South Africa’s Constitution2 entrenches fundamental rights and contains several provisions that are relevant to employment and labour, which confer upon everyone the right to fair labour practices, provide for freedom of association for workers and employers and the right to participate freely in the activities of a trade union or employers’ organisation. Trade unions and employers’ organisations have the right to form and join federations and to engage in collective bargaining. The Constitution provides for the enactment of national legislation to, inter alia, regulate collective bargaining, and the legislation so enacted is the Labour Relations Act No. 66 of 1995 (LRA).
The LRA also provides for resolution of labour disputes through, inter alia, the establishment of the Commission for Conciliation, Mediation and Arbitration (CCMA), industry bargaining councils, the Labour Court and the Labour Appeal Court (LAC), which is, in principle at least, the final court of appeal for labour matters. However, where the dispute involves a constitutional issue, or the Constitutional Court is of the view that a matter raises an arguable point of law of general public importance which ought to be considered by that court, it is still possible to take the matter to the Constitutional Court. Employees can also enforce contractual employment rights in the normal civil courts.
The LRA provides protection for employees against unfair dismissal and unfair labour practices, with further guidelines supplied in Codes of Good Practice. The LRA extensively regulates dismissals on the basis of the operational requirements of the employer (retrenchments), and the rights of employees and the obligations of employers in the context of the transfer of a business (or part of a business) as a going concern.
Minimum conditions of employment are regulated by the Basic Conditions of Employment Act No. 75 of 1997 (BCEA). The BCEA applies to all employers and employees except ‘soldiers and spies’ and unpaid volunteers working for charity. The BCEA regulates working time, leave, particulars of employment and the keeping of records regarding remuneration, termination of employment (notice and severance pay), and the prohibition of child and forced labour. It provides for basic conditions to be varied in different ways. For example, a particular sector or industry can regulate its own terms via a bargaining council agreement, which then takes precedence over the BCEA (subject to some limited exceptions). A bargaining council comprises representative employers and unions in the industry concerned. In addition, the Minister of Labour (the Minister) may make sectoral determinations setting basic conditions for a specific sector and area, a number of which have already been made.
Discrimination and affirmative action issues are regulated by the Employment Equity Act No. 55 of 1998 (EEA). The Occupational Health and Safety Act No. 85 of 1993 (OHSA) imposes on all employers a general duty to provide and maintain a working environment that is safe and without risk to employees’ health. In addition, there are a number of specific regulations published under the OHSA. Work-related injuries and illnesses are covered by the Compensation for Occupational Injuries and Diseases Act No. 130 of 1993.
Unemployment benefits are regulated by the Unemployment Insurance Act No. 63 of 2001 and the Unemployment Insurance Contributions Act No. 4 of 2002.
Skills development in the workplace is regulated by the Skills Development Act No. 97 of 1998 (SDA) and the Skills Development Levies Act No. 99 of 1999, which requires compulsory contributions by employers to a statutory fund with the opportunity for employers to get refunds against the contributions if they implement workplace skills development plans and the like.
Save for a section regulating the registration of private employment agencies, the provisions of Employment Services Act No 4 of 2014 (ESA) came into effect on 9 August 2015. The purpose of the ESA is to increase productivity within South Africa, decrease levels of unemployment, and provide for the training of unskilled workers. While the ESA has various mechanisms for improving employment levels in the country and training the workforce, it remains to be seen whether these mechanisms will fulfil their legislative objective. Retirement funding and provision for medical insurance in South Africa is private unless regulated under a bargaining council agreement.
The employment of foreign nationals who are not asylum seekers, refugees or permanent residents is governed by the Immigration Act No. 13 of 2002 (Immigration Act) as amended and the Regulations published pursuant thereto on 26 May 2014, as well as various practice directives issued by the Department of Home Affairs which influence the execution and application of the law.
