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South Africa: New Amendments to the LRA – Their Meaning and Implications

category southern africa | workplace struggles | non-anarchist press author Monday September 15, 2014 16:03author by David Cartwright, Komnas Poriazis Report this post to the editors

A summary of the August 2014 amendments to the Labour Relations Act and their meaning and implications for workers.

New Amendments to the LRA – Their Meaning and Implications

SECTION 21 : ORGANISATION RIGHTS

Minority Unions and Organisational Rights

• In terms of the new amendments if a trade union already has sufficient representation in the workplace and already has been granted by the employer the right to access to the workplace(section12 of the LRA), the right to have subscriptions (section 13) and the right to reasonable leave of office bearers of the trade union(section15) such trade union has the right to have shop stewards in the workplace.

Prior to the amendments a trade union was only entitled to have its own shopstewards if it had majority representation in the workplace.

One condition applies however and that is that if another trade union already holds the right to have shop stewards in the same workplace and the right to disclosure of information then the commissioner cannot grant the rights in terms of section 15 ( shop stewards) & 16 (disclosure of information) to another trade union in terms of these amendments.

• In terms of the new amendments a minority trade can bring an application for organizational rights, even though in the relevant workplace there is a collective agreement between the employer and a majority trade union. Such a minority must be granted the organisational rights in terms of section 12, 13, 14 and 15: on condition - the minority trade union is able to show that it represents a significant interest or a substantial number of employees in that workplace.

Before the amendments if a minority trade union attempted to recruit members and achieve organizational rights in a workplace where there was another majority trade union that held majority representation in the workplace and which had entered into a recognition agreement with the employer the minority trade union would be effectively blocked from recruiting in that workplace.

In order to qualify for this however the minority trade union will have to ensure that when it applies to the CCMA for these rights it must cite not only the employer but also the majority trade union so that in the arbitration the majority trade union will also have an opportunity to challenge the minority trade unions claim that it has a significant interest or substantial representation in the workplace.

Of course the big question will be what does significant interest and substantial representation mean and what meaning will the CCMA place on these words.

Labour Brokers and Organisational Rights

• In terms of the new amendments a trade union that represents labour broker employees may choose to exercise its organisational rights in terms of section 12 to 16 at the workplace of the client and not only at the workplace of the employer.

A workplace is now also defined as being the clients workplace. Now a trade union will be able to have access to the clients workplace and will be able to have shop stewards at the clients workplace and those shop stewards will be able to raise complaints and grievances and seek information from the supervisors and the management of that workplace.

This will be of great assistance to labour broker workers.

The power to organize that this gives to labour broker workers is greatly assisted by the fact that in terms of the amendment to section 22 of the LRA any arbitration or award made by the CCMA may be binding not only on the employer but also on the client.

The only condition that applies is that the trade union when bringing the application in terms of section 21 must cite the client and involve the client in the process right up to arbitration. If this is not done the arbitration award will not be binding on the client.

SECTION 69: PICKETING

Picketing

The amendment to the picketing section of the LRA namely section 69 has introduced important gains for workers.

• In terms of the new amendments workers can now request to picket in a workplace owned by another employer. Also workers can now request to picket inside the premises of an employer.

It is of assistance to labour broker employees and retail employees as these employees are now permitted to picket the workplace of the client or retail complex instead of having to in the past picket the employers premises which is often in an office building far away from where the employees work or outside the shopping malls.

However in order to obtain this right to picket the client the trade union will have to apply for a picketing agreement to the CCMA and in this process would have to cite and involve the client.

The amendments to this section also place the onus of proving that the employees should not picket inside the premises on the employer however again such a right to picket inside the premises would only be granted through a picketing agreement reached at the CCMA.

SECTION 103A: MONITORING OF UNIONS

Appointment of Administrator

• The amendment provides for an administrator on application of the Court, the registrar or the trade union itself can be appointed if the trade union fails to perform its functions or there is a mismanagement of the finances of the trade union.

The terms of reference of the administrator will be determined by the Court.The intervention of an administrator will be brought about by application to the Labour Court by any of the parties mentioned in the new provision.

This intervention could be beneficial to workers where it is obvious that leaders/official are mismanaging the finances of the trade union and where if nothing is done the trade union will inevitable not meet the requirements of the Registrar and be deregistered. It is also an intervention that could be used to delay or even prevent the Registrar from deregistering a trade union.

SECTION 111: DEREGISTRATION OF TRADE UNIONS

• The amendment prevents deregistered trade unions from operating when the decision of the Registrar to deregister has been taken on appeal.

Before the amendment a deregistered trade union could still operate and function when appealing the decision of the Registrar to deregister them.

