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COSATU Today  |  Submissions

COSATU submission to parliament on labour law amendment bills

COSATU submission to parliament on labour law amendment bills

31 July 2012

The media has reported on this incorrectly. As you will see from the submission below, COSATU has definitely not said that we have abandoned our stance of calling for a ban on labour brokers. That remains the federation’s policy.

As we had to give a report on the agreements from the bilateral process with the ANC, we did indicate that in that process we had not managed to get an agreement to our call for a ban, and that nevertheless we maintained our call for a total ban.


1.1. Socio-economic Considerations
1.2. Reliance on Distortions in Labour Market Data to Motivate for Deregulation and Wage Restraint

i) Labour Productivity
ii) Remuneration and Unit Labour Costs (ULC)


2.1. The Context Justifying Increased Regulation and Protection
2.2. Specific Comments on the Bill

i) Collective Bargaining and Organisational Rights

Exercise of Rights under Section 21

Disputes about Organisational Rights

ii) Strikes and Lock-outs
iii) Esential Services
iv) Dispute Resolution and Dismissals
v) Regulation of Non-Standard or Atypical Employment


3.1. Provisions Affecting Children
3.2. Sectoral Determinations

ANNEXURE 1: Comparison between Nominal and Real Unit Labour Costs


COSATU is grateful for the opportunity to present its views on the “Labour Relations Amendment Bill” (LRAB) and the “Basic Conditions of Employment Amendment Bill” (BCEAB), which respectively propose to amend the Labour Relations Act of 1995 (LRA) and the Basic Conditions of Employment Act of 1997 (BCEA).

It should be noted that we have participated extensively on both Bills at NEDLAC. Accordingly we will not comment comprehensively on all amendments, but will rather focus on key provisions. It should also be noted that subsequent to the NEDLAC process we also had several meetings with the national leadership of the ANC to address certain fundamental problems with the Bills. These include:

Our call for a complete and full ban on the usage of labour broking.

Concerns about problematic restrictions that would dampen strike and picket action in contravention of our Constitutional rights.

Expansion of the scope of “essential services” to include “public officials exercising authority in the name of the State”, thereby excluding them from exercising their rights to strike.

Provision for a new probationary type clause that would effectively allow employers to hire and fire employees during the first six months of employment, during which time the employee would have no recourse to challenge an unfair dismissal either on substantive or procedural grounds of fairness.

In relation to labour broking we were not successful in getting an agreement for a complete and full ban. However, there was an agreement to address residual contractual issues between the broker and true employer (referred to as the so-called “client” in the LRA), which would ensure that the true employer (i.e. client) would assume full employer responsibility for a worker where this involves work which is not temporary in nature.

Agreement was also reached to withdraw or delete provisions affecting the rights to strike and picket action as well as those imposing the new form of probation. Finally, there was agreement that the sections providing for the expansion of essential services would be redrafted. This is further explained in the relevant sections of the submission.

In terms of our understanding the above agreements will be addressed in the current Parliamentary process.

1.1. Socio-economic Considerations

Under apartheid black workers had no rights in the workplace, with legislation such as the Industrial Conciliation Act of 1924 excluding African workers from the legal definition of an “employee”. Management control of black workers in the workplace was reinforced by white power and black powerlessness in society, namely by apartheid. Successive oppressive colonial and apartheid policies created a range of institutions including amongst others, the migrant labour system, pass laws, compounds, hostels and Bantustans, which all sought to control black labour not only in the workplace but also in society.

When the LRA and BCEA were enacted (as part of a package of broader labour law reforms) they represented the formal commitment and foundations for reversing the apartheid labour market regime, in line with obligations arising from then new Constitutional democratic dispensation and extending even further back to the 1955 Freedom Charter.

Key elements of worker rights are succinctly enshrined in the Freedom Charter, providing:

“All who work shall be free to form trade unions, to elect their officers and to make wage agreements with their employers; there shall be a forty-hour working week, a national minimum wage, paid annual leave, and sick leave for all workers, and maternity leave on full pay for all working mothers; miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work; child labour, compound labour, the tot system and contract labour shall be abolished”.

Parallel, and in a similar modern vein to the Freedom Charter, the idea of “decent work” has been formulated by the ILO to capture similar labour market aspects and is explained as “decent work sums up the aspirations of people in their working lives. It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men. Decent work is central to the efforts to reduce poverty and is a means for achieving equitable, inclusive and sustainable development”.

How far have we moved in realising these demands? How has the current labour dispensation altered the distribution of national income between labour and capital”? More specifically what impact has it had on patterns of inequality and poverty?

Recent estimates suggest that the top 5% earners earn 30 times more than the bottom 5% earners[1]. White people earn on average earn four times what Africans earn, but estimates from the Community Survey (2007) say that whites earn 8 times what Africans earn, where it is estimated that an African male earns an average of R2 400 whilst a white male earns on average R19 000. This would mean that at the least, given an 8-hour working day, whites earn in one hour what Africans earn in a day. An estimated 81% of Africans earns less than R6 000 whilst 56% of whites earns more than R6 000. The Earnings Survey estimates that women earn 77% of what men earn, although the Community Survey (2007) estimates that males earn twice what women earn. Income inequalities have also increased within racial groups and most of the increase has been among Coloured people whilst the smallest increase in income inequality has been among Africans.

