labour greater influence over the SETAs. In terms of the amendment each
SETA is obliged to conclude an annual Service Level Agreement with the Department of Labour. The
agreement will set targets regarding implementation of the National Skills Development Strategy and
will also prescribe requirements for reporting. The Minister of Labour can issue instructions to
SETAs who do not meet their obligations. These amendments are intended to ensure that the SETAs
are accountable.

The Amendment also provides for the establishment of Employment and Skills Development
Agencies (ESDAs). ESDAs are intended to facilitate the uptake of learners on learnership
programmes. Despite significant tax advantages (SARS) and other financial incentives (from the
SETA) offered to organisations that implement learnerships, many organisations are overwhelmed by
the administrative functions that are associated. ESDAs can “take away the pain” by performing the
employer and administrative functions and by assisting employers (particularly SMMEs) through
proper implementation.

Fasset keeps its members abreast of skills development grant applications and other benefits and
updates via newsletters, its website and other media.

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8. EMPLOYMENT POLICIES AND INDUCTION
We have already established that in terms of S29 of the BCEA, upon commencing employment, an
employee must be supplied with a written contract of employment or letter of appointment setting
out terms and conditions of employment.

Employers are also advised to compile an employee handbook/organisation manual which sets out
company policies and procedures. In addition to policies and procedures it may also include, inter
alia, a mission statement for the company and an explanation of the company/corporate culture.

The following is a list of possible policies and procedures. It is not an exhaustive list:
▪ Disciplinary Code (this is an extremely important document since it sets out the rules of the
organisation as well as the consequences for breaking the rules. This document is especially
relevant when an employee is accused of misconduct). EVERY COMPANY SHOULD
HAVE A DISCIPLINARY CODE AND PROCEDURE!
▪ Grievance Policy (this is also extremely important as it outlines the procedures/steps that an
employee needs to follow if s/he wants to institute a grievance relating to his/her
employment). EVERY COMPANY SHOULD HAVE A GRIEVANCE POLICY AND
PROCEDURE!
▪ Performance Management Policy
▪ HIV/AIDS Policy
▪ Sexual Harassment Policy (or a General Harassment Policy)
▪ Policy regarding Travel Expenses, Rental Cars, Business Mileage Reimbursement
▪ Preferential Recruitment Policy
▪ Policy regarding Computer Usage and Electronic Communications (to regulate email and
internet usage)
▪ Health and Safety Policy
▪ Career Advancement and Promotion Policy
▪ Leave Policy (includes the company’s policy on annual leave, sick leave, family
responsibility leave, maternity leave, unpaid leave, study leave, leave for religious holidays
etc)

New employees must be made aware of company policies procedures and copies must be made
available for inspection and to enable the employees to become familiarized.

Company policies and procedures are usually “tailored” depending on the needs and culture of the
specific organisation. A professional will be able to assess which policies and procedures your
organisation needs and also the content thereof.

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ANNEXURE “A” HANDLING MISCONDUCT: STEPS TO FOLLOW

Where an employee commits an offence in the workplace the employer must adopt a corrective and
progressive approach to disciplining the employee (not punitive). This means that before resorting to
dismissal, the employer should first try to correct the employee’s behavior through warnings. The
number and type of warnings (verbal / written / final written) will depend on the seriousness of the
offence and the employer’s disciplinary code will list and grade offences from minor to serious and
inform the employee of the disciplinary action in the event of a specific offence being committed.
Written warnings must be properly served on the employee concerned and s/he should be asked to
sign acceptance of receipt. If s/he refuses to do so the employer should record this fact on the
warning and state the time, date and place that it was handed to the employee.

The employer should keep a record for each employee specifying disciplinary offences and action
taken. File copies of any written or final written warnings!

Where dismissal is a possible sanction for a disciplinary offence an employee must be given a
disciplinary enquiry. The reason for this is to attempt to establish his/her guilt and to give him/her a
fair opportunity to respond to the charges. The hearing is relatively informal and neither the
employer nor the employee may have legal representation present (unless by agreement).