II YEAR IN REVIEW
Racism in the workplace and on social media was a feature of 2016 in South Africa. The year saw high-profile acts of racism by individuals who consequently faced disciplinary and other action from employers as a result of their racist remarks on social media platforms. It began with a former employee of a real estate company, who, among other things, described black beach-goers as ‘monkeys’ on Facebook. At the time, her Facebook profile showed her as being employed at the real estate agency. Even though she was in fact no longer employed at the real estate agency, the ensuing public outcry accused the agency of protecting racists, forcing the agency to take steps to distance itself from its former employee. More instances of racism on social media platforms followed later in the year and employers suspended or dismissed employees for such racist posts. By way of example, a newly hired employee of a advertising company was dismissed after only two days because of her use of grossly racist language at a horse racing event. A high-profile economist employed at a well-known bank was also suspended as a result of his commentary on Twitter that was regarded as racist and he subsequently left the bank’s employment. The Gauteng Department of Sports, Arts, Culture and Recreation also suspended an employee for posting a ‘barbaric and racist utterance’ when one of its employees posted that he wished to ‘cleanse’ South Africa of all white people. The Constitutional Court in South African Revenue Service v. Commission for Conciliation, Mediation and Arbitration and others also looked at the dismissal of a South African Revenue Service employee for racist comments, and his subsequent reinstatement, which had been upheld by the LAC. The Constitutional Court ruled that the employee had been guilty of two acts of racism, which demonstrated the worst kind of contempt, racism and insubordination, and this alone proved that reinstatement was entirely inappropriate.
This year also brought with it a wave of student protests across the country, a continuation of the 2015 ‘fees must fall’ protests. These protests were on a much larger scale, and led to damage to campuses and injuries to students and workers. The student protests were in support of demands for free tertiary education for all South Africans and ending the outsourcing of workers at universities. Previously, ‘non-core’ workers, such as cleaning, catering and gardening staff had been employed by universities and received benefits such as medical aid, a pension and free tuition at the university for themselves or their children. However, in an attempt to cut costs, these workers were outsourced to service providers and many workers were either retrenched or experienced a decrease in their wages and the loss of the benefits. The protest saw students and workers working together to end outsourcing of workers at universities. The first victory for workers was at the University of Johannesburg (UJ). UJ entered into an agreement with the workers that committed the UJ management to end all outsourcing contracts by June 2017. This spilled over into the University of Cape Town as well as the University of the Witwatersrand. In 2016, Pretoria University and the Tshwane University of Technology also gave in to the demands of the workers, however, negotiations are still ongoing at the University of the Western Cape and the University of Kwa-Zulu Natal, as well as other universities. It remains to be seen if these demands will spill over to other industries as well.
The year 2016 also saw the announcement of a proposed national minimum wage to address low wages, wage inequalities and bring greater labour stability. The proposed national minimum wage is 3,500 rand per month. This figure is not final, and still needs to be discussed and debated. Once it is final, there will likely be a two-year adjustment process to give employers time to implement the new minimum wage.
On collective labour law, the LAC considered the constitutionality of the extension of collective agreements to non-parties in Association of Mineworkers and Construction Union (AMCU) and others v. Chamber of Mines of South Africa acting in its own name and obo Harmony Gold-Mining Company (Pty) Ltd and Anglo Gold Ashanti Ltd and Sibanye Gold Ltd and others. After wage negotiations, the Chamber of Mines and three of the unions (NUM, Solidarity and UASA) concluded a collective agreement about wages that was extended to non-party unions and their members (under the LRA, unions representing the majority of workers in a workplace and employers can agree, in a collective agreement, to bind the rest of the workers in the same workplace to the collective agreement). Another union, AMCU, wanted to embark on strike action about wages and denied that it was bound by the extended collective agreement. Effectively, the protected nature of AMCU’s strike action depended on the interpretation of the statutory term ‘workplace’ and whether the power of the majority unions should be limited. In its judgment, the LAC confirmed the application of the principle of majoritarianism in collective bargaining as a justifiable limitation on the right of a minority union to embark on a strike, and AMCU’s strike was ruled to be unprotected.
In relation to foreign workers, the Immigration Act was last amended by the Immigration Amendment Act, 13 of 2011, which was promulgated in 2014 and came into effect with its regulations on 26 May 2014. While no legislative changes were introduced since the 2014 amendments, these introduced significant changes to the available categories of visas and the processes surrounding visa applications and the past two years have seen the Department of Home Affairs issue a number of directives which impact on the practical implementation of these new rules.