The share of workers in national income declined from 55% in 2000 to 49% in 2008. During the crisis, the workers’ share increased from 49% to 52% between 2009 and 2010, and has since fallen below 50%. We called this fall in workers’ share reverse redistribution from the poor to the rich. The rate of exploitation of labour however shows a steady upward trend that stabilizes during the economic crisis. Our estimation is that almost 80% of the workforce is working class, i.e. those who rely solely on wage-labour for survival and less than 1% of the “labour force” is capitalist, i.e. predominantly survives on interest, profit and rental incomes. Figure 1 means that the profits earned by capitalists are equal to the total amount of wages earned in the South African economy. This gross inequality is confirmed by the fact that 50% of South Africans survive on 8% of national income[2].

Rate of Exploitation Trend

Figure 1 suggests that the rate of exploitation is now 100%, i.e. capitalists appropriate an amount of money that is equal to the sum total of wages that are earned in the economy. However, Figure 1 contains a distortion due to the nature of the data. The Monthly Earnings Survey (2010) suggests that the rate of exploitation is far higher than this. The ratio of employer’s earnings to what employees earn is 2.5, which means that the rate of exploitation may be as high as 250%. The steady increase in the rate of exploitation of workers as depicted in Figure 1 shows that the democratic order has a strong capitalist orientation, and its economics does not accord with one of the basic features that should underpin the national democratic revolution.

In our Growth Path document, we also reported that the Gini coefficient stood at 0.64 in 1995 and it increased to 0.68 in 2008[3]. The top 10% of the rich accounted for 33 times the income earned by the bottom 10% in 2000[4]. Approximately 20% of South Africans earned less than R800 a month in 2002, the situation is worse for Africans. By 2007, approximately 71% of African female-headed households earned less than R800 a month and 59% of these had no income; 58% of African male-headed households earn less than R800 a month and 48% had no income. Even the Minister of Finance has acknowledged that 50% of the population lives on 8% of national income in South Africa[5].

Inequality in incomes finds expression in patterns of expenditure among households; more than 90% of white households spend more than R1 800 per month for their upkeep, and 48% of white households spend more than R10 000 a month. On the other hand, 27% of African households spend more than R1 800 a month, and only 4% of African households spend more than R10 000 a month for their upkeep. These vast inequalities in expenditure are a direct result of inequalities in income. The World Development Report (2006) states that a white male South African spent 30 times what an African female spends for their upkeep in 2000. Specifically, an African female spent R119 a month, whilst a white male spent an average of R3 662 a month in 2000. These numbers have of course vastly changed, most probably for the worst, given the deterioration in income inequality that we have reported above.

In 2010, we noted that the top 20 directors of JSE-listed companies, the overwhelming majority of whom are still white males, earned an average of R59 million per annum each. We further noted that on average, each of the top 20 paid directors in JSE-listed companies earned 1728 times the average income of a South African worker. Furthermore, on average, between 2007 and 2008, these directors experienced 124% increase in their earnings[6], compared to below 10% settlements that ordinary workers tend to settle at. Hefty increases were also seen in state-owned enterprises, thereby contributing to income disparities in the economy. The top 20 directors in SOE’s experienced a 59% increase in their earnings, collectively raking in R132 223 million. This amounts to R6.6 million per director, which is 194 times the average income of the South African worker.

The Price Waterhouse Coopers Report (2010) on Executive Pay in South Africa echoes the same results, having found that more than half of executives in large JSE-listed companies earned more than R10 million per annum: “The lowest paid workers have monthly salaries of around R3 500, which equates to R42 000 per annum. This equates to a pay gap in the order of 250-300 times. Many question the morality of paying one human being 300 times more than another for an honest day’s work”, although of course the PWC Report exaggerates the monthly earnings of the lowest paid workers.

The Monthly Earnings of South Africans Report (2010) of Statistics South Africa reveals that actually, the bottom 5% of South African workers are paid less than R570 a month, which implies that the Price Waterhouse Coopers Report overstates the wage by 6.14 times. Despite this overstatement, we note that the Executive Pay report found the pay gap to be in the order of 250-300 times the lowest paid worker. If we then correct the wage of the lowest paid worker, we find that the median executive pay gap ranges from 1 535-1 842 times the wage earned by the lowest paid worker. Further, we note that in 2010, half of South African workers earned less than R2 800 a month. On average, 75% of South African workers earned R1 939 in 2010 and 90% of South African workers earned an average R3 327 a month. African workers earn 23% what white workers earn, and women earn 77% what men earn.

Income inequality has therefore moved in opposite direction to the one demanded in the Freedom Charter. The people do not share equitably in the country’s wealth, with inequality still being defined along racial lines.

The ILO reports that 33% of South African workers are in “low wage employment”, defined as those workers who earn less than two-thirds of the median wage (R1 867) or in the case of the EU definition 75% of the average wage. But 75% of the average wage is almost equal to the average minimum wage, which was R3 336 in 2010. This measure would place more than 55% of South African workers in low wage employment.

As of 2012, 85% of the workforce was working for more than 40 hours a week. In particular, 30% of workers (3.4 million workers) work for more than 45 hours a week. Only 32% of all those who work had medical aid benefits, 71% of those employed were not unionised, 43% of workers (5.8 million workers) had no access to paid maternity/paternity leave, 31% (4.2 million workers) had no access to paid sick leave and 35% (4.7 million workers) were engaged in contract and other short-term type of employment, 50% of workers (5.7 million workers) have no access to a pension or retirement fund and 33% of workers (4.4 million workers) do not have access to paid annual leave. Significant gaps therefore still exist, almost twenty years into democracy, towards fully realising these aspects of the Freedom Charter.

1.2. Reliance on Distortions in Labour Market Data to Motivate for Deregulation and Wage Restraint

It has become far too easy for individuals and even public institutions, with an agenda explicitly in opposition to labour market regulation, to publish distorted data purporting to reflect evidence of labour market rigidities.

i) Labour Productivity

A common criticism levelled at the labour market centres on perceptions of “weak” labour productivity with the arguments that annual wage increases have been excessive and out of proportion with labour productivity. This fails to take into account instances where there have been serious problems with the data.