The following guidelines should be followed to ensure that the hearing is procedurally fair:

• The employee must be given prior notice of the charge and of the investigation. This means that
before the enquiry the employee must be informed of the charges against him so that he can
prepare to defend himself. The charge and notification must be in simple English and the
employee must sign an acknowledgement of receipt. (Give the employee reasonable time to
prepare for the enquiry).
• The employee is entitled to the assistance of a trade union representative or fellow employee and
must be informed of this right.
• If necessary an interpreter should be used.
• Both employer and employee are entitled to call witnesses and to lead evidence and to cross-
examine any evidence given by the other party. The employee must be informed of this right.
• The following people will be present at the hearing: An impartial chairperson, the employee
(with or without his representative), the employer (or management representative). The chair
must be a person who has not been involved with investigating the employee or who is
representing the employer at the hearing.
• During the hearing the chairperson should start by re-informing the employee of his/her right to
have a representative and should explain the process that will be followed to the employee. The
chairperson must also make sure that the employee understands the charges made against
him/her by management.
• The employer presents its case first and will lead evidence against the employee to try to establish
the employee’s guilt on the charges. The employer may present relevant documentary and oral
evidence. The employee must be given an opportunity to cross-examine the employer on the
evidence.
• The employee will then present his/her case in the same manner as the employer.
• Witnesses may be called for each side and may be cross-examined by the other side.
• After both employer and employee have given evidence and called witnesses, the chairperson
must adjourn/postpone the enquiry to consider all the evidence and decide whether the employee

91
is guilty or not guilty. (The chairperson must consider whether: the employee broke a rule,
whether the rule was reasonable; whether the employee knew or should have known about the
rule and whether the employer has been consistent in applying the rule)
• If the chairperson finds the employee guilty, aggravating and mitigating factors will be heard.
The employer is given an opportunity to give reasons why the employee should be dismissed
(aggravating factors) and the employee is given an opportunity to give reasons why dismissal
should not be imposed (mitigating factors)
• After hearing aggravating and mitigating arguments, the chairperson should adjourn again to
consider the appropriate penalty. The chairperson must consider whether dismissal is the
appropriate penalty or whether a less severe sanction, such a final written warning or suspension
is more appropriate
• After the enquiry the decision must be communicated to the employee (in writing).
• If the employee is dismissed, s/he must be informed of the reason for dismissal and must be
reminded that /she can refer the matter to the CCMA.
• Note: If the organisation has an internal appeal procedure this must be followed.

the chairperson should keep proper minutes of the hearing and of the evidence heard and considered
and of the mitigating and aggravating arguments.

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Note: use the wording in brackets if it is a final written warning

ANNEXURE “B” (FINAL) WRITTEN WARNING

NAME OF EMPLOYEE: ___________________

POSITION: ______________________________

LENGTH OF SERVICE: ___________________

DATE: __________________________________

DESCRIPTION OF THE OFFENCE:

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
________________________________________________________________________________

(You were previously found guilty of this offence on ________(date)). (only insert if necessary)

AGREED CORRECTIVE ACTION:

(Final) Written Warning.

CONSEQUENCES OF REPETITION:

(Dismissal) Final Written Warning

Owing to the seriousness of this offence this warning will remain in force for _____ months

SIGNED:

……………………………………………….. ……………………………………………
C.E.O EMPLOYEE

DATE:

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ANNEXURE “C” NOTICE BEFORE DISCIPLINARY HEARING

ATTENTION:
FROM :
DATE :

Dear______________________________

NOTICE OF DISCIPLINARY HEARING

1. This notice serves to advise you that you are to attend a disciplinary hearing to respond to the following
charges:

DETAILS OF THE CHARGES:


__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
______________________________________________________________________________

2. This hearing will take place as follows:


DATE: _____/_______/________ TIME:_______HR________ PLACE:_________

3. Should you require to be represented by a trade union representative or co-employee, you must on
receiving this notice or very soon thereafter, advise _________________________of who the Witnesses are
and the name of your Representative, in order that arrangements may be made in time for their presence at
the hearing.

