SUMMARY OF THE LABOUR RELATIONS AMENDMENT ACT 6 OF 2014
1. The Labour Relations Amendment Act 6 of 2014 ("Act") was assented to by the President and published in the Government Gazette No. 37921 on 18 August 2014. The date on which the amendments will come into operation is still to be determined but it is expected to be before the end of the year.
2. We provide below a summary of the salient changes to the Labour Relations Act, 1995 ("LRA"). This is a fairly long summary. We have, for example, not dealt with the changes to the LRA relating to: the requirements for a collective agreement concluded in a bargaining council to be extended to non-members; the issue of essential services; and various administrative issues relating to trade unions and employers' organizations. However, should you have any queries in this regard please do not hesitate to contact us.
3. Several amendments have been introduced that either remove anomalies or seek to improve the CCMA's ability to function more effectively, including its ability to provide administrative assistance to lower earning employees in relation to the service of pleadings relating to proceedings in the CCMA. The CCMA is also empowered to make rules regulating the consequences of a party's failure to attend conciliation or arbitration proceedings.
ENFORCEMENT OF ARBITRATION AWARDS (SECTION 143 OF THE LRA)
4. Amendments to section 143 of the LRA are intended to streamline the mechanisms for enforcing arbitration awards of the CCMA/bargaining councils and are aimed at making these mechanisms more cost effective and easily accessible to lower earning litigants.
5. An award for the payment of money, which has been certified by the CCMA, can be presented to the sheriff for execution if payment is not made. This amendment does away with the current practice in terms of which parties had to have a writ issued by the Labour Court.
6. The enforcement of awards to pay money will now occur in terms of the Rules and Tariffs applicable to the Magistrates Court, thus simplifying and reducing the costs of execution of awards for the payment of money.
7. In the case of awards such as reinstatement, which are enforced by contempt proceedings in the Labour Court, the need to have the arbitration award made an order of the Labour Court before contempt proceedings can commence is removed.
RESCISSION OF AWARDS OR RULINGS (SECTION 144 OF THE LRA)
8. Section 144 of the LRA has been amended to confirm previous decisions of the Labour Court in terms of which it was held that arbitration awards or rulings can be rescinded if good cause is shown.
REVIEW APPLICATIONS IN THE LABOUR COURT (SECTION 145 OF THE LRA)
9. The amendments to section 145 of the LRA are aimed at reducing the number of review applications that are merely brought to frustrate or delay compliance with arbitration awards, and also to expedite the finalization of review applications brought to the Labour Court.
10. Prior to the amendments, a review application did not suspend the operation of an arbitration award. This often resulted in urgent separate or interlocutory applications to stay the enforcement of awards pending review proceedings. In terms of the amendments the operation of an arbitration award would be suspended if security is provided by the applicant (namely the amount of compensation payable or in cases where reinstatement ordered, 24 months' remuneration), or any lesser amount permitted by the Labour Court.
11. To speed up the finalization of review applications, the amended provisions require that an applicant must apply for a date for the hearing of a review application within six months of the delivery of the notice of motion. A failure to comply with this requirement can be condoned. Judgment in review matters must be handed down within a reasonable time. The amendment also seeks to provide that a review application interrupts the running of prescription in respect of an arbitration award.
12. The amendments exclude the jurisdiction of the Labour Court to adjudicate disputes that are required, not only by the LRA, but by any other employment law, to be determined by arbitration.
13. When the amendments come into effect it will only be in exceptional circumstances (i.e. where the Labour Court is of the opinion it is just and equitable) that the Labour Court will deal with review applications against decisions or rulings of the CCMA/bargaining council before a matter has been finalized by the CCMA/bargaining council. For example, the ability of a party to challenge a CCMA "jurisdictional ruling" dealing with condonation for the late referral of the dispute, prior to dealing with the merits of the dispute, may be limited. This seeks to limit the use of piece-meal review applications during arbitration proceedings as a mechanism to delay a matter.
