Proposed changes to South African labour laws - What you need to know!
The National Economic Development and Labour Council (NEDLAC) recently published its Labour Law Reform Report, outlining key proposals that could reshape employment laws and obligations for employers and employees. The report proposes 65 amendments in total, which include proposed amendments to the Labour Relations Act (LRA), associated Code of Good Practice (COGP), Basic Conditions of Employment Act (BCEA) National Minimum Wage Act (NMWA), and the Employment Equity Act (EEA). Whilst these proposed amendments are still at a very early stage, it is clear that we can expect significant changes in the near future.
NEDLAC has tabled its report, along with the four amendment bills. These will first be vetted by the State Law Advisor, before entering the Parliamentary process. It is only after this that the bills will be released for public comment. As a result, there is certainly room for further development and change. This being said, these proposals are the product of years of discussion and consultation. Therefore, they still serve as a good indication of what we can expect to see.
We have highlighted some of the key proposed changes.
Limitation of remedies for high-paid employees
One of the significant changes affects high-paid employees. It is proposed that employees earning over R1,800,000.00 per annum (R150,000.00 per month) will no longer be eligible for the remedy of reinstatement in ordinary dismissal disputes. Only the remedy of compensation will be available, and it will be capped. These high-earners will, however, be entitled to reinstatement if their dismissal is deemed automatically unfair. In the case of automatically unfair dismissals and unfair labour practices related to whistleblowing, there will be no cap on compensation applicable.
The Earnings Threshold of a “high-paid” employee is proposed for the period May 2024 to April 2025 and is suggested to be adjusted annually on 1 May in line with the South African Consumer Price Index.
2. Increased severance pay for retrenchment
Currently, retrenched employees are entitled to the equivalent of one week’s remuneration for every completed year of service. The new proposals seek to increase this calculation to the equivalent of two weeks’ remuneration for every completed year of service. As a result, this proposal will double the cost of severance pay payable by employers in retrenchment terminations.
3. Large-scale retrenchment processes
Proposals are made to allow for the Commission for Conciliation, Mediation and Arbitration (CCMA) to have the power to make rules regarding retrenchment facilitation in the case of large-scale retrenchment processes (rather than the Minister of Employment and Labour).
Large-scale retrenchments have also been subjected to a deviated adjudication process, where any concern around procedural unfairness needed to be challenged by way of an urgent application to the Labour Court – typically during the consultation process or very shortly after it ends. The proposed amendments seek to allow litigants to challenge all aspects of the retrenchment dismissal after the termination has taken place. It will not be required that a litigant follows the urgent procedure. Further to this, it is proposed that where a large-scale retrenchment has gone through the CCMA facilitation process, it may proceed immediately to be referred to the Labour Court, it need not be conciliated first.
4. Qualifying period for full protection against unfair dismissal
It is proposed that employees will not enjoy a protection against unfair dismissal for at least three months after commencing employment. This period may be longer if the employee is subject to a probationary period of longer than three months in a written employment contract – and that probation period is both reasonable and operationally justifiable. This qualifying period is only proposed to apply to ordinary dismissals, not automatically unfair dismissals. The latter protections will remain in place for the entirety of the employment relationship.
This proposed change gives significantly greater weight to the use of a probation period is assessing the fit of a new employee. It should also assist in removing barriers to entry as employers are given a greater safety net for a “bad hire”, so they could be more likely to take a chance on a candidate who shows potential.
5. Procedural fairness in dismissal processes
Earlier this year, a new proposed COGP was released on the management of dismissals. The new COGP seeks to move away from the very formal processes which have developed over time in the management of hearing processes pre-dismissal. The proposed changes to the legislation are aligned to this, where it is clarified that a fair process is achieved by merely ensuring that an employee is provided with an adequate and reasonable opportunity to respond to the reason proffered by the employer for dismissal.
6. Revision of unfair labour practice definition
The definition and scope of an ‘unfair labour practice’ is proposed to be narrowed. The amendments propose removing certain types of unfair labour practices, particularly those relating to issues of promotions. Sub-sections 186(2)(a) and (c) of the LRA are proposed to be deleted from the definition, limiting what classifies as an unfair labour practice (one example of this change would be that complaints about unfair promotions will no longer be considered as an unfair labour practice). The narrowing of this definition will now only cover cases like unfair suspensions, disciplinary action short of dismissal, and occupational detriments against whistleblowers. A transitional period one year will apply within the public service and local government, as well as employers covered by the Employment of Educators Act and SAPS. This transitional period should be used to bargain collectively over promotions, and reduce the agreement to writing in a collective agreement.
7. Extended definition of employee
A new schedule 11 has been drafted and proposed for the LRA to give more workers the right to join unions, negotiate for better conditions and be part of collective bargaining. The definition is essentially any person who works personally for another person. This does not include where the individual works for clients and/or customers as part of their profession, business, or undertaking that they carry on. It would seem that this is specifically geared towards e-hailing drivers and last-mile delivery drivers (such as Uber and Uber Eats and other similar platforms).
This definition will be extended across all legislation, therefore, it is a universal expansion of the definition.
8. “On call” or seasonal workers
A new section 9B in the BCEA is proposed to provide better protections for ‘’on-call' or seasonal workers. Employers will have to set fair working conditions, including a fair rotation system to ensure equal work opportunities, reasonable notice before requiring an employee to work or cancelling any work, and leave entitlements to be aligned according to the average hours of work.
What’s next?
We are sure that both employees and employers will feel thrilled and concerned about these changes. The proposed amendments have pros and cons for both parties. However, what must be considered amongst the most significant of these proposed changes is the reduced burden on employers in the early days of the employment relationship and in the procedures required around terminations. Whether you are for or against these amendments, they certainly are game-changers.
We will keep you posted as we learn more.
