Labour Relations Act Amendment 2014: An Overview of Material Changes

On 18 August 2014, the President of the Republic of South Africa assented to the Labour Relations Amendment Act 6 of 2014 (“Amendment Act”). The Amendment Act came into effect on 1 January 2015 and introduces significant changes to the Labour Relations Act 66 of 1995 (“LRA”). The most crucial of these amendments are briefly addressed below:

TEMPORARY EMPLOYMENT SERVICE (“TES”), MORE COMMONLY TERMED “LABOUR BROKER”

Section 198 of the LRA makes provision for the contracting of a workforce through a temporary employment service or labour broker and section 198(2) specifically states that “for the purposes of the LRA a person whose services have been procured for or provided to a client by a temporary employment service is the employee of that temporary employment service, and the temporary employment service is that person’s employer.

The new section 198A (1) introduces a deeming provision, which applies only to employees earning below the prescribed earnings threshold referenced in the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) [currently R205 433.30 per annum]. These employees will only be regarded as employees of the TES if they are performing Temporary Services. “Temporary Services” are defined as:

  • Services limited to a fixed time period of not more than three (3) months, or
  • Where the employee is substituting for a temporarily absent permanent employee of another employer i.e. the client of the TES, or
  • Where a particular work category is designated as a temporary service, or the maximum temporary period is determined by way of a collective agreement in a bargaining council or by way of a sectoral determination.

Only those employees falling under the above definition will be regarded as actual employees of the TES itself. Employees that fall outside the ambit of the definition and who earn less than the BCEA earnings threshold are deemed to be employees of the client of the TES, with the consequence that the client takes on all dismissal obligations and liabilities. Furthermore an employee may not be employed by a TES on terms and conditions contrary to the various employment laws, provisions and collective agreements applicable to the client with whom the employee is placed.

The TES and its clients continue to be jointly and severally liable should the employment of the employee contravene a collective agreement or binding arbitration award regulating the terms and conditions of employment, the BCEA and/or a sectoral determination made in terms of the BCEA.

The new amendment now allows the employee or a labour inspector to take action either against the TES, the client or both where joint and several liability applies or in instances where the client is deemed to be the employer.

An employee deemed to be an employee of the client must be treated on the whole no less favourably than an actual employee of the client performing the same or similar work, unless the distinction is justifiable.

A TES will in due course have to be registered as such with an appropriate statutory body.  The applicable legislation for such has yet to be confirmed.

FIXED TERM CONTRACTS OF EMPLOYMENT

The amendments have also introduced a deeming provision in relation to fixed term contracts of employment.

Employees earning below the BCEA earnings threshold and employed on a fixed term employment contract for longer than three (3) months or on successive fixed term contracts totalling more than three (3) months, will be deemed to be employed permanently, unless the employer can show a justifiable reason for fixing the contract period.

Recognized, justifiable reasons for employing on a fixed term contract for longer than three (3) months are the following:

  • If the employee replaces a permanent employee of an employer that is temporarily absent;
  • If there is a temporary increase in the volume of work of an employer, provided the contract is then not for a period of more than twelve (12) months;
  • If the employee is a student or recent graduate being trained for a profession;
  • If the employee is exclusively employed on a specific project that has a limited or defined duration;
  • If the employee is not a citizen and the employment is linked to the period of the employee’s work permit;
  • If the employee performs seasonal work;
  • If the employee is engaged in an official public works scheme or public job creation scheme;
  • Where the position the employee occupies is funded by an external source for a limited period; and
  • If the employee has reached normal or agreed retirement age.

Fixed term employees now deemed to be permanently employed may not be treated any less favourably than permanent employees performing the same or similar work unless justifiable reasons exist for this, such as length of service, merit and quality or quantity of work.

Should a fixed term contract run in excess of two (2) years, an employee will now be entitled to payment equal to one (1) week’s remuneration for every full year of service upon expiry of the contract period. An exception to this is where, prior to the expiry of the fixed term contract, the employer offers the employee employment or procures employment for the employee with a different employer on the same or similar terms, which commences at the expiry of the contract.

Where previously an employee could claim dismissal only if the employee reasonably expected the employer to renew a fixed term contract on the same or similar terms, an employee can now also claim dismissal where there is a reasonable expectation of permanent employment, which is not honoured by the employer.