THE CCMA AND PRIVATE ARBITRATIONS
14. The CCMA will be required to resolve disputes even where the parties have agreed to private dispute resolution if, in the case of lower paid employees (i.e. employees who earn below the earnings threshold determined by the Minister of Labour from time to time, currently R205,433.30 per annum), the employee is required to pay any part of the cost of private dispute resolution, or, in the case of all employees, the person appointed to resolve the dispute is not independent of the employer.
CONVENING CONCILIATIONS IN THE PUBLIC INTEREST
15. In a change that would affect collective bargaining disputes, the CCMA is given the power to intervene in disputes where it is in the public interest to do so, by appointing a commissioner to attempt conciliation even if a previous attempt at conciliation has already failed. The CCMA's intervention does not however affect the parties' right to strike or lock-out.
AUTOMATICALLY UNFAIR DISMISSALS AND MATTERS OF MUTUAL INTEREST (SECTION 187(1)(C) OF THE LRA)
16. The amendment broadens the scope of section 187(1)(c) of the LRA. Previously, section 187(1)(c) of the LRA provided that a dismissal is automatically unfair if the reason for the dismissal is to compel an employee to accept a demand in respect of any matter of mutual interest between the employer and employee.
17. This provision has been considered in the situation where an employer wishes to introduce new terms and conditions of employment and an employee or employees refuse to agree to these new terms and conditions. It has been argued that this provision prevents employers from dismissing employees in these circumstances. This section has, however, been interpreted in such a way as not to prevent an employer from dismissing employees who refuse to accept changes to conditions of employment – at least in certain circumstances. This has been the case where the employer has been able to persuade a court that the reason for the dismissal is not to force employees to accept a change, but rather that its operational requirements justify dismissal.
In effect the employer argues that it concedes that the employees do not want to accept the change to their conditions of employment and it is not attempting to force them to do so by dismissing them; it is dismissing them in order to replace them with employees who are willing to work in accordance with the new terms and conditions of employment and that these dismissals can be justified on the basis of its operational requirements. See the decision in National Union of Metalworkers v Fry's Metals (Pty) Ltd (2005) 26 ILJ 689 (SCA).
18. The proposed new section 187(1)(c) states that a dismissal will be automatically unfair if the reason for the dismissal is the refusal of employees to accept a demand in relation to a matter mutual interest. The explanatory memorandum states that the purpose of the amendment is to remove the anomaly arising from the Supreme Court of Appeal's decision in the Fry's Metals decision and that the amendment seeks to give effect to the intention of the legislature when this section was originally enacted – i.e. to protect employees who refuse to accept a demand by an employer relating to a matter of mutual interest. It is seen as an amendment designed to protect the integrity of the collective bargaining process.
19. An employer could still argue that the reason for the dismissal is not the refusal of employees to accept a demand relating to a matter of mutual interest, but rather that dismissal is needed to replace the employees with persons who are prepared to work in accordance with the new terms and conditions of employment. Whether the courts will accept this argument remains to be seen. If it is not accepted, the ability of employers to introduce more flexible working practices in the absence of employee consent will be further restricted. It will also possibly lead to a greater use of the lock-out. It may also give rise to a reconsideration of employers' contractual rights to change working conditions.
AGREEMENT FOR PRE-DISMISSAL ARBITRATION (SECTION 188A OF THE LRA)
20. Agreed pre-dismissal arbitrations in terms of section 188A of the LRA will in future be referred to as an "inquiry by an arbitrator". In addition to by agreement between the employer and employee, they may be provided for in a collective agreement. The amendments to section 188A also aim to prevent the collateral litigation that frequently follows when an employee who is charged with misconduct for making disclosure claims that it was a protected disclosure. The amendment allows either party in these circumstances to trigger a pre-dismissal arbitration (now referred to as an inquiry by an arbitrator). An inquiry of this kind (by an independent arbitrator) will not constitute an occupational detriment as contemplated in the Protected Disclosures Act, 2000.