For example, there was a failure to factor in three so-called “structural breaks” in the labour statistics of 2002, 2004 and 2006 during which periods an additional one million employees were included in the labour market. This does not reflect so much increased employment but rather adjustments to include previously excluded categories of finance employees. As labour productivity is determined by using the GDP over the quantity of labour (viz the number of workers in the labour market), this led to the illogical result reflecting that labour productivity had decreased by 23% from 2000 to 2007. Despite this Treasury and the South African Reserve Bank (SARB) had continued to use the data until as recently as 2011. Notwithstanding this more accurate labour productivity statistics reflect that there were increases averaging more than 3%, year-on-year since 1994.[7]

It is worth noting that Productivity South Africa has also indicated concerns about the accuracy of productivity statistics. These include:

the need to replace “quantity of labour” as denominator with “labour hours involved in production” in line with international practice, which would have mitigated the problems described above in relation to the structural breaks.

Labour productivity is merely a “partial” productivity measure which takes into account only one factor of production, namely labour. It therefore fails to take into account factors and conditions external to labour even when they may substantially or overwhelmingly contribute to a decline in productivity. These include for example, . climate and weather conditions would logically impact upon productivity such sectors as agriculture and construction; market factors affecting commodity and input prices.[8]

ii) Remuneration and Unit Labour Costs (ULC)

The measure of remuneration, representing the cost of labour, is generally used hand-in-hand with labour productivity statistics. For example, in the 2012 Budget Review, Treasury made the following statement:

“Nominal wage settlements averaged 7.7 per cent in 2011 compared with an average settlement level of 8.2 per cent in 2010. More recently, slowing labour productivity growth has contributed to accelerated growth in nominal unit labour costs, which grew from below 6 per cent in the first quarter of 2011 to 8.3 per cent in September 2011.”

The use of “nominal” remuneration figures is striking since in omitting to apply deflation methods to factor in inflation the figures appear artificially higher, than if “real” figures were used. In contrast it has been noted that since 1998 on average real wage increases have been one percentage point lower than the increase in labour productivity”[9], which as noted earlier has averaged in excess of 3% annually. Further, with reference to the unit labour costs, it should be noted that according to the SARB calculation (see Annexure 1 using STATSSA data) real unit labour costs reflected a decrease for almost all quarters in 2011 except the third, which reflected a only marginal real increase of 0,1%.

A further problem with the measurement of compensation and remuneration is that it is based on “the total remuneration, in cash or kind....recorded on a gross basis ...and includes directors’ fees and remuneration of top management”[10], despite the latter having the potential to skew the reflection of the data.


2.1. The Context Justifying Increased Regulation and Protection

The Freedom Charter demands the protection of worker rights, to form trade unions and for workers to negotiate with employers. The RDP highlights the need for democratic South Africa to address the colonial and capitalist power relations between employers and workers. It is often argued that Labour Law plays a game of “catch up”, in that it tends to reactively and retrospectively reverse the losses suffered by workers as employers embark upon ever more complex legal manoeuvres to evade complying with labour law protections.

Against this background, gains by labour rarely constitute a REAL advance but rather an attempt to reinstate an EARLIER status quo. Within the context of the ever-changing nature of the employment relationship, this has transformed into an ongoing class battle to resurrect the more traditional or typical form of the employment contract, whereby workers are employed on a full time basis on an indefinite formal contract with a regular wage and employment benefits. Job security, in the form of a formal written contract, is also associated with more traditional, regular employment.

However, employers have tended to decrease (in some cases completely detach themselves from) their legislative obligations by variously:

Disguising the true employment status of a worker as a commercial contract, using such contractual forms as independent contracting or the contract of a so-called owner-driver, as is the case in the road freight industry.

Fragmenting the workplace, using outsourcing arrangements or restructuring the organisation commercially into separate business units and legal entities. This has contributed significantly to undermining the centralised nature of collective bargaining.

Relocating employer obligations to a third party/intermediary using outsourcing, subcontracting, labour broking and franchising.

Using insecure contractual arrangements such as casual or short-term contracts (20% of workers are on verbal contracts, while 32% are on non-permanent contracts).

For vulnerable workers, such as farm workers and domestic workers, these abuses are even more pervasive, given the inherent difficulties in organising workers in order to harness collective power. While sectoral determinations do set the minimum floor for wages and conditions but there remain serious problems with both enforcement and the minima being set too low, as we have illustrated above. Indeed, experience has shown that casualisation and other atypical forms of labour have contributed to declining levels of unionisation, with workers being more easily intimidated against joining explicitly or implicitly owing to poor job security. It is also more difficult for union organisers to access atypical workers whose working times are correspondingly more irregular.

Employers, organised business formations and other role-players that are antagonistic to labour market regulation, have sought to downplay the impact described above, instead attempting to sow divisions amongst the working class. The employed are depicted as being privileged and resistant to the entry of unemployed into the labour market. This is despite statistics reflecting that as mentioned earlier that place 55% of South African workers in low wage employment. Further according to Stats SA’s “General Household Survey” more than 77% of the unemployed rely on employed workers to survive. Accordingly imposing a dividing line between the employed or unemployed is artificial at best.

2.2. Specific Comments on the Bill

i) Collective Bargaining and Organisational Rights

Exercise of Rights under Section 21

Although every employee has the right to join and participate in the activities of a trade union, certain organisational rights afforded to a trade union are conditional on it meeting the requisite minimum threshold of representativity. The emphasis on this limitation is to promote strong unions through the principle of majoritarianism.