NAME OF REPRESENTATIVE______________________________
NAME OF WITNESS(ES) ______________________________
______________________________

4. You have the right to:

4.1 Put your version of the events to the hearing.


4.2 Call Witnesses to testify.
4.3 Be represented at this hearing by a trade union representative or by a co-employee.
4.4 Cross question the Complainant and any Witness(es).
4.5 An interpreter, if needed.
4.6 Be advised of the charges in writing at least 24 hours in advance of the hearing.
4.7 Be advised of the outcome of the hearing and be furnished with written notification of the decision as well
as the reason/s for the decision.
4.8 If dismissed, refer this matter to the Commission for Conciliation, Mediation and Arbitration – CCMA.

5. you are also herewith notified that should you not attend the disciplinary hearing on the aforesaid date
that management will seriously consider proceeding with the disciplinary hearing in your absence.

6. Kindly sign this letter as acknowledgement of having received same.

Yours faithfully

_____________________________

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Acknowledge receipt:

______________________________ ________________________
SIGNATURE DATE

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ANNEXURE “D” HANDLING POOR WORK PERFORMANCE: STEPS TO FOLLOW:
Amended from the CCMA Website (This procedure does not apply to probationary
employees)

STEP 1
Supply the employee with written reasons why it is necessary to initiate this procedure.

STEP 2
Meet with the employee (and, if the employee wishes, with his/her trade union representative or
co-employee). During the meeting:
▪ Explain the job requirements, grade, skills and the nature of the job;
▪ Evaluate the employee’s performance in relation to the job requirements;
▪ Indicate reasons for perceived poor performance;
▪ Give the employee (or representative) an opportunity to make representations regarding
whether the employee has performed according to the requirements and whether s/he
agrees that performance is not up to standard.

STEP 3
Develop and initiate a programme of counseling, instruction and guidance to enable the employee
to reach the required standard of performance. This programme must include assessing with the
employee the time it would take for an employee to overcome the poor work performance; realistic
time frames within which the employer expects the employee to meet the performance standard;
appropriate training (if necessary); factors affecting performance that are beyond the employee’s
control.

STEP 4
If poor performance is not remedied within the time frames established by the programme the
employer must give the employee a written report of the outcome and consult with him/her to
explain the outcome of the procedure.

STEP 5
After the consultation (step 4) the employer must consider whether to continue giving the
employee appropriate counseling, instruction and guidance and give the employee more time to
improve OR to mentor the employee OR to convene a poor performance hearing to consider what
action should be taken, which may include transferring the employee to another job or dismissing
him/her.

Note: the employer should keep a record of all the above counseling sessions

STEP 6 (if the decision is to convene a Poor performance hearing)


If the employer feels that action stronger than a final written notice may be warranted the
employer/appropriate manager must give the employee not less than 3 working days notice of the
time and date of the hearing and details of the performance standard the employee is alleged not to
have met.
A chairperson (director/general manager or his/her nominee), employer representative, the
employee, the employee’s representative (shop steward or co-employee), any witnesses which the
employer or employee wish to call and an interpreter (if the employee requests) may be present at
the hearing.

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At the hearing the chairperson must give the employer an opportunity to explain the procedure
that has already been followed in counselling the employee who has failed to meet the work
standard, in what respects the employee’s performance is unsatisfactory, the steps taken to assist the
employee to remedy the situation and the time period that has been granted to the employee to
remedy the defects.

The chairperson must then give the employee (and his/her representative) an opportunity to
present the employee’s case.

At the conclusion of the hearing the chairperson must make a decision as to whether the employee
is able to meet the required work performance standard or not. If s/he feels that the employee is
not able to meet the required work standard, the chairperson may ask the employer and the
employee and his/her representative for submissions on the appropriate outcome.

The chairperson must then make a decision on the outcome. S/he must consider whether there are
any alternatives to dismissal. If there are not, then the employee may be dismissed with notice. In
the case of dismissal the employee must be remined of his/her right to refer the matter to the
CCMA.