PART TIME EMPLOYEES

A part-time employee is defined as an “employee who is remunerated wholly or partly by reference to the time the employee works and who works less than a compatible full-time employee.

  • The new amendments introduce certain protections for part time employees earning below the BCEA threshold and employed with an employer who employs less than ten (10) employees or an employer who employs less than fifty (50) employees where the business has been in operation for less than two (2) years. Additionally, these protections do not apply to employees who work less than twenty-four (24) hours in a month and during an employee’s first three (3) months of continuous employment.
  • Where a part-time employee qualifies for protection, an employer must treat the part time employee on the whole no less favourably than a full time employee doing the same or similar work. There must be a justifiable reason for different treatment. The employer must also provide the employee with access to training and skills development on the whole no less favourable to that accessible by a full time employee. Further, the employer must allow the part time employee access to opportunities and to apply for vacancies as is provided to full time employees.

PICKETING

Employees engaged in protected strike action may be permitted to picket not only at their employer’s premises, but also at the premises owned or controlled by other parties. Thus, the employees of labour brokers may be allowed to picket at the client’s premises and employees employed by a chain store in a mall could notionally picket in the mall.

TRADE UNIONS AND ORGANISATIONAL RIGHTS

Unions representing the employees of a TES are permitted to exercise their organisational rights not only in the workplace of the TES but also at the client’s premises despite the employees of the TES not being employees of the client. Additionally, the amendments have made it easier for minority unions to obtain organisational rights entitling them to trade union representatives and disclosure of information (section 14 and 16 rights) without having majority representation in the workplace. A commissioner now has a discretion to award these rights to a minority union on condition the union is already sufficiently representative and therefore entitled to rights under section 12 (access to workplace), section 13 (deduction of union membership fees) and section 15 (leave for trade union activities). In addition, the minority union may only acquire section 14 and 16 rights if it is the only sufficiently representative trade union in the workplace that has section 12, 13 and 15 rights.

REVIEW OF ARBITRATION AWARDS

Review proceedings brought by an employer in respect of an arbitration award will no longer suspend the enforcement of such an arbitration award, unless the employer furnishes security to the Labour Court or can show that in the interest of justice, security should not be furnished. Security in the case of reinstatement must be equal to two (2) years remuneration of the employee and security for compensation must be equal to the amount awarded.  Review proceedings must still be implemented within six (6) weeks of the date of the arbitration award and the applicant must now, within six (6) months of launching the review proceedings, finalise the pleadings and record, so that the review is ready to be heard by the Labour Court.

AUTOMATICALLY UNFAIR DISMISSALS AND MATTERS OF MUTUAL INTEREST S 187(1)(c)

It would seem that the amendment to section 187(1)(c) of the LRA is in response to the Supreme Court of Appeal decision in National Union of Metalworkers of South Africa v Fry’s Metals (Pty) Ltd [2005] 3 All SA 318 (SCA). The SCA gave s187(1)(c) a narrow interpretation with the effect that employers could retrench employees, if the employees were unwilling to agree to changes to their terms and conditions of employment provided that such changes could be justified based on the employer’s operational requirements. Following the amendment to section 187(1)(c) a dismissal is now automatically unfair …“ if the reason for the dismissal is a refusal by employees to accept a demand in respect of any matter of mutual interest” and no longer “if the reason for the dismissal is to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee.”. Where an employee faces dismissal through operational requirements and is given an alternative to dismissal, but refuses to accept it, taken literally, the amendment will cause the dismissal based on such refusal to be automatically unfair. A further possible unforeseen consequence of this amendment is the dismissal of an employee, who is not performing satisfactorily and is offered an alternative, more suitable position, which is then rejected by the employee.

This is a controversial amendment, and one with far reaching consequences if applied literally, and we wait to see how our courts will deal with it in future.

 

Justine Del Monte

Justine has a BLC and LLB (cum laude) from the University of Pretoria and was admitted as an attorney in 2002. She spent 6 years at Irish Ashman Attorneys where she rose to the level of partner before leaving to focus on her employment law practice. She joined Caveat Legal in 2015.

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