Exclusion of Atypical Employees for the Purposes of Determining Representativity

Section 21(1) of the LRA enables a trade union to notify an employer that it seeks to exercise specific organisational rights. Clause 1(a) of the LRAB seeks to impose a new subparagraph 21(8)(b)(v), which states that where there is a dispute regarding whether the trade union is representative or not, a Commissioner must consider

“the composition of the work-force ....taking into account the extent to which there are employees assigned to work by temporary employment services, employees engaged in fixed term contracts, part-time employees or employees in other categories of non-standard employment”.

We support this amendment as it would ensure that when employee numbers are counted for recognition, atypical employees could be excluded as they are extremely difficult to organise into trade unions. Employers often exploit their vulnerable status and mobility within the workplace to undermine their recruitment. To illustrate by way of example, currently if there are 100 employees at a workplace, of which 30 are atypical, a trade union requires 51 members in order to be recognised as a majority union. The proposed amendment means that, after subtracting the 30 atypical workers from the calculation, there would be 70 employees remaining and thus for a trade union only 36 members are needed to acquire majority rights. It should be noted that atypical employees are not taken into account only for the purposes of the calculation and this in no way affects any of their rights. Moreover a trade union that has acquired majority rights would have better access to the workplace and could accordingly more easily recruit atypical workers.

Organisational Rights for Trade Unions That Do Not Have a Majority

Further provision is made through sub-clauses 1(b) to insert new subsections 21(8A) -(8D). A commissioner will be allowed in an arbitration to grant a trade union, that is not a majority union, the rights under sections 14 and 16 which respectively entail the rights to elect representatives at the workplace and to disclosure of information. A further amendment allows for a commissioner to grant one or more unions acting jointly rights under sections 12 (access to the workplace), 13 (deduction of union fees by employer) and 15 (leave for trade union activities), provided the union)s) represent a significant interest or a substantial number of employees despite not representing a majority of employees at the workplace.

We support the above amendment as it addresses problems where overly technical restrictions prevent unions gaining organisational rights. In particular there often instances where employees outside a bargaining unit are included in the determination to prevent recognition of a union’s de facto representation of the majority of employees at the workplace. In some instances management figures are included to downplay the level of union’s representativeness.

Disputes about Organisational Rights

Section 22 of the LRA provides for the resolving of disputes involving organisational rights, through conciliation and where this fails, arbitration. Clause 2 of the LRAB inserts a new amendment enabling an arbitration award may be imposed against a so-called client of a temporary employment service (TES) and any other person that controls access to a workplace. This is in addition to the initial person considered to be the employer.

Notwithstanding that we retain our fundamental objective to the retention provisions in the Bill allowing labour brokers to operate, we agree that as a general principle arbitration awards should be made more broadly implementable in order to promote organisational rights. More specifically we are in support of the amendment since its latter provisions would enable increased protection for a trade union whose access is restricted owing to their workplace being located in a shopping mall or office park that is NOT owned by the employer. Currently trade unions operating in the retail sector in particular experience immense difficulty in exercising their rights within this context.

ii) Strikes and Lock-outs

Chapter IV of the LRA regulates the right to strikes and employers’ recourse to a lock-out, and sets out various procedures that must be complied with in respect of a dispute prior to industrial action being embarked upon. This constitutes one of the areas where we had reached agreement with the ANC leadership in the course of the aforementioned bilateral meeting to WITHDRAW all problematic amendments affecting strikes and pickets. In our view these amendments constitute an attack on the right to strike and thereby undermines collective bargaining. Accordingly we are calling for the requisite sections to be deleted.

For the purposes of this submission we hereby set out our concerns regarding the proposed amendments to sections 64; 67 and 69, which should be viewed collectively:

Amendments to Section 64

1. Trade unions and employers will be required to ballot members who are entitled to strike or lock-out in respect of the issue in dispute, with majority who voted having accordingly voted in favour. A certificate must be issued by the CCMA, bargaining council or accredited agency showing compliance with balloting requirements. (See section 6 of the LRAB, which amends section 64(1) of the LRA.)

It should be noted that balloting requirements were a distinct feature of the apartheid labour legislative regime. Its absence in the current LRA was no oversight but rather an acknowledgment of the extensive abuse of technicalities by employers around balloting to prevent industrial action. Its reintroduction reflects a fundamental attack not only on the right to strike but also on collective bargaining. This amendment imposes an ADDITIONAL hurdle once a deadlock has been reached after what is often a long process of negotiation.

The provision for balloting of employers will generally amount to a notional restriction in practice. Only in respect of a national dispute would an employer ever have to ballot. Whilst unions would have to ballot in all strikes at national and company level. At a company level if an employer intends to lock-out no ballot is necessary since it cannot be expected to ballot itself as a single entity.

Amendments to section 67

2. Currently section 67(8) of the LRA states that the protections against dismissal, claims for damages for a delict or contractual breach for participating in a protected strike are not applicable to any act that is a criminal “offence”. The amendment proposed under section 8(b) of the Bill extends this exclusion to a “material breach of a picketing agreement …or a picketing rule”.

Quite problematically this equates a breach of a picketing rule/agreement with a criminal offence and attaches the same adverse consequences. It would have a dampening effect on the participation of individual members who could be sued in a personal capacity in the civil courts. Further the concept of a “material breach” is open to subjective interpretation.