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ANNEXURE “E” STEPS TO FOLLOW IF CONTEMPLATING RETRENCHMENT IN
TERMS OF S189 (Note this is different from steps in terms of S189A)

Remember: S189 Deals with Dismissals based on operational requirements for employers with less
than 50 employees or small-scale dismissals based on operational requirements by big employers.
The steps below should be read together with the explanatory notes set out in this handbook under
the section dealing with S189.

STEP 1
The employer contemplates the possibility of retrenching staff.

STEP 2
Send written notice to the consulting party that retrenchment is contemplated and that they
are invited to consult in this regard. The notice must set out the date, time and place of the
initial consultation and must disclose relevant information (the information which must be
disclosed is set out in the handbook under S189 under the heading “3. Written notice of
invitation to consult and written disclosure of relevant information”)

STEP 3
Engage in initial consultation with the other consulting party (see the notes regarding who must be
consulted). Explain that the purpose of consultation is to attempt to reach consensus on the topics
listed under heading “2. Attempt to reach consensus on certain matters” (set out in the handbook
under the notes on S189) and disclose all relevant information to the consulting parties in order to
facilitate an effective joint consensus-seeking process. Remember: parties must attempt to reach
consensus on certain issues, specified in S189(2) of the LRA

STEP 4
Allow the other consulting party an opportunity to make representations. (At the initial and/or
subsequent consultations regarding the contemplated retrenchments)

STEP 5
Consider and respond to the representations of the other consulting party

STEP 6
Make a final decision regarding retrenchment and give written notice of the decision and reasons to
the other consulting party.

NB: Remember Severance Pay!

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ANNEXURE “F” GUIDELINES FOR DRAFTING THE CONTRACT OF
EMPLOYMENT/LETTER OF APPOINTMENT

According to S29 of the BCEA a contract of employment/letter of appointment must, at least contain the
following information:
“(a) the full name and address of the employer;
(b) the name and occupation of the employee, or a brief description of the work
for which the employee is employed;
(c) the place of work, and, where the employee is required or permitted to work
at various places, an indication of this;
(d) the date on which the employment began;
(e) the employee’s ordinary hours of work and days of work;
(f) the employee’s wage or the rate and method of calculating wages;
(g) the rate of pay for overtime work;
(h) any other cash payments that the employee is entitled to;
(i) any payment in kind that the employee is entitled to and the value of the
payment in kind;
(j) how frequently remuneration will be paid;
(k) any deductions to be made from the employee’s remuneration;
(l) the leave to which the employee is entitled;
(m) the period of notice required to terminate employment, or if employment is for
a specified period, the date when employment is to terminate;
(n) a description of any council or sectoral determination which covers the
employer’s business;
(o) any period of employment with a previous employer that counts towards the
employee’s period of employment;
(p) a list of any other documents that form part of the contract of employment,
indicating a place that is reasonably accessible to the employee where a copy
of each may be obtained.”
(S29 Basic Conditions of Employment Act, No 75 of 1997)

In addition to the above information there are various other clauses which a contract of employment/letter of
appointment may contain. Inter alia:

▪ Dress code
▪ Extraneous employment
▪ Training paid for by the employer
▪ Confidentiality
▪ Discretionary bonus/Annual incentive
▪ Restraint of trade
▪ Intellectual property
▪ Company property
▪ Miscellaneous matters (postal address and address for service of legal documents)
▪ Medical aid//Pension/Other employee benefits
▪ ETC ETC

A professional will be able to determine the clauses to be contained in your specific contracts of
employment.

Note: Remember that the provisions in the BCEA regarding working hours and leave apply
differently to different types of employee. Also remember that temporary and part-time employees
are entitled to pro rata annual leave and that there is a formula for sick leave.

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Check the CCMA and Dept Labour Websites for examples of contracts!

ANNEXURE “G” PRACTICAL STEPS FOR DEVELOPING AND IMPLEMENTING AN


EMPLOYMENT EQUITY PLAN

The Employment Equity Act highlights that there are four main duties imposed on an employer
towards achieving employment equity in the workplace:

• Consult with representative trade unions and employees in the workplace.