III SIGNIFICANT CASES
In Vodacom (Pty) Ltd v. Motsa & another, the Labour Court was required to determine whether the placement of an employee on ‘garden leave’ would affect the enforceability of a restraint of trade against that employee. In this case, Godfrey Motsa was appointed as Vodacom’s Chief Officer of its Consumer Business Unit. His contract of employment contained a six-month notice period and a gardening leave provision, which entitled Vodacom to require him not to report for duty during his notice period. In addition, he was bound by a restraint of trade in terms of which he was restrained, among other things, from working for a competitor, such as MTN, for a period of six months from the termination of his employment with Vodacom. When Mr Motsa tendered his resignation to Vodacom and it came to Vodacom’s attention that Mr Motsa had apparently been engaged in discussions with MTN to commence employment with it, Vodacom sought to enforce the gardening leave provision against Mr Motsa until the termination of his notice period, together with the restraint of trade.
The Labour Court held that it was entitled to have regard to both the gardening leave sterilisation period and the duration of the restraint of trade when determining the reasonableness and necessity of the restraint of trade. In this regard, the Labour Court held that the objective of the gardening leave provision was to protect the employer’s confidential information and keep employees away from competitors, while still being remunerated by the employer. On the other hand, in the case of a restraint of trade agreement, the employee is not commercially inactive outside the bounds of the agreement. In this case, the Labour Court held that ‘where the garden leave is found to have been excessive, the subsequent restraint might not be enforced, or fully enforced.’ On the facts before the Labour Court, the Labour Court found that Mr Motsa’s gardening leave of six months was not excessive, and that his restraint of trade for a period of six months was reasonable. This was so because Mr Motsa had access to significant confidential and proprietary information and Vodacom clearly had a proprietary interest worthy of protection for a period exceeding one year. The Labour Court accordingly enforced Mr Motsa’s restraint of trade undertakings and the six-month gardening leave period.
In Pioneer Foods (Pty) Ltd v. Workers Against Regression (WAR) and Others the Labour Court had to decide whether paying employees with longer service who perform the same work or work of equal value to their colleagues amounts to unfair discrimination. This case is among the first to be decided by the Labour Court in terms of the amendments made to the Employment Equity Act 55 of 1998, as amended (EEA). The first challenge that the Labour Court was faced with was establishing the ground on which the alleged discrimination was based. Given that WAR had not based its claim of discrimination on any of the listed grounds set out in Section 6 of the EEA, the Labour Court accepted that the claim was based on an unlisted or arbitrary ground.
The Labour Court held that in order for ‘mere differentiation’ among employees to amount to unfair discrimination, the reason for the differentiation must be irrational. The Labour Court further held that should one wish to rely on an ‘arbitrary ground’ in a discrimination claim, one must be able to illustrate, objectively, that the arbitrary ground is ‘based on attributes and characteristics which have the potential to impair the fundamental human dignity of persons as human beings or to affect them in a comparably serious manner’. The Labour Court also found that in circumstances where a wider interpretation of the term ‘arbitrary ground’ is adopted, one must be able to demonstrate that the differentiation was capricious or for no good reason (i.e., irrational). On the facts of this case, the Labour Court found that there was a rational connection in the difference in remuneration between employees who perform the same work or work of equal value on the basis of their length of service. Accordingly, the Labour Court held that the differentiation was not arbitrary and, as a result, was not discriminatory.
In CCMA v. MBS Transport CC and Others and CCMA v. Bheka Management Services (Pty) Ltd and Others, the LAC dealt with an appeal against the judgments of the Labour Court wherein it dismissed two urgent applications to stay the enforcement of the arbitration awards issued by the CCMA in terms of Section 143 of the LRA. These two matters were consolidated by the court a quo because the issues to be decided were similar. In both cases, the arbitration awards issued by the CCMA were certified by the Director of the CCMA. The LAC, in dealing with the enforcement of arbitration awards in terms of Section 143 of the LRA, which provides that ‘an arbitration award issued by a commissioner is final and binding and it may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued,’ held that the use of the words ‘as if it were’ in Section 143 of the LRA suggested that the legislature intended to create a legal fiction, which insinuates that when an arbitration award is certified by the director of the CCMA, it may be enforced as if it were an order of the Labour Court in respect to which a writ has been issued. Accordingly, it must be assumed that a certified arbitration award is not only an order of the Labour Court but also an order in respect of which a writ has been issued. The LAC further stated that the practical effect of Sections 143(1) and 143(3) of the LRA is that a certified arbitration award may be enforced without the need for a writ to be issued by any court or the CCMA. The LAC was of the view that Section 145(3) of the LRA is clear and that the enforcement of an arbitration award may be stayed by the Labour Court and further that the section has no qualification or limitation. The enforcement of any arbitration award issued in terms of the LRA may be stayed by the Labour Court pending its decision in a review application.