THE DATE OF DISMISSAL (SECTION 190 OF THE LRA)
21. Section 190 contains provisions relating to when a dismissal is deemed to take place – the importance of this date being that it determines when the 30-day time period for the referral of an unfair dismissal dispute to the CCMA/bargaining council begins to run. In terms of the amendments, if a contract of employment is terminated on notice, then the date of dismissal will be the date on which the notice expires or, if it is earlier, the date on which the employee is paid all outstanding salary.
OPERATIONAL REQUIREMENT DISMISSALS (SECTIONS 189 AND 189A OF THE LRA)
22. Section 189A of the LRA is amended to preclude a party from unreasonably refusing to agree to extend the period for consultation over a proposed retrenchment.
23. Section 189A(19), which attempts to define when a dismissal on the grounds of operational requirements will be fair, is repealed. It appears that the reason for this is that it will remove the uncertainty as to whether this test also applies to retrenchments not covered by section 189A and also to ensure that the Courts retain their discretion to develop jurisprudence in this area in light of the circumstances of each case.
24. Unfair retrenchment claims may now be adjudicated by the CCMA if:
24.1 the consultation process applied to one employee only, or
24.2 if only the employee in question is dismissed; or
24.3 if the employer employs less than 10 employees, irrespective of the number of employees who are dismissed.
25. The amendments to section 198 of the LRA are designed to introduce additional protections to non-standard employees.
26. The main highlights in relation to the amendments pertaining to temporary employment service employees (labour broker employees), employees employed on fixed term employment contracts and part time employees are as follows:
26.1 protection is provided only for employees earning an amount equal to or less than R205,433.30 per annum;
26.2 flexibility for employers is retained during the first three months of employment i.e. the deeming provisions do not apply during this period; and
26.3 employees who fall within the protected category have a right to be treated "on the whole not less favourably" than "standard" employees after three months.
FIXED TERM EMPLOYEES AND A REASONABLE EXPECTATION OF RENEWAL (SECTION 186 OF THE LRA)
27. The definition of "dismissal" in section 186 of the LRA has been extended to include a situation where an employee employed in terms of a fixed term contract of employment reasonably expects to be retained on an indefinite or permanent contract of employment but the employer fails to offer such employment. Prior to the amendment the best an employee could expect was for a renewal of the fixed term contract on the same or similar terms. The amendment introduces an expectation of permanent or indefinite employment. Where the employee is able to prove a reasonable expectation of renewal on a permanent or indefinite basis the employee may now be appointed permanently.
28. The provisions of the new section 198B of the LRA only apply to fixed term employees earning below the current earnings threshold (R205, 433.30 per annum). These provisions are subject to certain exceptions. For example, they do not apply in respect of small employers (i.e. an employer who employs less than 10 employees) or start-ups (i.e. an employer who employs less than 50 employees where the business has 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 for any reason of an existing business). They also do not apply in respect of fixed term contracts that are permitted by any statute, sectoral determination or collective agreement.
29. Where the amendments do apply:
29.1 An employer may only employ an employee on a fixed term contract or successive fixed term contracts for a period of up to three months.
(The period of three months may be varied by a sectoral determination or a collective agreement concluded at a bargaining council.) Where an employee is employed on a fixed term contract for longer than three months the employee is deemed to be employed for an indefinite or permanent period unless the nature of the work is of a limited or definite duration or if the employer can demonstrate any other justifiable reason for engaging the employee on a fixed term contract.