SECTION 143: ARBITRATION AWARDS

• In terms of the amendments an arbitration award may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued.

In the past there was confusion whether a certified award could be used to bring contempt proceedings against an employer that is refusing to reinstate some. This has now been resolved by the amendment clearly stating that an award may, without further order, be enforced by way of contempt proceedings.

When enforcing an award through the execution process the award should be treated as if it was an order of the Magistrates Court. This will proof beneficial to both workers and trade union as the tariff of fees and disbursements in the Magistrates broker Court are lower than the High Court/Labour Court.

This amendment will make the enforcement process cheaper for workers and trade unions.

SECTION 145: REVIEW OF ARBITRATION AWARDS

Provision of Security during Review Procedures

• The amendments require that employers that take awards that are in favour of workers on review to furnish security of 24 months remuneration if the employee is reinstated in terms of the award and if the employee is granted compensation in terms of the award, security equivalent in sum to the compensation.

This will assist trade unions as it is the habit of employers to take awards on review that are in the favour of workers for the purposes of delay and without the hope that, due to the long delays at the Labour Court, that the employees will out of sheer frustration just walk away from the matter.

• Another amendment to section 145 which is also beneficial to workers and trade union is that now when an award is taken on review prescription is interrupted.

Prior to the amendments the Labour Court has ruled that awards that have been taken on review by employers prescribe after 3 years even though the delay of 3 years has not been the fault of the employee or the trade union but has been caused entirely by the employers review application and the employers failure to prosecute the review diligently.

This will no longer happen as the 3 year period will not run anymore as it will be stopped by the brining of a review application.

SECTION 147: PRIVATE ARBITRATION

• In terms of the amendments if the employee earns less than the BCEA threshold or the person appointed to arbitrate the dispute is not independent they are not bound to refer their dispute to privatearbitration and can instead refer it to the CCMA, Bargaining Council or the Labour Court.The current threshold is a salary of R205 433.30 per annum.

This amendment to section 147 is beneficial as many employees are forced to sign contract that contain a private arbitration clause that forces employees to refer their dismissal dispute to private arbitration. Often these clauses force the employee to pay half of the arbitration costs.

SECTION 158: REVIEW OF COMMISSIONERS’ RULINGS

• The amendment only allows the Labour Court to review decisions or rulings of commissioners once the unfair dismissal dispute has been finally determined by the CCMA or Bargaining Council.

The amendments to section 158 also help to do away with the delay tactics of employers by preventing employers from taking a commissioners decision to grant condonation or rescission on review.

In the case where a referral to arbitration is late and then the trade union applies for condonation which is opposed by the employer and then when the CCMA grants condonation, the employer will now not be able to take the decision on condonation on review as the matter has not been finally determined as under the circumstances it must first proceed to arbitration before it can be finally determined.

SECTION 161: REPRESENTATION BEFORE LABOUR COURT

This section of the LRA determines who has right of appearance at the Labour Court and the CCMA and the Bargaining Council.

• The amendment prevents employers organisations from acting on behalf of employers at the Labour Court, CCMA and Bargaining Council.

The word “member” has now been removed from the section so these employers organisations can now effectively be prevented from acting on behalf of employers as only office bearers and officials of the umbrella employers organisation will have right of appearance.

It is an important amendment as it has been a longstanding concern of trade unions that fly by night employer organisations that often act in bad faith and use unethical tactics against unions are allowed to appear because they are “members” of large umbrella employers organisations.

SECTION 187: AUTOMATICALLY UNFAIR DISMISSALS

• In terms of the amendment a dismissal is automatically unfair if the employees are dismissed after refusing to agree to a change to their terms and conditions of employment.

Accordingly the trade unions can now argue that employees cannot be retrenched as in effect they are being dismissed first and foremost because of their refusal to agree to the changes to their terms and conditions.

The amendment to section 187 is known as the “Frys Metal” amendment. In Frys Metal the Court held that under the old wording of section 187 (1)(c) that a dismissal is automatically unfair if the dismissal was used to compel an employee to agree to a change to terms and conditions, a situation where an employer negotiate with employees to change a shift system and once there is a deadlock proceeds to retrench them does not fall foul of the section 187(1)(c).

The Court have said that once the employer retrenches it is no longer trying to compel employees to agree to the changes but is retrenching due to its operational requirements.

SECTION 188A: PRE-DISMISSAL INQUIRY

The amendments to section 188A although of less significance to trade union are important in at least one respect.

The pre-dismissal arbitration section is now called Inquiry by an arbitrator and whereas before an employee had to agree to this process now it can be agreed by a trade union and an employer in a collective agreement that dismissal will be subject to inquiry by an arbitrator and not referred in the normal course to the Bargaining Council or the CCMA for conciliation and then arbitration.

