BILL WATCH 32/2015
[17th August 2015]
Parliament Recalled to Pass Labour Amendment Bill
The Labour Amendment Bill was gazetted late in the afternoon of Friday 14th August. The President has recalled both Houses of Parliament to deal with the Bill as a matter of urgency: the National Assembly will meet on Tuesday 18th August, the Senate on 20th August. [Soft copies of the Bill are available from Veritas at the addresses given at the end of this bulletin].
Background to the Bill
Why the urgency?
Amendments to the Labour Act have been talked about for a long time, but this Bill has come suddenly to Parliament following:
· the 17th July Supreme Court ruling upholding an employer’s common law right to terminate employment by notice in the case of Don Nyamande and Kingstone Donga v Zuva Petroleum (Private) Limited ; and
· the ensuing reliance on this ruling by employers rushing to terminate the employment of many thousands of workers by giving them notice rather than going through formal retrenchment processes in accordance with the Labour Act.
Scope of the Bill
There is more to the Bill, however, than its response to the Zuva Petroleum ruling. The supporting memorandum claims that the Bill has come about in recognition of the need—
· not only to align labour laws with the Constitution
· but also to promote productivity and competitiveness of local industry.
Consultation
The supporting memorandum states that the Bill is the joint product of a consultative process carried out by Government, including its two other social partners, labour and business: “Together the tripartite partners came up with a draft amendment Bill.” It remains to be seen whether MPs and the relevant Portfolio Committee will accept that this consultative process, coupled with the urgent need for a response to the Zuva Petroleum ruling, makes it “inappropriate or impracticable” for Parliament to undertake public hearings and other consultations on the Bill I [Constitution, section 141].
1. The Bill’s Response to the Zuva Petroleum decision
[clauses 4(b), 5, 6 and 18]
In the Zuva Petroleum case the employer resorted to termination by three months’ notice in terms of the contracts of employment between it and its employees only after protracted proceedings for formal retrenchment in terms of section 12B of the Labour Act had failed. The Supreme Court, in a judgment written by the Chief Justice upholding the decision of the Labour Court and following several of its own precedents, decided that the termination had been lawful. The court could find nothing in either section 12(4) of the Labour Act or section 12B, that abolishes the common law right to give notice in accordance with a contract of employment. The Bill seeks to change this situation in three of its clauses:
Clause 4(b) – New rules about notice
This inserts two new subsections (4a) and (4b) into section 12 of the Act. Unfortunately, neither new subsection is explained by the supporting memorandum [perhaps indicating how hastily this part of the Bill was prepared]. Subsection (4a) states that an employer [but not an employee] may terminate a contract of employment by notice in the following circumstances only:
a) in terms of the employment code for the industry/sector concerned – or if there isn’t an applicable code, in terms of the Model Employment Code made in terms of section 101(9) of the Act [the current such code is in SI 15/2001, as amended by SI 232/2006, which does not allow for Zuva Petroleum-type notice]
b) mutual agreement in writing “to the termination of the contract” [Note: this must presumably envisage specific agreement by an employee of an actual notice of termination.]
c) where the employee was engaged for a fixed period or for the performance of a specific service [note that strictly speaking notice of termination is not required in this situation because logically the contract is terminated by completion of the period or the service]
d) pursuant to retrenchment in terms of the new section 12C of the Act to be inserted by clause 5.
Comment: This new section 12(4a) comes straight from section 5 of SI 15/2006, the Model Employment Code referred to above. This code does not recognise the common law right of either party to terminate a contract of employment by notice. So the combined effect of the new section 12(4a) and the Model Employment Code will be to prevent the use of the employer’s common law right to terminate by notice. There are a few industry-specific codes of conduct that we have not had time to check on, but they are unlikely to allow for unilateral termination on notice. In fact, because these codes of conduct are meant to be about dealing with discipline and misconduct, one would not expect provision for termination by notice. So the effect of this clause of the Bill will be to stop employers using unilateral termination on notice – and compel them to follow the retrenchment route if they want to “downsize” their undertakings. Which leads to the new approach to retrenchment and compensation for termination by notice.
The new section 12(4b) merely draws attention to the fact that anyone given notice of termination in terms of section 12(4a) qwualifies for compensation in terms of the new section 12C of the Act to be inserted by clause 5.