29.2 The non-exhaustive grounds of possible justifiable grounds for engaging an employee on a fixed term contract for longer than three months include where the employee:
Is engaged on account of a temporary increase in the volume of work which is not expected to endure beyond 12 months;
Is replacing another employee who is temporarily absent from work;
Is a student or recent graduate who is employed for the purpose of being trained;
Gaining work experience in order to enter a job or profession;
Is engaged to work exclusively on a specific project that has a limited or defined duration;
Is a non-citizen who has been granted a work permit for a defined period;
Is engaged to perform seasonal work;
Is engaged in an official public works scheme or similar public job creation scheme;
Is engaged on a position which is funded by an external source for a limited period; or
Has reached the normal or agreed retirement age applicable in the employer's business.
29.3 An employer who employs an employee to whom the section applies on a fixed term contract or who renews or extends a fixed term contract, must do so in writing and must state the reason that justifies the fixed term nature of the employment contract.
29.4 The employer bears the onus of proving at any proceedings that there exists a justifiable reason for fixing the term of the contract and that the term was agreed. In the absence of a justifiable reason this does not mean that the contract is invalid it simply means that the employee is deemed to be a permanent employee.
29.5 An employee employed on a fixed term contract for more than three months must not be treated less favourably than an employee who is employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for different treatment.
29.6 An employer must also provide an employee employed on a fixed term contract and an employee employed on a permanent basis with equal access to opportunities to apply for vacancies.
29.7 This provision will apply three months after the commencement of the amendments to fixed term contracts of employment entered into before the commencement of the amendments.
29.8 A justifiable reason for different treatment includes where different treatment is a result of the application of a system that takes into account: seniority, experience, or length of service; merit; the quality or quantity of work performed; or any other criteria of a similar nature and such reason is not prohibited by section 6(1) of the Employment Equity Act.
29.9 In the event that it is justifiable to employ an employee on a fixed term contract for longer than 24 months, then upon the expiry of the contract the employer would be required to pay the employee one week's remuneration for each completed year of the contract (severance pay).
However, a different arrangement can be made in an applicable collective agreement and/or the employer may procure employment for the employee, which commences at the expiry of the contract and is on the same or similar terms. In the event that the employee unreasonably refuses such offer of employment, the employee will not be entitled to such severance pay.
TEMPORARY EMPLOYMENT SERVICES (OR LABOUR BROKERS)
30. For the most part, section 198 of the LRA has largely remained unchanged and, for example, the position still remains that the temporary employment service (labour broker) and not the client is the employer. Furthermore, in terms of section 198 the joint and several liability on the part of the client for non-compliance by the temporary employment service does not extend to dismissals.
31. The additions can be summarised as follows:
31.1 Where there is joint and several liability between the temporary employment service and the client (e.g. in relation to the provisions of the BCEA) or where the client is deemed to be the employer in terms of the new deeming provisions introduced by section 198A (discussed below), the employee may institute proceedings against either the temporary employment service or the client or both and may enforce an award, order, ruling etc against either party.
31.2 A labour inspector of the Department of Labour acting in terms of the BCEA may secure and enforce a compliance order against the temporary employment services or the client, as if it were the employer, or both.
31.3 A temporary employment service may not employ an employee on terms and conditions of employment not permitted by the LRA, a sectoral determination or a collective agreement concluded at a bargaining council that is applicable to a client for whom the employee works.
31.4 A temporary employment service must be registered to conduct business, but the fact that it is not registered is no defence to any claim instituted in terms of the section 198A.
31.5 In any proceedings brought by an employee, the Labour Court or the CCMA may determine whether any provision in an employment contract or a contract between a temporary employment service and a client complies with the law and make an appropriate order or award.
31.6 When determining whether a sectoral determination applies, the courts will look at the sector in which the client is engaged. This means that temporary employment services will no longer be able to pay their employees at a lower rate than that which applies to the other workers within the sector in which they render services.
32. The most controversial amendments to temporary employment services arrangements are those contained in the new section 198A to the LRA. However, as with the case of fixed term contracts this section only applies to employees earning below the prescribed BCEA threshold (currently R205, 433.30 per annum).
