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Memorandum of Objects

Labour Relations Amendment Bill, 2012

The Minister of Labour is tabling in Parliament Bills to amend the Labour Relations Act, 1995 (LRA) and the Basic Conditions of Employment Act, 1997 (BCEA). These two statutes, which form the cornerstone of South Africa’s labour legislation, have not been amended since 2002. In preparation for the publication of these Bills the Department of Labour and the representatives of organised business and labour undertook a labour law review and have engaged in extensive consultations over a period of almost one year in Nedlac. 

The proposed amendments to the Acts can be grouped under the following themes -
(a)responses to the increased informalisation of labour to ensure that vulnerable categories of workers receive adequate protection and are employed in conditions of decent work;
(b)adjustments to the law to ensure compliance with South Africa’s obligations in terms of international labour standards;
(c)ensuring that labour legislation gives effect to fundamental Constitutional rights including the right to fair labour practices, to engage in collective bargaining and right to equality and protection from discrimination;
(d)enhancing the effectiveness of the primary labour market institutions such as the Labour Court, the CCMA, the Essential Services Committee  and the labour inspectorate;
(e)rectifying anomalies and clarifying uncertainties that have arisen from the interpretation and application of these two statutes in the past decade.

Amendment of section 21 of Act 66 of 1995

Certain amendments are made to adjust the circumstances under which a Commissioner may grant organisational rights to a trade union.

A Commissioner determining a dispute about organisational rights may consider the composition of the workforce, including the extent to which employees in the workplace are employed in non-standard employment, including through temporary employment services, on fixed term contracts, and in part time work.  This provision is intended to promote the organisation of non-standard employees.    

The section is also amended to broaden the discretion of a commissioner to award organisational rights in certain circumstances.  A trade union that does not have a majority membership among employees a workplace may be awarded the right for its members to elect trade union representatives under section 14.  For such an award to be made, the trade union must already have acquired the organisational rights referred to in sections 12 (trade union access to the workplace), 13 (deduction of trade union subscriptions or levies) and 15 (leave for trade union activities) and there must be no majority trade union in the workplace.  This allows a commissioner to award the organisational right associated with trade union representatives in appropriate cases to a trade union with substantial membership where there is no majority trade union. The organisational right of disclosure of information (section 16) may be awarded to a non-majority trade union in similar circumstances in order to facilitate collective bargaining.

Arbitrators may award organisational rights to a trade union that does not meet a threshold established by a collective agreement concluded in terms of section 18 of the LRA between the employer and a majority trade union.  The commissioner may overlook a threshold of this kind if applying it would unfairly affect another trade union and the trade union seeking the rights represents a significant interest or number of employees in the workplace.  A commissioner applying the new provision will need to draw an appropriate balance between the rights of the trade union wishing to exercise organisational rights and the rights of the majority trade union.     

Finally, the section is amended to provide that, for the purpose of organisational rights, employees engaged by a temporary employment service may be regarded as forming part of the workplace either of the temporary employment service or of the client where they work. This is to remedy the situation where temporary employment service employees may only exercise their rights at the premises of the temporary employment service, which may be far away from their actual place of work.  

Amendment of section 22 of Act 66 of 1995

This section is amended to ensure that where organisational rights may affect the rights and interests of third parties, such as the client of a temporary employment service or owner of the premises from which the employer operates, an arbitration award may bind those third parties as long as they have been given an opportunity to participate in the arbitration.

Amendment of section 32 of Act 66 of 1995

This section is amended to improve the speed and effectiveness of the exemption procedures associated with a collective agreement concluded in a bargaining council agreement that is extended to non-parties.  The amendments also ensure the independence of an exemptions appeal body from the trade union and employer parties to the council.

The amendments also introduce a requirement that the Minister must allow an opportunity for public comment when considering whether to extend a bargaining council collective agreement where the parties to the bargaining council are only sufficiently representative (section 32(5)).  When considering, whether the parties to a bargaining council are sufficiently representative, the Minister may take into account the extent to which there are employees within the sector employed in non-standard forms of employment.

Amendment of section 49 of Act 66 of 1995

This section is amended to clarify that a certificate specifying the level of representativeness of a bargaining council may be taken into account for any purpose under the Act, including a decision by the Minister whether or not to extend a collective bargaining agreement in terms of section 32.