As collective agreement can be extended to non parties employees could be forced to follow this process when they are dismissed.

SECTION 189A: RETRENCHMENT CONSULTATIONS

• The amendment to section 189A now prevent employers from terminating consultations after the 60 days have expired and prevents them from unreasonable refusing to continue with the consultations beyond the 60 days.

SECTION 191(12): RETRENCHMENT OF A SINGLE WORKER/ in SMALL COMPANIES

• In terms of the amendment if the consultation process applied to one employee only and irrespective of whether the procedure was in compliance with section 189 the dispute could be referred to arbitration.

The amendment clarifies the confusion around when a single retrenchment can be referred to arbitration at the CCMA or Bargaining Council instead of the Labour Court.

This takes care of the situation where employers in order to frustrate and obstruct employees have in the past argued that because no consultation process was followed in terms of section 189 the matter had to be referred to the Labour Court.

• The amendments introduce also a new provision which favours trade unions that organize small companies. In terms of this provision under section 191(12) if an employer with less than 10 employees retrenches one or more employees then all of the dismissed employees can refer their unfair retrenchment dispute to the Bargaining Council or the CCMA for arbitration.

SECTION 198, 198 A, B, C & D : LABOUR BROKERS/ FIXED TERM CONTRACT WORKERS/ PART-TIME WORKERS

• The new amendment states that labour broker employees may not be employed on conditions less favourable than a collective agreement concluded in a Bargaining Council applicable to the client to whom the employee renders service.

This subsection prevents an employer from alleging that while its employees fall under the Bargaining Council and are entitled to be paid in terms of what is laid down in the collective agreement labour broker employees are involved in other work that excludes them from the scope of the collective agreement and disentitles them to be paid in terms of the collective agreement.

This amendment creates an obligation on a labour broker to pay in terms of the collective agreement of the relevant Bargaining Council which can only be dislodged if the labour broker has the work that his employees perform at the client demarcated by the CCMA as falling outside of the scope of the relevant Bargaining Council.

Section 198A: LABOUR BROKERS

The amendments makes certain additions to section 198 of the LRA which regulates labour broker non-standard employment relationships. These provisions are effective three months after the commencement of the amendments (i.e. 15 Nov 2014).

• The new Section 198 A states that when a worker employed by a labour broker provides a ‘temporary service’ for a client, that worker would be an employee of the labour broker and not the client.

• However the new amendment also that the ‘temporary service’ can only be for a period of three months.

• The new amendments also state that should the period in which a labour broker employee provides services to a client exceed this period of three months then such a worker would be deemed to be the employee of the client business.

The meaning of the new amendments is that should a worker employed by a labour broker work for or provide their services to a client business for three months or longer then that worker will be deemed to be an employee of the client business.

• The new amendments also states that should such a business discontinue the services of a worker provided by a labour broker and who has worked for the client for more than three months then this would amount to the termination of the employment of that worker by the client and so would constitute a dismissal.

Such a dismissal would be treated as an unfair dismissal and could be referred to the CCMA or the Bargaining Council despite the fact that the labour broker might claim that the termination was due to the contract of employment coming to an end.

• According to subsections (1) (a) and (b) of section 198 A of the LRA if a worker employed by a labour broker works for a client for a period of less than three months or does the kind of work which would usually be performed by an employee of the client temporarily absent from work, that is works as a substitute for that employee, then according to the law such workers will be considered to be performing a ‘temporary service’ for their employers’ clients. Such workers will continue to be employed by labour brokers and not by the client businesses at and for which they work.

Workers employed by a labour broker and providing a ‘temporary service’, as specified in this section of the LRA, still are not given the same protection with regards to the security of their employment as are other workers. These workers continue to perform work for a client business which may terminate their services on any grounds but are employed by labour brokers.

• However the amended section categorically states that the contract period must be for a definite and limited durations of time and a fundamental purpose of this section is to prevent supposedly temporary workers from working for client businesses for an extended or indefinite period of time under conditions where their job security would be highly precarious.

This section must be read together with the limitation placed on fixed term contracts by section 198B(3) which states that the contract must be primarily determined by the nature of work for which the employee is employed and must be of a limited or definite duration.

• However another amendment allows for collective agreements concluded in bargaining council, sectoral determinations or notices made by the minister of labour to designate types of work performed for “any period of time” by employees of labour brokers as the provision of a “temporary service”.

This undermines job security.