33. In terms of the new section 198A, temporary employment services employees who fall below the threshold will only be regarded as being employed by the temporary employment services if they are performing temporary services. If not they will be deemed to be the employee of the client. In this regard, temporary services means:
33.1 for a period not exceeding three months of employment;
33.2 as a substitute for an employee of a client temporarily absent (e.g. on maternity leave); or
33.3 in a category or work or for a period determined by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister of Labour.
34. If the employee of the temporary employment services is not performing "temporary services" for the client, then:
34.1 the employees are deemed to be permanent employees of the client, with the consequence that the client takes on all dismissal obligations and liabilities;
34.2 they are entitled to be treated on the whole not less favourably than the (actual) employees of the client performing same or similar work unless a justifiable reason for different treatment exists (as discussed above);
34.3 termination of their assignment, whether at the instance of the temporary employment service or the client, to avoid the deeming provision or because the employee exercised a right in terms of the LRA, will be regarded as a dismissal.
35. Employees covered by section 198A who provide services to a client before the commencement of the amendments acquire the rights in terms of section 198A with effect from three months after the commencement of the amendments.
36. It is important to note that the new section 198A does not provide a claim for equal treatment by all temporary employment services employees, but only those who earn below the threshold and who are doing temporary work, as defined (i.e. more than three months and not filling in for someone temporarily absent.) In addition, it is provided that the employees of the temporary employment service must be treated equally vis-a-vis the client's employees - the converse is not provided for, namely that the client's employees must be treated equally vis-a-vis the employees of the temporary employment service. Therefore, if the TES offers better conditions of employment, the employees of the client will not have a claim by virtue of the amendments. They will have to bargain for additional rights in the normal course.
37. Section 198C of the LRA introduces certain protections to part-time employees earning below the threshold.
38. A part-time employee is "an employee who is remunerated wholly or partly by reference to the time that the employee works and who works less hours than a comparable full-time employee". A comparable full-time employee is defined as "an employee who is remunerated wholly or partly by reference to the time that the employee works and who is identifiable as a full-time employee in terms of the custom and practice of the employer of that employee". It does not however include a full-time employee whose hours of work are temporarily reduced for operational requirements as a result of an agreement.
39. This new section only applies to employees earning below the prescribed BCEA threshold (currently R205, 433.30 per annum). These provisions are subject to certain exceptions. For example, they do not apply in respect of an employer who employs less than 10 employees or an employer who employs less than 50 employees where the business has 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 for any reason of an existing business). They also do not apply in respect of an employee who ordinarily works less than 24 hours a month for an employer and during an employee's first three months of continuous employment with an employer.
40. Where the section does apply, taking into account the working hours of a part-time employee, an employer must:
40.1 treat a part-time employee on the whole not less favourably than a comparable full-time employee doing the same or similar work, unless there is a justifiable reason for different treatment (as discussed above);
40.2 provide a part-time employee with access to training and skills development on the whole not less favourable than the access applicable to a comparable full-time employee; and
40.3 provide a part-time employee with the same access to opportunities to apply for vacancies as it provides to full-time employees.
41. For the purposes of identifying a comparable full-time employee, regard must be had to a full-time employee employed by the employer on the same type of employment relationship who performs the same or similar work in the same workplace as the part-time employee; or if there is no comparable full-time employee who works in the same workplace, a comparable full-time employee employed by the employer in any other workplace.
JURISDICTION TO DEAL WITH DISPUTES ARISING FROM THE AMENDMENTS TO SECTION 198 OF THE LRA
42. Disputes arising from the interpretation and/or application of the new sections 198A, 198B and 198C can be referred to the CCMA or relevant bargaining council (within six months of the act or omission concerned) for conciliation and thereafter arbitration.
43. It is important to note that the LRA seek to prevent simulated arrangements or corporate structures that are intended to defeat the purposes of the LRA or any employment law. It also seeks to impose joint and several liability on the persons found to be employers under this section for any failures to comply with an employer's obligations under the LRA or any employment law. The explanatory memorandum to the amendments explains that this is particularly important in the context of subcontracting and outsourcing arrangements if such arrangements are subterfuge to disguise the identity of the true employer.