Amendment of section 51 of Act 66 of 1995

This section is amended to provide for the funding of dispute resolution services of bargaining councils either by a levy required by collective agreement or by fees imposed on parties to a dispute in circumstances in which the CCMA is entitled to charge a fee.

Amendments to Chapter IV of the LRA

The key amendments in the Chapter concern procedural requirements for protected industrial action, and changes to the manner in which dispute resolution in essential services is regulated.  The changes are intended to respond to unacceptable levels of unprotected industrial action, including strike action in essential services, and unlawful acts in support of industrial action, including violence and intimidation. 

Amendment of section 64 of Act 66 of 1995

The section is amended to reintroduce the requirement of a ballot before a protected strike or lock-out may commence.  The change is intended to prevent industrial action being staged if it enjoys only minority support, as violence or intimidation are more likely to occur under these circumstances. 

Before calling a strike or lock-out, a trade union or employers’ organisation must conduct a ballot of its members entitled to participate in the industrial action.  The strike or lock-out will be protected if a majority of those who vote in the ballot vote in favour of industrial action. 

The 1956 LRA contained balloting requirements but these were not re-enacted in the 1995 statute.  One of the principle reasons for this was that the balloting requirements had given rise to technical disputes over compliance and there was extensive litigation over this issue.  This issue is dealt with by providing that a certificate of compliance issued by the Commission, a bargaining council or an accredited private agency will serve as proof that a ballot has been staged in compliance with the statutory requirements. 

Amendment of section 65 of Act 66 of 1995

Amendments are proposed to this section to eliminate the anomalous distinction between disputes that can be adjudicated under the LRA in respect of which industrial action is currently restricted and those under other employment laws in respect of which there is no equivalent restriction.

Amendment of section 67 of Act 66 of 1995

An amendment to this section makes it clear that conduct in breach of a picketing agreement or picketing rules does not enjoy protection against civil legal proceedings under this section.

Amendment of section 69 of Act 66 of 1995

Amendments to this section seek to improve the regulation of picketing by making picketing rules binding on third parties such as the landlords of employers.  This may result in a situation in which picketing is permitted to occur on property that is owned or controlled by such a third party, where this is appropriate, but only where the third party has consented or has had an opportunity to be heard before the rules are made. 

The amendments also confirm and elaborate on the access of parties to the Labour Court in the case of a dispute over compliance with picketing rules, and describe remedies that may be granted by the Labour Court.  The Labour Court may, in appropriate cases, order compliance with picketing rules or vary the terms of a picketing agreement or rules. The Labour Court is further granted the power to suspend a picket or strike in appropriate circumstances. Likewise, the Court may suspend a lock-out or suspend an employer from engaging replacement labour during a strike or lock-out. 

Amendment of sections 70 to 74 of Act 66 of 1995 and insertion of sections 70A to 70F of Act 66 of 1995 - Essential Services

Under the current dispensation numerous problems have been identified with the system for regulating dispute resolution in essential services.  These include the scope of essential service determinations made to date, the small number of minimum service agreements ratified by the Essential Services Committee (ESC) and the high level of strike action within essential services.  Many stakeholders have negative perceptions about the operation and administration of the ESC.  Extensive amendments are proposed to address these problems. 

Amendment of section 70 of Act 66 of 1995 - Establishment of the ESC

Section 70 provides for the establishment of the Essential  Services Committee (ESC).  While the ESC was brought into existence by the 1995 Act, its structure and functioning are to be significantly revised to enhance its legitimacy and efficacy.

Insertion of section 70A of Act 66 of 1995 - composition of the ESC

The ESC is to be composed of eight persons. The independent chairperson and deputy chairperson are to be appointed by the Minister, after consulting NEDLAC.  The chairperson may be a senior commissioner of the CCMA while the deputy chairperson must be a senior commissioner of the CCMA.  This is to ensure that the ESC has someone who is always available to devote time to the functioning of the ESC. 

The remaining six members of the ESC are nominated by the social partners at NEDLAC - two by each of Government, Labour and Business.  The introduction of government nominees is an innovation to ensure that government is adequately represented on the ESC in its capacity as an employer, as a high proportion of essential service matters occur within the public service. 

The criteria for appointment to the ESC are also specified and members must have suitable qualifications or experience in labour law, labour relations, commerce, industry or a sector of the economy, public affairs or the administration of justice.