In Stewart v. Minister of Home Affairs, the High Court of South Africa, Western Cape Division, handed down a judgment aimed at allowing the spouses of South Africans to change the conditions of their visas from an ordinary visitor’s visa (tourist visa) to a spousal visa, in-country, whereas Section 10(6) if the Immigration Act disallows this by providing that a foreigner, other than the holder of a medical treatment visa or visitor’s visa, may apply to the Director General, in the prescribed manner, to change his or her status or terms and conditions attached to his or her visa, or both such status and terms and conditions. In casu, the court held that the provisions of Section 10(6) were unconstitutional, inter alia, on the basis that it required spouses to be separated from their families to return to their countries of origin in order to apply for a spousal visa.
Unfortunately, the VFS offices to whom visa applications must be submitted still disallow the submission of such applications in practice.
In Transport and Allied Workers Union of South Africa obo Ngedle and others v. Unitrans Fuel and Chemical (Pty) Ltd, seven workers striking over the unilateral reduction of their wages were joined by other employees of Unitrans (whose wages had not been unilaterally reduced), the employer dismissed these other employees claiming they were not party to the dispute and thus could not strike. The Constitutional Court held that other workers were entitled to join the strike even if they were not directly affected. The strike was therefore found to be a protected strike and the dismissal of the other employees was held to be unfair.
In Mnyandu v. Padayachi, an employee applied for a protection order in terms of the Protection from Harassment Act No. 17 of 2011 (the Protection from Harassment Act) relating to a single email sent out by the respondent fellow employee. The High Court found that the harassment of the employee was not objectively oppressive, nor did it have the gravity or repetitive nature to constitute harassment, although her conduct was unreasonable. What was noteworthy was that the High Court held that the Protection of Harassment Act can apply in a workplace, in addition to other employment laws that guide against harassment in the workplace, such as the EEA. The employment laws on harassment do not require repetitive conduct, whereas the Protection from Harassment Act does, according to this judgment.
In Mawethu Civils (Pty) Ltd another v. National Union of Mineworkers & Others, the LAC had to decide whether or not a dispute over the payment for a day off taken after a public holiday, (which had been a past practice where the employees in question had worked prior to the public holiday), was a mutual interest dispute entitling the employees to strike. The LAC held that a dispute about the payment of the day off was a dispute of right (which has to be adjudicated) as opposed to a dispute of interest (over which the employees may strike) as the practice constituted a benefit and unfair conduct relating to the provision of a benefit could be adjudicated under the LRA’s unfair labour practice jurisdiction. The strike was therefore unprotected. This judgment is a significant application of the limitation on the issues over which unions can strike and has already proven a useful tool for employers seeking to interdict strike action by its employees.
In Solidarity and Others v. Department of Correctional Services and Others, correctional services officers of a particular race group (‘coloured’) applied for promotional posts. Nine out of 10 were recommended for the positions by the interview panel but turned down by the senior management on the basis that a different race group (‘Africans’) needed to be affirmed instead, with regard to national racial demographics. The department’s employment equity plan set targets for different racial groups in various job categories based only on national racial demographics. The Constitutional Court considered the fact that in certain regions the regional racial demographics were very different to the national racial demographics. The court held that the department’s approach in only considering national demographics was incorrect, and that the correct approach would have been to set their targets and flexible numerical goals (as opposed to inflexible quotas) using both regional and national demographics when preparing its employment equity plan. While this dispute was decided based on the pre-amended EEA, the underlying principle of considering both regional and national demographics when setting targets and goals remain relevant for designated employers in the preparation of their own employment equity plans.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
The existence of an employment contract is not a prerequisite for an employee to qualify for statutory employment rights. The definition of an employee under most South African employment legislation is wide enough to include persons (excluding independent contractors) who assist in carrying on or conducting the business of the employer even though they may not be formally employed by the employer. Most employees in South Africa are, however, employed under employment contracts.