If collective agreements, sectoral determinations or notices by the minister make contradictory statements regarding the kinds of work to be considered ‘temporary services’ then collective agreements take precedence over sectoral determinations or notices while ministerial notices take precedence over sectoral determinations according to subsection 198 A(8).

Throughout the period in which workers are employed in these designated types of work the workers would be considered to be providing a “temporary service” such workers would not be considered to be the employees of the client and so would lack job security, potentially for extensive lengths of time but at any rate probably for longer than three months.

• If a labour broker or a client attempted to avoid a situation whereby a temporary worker would be deemed to be employed by a client, as in where the worker was about to be employed at the client for more than three months, by terminating that worker’s placement with the client then such a termination will be regarded as a dismissal as stipulated by subsection 198 A (4) .

This will also be the case if the labour broker employee’s services are terminated when they attempt to exercise any right granted them in terms of the amendments.

In terms of section 198 4 A the client and the labour broker are jointly liable for any failure to fulfill an employer’s obligations to the workers in question.

Section 198B: FIXED TERM CONTRACTS

What is a Fixed Term Contract?

• The amendments state that a fixed term contract is an employment contract which is not, in principle, indefinite in length, but terminates after some specific period of time. According to this amendment a fixed term contract is an employment contract which terminates:

(a) once some agreed upon event occurs,
(b) once a specified task has been completed or
(c) on a fixed date other than the employees normal or agreed upon retirement age.

• Fixed term contracts can be entered into and be justified if the employee:

(a) Is a substitute for a temporarily absent employee
(b) is employed due to a temporary increase in work expected to last for no more than a year
(c) is a student or recent graduate for the purpose of training or gaining work experience
(d) is employed specifically to work on a specific project of a definite or limited duration
(e) is a non-citizen granted a temporary work permit for a specific length of time
(f) an employee is employed to perform seasonal work.
(g) work on an official public works programme
(h) is employed in a position which is funded by an external source for a limited period
(i) has reached the normal or agreed retirement age

Fixed Term Contracts are to be for three months

• The amendment states a worker can be on a fixed term contract term or successive fixed term contract for a period no longer than three months.

• A fixed term contract that requires to perform work which is not of a limited or definite duration, or which is not justifiable, will be deemed to be of ‘indefinite duration.

• An employee on a fixed term contract must have equal opportunities to apply for vacancies. ( This comes into effect immediately)

The amendments seek to prevent the abuse of fixed term contracts as a means to undercut the job security of workers employed for protracted lengths of time.

The result of this is that in most instances where an employee is employed on a fixed term contract for longer than three months they will be deemed to be employed for an indefinite period. After three months fixed term contract workers will, for the purposes of the law, be considered to be standard employees who are employed indefinitely by a business. The employment of a worker on a fixed term contract who has worked for a business for more than three months could thus not be discontinued upon the expiry of that contract.

A business would thus no longer have the option of failing to renew the contract of their employee if they wished to terminate the employment relationship but would have to dismiss this employee. Under these circumstances the laws regulating dismissals would apply and the company would thus have to prove at the CCMA or the Bargaining Council or the Labour Court that the dismissal was fair.

198 B does allow for exceptions to the general rule that a fixed term contract may only be for a three month period.

Exceptions to three months ( i.e. longer than three months contracts)

• According to the amendments small scale employers with a workforce of less than ten employees are excluded from the ambit of the provisions relating to fixed term contracts which means that they can employ fixed term contract workers for longer than three months or can successively renew fixed term contracts. Businesses with less than 50 employees are also removed from the range of applicability of this rule during their first two years of operation u.nless operating more than one business

• Further exceptions to the three months are allowed where an employee is employed in terms of a fixed term contract which is permitted by any statute, sectoral determination or collective agreement.

• Another exception to the three months limit is where an employee performs work which is by its nature of limited duration or the employer can demonstrate a justifiable reason.

• Employee on a fixed term contract for longer than three months must not be treated less favourably than an employee employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for different treatement. This comes into effect three months after the commencement of the amendments (i.e 15 November 2014)

Justification for extensions of fixed term contracts beyond three months

• An extended fixed term contract will be justifiable where a worker is employed as:

(a) Is a substitute for a temporarily absent employee
(b) is employed due to a temporary increase in work expected to last for no more than a year
(c) is a student or recent graduate for the purpose of training or gaining work experience
(d) is employed specifically to work on a specific project of a definite or limited duration
(e) is a non-citizen granted a temporary work permit for a specific length of time
(f) an employee is employed to perform seasonal work.
(g) work on an official public works programme
(h) is employed in a position which is funded by an external source for a limited period
(i) has reached the normal or agreed retirement age

These cases do not provide a complete list of all the instances where it would apply. Where it can be shown that an employment relationship is of similar to these examples then this will be sufficient to prove that the fixed term contract can be extended beyond three months or successively renewed over a period longer than three months.