Amendments to Section 69

3. Section 69 of the LRA currently regulates the rights and process around picketing.

Section 9 of the LRAB inserts various problematic provisions entailing:

Amendments to subsection 69(1)(a), which deletes the words “and supporters”. This means that the picket would be limited to the members of the trade union who are a part of the bargaining unit. This would exclude public and civil society supporters as well and fundamentally undermines the principle of labour solidarity, which underpins the emphasis on collective power.

Insertion of a new subsection 69 (12)(c) into the LRA which would in future allow the Labour Court to grant relief in respect of a picketing dispute, by suspending the picket or strike. This provision has far-reaching consequence since it would include the power to suspend a strike, and is capable of being opportunistically used by employers to frustrate industrial action. Currently the relief granted by the court is limited to any unlawful behaviour. Further it would render a collective right vulnerable to problematic actions of individuals.

Notwithstanding our other fundamental concerns about the above amendments to section 69, we wish to indicate our support for the proposal that would in future allow the Commission to establish picketing rules that would permit a picket to be held in premises that are “owned or controlled by a person other than the employer”, provided that that person has had an opportunity to make representations to the Commission before the rules have been established. Current restrictions in office parks and shopping malls severely undermine the right of affected workers to participate in pickets, especially in the retail sector.

iii) Essential Services

The Essential Services Committee, Panel, and Designating a Service

Clause 11 of the Bill inserts various new sections into the Bill that deal with the essential services committee (ESC)and its functioning, namely sections 70A, 70B, 70C, 70D, 70E and 70F. These respectively provide for the ESC’s composition; powers and functions; appointment of panels, powers and functions of the panel; jurisdiction and administration of the ESC; and regulations.

Under the current dispensation there is widespread abuse of the designation of “essential service” by employers especially in the public sector, in order to prevent workers from exercising their rights to strike. According to the definition in the LRA under section 213, in addition to Parliament and the SAPS, essential services should mean services which “the interruption of which endangers the life, personal safety or health of the whole or any part of the population”.

In practice this has been widely interpreted to cover ENTIRE services or occupations, as opposed to being limited to just those sections or parts that have safety or health consequences if interrupted. This in turn has translated into unduly curbing the right to strike for affected services and occupations. In the public service, unions have for many years complained about the unwillingness of the state to conclude a minimum service agreement as contemplated currently by section 72 of the LRA.

Labour also notes that currently the ESC, being under-resourced and comprising only part time members, does not function optimally. In fact it rarely meets with decisions being delayed for long periods of time. Accordingly appropriate improvements to address its practical functioning are supported.

Sections 70A , 70B and 70E

We note support for the proposed amendment under the proposed sections 70A , 70B and 70E, which respectively deals with the composition, powers and jurisdiction of the ESC. Explicit provision is made for six members (nominated by NEDLAC constituencies) in addition to an independent chairperson and a deputy. Hopefully the expansion of the ESC would address some of the practical logistics problems it currently experiences.

Sections 70C and 70D

For similar reasons we support the provision under section 70C for the ESC to appoint a panel of three to five people to consider a matter that is before the ESC. The panel will be presided over by ESC chairperson, deputy or a senior commissioner. Further provision for the employer and trade union parties to nominate assessors should the panel consist of only three members. Under the new section 70D provision is made for the powers and functions of the panel, which include conducting investigations, determining whether part or whole of a service is an essential service or maintenance service, and even determine disputes.

The provision for a panel is a new development which may address existing capacity constraints with the ESC, and can be sufficiently tailored to ensure it is composed of individuals who understand the specific sector dynamics associated with the matter that they must consider.

Notwithstanding our comments above, we would like to propose an amendment to subsection 70C(2) that would allow parties to decide to decide on their own representatives to the panel. As this proposal would allow BOTH trade union and employer parties to make a nomination, it is sufficiently balanced to avoid any unevenness. It would also ensure parties have more confidence in the process and would be in line with amendments to appoint assessors.

Amendments to Section 71

Currently section 71 of the LRA deals with the process that the ESC must follow before it initiates an investigation into whether a whole or part of a service should be designated as an essential service. Amendments in the LRAB to subsections 71(8) and (9) are only consequential amendments to accommodate the role of the panels, which we support.

Notwithstanding this, and noting our earlier concerns regarding the implementation of overly wide designations we would like to propose the insertion of the following amendment:

"Subsection 71(7A)

When considering whether to designate the whole or a part of the service as an essential service, the essential services committee must ?

consider the nature of the service, the parts of the service and the functions and occupations performed by the employees in that service; and

make the least restrictive designation on the right to strike and the recourse to lock-out that achieves the purpose set out in the definition of essential service.”

Furthermore we are of the view that there is a need to regularly review determinations to ensure that new developments in a sector or service are taken, into account especially if it would have an impact on the proper compliance with the definition of “essential service”. Accordingly we are proposing the insertion of an amendment in the form of a new subsection 71(11) and 12:

Subsection 71

(1) .....(10)

11) The essential services committee must review all essential service designations, ratified minimum service agreements and minimum service determinations every three years.”

Propose insertion of transitional provision:

12) Within 12 months of these amendments coming into effect, the essential service committee must review in accordance with the provisions of section 71 all designations made to date under this Act.”

Public Officials Exercising Authority in the Name of the State

Section 13 of the LRAB introduces a new section 71A, which provides for a new category of essential services workers under the category of “public officials exercising authority in the name of the State”. In so doing it lists “customs officials, immigration officers, judicial officers and officials working in the administration of justice” under this category and deems them to be an essential service.

This amendment is fundamentally problematic and was considered in the course of the bilateral that COSATU had with the ANC, who indicated a willingness to address the problem with alternative drafting during the Parliamentary process.

However, in our view the provision constitutes a fundamental attack on the right to strike in the public service, and accordingly we are calling for it to be deleted in its entirety.