COLLECTIVE BARGAINING: CHANGES RELATING TO ORGANIZATIONAL RIGHTS
44. In a dispute about a trade union's level of representativeness, in addition to the factors already provided for in section 21(8) of the LRA, a commissioner must also now consider the general make up of the workplace including the extent to which there are temporary employment services (labour broker) employees assigned to work in the workplace, employees employed on fixed term contracts, part time employees, or employees in other categories of non-standard employment. The rationale for this appears to be the view that these types of employees are difficult for the union to recruit as members.
45. In an arbitration about the granting of organizational rights a commissioner has a discretion to grant shop steward representation rights (section 14) and disclosure of information rights (section 16) to a minority trade union provided that:
45.1 the union is sufficiently representative and already enjoys access to the workplace rights (section 12), deduction of union dues (section 13) and leave for trade union activities rights (section 15); and
45.2 no other union has the relevant rights; and
45.3 the union satisfies the other requirements contained in section 21(8) of the LRA.
46. Accordingly, although a commissioner may award organizational rights to minority trade unions, such unions should have substantial membership and effectively be the most representative union in the workplace.
47. However, any such organizational rights granted to a minority union will lapse if the trade union concerned is no longer the most representative trade union in the workplace.
48. If a majority union and an employer have agreed on thresholds of representativeness in respect of one or more of the organizational rights referred to in sections 12, 13 and 15 in terms of section 18 of the LRA ('Rights to establish thresholds of representativeness') a commissioner has a discretion to overrule the threshold if all parties to the collective agreement have been given an opportunity to participate in the arbitration and the applicant union/s represent a significant interest or a substantial number of employees.
49. A union may seek to exercise organizational rights in respect of the employees of a temporary employment service or one or more of its clients, in the workplace of either the temporary employment service or one or more of the clients of the temporary employment service. If the union exercises rights in the workplace of a client of a temporary employment service it will include the premises of the client.
50. An award about the interpretation and application of organizational rights may be made binding not only on the employer but to the extent that it applies to the employees of a temporary employment service, also a client of the temporary employment service for whom an employee covered by the award is assigned to work. In addition, the award may be made binding on any person other than the employer who controls access to a workplace to which an award applies provided that person is given a chance to participate in the arbitration.
STRIKES, LOCK-OUTS AND PICKETING
51. Section 65 of the LRA has been amended to make it clear that the right to strike or lock-out is limited if the issue in dispute is one that a party has the right to refer to arbitration or the Labour Court in terms of the LRA or in terms of any other employment law i.e. the Employment Equity Act, 1998.
52. Section 67(9) of the LRA has been deleted. This section provided that any act in contemplation or furtherance of a protected strike or a protected lockout that is a contravention of the BCEA does not constitute an offence. The aim of this deletion appears to be that it seeks to clarify that conduct in breach of a picketing agreement or picketing rule does not enjoy protection against civil legal proceedings under section 67.
53. Prior to the amendment, employees were only allowed to picket in a place to which the public had access or on their employers' premises with its permission, which permission cannot be unreasonably withheld. The CCMA may now authorize a picket in a place owned or controlled by a third party (for example, a mall owner) other than the employer but that third party must be given an opportunity to make representations to the CCMA. The third party in question may refer picketing disputes to the CCMA.
54. Provided proper notice has been given to the affected party, in relation to picketing the Labour Court "may grant relief, including urgent interim relief, which is just and equitable in the circumstances", which may include:
54.1 an order directing a party to comply with the picketing agreement or rule;
54.2 an order varying a picketing agreement or rule.
55. The amendment granting the Labour Court the power to suspend a picket or a strike was removed from the final version of the Act.
Permission to use this article was granted by MacRobert Attorneys.