Clause 5 and 6 – retrenchment and compensation for retrenchment and termination by notice
These clauses respectively replace the existing section 12C [“Retrenchment”] of the Labour Act with a new and different section 12C {Retrenchment and compensation for loss of employment on retrenchment or in terms of section 12(4a)”], and amend section 12D (“Special measures to avoid retrenchment”]. A minimum package is stipulated for the situation where quick agreement on retrenchment cannot be reached; this minimum package is also applicable where employment is terminated by notice in terms of the new section 12(4a).
The claim made for the new provisions by the supporting memorandum is that they provide for quickly resolving the present cumbersome process, by providing for a minimum retrenchment package, plus provision for employment councils or the Retrenchment Board to allow payment by instalments or even total exemption from paying the package where satisfied an employer is unable to pay the minimum package timeously or at all.
Clause 18 – compensation for those already terminated
This clause, according to the memorandum, seeks to backdate the application of section 12 of the Act concerning statutory benefits on termination of employment [i.e., as amended to include the new provisions listed above] “to all employees directly or indirectly affected by the Supreme Court judgment” in the Zuva Petroleum case. The clause states simply that section 12 of the Act “applies to every employee whose services were terminated on three months’ notice on or after the 17th July 2015”. So Mr Nyamande and Mr Donga, and others whose services were terminated before 17th July, will not benefit from clause 18.
2. Other Amendments to the Labour Act
Clause 2 – definition of “forced labour”
A definition of “forced labour” is included in the Act for the first time. Section 4A of the Act already prohibits forced labour.
Clause 3 – employment of young persons
Section 11 of the Act is amended to make 16 the minimum age for apprenticeship and other forms of employment of young persons. Young persons between 16 and 18 may only work as part of a course of vocational or technical education or in conjunction with such a course.
Clause 4(a) – bogus fixed term contracts
This subclause is aimed at protecting workers from employers who repeatedly renew “fixed term contracts” so as to avoid obligations legally owed to permanent employees. After a certain time, to be determined by employment councils, workers in this situation will automatically become permanent employees.
Clauses 4(b), 5 and 6 [already dealt with above]
Clauses 7, 8 and 9 provide for the levying of fees on application by trade unions and employers’ organisations for registration and fees for services rendered to them.
Clause 10 repeals the Minister’s power to limit the salaries and allowances payable by trade unions to their employees, the numbers of staff that may be employed and the property that may be acquired.
Clause 11 allows for a fee for registration of an employment council and requires all employment councils to submit audited accounts and reports to the Registrar
Clause 12 – Audit of accounts of employment councils, and administration of affairs of employment councils
This clause inserts an entirely new section 63A into the Act, making comprehensive provision for submission of audited accounts by employment councils, and investigation and remedial action where the Registrar of Labour has reasonable cause to believe the property or funds of an employment council are being misappropriated or misapplied or that its affairs are being conducted in a manner detrimental to the interests of the employers or employees concerned.
Clauses 13 and 14 – Collective bargaining agreements: scope and approval
Clause 13 allows such factors as productivity and competitiveness at enterprise and sector level to be taken into account in the collective bargaining process. Clause 14 will allow the Minister to prohibit the registration of a collective bargaining agreement that he or she considers “contrary to public interest”.
Clause 15 – Review powers of Labour Court
A new section 92EE for the Labour Act will state the grounds on which proceedings or decisions conducted or made in connection with the Labour Act may be brought on review before the Labour Court. This will not affect any other law relating to the review of proceedings or decisions of inferior courts, tribunals or authorities.
Clause 16 – Powers of labour officers
The clause will amend section 93 of the Labour Act to empower labour officers to actually decide cases where a certificate of no settlement has been issued and the dispute or unfair labour practice is a “dispute of right”; their rulings made will be subject to confirmation by the Labour Court. References to compulsory arbitration will be limited to disputes of right where the parties are engaged in an essential service.
Clause 17 – Investigations of trade unions and employers organisations
Curiously, this clause is not mentioned in the supporting memorandum. It amends section 120 of the Labour Act. The existing subsections (7) to (11) of section 120 will be replaced by new subsections setting out the procedure to be followed where an investigation of the affairs of a registered trade union or employers’ organisation or federation results in a recommendation that it be placed under administration by an administrator.
Clause 18 [already dealt with above]
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