This new category effectively broadens the scope of ‘essential services’, whilst at the same time sidestepping the requirement to conduct an investigation required in terms of section 71 before a service is designated. Not surprisingly no definition is provided for the category since internationally it has proved difficult to define. The list approach poses a particular problem since it means that it can be amended and extended more easily without having to show compliance with the LRA definition of “essential services or undergo a proper investigation into the justification for its designation.

Furthermore the link to “authority” undermines fundamentally the rationale of the definition of “essential services” in the LRA, which has a different focus, namely the endangerment to health and safety. This creates the space for further similar designations on the grounds of “exercise of authority”, which is capable of highly subjective interpretation and which in the public sector is potentially limitless.

Furthermore it gives Parliament power to encroach upon a matter that should ideally be resolved through a more inclusive investigative process involving relevant parties. As such it creates inequalities between these workers and others in the labour market.

iv) Dispute Resolution and Dismissals

Conciliation in the Public Interest

Section 26 of the LRAB replaces the current section 150 in the LRA with an entirely new provision. In terms of the existing unamended version in the LRA, the Commission may “offer” to resolve a dispute that has not been referred to it, if this would be in the public interest. Both parties in this case would need to agree to the appointment of the Commissioner. In contrast the amendment removes the voluntary nature of the provision since neither party needs to consent.

We cannot support this amendment as we are of the view that it undermines collective bargaining. Furthermore the interpretation of what would constitute “public interest” for the purposes of this section is capable of being construed quite subjectively.

Automatically Unfair Dismissals and the NUMSA vs Fry’s Metals Case

Automatically unfair dismissals are dealt with under section 187 of the LRA. The interpretation of subsection 187(1)(C) has been sore point for the labour movement, with three courts( namely the Labour Appeal Court, the Supreme Court of Appeal and the Constitutional Court) failing to interpret the legislation as it was intended. Currently the section states that it is an automatically unfair dismissal if the reason is to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee.

However, the LAC ruled (and as was confirmed by two subsequent dismissals of the appeals at levels of the SCA and Constitutional Court) against NUMSA in the above case and instead construed it as a dismissal for operational requirements, thereby allowing the employer to bypass the protection in section 187(1)(c). This of course has severe implications for collective bargaining as it allows ‘operational requirements” to be interpreted quite broadly.

Accordingly we support the proposed amendment by section 36 of the LRAB, which is aimed at reinstating the proper interpretation of subsection 187(1)(c). Accordingly it replaces the words “to compel the employee” with “a refusal by employees to accept a demand.

Dismissal of High Earning Employees

Section 38 of the LRAB inserts a new section 188B into the LRA, which states that an employee who earns over an amount to be determined by the Minister and whose dismissal is not automatically unfair will be deemed to fairly dismissed and in accordance with a fair procedure. This is provided they are given three months notice or three months compensation. A longer period can be set out in a contract of employment. The Minister must consult NEDLAC as to the amount in this section. This section will initially only apply to new contracts of employment but after two years will apply to contracts concluded prior to the commencement of the LRAB.

COSATU is opposed to this clause, which in our view denies a group of employees (albeit higher paid ones) their fundamental rights. Discriminating against higher paid workers in respect of certain limited rights may be justifiable owing to their otherwise privileged position. However, the denial of rights to substantive and procedural fairness when facing a dismissal effectively undermines their security of employment, which amounts to the ultimate penalty that may be imposed in an employment relationship.

Dismissals Based on Operational Requirements

Provisions in the LRA on dismissals based on operational requirements are dealt with under sections 189 and 189A of the LRA, with the latter being applicable to employers employing more than 50 employees.

Section 39 of the LRAB amends this by inserting a new paragraph 189A(2)(d), which provides that a “consulting party should not unreasonably refuse to extend the period of consultation” this would ensure meaningful consultation. We support this amendment, which in our view is oriented to ensure that adequate opportunity is afforded to save or mitigate job losses.

Furthermore, subsection 189A(19) will now be deleted. It sets out a substantive test that the Labour Court must apply when considering a dispute around dismissals for operational requirements. However, the problem is that this effectively sets down in law a different test from that which is applied under section 189, which has created uncertainty as to whether this should simply be applied to section 189 as well.

Date of Dismissal

Section 190 of the LRA regulates the issue of determining the date of a dismissal. Section 40 of the LRAB inserts a new paragraph 190(2)(d), which clarifies the date of a dismissal if an employee is dismissed on notice. The effective date will now be the date on which the notice expires unless “all outstanding salary” is paid on an “earlier” date, in which case this earlier date will be the date of dismissal.

We support the amendment since it provides greater certainty, especially in relation to pursuing procedural rights such as declaring a dispute.

v) Regulation of Non-Standard or Atypical Employment

We have already outlined earlier in this submission the problems associated with non-standard or atypical employment. The remaining amendments in the LRAB are predominantly concerned with countering the impact upon the overall conditions and contractual security of affected workers. As a package it represents significant advances for workers, notwithstanding our earlier comments that labour law protections often only amount to reversing losses rather than constituting real advances.

Regulation of Temporary Employment Services/ Labour Brokers

Again we wish to draw the attention of the Committee to the discussions that COSATU had with the ANC, and which included the regulation of labour broking. This is notwithstanding the fact that we maintain our fundamental stance that there should be a complete and full ban on the practice of labour broking, with an emphasis on the bipartite employment contractual relationship between the worker and the true employer (viz. the so-called client). Below we outline our understanding of the proposed amendments affecting labour broking and also make comments with reference to our agreement with the ANC.