While these listed grounds are not exhaustive of the ‘justifiable reasons’ envisioned by the Act an extended fixed term contract justified on these grounds would be deemed to be legitimate without the employer having to illustrate that the reasons for fixing the contractual term trump the need to guarantee job security.

However should an employer allege that a ‘justifiable reason’ existed for fixing the length of operation of an employment contract, then that employer will be responsible for proving this and also of showing that both parties to the employment contract consented to the contract only enduring for a limited duration.

An employer thus bears the onus of proving that a reason for varying the period of application of an employment beyond three months exists, of demonstrating that this reason outweighs the purpose of providing employees with job security given the specific circumstances in question, and that both the employer and the employee agreed that the contract should be for a fixed term when it was entered into by the parties.

• Where an employee works on a project for more than 24 months, on expiry of the contract that employee would be entitled to one week’s remuneration for each year of the contract completed.

• If prior to the expiry of the contract the employer offers an employee employment or obtains employment for that employee on the expiry of the contract and on the similar terms then an employee would not be entitled to remuneration.

Section 198 C: PART-TIME EMPLOYEES

What is a Part-time Employee?

• Part time employees are defined as being employees who are remunerated in reference to the time worked for the employer and who work less hours than the usual hours worked by an equivalent full time employee.

(A comparable full time employee is someone who performs the same or similar work at the workplace of the part time employee or if there is no comparable employee in the workplace at another workplace owned by the same business.)

• Part time employees are to be treated not less favourably than comparable full time employees unless differences in treatment are warranted on justifiable grounds. In this case the equivalent treatment specification is effective throughout the employment of parttime employees and is not only activated after an initial three month period.

A justifiable reason “ includes the application of a system which takes into account : (a) seniority, experience or length of service (b) merit (c) the quality or quantity of the work performed or (d) any criteria of a similar nature” and which is not discriminatory.

Referring to a ‘system’ suggests that the criteria mentioned in this subsection should not be applied haphazardly but in a predictable and intelligible manner, probably as prescribed by a company or business policy, in order for the reasons for differential treatment deriving from this system to be considered justifiable.

• Both fixed term contract workers and part-time employees are assured equal access to opportunities to apply to fill vacant posts with their employers as are permanent workers or full time workers respectively

• Part time workers are also guaranteed access to training and skills development ‘on the whole not less favourable’ than full-time workers.

Exceptions

• These amendments (i.e. of section 198C) do not apply to:

(a) Businesses employing less than ten employees or
(b) Businesses which employ less than fifty employees and have only been in operation for less than two years unless the employer conducts more than one business or the business was formed by the division or dissolution of an existing business.

A further common characteristic of additions 198 A through C of the LRA is that employees who earn in excess of the BCEA earnings threshold, determined annually by the Minister of Labour, are excluded from the protection of job security and other benefits conferred by these additions upon the different categories of employees. In short none of these provisions apply to those who earn more than the annual threshold which as of the 2 July 2014 stands at R205 433.30 per annum.

SECTION 198D: GENERAL PROVISIONS

• In terms of these amendments the CCMA and Bargaining Councils have now the capacity to hear a dispute arising from the interpretation or application of sections dealing with labour brokers, fixed term contracts and part-time employees from conciliation and thereafter arbitration.

This measure is probably intended to make the resolution of disputes arising from the additions to section 198 more cost effective and accessible to the vulnerable categories of employees to whom these section apply.

• According to 198 D (3) a party to a dispute arising from the sections under discussion refer the dispute, in writing, to the CCMA or a bargaining council within six months after the act or omission concerned. This six month window to refer a dispute does not apply to deemed dismissals arising from the termination of the services that a labour broker employee performs for a client.

• Disputes pertaining to subsection (4) of 198 A are explicitly excluded from the application of the subsection 198 D (3) and from the referral period for matters concerning 198 A though C. The usual 30 day time limit to lodge a dispute regarding dismissal would thus probably apply to disputes involving subsection 198 A (4).

• The amendments to section 186 that exclude the word “contract” is specifically to accommodate disputes in terms of this subsection as those employees that are dismissed under this subsection are “deemed” to be employed by the client and do not in fact have contracts of employment with the client.

• Following the conclusion of a conciliation process the parties have 90 days in which to refer an unresolved dispute to the CCMA or to a bargaining council in terms of section198 D (5). The CCMA or a bargaining council may permit a party which shows ‘good cause’ to refer a dispute after the expiration of the relevant time period with regards to either conciliation or arbitration.

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