Insertion of section 70B of Act 66 of 1995 - powers and functions of the ESC

The ESC is responsible for overseeing dispute resolution in essential service sectors.  Its powers and functions are to:
·monitor the implementation and observance of essential service determinations and minimum service agreements and determinations;
·promote effective dispute resolution in essential services;
·develop guidelines for the negotiation of minimum service agreements.
·decide whether to institute investigations as to whether or not the whole or a part of any service is an essential service;
·manage the ESC’s case load; and
·appoint panels to hear and determine matters.

The ESC must establish a panel to hear and determine a matter if requested to do so by a bargaining council. The ESC may also request the CCMA or any other appropriate person to conduct an investigation to assist the ESC in an investigation and to submit a report.

Insertion of section 70C of Act 66 of 1995 - appointment of panels

The ESC must appoint a panel to preside over each matter that is before it.  The panel may consist of either three or five persons, depending upon the complexity of the issue involved. The panel includes a presiding member and either two or four assessors.

The chairperson or deputy chairperson of the ESC may preside over a panel hearing.  In addition, a presiding member may be appointed from a list of senior commissioners that have been trained for this purpose.

The presiding member of the panel determines questions of law and procedure, including whether a matter is a question of law or procedure.  The assessors only make decisions on questions of fact.  As the assessors will have knowledge or experience of the sector concerned, their participation will promote effective decision-making and enhance the legitimacy of the ESC.   

The Act provides for the panel to be composed in several ways.  In the case of a three person panel, the assessors must be either:
·Two members of the ESC - one from a person nominated to the essential services committee by organised labour and one from the nominees of organised business or government.  If the matter involves the state in its capacity as employer, the “employer” assessor must be a government nominee; if it involves the private sector, that assessor must be from organised business’ nominations to the ESC.
·One person nominated from the trade union parties to the proceedings before the panel and one person from the employer parties to the proceedings.     

If the panel is composed of five persons, the ESC must appoint two of its members to serve as its assessors and invite the employer and trade union parties participating in the hearing to each nominate an assessor. The assessor nominated by either the trade union or employer parties to the proceedings may be a member of the ESC.   

Insertion of section 70D - powers and functions of a panel 

The powers and functions of panels appointed by the ESC are to:
·conduct investigations as to whether or not the whole or a part of any service is an essential service;
·determine whether or not to designate the whole or a part of that service as an essential service;
·determine disputes as to whether or not the whole or a part of any service falls within the scope of a designated essential service;
·determine whether or not the whole or a part of any service is a maintenance service;
·ratify a collective agreement that provides for the maintenance of minimum services in a service designated as an essential service; and
·determine, in accordance with the provisions of the Act, the minimum services required to be maintained in the service that is designated as an essential service.

The decision or finding of the majority of the panel is the decision of the ESC. 

Insertion of section 70E of Act 66 of 1995 - jurisdiction and administration of the ESC

The ESC has jurisdiction throughout South Africa and is based in the CCMA’s head office.  It is administered by the CCMA and the director of the CCMA is the accounting officer of the CCMA.  The director is required to allocate adequate resources to the ESC in order for it to perform its functions.  The ESC is to be financed primarily through the budget allocated to the CCMA

The Director appoints staff to the ESC after consulting the ESC and governing body of the CCMA.  The governing body determines the remuneration and other terms and conditions of staff of the ESC. 

The Minister of Finance determines the allowances of members of the ESC, assessors and persons appointed to investigate matter for the ESC

Insertion of section 70F of Act 66 of 1995 - ESC Regulations

The Minister of Labour may make regulations concerning any matter related to the functioning of the ESC and its panels.

Insertion of section 71A of Act 66 of 1995 - public officials exercising authority in the name of the state

The International Labour Organisation (ILO) recognises that the right to strike of public officials exercising authority in the name of the state may be limited, despite the fact that their work does not fit into the strict definition of an essential service.  “Public officials exercising authority in the name of the state” is defined as customs’ officials, immigration officers, judicial officers and officials working in the administration of justice. 

The amendments provide that these officials will be deemed to be within an essential service if a minimum service agreement that covers them is ratified or determined by the ESC. Provisions are put in place that allow for the negotiation and mediation of a minimum service agreement, and if no agreement can be concluded, the determination of the minimum services for the maintenance of the services provided by these officials.   