Sections 43 and 44 of the LRAB propose to regulate labour broking through amendments to the existing section 198 and an insertion of a new section 198A. The new section 198 is applicable to all employees (regardless of earnings) and provides for the application of joint and several liability to both the broker and true employer (viz. the so-called “client”) to uphold specific employer obligations. Whereas the thrust of the new section 198A is to regulate the conditions applicable to those workers who earn less than the annual R172 000 threshold set down under section 6(3) of the BCEA. In this section a distinction is drawn between those workers who provide “temporary services” and those who do not. Those considered to be providing temporary services will be subject to the principle of joint and several liability in a similar manner to section 198. In other cases the true employer (so-called client) will be deemed to be the employer.

This effectively means that for workers earning less than the BCEA threshold of R172 000, they are only considered employees of a labour broker if this involves “temporary services”. It does not mean that labour brokers cannot act as an intermediary even when not performing temporary services. Temporary services entail the following:

Work not exceeding a six month period;

Substituting for an employee who is away temporarily, although the period is undefined; and

Categories of work as defined either through a bargaining council agreement or sectoral determination.

In line with our stance calling for a complete and full ban the differentiation merely based on temporary services does not address our concerns, since even temporary employees can and should be directly contracted. Furthermore we have concerns that the “deeming” of a so-called client as the employer does not actually create a full employment contractual relationship. The relationship with the worker is not implemented through an employment contract but rather indirectly through a commercial contract with the broker. As such it is unclear as to what happens should so-called client terminate the commercial contract or it reaches it full term. It is unlikely that the so-called client would be constrained from contracting with a DIFFERENT broker. At best any protection arising from the deeming of the so-called client as the employer would only be effective during the duration of the commercial contract.

In our discussions with the ANC it was agreed that further drafting would be required to ensure that the protection afforded to an affected worker would extend beyond the initial commercial contract through which s/he was placed with a so-called client.

In relation to the other provisions we remain concerned that the amendments would not translate sufficiently in practice to benefit affected workers. There would be the usual difficulties experienced with ensuring that there is minimal evasion of compliance, which is always difficult when it entails more vulnerable workers. The retention of labour brokers means the continued fragmentation of workplaces and industries, which undermine the potential to harness the collective power of the workforce, which is often the weapon that workers have in inevitably unequal employment relationships.

Fixed Term Contracts and Part-time Employment

Section 44 of the LRAB inserts new sections 198B and 198C, which respectively regulate fixed term contracts and part-time employment. In both cases these provisions will not apply to employees earning above the R172000 threshold set down in terms of section 6(3) of the BCEA.

A further exclusion is applicable to employers employing less than 10 employees or less than 50 if the business has been in operation for less than two years, which we are opposed to and accordingly are calling for the deletion of these restrictions. These would ensure that employers are able to circumvent both sections 198B and 198C, merely by engaging in commercial and legal restructuring.


There is also a separate amendment to section 186(1)( b) which addresses rights around dismissals for employees subject to fixed term contracts (See section 35 of the LRAB), which inserts a new paragraph 186(1)(b)(ii). Under the existing provision it constitutes a dismissal where a fixed contract employee reasonably expected a renewal of the contract on the same or similar conditions and the employer failed to renew the contract or offered a renewal on less favourable terms. The proposed amendment takes this further by providing it will also be a dismissal where the employee reasonably expected to be offered an indefinite contract, and either no such offer was made or it was offered on less favourable terms. This will address the situation where courts have tended to make findings that such employees only have an expectation of another limited duration contract.

In summary we wish to record our support for the following amendments affecting fixed term contract employees:

An employee may only be engaged on a fixed term contract for a period longer than 6 months only if the nature of the work entailed is of a limited duration and there is a justifiable reason for fixing the contract.

Fixed term contract employees employed for longer than six months must not be treated less favourably than those employed on a permanent basis.

These provisions have the potential to address the exploitative phenomenon whereby workers have been working for a single employer for years but on a temporary contract.

Justifiable reasons for engaging workers on a fixed terms beyond six months are contained under section 198B(4) of the LRAB and include variously substituting for another worker, being engaged through a public works scheme, the performance of seasonal work. In most instances our general comment here is to support the bulk of 198B(4), with the proviso that there is monitoring to prevent abuse.

Notwithstanding this we wish to register our objection to paragraph 198B(4)(e), which allows the use of a fixed term contract for a “trial period” of six months to test an employee’s “suitability” for permanent employment. This effectively establishes a new form of probation whereby an employer has the complete discretion to hire and fire at will within the first six months of employment, and in respect of which such an employer is completely deprived rights against unfair dismissal. Furthermore, this clause was a subject of discussion in our engagements with the ANC, and it was agreed to delete it.

Accordingly we are calling for the deletion of paragraph 198B(4)(e)


The main advances for part time workers under section 198C entail the following rights for part-time employees:

Their treatment on the whole not be should not be less favourable than conditions for a comparable full-time employee;

Access to training and skills development should on the whole not be less than favourable than those applicable to a comparable full-time employee; and

The same access should afforded to apply for vacancies as would be applicable to full-time employees.

Notwithstanding our support for the above, we wish to note that we do not support the restriction under subsection 198C(2)(d) that the above not be applicable within the first six months of employment. Accordingly we are calling for it to be deleted.

Liability for Employer’s Obligations

Section 46 of the LARB inserts a new section 200B into the LRA, which broadens the definition of “employer” to include:

“persons who carry on associated or related activity or business by or through an employer if the intent or effect ....is to defeat the purposes of the Act or any other employment law”.

We support the above provision since it has the potential to address the abuse of residual forms of atypical employment that are not specifically addressed in the Bill. Joint and several liability can be imposed where employers embark on complex commercial arrangements or use intermediaries through outsourcing or subcontracting.