• Analyse the existing policies, practices and procedures in the workplace to identify barriers that
adversely affect employees from the designated groups and prepare a Profile of the existing
workplace to ascertain the degree of under-representation of employees from the designated
groups in the workplace.

• Prepare and implement an Employment Equity Plan setting out affirmative action measures,
objectives and numerical goals for each year of the plan.

• Report to the Department of Labour on the implementation of the plan and on progress made in
achieving employment equity in the workplace.

• Display a summary of the Employment Equity Act in the workplace.

The Department of Labour has published a Code of Good Practice: Preparation, implementation and
monitoring of employment equity plans and a booklet “Preparing an Employment Equity Plan:
Based on the Guidelines laid down in both documents, employers may use the following ten steps in
preparing and implementing an employment equity plan:

(The first 4 steps are concerned with preparing the plan, the next 4 steps deal with developing and
implementing the plan and the final 2 steps cover monitoring the plan and reporting thereon.
Although the steps, which are set out and discussed below, are not law, they provide concrete
guidelines for employers in the process of transformation towards employment equity).

• PREPARATION

➢ Step 1: Assigning responsibility to one or more senior manager/s


The task of transforming the workplace into one that has equitable representation of
employees from the designated groups ultimately rests with one or more senior
manager/s in the workplace. Every designated employer should therefore appoint at
least one senior manager to actively engineer and oversee the process. The appointed
person must be a permanent employee, who reports directly to the CEO. Although
he or she need not spend all working time devoted to this project, he or she must be
given authority, a budget, adequate resources and reasonable time off work to make
this project a meaningful one.
➢ Step 2: Communication and awareness
It is essential that all employees be made aware of the employment equity process and
of the Employment Equity Act in general. It is therefore imperative to begin by
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sensitising employees with regard to the main provisions and purpose of the Act.
They should be familiar with the anti-discrimination provisions in Chapter II of the
Act and should learn what constitutes unfair discrimination as well as the
mechanisms for preventing and handling this. Employees should also become
familiar with the employment equity process, the needs, aims and objectives of the
Act in this regard. The main reason for this level of communication and awareness is
to encourage employees to “buy into” the process.
Employees can be made aware of the above through training sessions, workshops or
newsletters.

➢ Step 3: Consultation (establishing the employment equity committee)


The employer, represented by the appointed senior manager/s may not engineer the
employment equity process alone. The preparation and implementation of the plan
should be done together with a consultative forum, which should be set up as early as
possible. An effective method for setting up the committee is for employees to
nominate members to the committee. The forum should consist of members from
representative trade unions (if any) and of employees from designated and non-
designated groups from all levels and occupational categories in the workplace. The
forum should meet regularly (depending on the size and sophistication of the
workplace). Although the forum is led by the appointed senior manager/s, it is
essentially the forum as a unit that is responsible for preparing and implementing the
process in the workplace.
Members of the forum must be given time off ordinary work duties to consult on the
process and members must be given opportunities to make representations and for
report back. To promote effective consultation relevant information should be
disclosed regarding the following:
- The employer’s business
- The sector/industry
- The national and provincial demographics
- The anticipated growth or reduction of the workforce
- The turnover within the workforce
- Internal employees from designated groups available for promotion
- External people from the designated groups available for employment and for
promotion
- The degree of representation of employees from the designated groups within
the workplace
- Available resources for training bursaries etc
- Current employment policies and practices

➢ Step 4: Conducting the analysis


An analysis must be conducted for two reasons:
i) to assess current policies and practices in order to identify barriers which
adversely affect employment and promotion of employees from the
designated groups, and
ii) to determine the degree of under-representation of employees from the
designated groups.

i) Assessment of current policies and practices to identify employment and


promotion barriers

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The following policies and practices should be reviewed:
- Recruitment, selection, pre-employment testing and induction (e.g are
they competency based and how and by whom are they conducted?)
- Succession and experience planning
- Promotions and transfers
- Job assignments
- Current training and development methodologies and strategies and
access to training
- Remuneration structures and practices
- Employee benefits
- Disciplinary practices
- Working conditions
- Number and nature of dismissals
- Corporate culture
- Management of HIV/Aids in the workplace (any discrimination)
- Any other practices or conditions tabled by the forum