Amendment to section 72 of Act 66 of 1995 - Minimum Services

Provision is made for the negotiation and mediation of minimum service agreements.  These acquire validity and become binding once ratified by a panel appointed by the ESC.  In the absence of a ratified minimum service agreement, a panel may determine the minimum services required for the maintenance of essential services.  A minimum service determination is valid until varied or revoked; however, it may not be varied or revoked for a period of 12 months unless the relevant trade union and employers agree to this.

In order to promote interest arbitration and protect employees from an overly broad minimum service designation, the Bill provides that a minimum service designation will not apply if the majority of employees concerned vote to be covered by the broader essential service designation.  This will have the result that there can be no strike or lock-out in the service concerned and all unresolved interest disputes will be subject to compulsory arbitration.

Insertion of section 103A of Act 66 of 1995

This new section is introduced to permit the Labour Court to make an order placing a trade union or employers’ organisation under administration in circumstances such as if the trade union is unable to perform its functions.  The application may be made by the trade union or employers’ organisation concerned or by the Registrar of Labour Relations.  The section provides an alternative to the winding up procedure in section 103 and provides for a more appropriate process if the circumstances facing the trade union or employers’ organisation are capable of being remedied.

Amendment of section 111 of Act 66 of 1995

This section is amended to clarify an issue that has been the subject of litigation in the Labour Courts.  The amendment provides that a trade union or employers’ organisation whose registration has been cancelled by a decision of the Registrar of Labour Relations is not entitled to continue to function pending the outcome of an appeal against the decision of the Registrar.

Amendment of Section 115 of Act 66 of 1995

This section is amended to introduce what are primarily formal amendments to the powers of the Commission. One change empowers the Commission to provide purely administrative assistance to lower paid employees in the delivery of notices or documents relating to proceedings in the Commission.  Often such employees are unable to serve referral documents on their employer.  Another change empowers the Commission to make rules to regulate the consequences of a party’s failure to attend conciliation or arbitration proceedings. This change has been necessitated by the Labour Appeal Court’s interpretation of the CCMA’s rule-making powers. In addition, the section is amended to clarify the powers of the Commission to make rules regulating the rights of parties to be represented in proceedings before the Commission.

Amendment of section 138 of Act 66 of 1995

This amendment removes a requirement that original arbitration awards must be lodged with the Registrar of the Labour Court. This has proved to be unnecessary and administratively burdensome.

Amendment of section 143 of Act 66 of 1995

Amendments to this section are intended to further streamline the mechanisms for enforcing arbitration awards of the Commission and to make these mechanisms more effective and accessible.

Firstly, an award which has been certified by the Commission can be presented to the Deputy-Sheriff for execution if payment is not made.  This removes the need for the current practice in terms of which parties have a writ issued by the Labour Court.  This has proved to be time-consuming and expensive, particularly for applicants in a centre where there is no Labour Court.  Secondly, in the case of awards such as reinstatement which are enforced by contempt proceedings in the Labour Court, the need to have an arbitration award made an order of the Labour Court before contempt proceedings can be commenced is removed.  Finally, the enforcement of awards to pay money will occur in terms of the Rules and Tariffs applicable to the Magistrate’s Court, thus simplifying and reducing the costs of these proceedings.  These amendments are anticipated to simplify and expedite the enforcement of arbitration awards by the Commission and bargaining councils.

Amendment of section 144 of Act 66 of 1995

This section is amended to bring the Act into line with decisions of the Labour Court holding that the common law grounds which allow for rescission on good cause apply to proceedings before the Commission.

Amendment of section 145 of Act 66 of 1995

This section is amended by introducing certain measures intended to reduce the number of review applications that are brought to frustrate or delay compliance with arbitration awards, and to speed up the finalisation of applications brought to the Labour Court to review arbitration awards. 

At present, a review application does not suspend the operation of an arbitration award. This often results in separate or interlocutory applications to stay enforcement of awards pending review proceedings.  It is proposed that the operation of an arbitration award would be suspended if security is provided by the applicant in an amount specified in the provision, or any lesser amount permitted by the Labour Court. 

In order to prevent delay by applicants, the amended provisions require that an applicant must apply for a date for the hearing of a review application within six months of commencing proceedings.  Judgment in review matters must be handed down within six weeks unless there are exceptional circumstances.

Finally, a new subsection provides that a review application interrupts the running of prescription in respect of an arbitration award.   

Amendment of section 147 of Act 66 of 1995

This section is amended to require the Commission to resolve disputes even where the parties have agreed to private dispute resolution if, in the case of lower paid employees, 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.