3.1. Provisions Affecting Children

The ILO’s “Decent Work Country Profile : SOUTH AFRICA” study of 2011, reports the following statistics on child labour for 2010:

116 000 children appeared to be doing work prohibited by the BCEA, reflecting an increase from 93 000 in 2006;

431 000 were working excessive hours for their age, reflecting an increase from 383 000 in 2006;

36 000 had been absent from school owing to work-related activities. Although this was a decrease from 57 000 in 2006 the figures is still unacceptably high; and

290 000 were reported to have been injured or exposed to hazardous conditions, reflecting an increase from 183 000 in 2006.

The above statistics are not only worrying and unacceptably high but in most cases reflect an upward trend. Despite the existing protections in the BCEA and Constitutional protections, children remain vulnerable to child labour. Much of this can be attributed to high rates of poverty, unemployment, inequality in addition to the established and increasing trends of child-headed households. All of these point to the need for interventions that extend beyond mere regulatory enforcement, and which include interventions that target the root of their vulnerability, which is inherently socio-economic in nature. To illustrate this point, prohibitions against child labour may offer little comfort to children coming from child-headed households or who live on the streets.

Notwithstanding this, COSATU is in support of increasing legislative protection against child labour. It should be noted that our upfront principle position is that no child below the age of 18 years should work, although we accept that legally in terms of the BCEA and the Constitution this is set at age 15.

On the basis of our comments made above we wish to note support for the various amendments in the Bill including:

Section 3 of the BCEAB amends section 43, by extending liability for prosecution to persons who “permit or require” child under 15 years to work, or “permit or require” any child to perform work that is inappropriate for his or her age, or would impact on his education, mental or physical well being. Previously this prohibition was imposed against employers only, whereas this may now be implemented against others who benefit from child labour. Under section 6(1) of the Bill this would even include others who assist a person who permits or requires a child to work in contravention of this section.

Provision under section 4 of the BCEAB amending section 44, enabling the Minister to make regulations in order to give effect to South Africa’s international obligations in relation to child labour.

3.2. Sectoral Determinations

Section 1 of the BCEA will be amended to include a definition of “sector”, which extends it beyond the existing scope of an “industry or service” to include “employers and employees” covered by a sectoral determination issued in terms of section 55(8), which is a new provision inserted through section 8 of the Bill. More specifically it provides for the Minister to publish a sectoral determination to cover employers and employees not covered by any other sectoral determination. In form it would be an umbrella-like sectoral determination that would ensure that a minimum floor of protection from which no group of vulnerable workers are excluded.

We would also wish to register support for the following amendments under section 8 of the Bill, which would be implemented through corresponding sectoral determinations:

Provisions for the Minister to prescribe minimum increases in addition to the existing power to prescribe minimum rates. This would address situations where annual increases do not keep pace with inflation in cases where employers pay above the minimum rate.

Enabling the prohibition of sub-contracting in specific sectors.

Enabling the setting of a threshold of representativeness at which an applicable trade union would automatically have access to sections 12 and 13 rights under the LRA, pertaining to access to the workplace as well as the deduction of union subscriptions from a worker’s wage.

Setting minimum conditions for labour tenants, who are currently not protected under any labour legislation.

ANNEXURE 1: Comparison between Nominal and Real Unit Labour Costs

Formal non-agricultural employment:

Quarterly Employment Statistics (QES)

Nominal unit labour cost

Real unit labour cost

Nominal unit labour cost growth (year -on- year)

Real unit labour cost growth (year- on- year)

Index: 2000 = 100

Index: 2000 = 100
























































































1994/02 64,8 105,1 12,7





































































































































































































































































































































































Source: Statistics SA and SARB
Note: Prior to 2006/02 the official data had been adjusted on three occasions (2002, 2004, 2006 ) by the SA Reserve Bank to compensate for structural breaks that occurred due to survey data that had been improved by Statistics SA at the time.

Patrick Craven (National Spokesperson)
Congress of South African Trade Unions
110 Jorissen Cnr Simmonds Street

P.O.Box 1019
South Africa

Tel: +27 11 339-4911 or Direct: +27 10 219-1339
Mobile: +27 82 821 7456
E-Mail: patrick@cosatu.org.za


[1] See Monthly Earnings of South Africans, Statistics South Africa, 30 November 2010.

[2] See Budget Speech, February 2010.

[3] Development Indicators 2009, The Presidency, p.25. These are based on Income Expenditure Surveys.

[4] Human Development Report: Fighting Climate Change-Human Solidarity in a Divided World, 2007/08, p.283.

[5] In the Budget Speech 2010, the Minister of Finance notes that in South Africa “income inequality is among the highest in the world; and half of our population survives on 8% of national income”. Nevertheless, the policy proposals that are contained in the Budget Review 2010, completely fail to address this problem.

[6] McGregor’s Who Owns Whom, 30th Edition, 2010, p.45.

[7] See Dick Forslund “Wages, profits and labour productivity in SA: A reply, 24 January 2012, http://politicsweb.co.za/politicsweb/view/politicsweb/en/page71619?oid=276638&sn=Detail&pid=71619. Also see statement issue by Dick Forslund (AIDC) “Adcorp and CDE are wrong about productivity decline - AIDC” 14 September 2011.

[8] Presentation by Dr Maylene D. Azevedo, Chief Economist at Productivity South Africa to NEDLAC Labour Constituency on 11 July 2012.

[9] See Dick Forslund “Wages, profits and labour productivity in SA: A reply.

[10] See presentation by Dr Maylene D. Azevedo above.