The forum should look for factors which may adversely affect employees from
the designated groups and should be particularly sensitive to practices which
may be subtly discriminatory. Good methods for identifying these factors are
to brainstorm (within the forum) or to prepare and conduct a questionaire,
which may be filled in by all employees and then considered by the forum.
The questionaire should contain questions relating to how the employees
perceive current employment policies and practices, whether they regard
them as discriminatory or not and employees should be given space on the
questionaire to suggest possible solutions to barriers which they identify.

ii) Assessment of under-representation of members from the designated groups


Designated employers should conduct an audit, counting the number of
employees in the workplace from the designated and from the non-designated
groups. This workforce profile may be established by asking the employees
themselves to fill in the form EEA1 of the Employment Equity Act
Regulations.

Once the audit is complete the workplace profile should be compared with
the provincial and national demographics and with the workforce profiles of
other organisations of similar size and structure within the sector.

The business’s workforce profile and subsequent comparisons will enable the
employer to determine its degree of under-representation of employees from
the designated groups and its numerical goals for the plan.

• DEVELOPMENT AND IMPLEMENTATION

➢ Step 5: Setting objectives and formulating affirmative action measures


Designated employers should now prepare the employment equity plan, using the analysis as the
point of departure. The ultimate purpose of the plan is to set progressive, realistic and achievable
objectives, goals and affirmative action measures that will transform the workplace into one which
has due regard for employment equity. In other words the objectives, goals and AA measures

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should aim towards achieving a workplace profile that is equitably representative of employees
from the designated groups at all levels and within all occupational categories.

The analysis should provide the consultative forum with valuable information regarding:

- The workplace profile


- Practices or policies which adversely affect members of the designated groups
- Internal statistics
- Demographic statistics
- Comparisons between the organisation’s workplace profile and that of similar
organisations

The consultative forum should implement affirmative action measures, which will
address the barriers identified in the analysis. Affirmative action measures should be
implemented for each adverse policy and practice identified.

Examples of affirmative action measures would be:


- training and/or shadow posting for employees from the designated groups.
- Introducing competency based tests where pre-employment psychological tests are found
to be discriminatory.
- Advertising vacant positions appropriately where they are poorly advertised to the
designated groups.
- Using bursaries to bring members from the designated groups into the workplace.
- Using community organisations to offer career counseling and information regarding
opportunities and career paths within the industry.

➢ Step 6: Establishing a time frame


The duration of the plan may be anything between 1 and 5 years. The duration of the plan should be
decided with reference to the size and the sophistication of the business and due regard should be had
to the length of time that is necessary to make meaningful progress in employment equity. The plan
should specify milestones and target dates.

➢ Step 7: Allocating resources


Adequate resources should be allocated to the project. These include time, people, infrastructure,
money and training.

➢ Step 8: Communicating the plan


All employees should be kept informed of the employment equity plan. Employees should be
informed of whom is responsible for implementation of the plan, of the dispute resolution procedure,
of the role and responsibility of key-persons and of any other relevant information.

• MONITORING AND REPORTING

➢ Step 9: Monitoring and evaluating the plan


The consultative forum should keep all records of the plan and of the objectives, goals and affirmative
action measures to be implemented. Progress should be evaluated at regular intervals and reports on
progress made should be made to all employees.

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➢ Step 10: Reporting to the Department of Labour
Designated employers are required to submit an employment equity report (form
EEA 2 (or EEA 2A, for smaller employers)). At the same time designated employers must submit an
income differential statement (form EEA 4 (or EEA 4A, for smaller employers)). Forms may be
obtained from the Department of Labour or by accessing the website www.labour.gov.za.

The first report, since promulgation of the EEA was the actual employment equity plan and had to be
submitted by 1 June 2000 if the employer has 150 or more employees and by 1 December 2000 if the
employer has fewer than 150 employees.

Subsequent progress reports must be submitted every year by 1 October each year for employers with
more than 150 employees and every second year by 1 October for employers with less than 150
employees.

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