Labour Law Seminar

Many challenges expected in 2014

Leading labour economist Andrew Levy
Andrew Levy.jpg

Do you want to know how to manage the recent changes in our judiciary system? Then make sure you do not miss the Sage Annual Labour Law Seminar in November.

Leading labour economist Andrew Levy, who will be discussing in detail how to manage the recent changes in our judiciary system and refer to important case law and practical developments, says many employers have experienced a tough year on the labour front. "However in the light of recent changes and additions made to key labour acts, 2014 is going to be even more challenging and complex,” says Levy. He continues by highlighting some of the consequences that will result from the changes and additions made to the Labour Relations Act, the basic Conditions of Employment Acts and the Employment Equity Act.

Equal Pay for Equal Work

The notion of no pay discrimination in South African law is not a new one and has in fact been part of the Employment Equity Act since its inception.  However very little case law has developed around it. The new law will stipulate that employees on fixed term contracts or employees from Labour Brokers will have to be remunerated on the same basis as the permanent employees in the client firm, so that pay and benefits are equal.

Pay equality remains a very complex subject and it does not mean that everybody must be paid equally. In fact, if you look at any wage structure it becomes patently obvious that very few people are paid equally. Pay equality means that people who are exactly alike in every material respect, should not earn differently based on factors which are discriminatory or prohibited. Immediate and obvious examples of legitimate pay differences are those differentials based on skill, performance, length of service, competencies or flexibility, seniority, responsibility, and a number of other factors.

Pay equality therefore is about being able to analyse using the proper statistical methodology, a pay structure, determining the shape of its pay curve, establishing the differentials, and then conducting a proper analysis, once again statistically, to determine whether or not the differentials are capable of a rational explanation, or can be seen to be clearly based only upon prohibited reasons.

Equally, when one talks about equality in pay and benefits, this does not necessarily mean that pay packets must be identical like-for-like but the notion of ‘not less favourable’ should rather apply.

Where pay inequalities exist and they are based on nothing other than fixed term contracts or being sourced from a Labour Broker, then it is the intention of the legislation to do away with this.

Pay equality cannot be achieved overnight. The cost would be horrific, and in some cases would be enough to sink the employer. It therefore needs to be made clear that pay equality, like employment equity is a target which needs to be achieved over time, rather than at a stroke.

An end to fixed term contracts as you know it

In future, employers will (in most cases) not be allowed to enter into a fixed term contract with an employee for longer than three months. This is one of the most far reaching amendments recently made to labour legislation and will have a definite impact on, for example, businesses who rely on outsourcing arrangements.

The amendments do not introduce a new practice, but what they do seek to achieve, is to make it more difficult for an employer, legally in any event, to use this device to create flexibility. This is achieved by introducing what is known as a ‘deeming provision’ and it simply means that all fixed term contracts will be held in law to be normal open ended employment unless the employer can show good reason as to why the position should be on a fixed term.

Legitimate reasons of course are reasonably straight forward and could include circumstances where the contract is used for a limited role or definite duration, and where the employer can offer a justifiable reason for fixing the term of the contract. So, fixed term contracts are permissible where properly justified.

Where they will not be permissible, is where the employer tries to use the fixed term contract, which is a device meant for short-term periods, as a means of employing a full-time labour force on an open-ended basis, and thereby shifting the risk of employment onto the employee's shoulders. This in reality is what the law already says.  But enter the ‘deeming provision’, which shifts the onus and burden of proof.

What will change now is the fact that abuses will be easier to prove, will be better policed, and employees will be more aware of them.  Those employers, who already comply with the law, will find that it is effectively no real problem.

Labour Brokers

The amendments made to the BCEA makes it clear it will no longer be possible for employers to employ what is effectively a full-time labour force on either short-term contracts, or via a third party such as a labour broker.

Now in cases where labour is supplied by a Labour Broker, then in the first six months of employment, the Labour Broker is still regarded as being the employer. The Labour Broker (or Temporary Employment Service as they are more correctly known) is liable for all matters set out in the BCEA, which covers hours of work, overtime payments, leave, and similar substantive terms and conditions.

Once the new amendments become law, then from the date of employment both the Temporary Employment Service (TES) and the client will be liable for procedural fairness. This includes the whole area of fair labour practices, the prohibition of unfair dismissal and any other form of procedural requirement.

There is also sometimes a misperception in the industry that Labour Brokers will be outlawed, while in real fact companies can still continue to source labour from the TES. However, the impact of the draft legislation is such that after a three month period the client company becomes the employer.

Strikes and violence in the workplace

One of the ways in which the legislation proposes to get to grips with the unacceptable levels of violence and intimidation in strike situations, is by making it clear that under certain circumstances unions and all their members may be sued for the damages that are part of any strike action.

It is already clear in the legislation that where the strike is procedural, the liability for damages is placed fairly and squarely on the union and the employees.

However, one of the benefits of a protected strike, is that there is an indemnity upon the strikers and the union from being sued - not a very satisfactory situation. However this has now been remedied, and interestingly enough, it was the courts that led the way.

It is proposed that a protected strike may lose its protected status if the employees and/or their union get out of hand in their behaviour. The actual amendment provides that the court may suspend a particular strike, and clearly if the employees do not abide by the court order this is serious contempt. It also means that continuing the strike would be unlawful and therefore unprotected, and hence the indemnities against dismissal and being indemnified against having to pay damages, would presumably fall away.

In closure Levy says: “These are only some of the elements that can be expected from a changing labour environment. There will in future for example also be fines for employment equity shortcomings and there will be serious limitations on employers’ abilities to change working practices.”

Levy encourages ell employers to ensure they fully understand the real impact of a changing and more complex labour scene in 2014 and says companies should at all times ensure that the country’s labour law requirements form an integrated part of their business. HR and Payroll offices should also understand the principles and be empowered to implement it effectively.

The seminar will help employers to regain balance and control, as well as improve their outcomes at the CCMA. It will provide practical insights and 'how to' solutions. For more information, please visit: www.vippayroll.co.za.

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