Substitution of section 150 of Act 66 of 1995

This amendment extends and regulates the circumstances in which the Commission may intervene to attempt to resolve disputes by conciliation at the request of the parties or where this is in the public interest, even if conciliation has already been attempted. The purpose of the provision is to empower the Commission to intervene when appropriate in protracted disputes in an effort to secure their resolution in the public interest. The Commission’s intervention does not affect the parties’ entitlement to strike or lock-out.  

Amendment of section 151 of Act 66 of 1995

This is a formal amendment to align the LRA with other statutory developments. 

Amendment of section 154 of Act 66 of 1995

These amendments provide for the tenure of Labour Court judges, who are currently appointed for a fixed term, and regulate their remuneration on the same basis as High Court judges.  These amendments are contained in a Schedule to the Superior Courts Bill, 2011 but have been included in this Bill because of the delays involved in the finalisation of the Superior Courts Bill. 

Amendment of section 157 of Act 66 of 1995

This is a formal amendment that excludes 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.

Amendment of section 158 of Act 66 of 1995

The powers of the Labour Court are clarified and amended in certain respects.  The amendments clarify that it is only in exceptional circumstances that the Labour Court may deal with review applications against decisions or rulings of the Commission before a matter has been finalised in the Commission. This seeks to limit the use of piece-meal review applications during arbitration proceedings as a mechanism for delay. In addition, when the Labour Court deals with a matter under the powers conferred by subsection 158(2) it will not do so as an arbitrator, but as the Court.

This means that any challenge to the Court’s decision will be by way of appeal to the Labour Appeal Court, and not on review to the Labour Court.  Finally, the amendment provides a period within which judgements of the Labour Court must be handed down.  

Amendment of section 159 of Act 66 of 1995

Formal amendments to this section are intended to ensure that a Rules Board for the Labour Court is appointed and meets regularly.

Amendment of section 161 of Act 66 of 1995

The section is amended to deal with the problem of labour consultants appearing in proceedings before the Labour Court under the guise of membership of, or being an official of, a trade union or employer’s organisation, or of another permitted category, when in fact they appear in a professional capacity and seek to charge fees for that appearance. 

Amendment of section 168 of Act 66 of 1995

This amendment allows Labour Court judges to be appointed to act in the Labour Appeal Court. This is intended to ensure that the Labour Appeal Court functions as a specialist institution.

Amendment of section 186 of Act 66 of 1995

This section is amended to remove an anomaly in the definition of dismissal which meant that employees engaged for a fixed term could claim dismissal on expiry of the term only if they could show that they reasonably expected the employer to renew the fixed term, but not if they could show that they reasonably expected to be retained in indefinite employment.  The amendment also clarifies that the termination of employment is a dismissal, whether or not there is a formal or written contract of employment.

Amendment of section 187 of Act 66 of 1995

This section is amended to remove an anomaly arising from the interpretation of section 187(1)(c) in National Union of Metalworkers of SA v Fry’s Metals (Pty) Ltd (2005) 26 ILJ 689 (SCA) which held that the clause had been intended to remedy the so-called “lock-out” dismissal which was a feature of pre-1995 labour relations practice. The effect of this decision when read with decisions such as Chemical Workers Industrial Union & others v Algorax (Pty) Ltd (2003) 24 ILJ 1917 (LAC) is to discourage employers from offering re-employment to employees who have been retrenched after refusing to accept changes in working conditions. 

The amended provision seeks to give effect to the intention of the provision as enacted in 1995 which is to preclude the dismissal of employees where the reason for the dismissal is their refusal to accept a demand by the employer over a matter of mutual interest. This is intended to protect the integrity of the process of collective bargaining under the LRA and is consistent with the purposes of the Act.   

Substitution of section 188A of Act 66 of 1995

Certain formal amendments are made to facilitate the use of CCMA commissioners to conduct disciplinary enquiries (currently referred to as pre-dismissal enquiries). The amendment seeks to promote the enquiries by arbitrators, which avoid the need to have both an enquiry and an arbitration hearing, by allowing their introduction through collective agreement.   In addition, the section is amended to avoid disputes where an employee claims that the holding of an enquiry into allegations of misconduct, and suspension pending such an enquiry, breaches the provisions of the Protected Disclosures Act.  By permitting either party to insist on an enquiry under this section the amended provision reduces the risk of collateral litigation, including High Court litigation, which has been common in these circumstances.