The BCEA obliges employers to provide their employees with written particulars of their employment conditions once the employee commences employment. Signatures on a contract are not legally required, subject to two limited exceptions, namely for written employment contracts under the Merchant Shipping Act No. 57 of 1951 and contracts relating to learners (i.e., apprentices) under the Skills Development Act.
The conditions of employment provided for under the BCEA constitute the basic terms of any employment relationship except to the extent that any other law or terms of the employment contract provide for more favourable terms, or where the basic condition has been varied in terms of the BCEA. Collective agreements, where applicable, can also vary the terms of employment contracts between the employers and employees who are bound by them.
Under South African law, employers and employees are generally free to conclude their contract of employment either for a fixed term or an indefinite period. The LRA places certain restrictions on the use of fixed term contracts for employees earning below the BCEA earnings threshold.3
Parties to an employment contract can only amend the contract by agreement. Agreement is obtained either through negotiation or, if this fails, after taking certain procedural steps parties can resort to industrial action (i.e., a strike in the case of employees or a lockout in the case of employers) aimed at compelling the other party to agree.
It is mandatory that all offers of employment to foreigners who require work visas be made subject to the employee procuring such a work visa before commencing employment.
ii Probationary periods
Probationary periods are permitted for newly hired employees in order to afford the employer an opportunity to evaluate the employee’s performance and suitability for employment before confirming his or her appointment. An employer must still have a fair reason and follow a fair procedure before effecting the dismissal of a probationary employee. The minimum notice periods for termination of employment described in Section XII.i, infra, also apply to employees on probation.
iii Establishing a presence
A foreign employer can hire employees and engage independent contractors in South Africa without being required to set up a local entity. A foreign employer may, however, be required to register as an external company (commonly referred to as a ‘branch’) with the South African Companies and Intellectual Property Commission if it ‘conducts business’ within South Africa as contemplated by the South African Companies Act No. 71 of 2008. A company is deemed to be conducting business in South Africa if it is (1) a party to one or more employment contracts within South Africa; or (2) engaging in a course of conduct that would ‘lead a person to reasonably conclude that the company intended to continually engage in business’ within South Africa.4
A non-resident employer is not obliged to withhold employees’ tax from remuneration (provided that it does not have a ‘representative employer’ as defined in South Africa). The employees themselves will be required to settle their tax liabilities in respect of the remuneration they receive from the non-resident employer for the services that they render in South Africa. This will be done through provisional tax payments.
If a foreign employer appoints a South African resident agent to pay remuneration on behalf of the foreign employer, the South African agent will be regarded as a representative employer of the foreign employer in South Africa and will be required to register as an employer with the South African Revenue Service and withhold employees’ tax from remuneration paid to employees of the foreign employer.
A foreign employer will be liable for income tax on its South African-sourced income. However, if there is a double taxation agreement in place between South Africa and the jurisdiction within which the foreign employer is resident (for the purposes of the double taxation agreement), and the income of the foreign employer comprises business profits, then the double taxation agreement would allocate taxing rights to the country in which the foreign employer is a resident, unless the foreign employer carries on business in South Africa through a permanent establishment. Most of South Africa’s double taxation agreements are based on the Organisation for Economic Co-operation and Development Model Tax Convention on Income and Capital (the Model Tax Convention).
The existence of a permanent establishment is determined with reference to Article 5 of the Model Tax Convention. Generally, however, what is required for permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on. There must be a fixed location or facility with a certain degree of permanence which is used for the conduct of business activities of the enterprise, and it must be utilised on a regular basis for business operations. Generally, business is regarded as being carried out through the employees of the enterprise, but a business may also be carried on through agents or other representatives of the enterprise, particularly where those representatives are dependent on the enterprise.
Therefore, if employees of a foreign employer spend significant periods of time in South Africa and carry on the business of the foreign employer in South Africa, these employees may create a permanent establishment for the employer in South Africa. If so, then the profits of the foreign employer that are attributable to the permanent establishment may also be taxed in South Africa.
If a South African-resident company employs employees in South Africa, whether the employees are foreign or local, employees’ tax must be deducted from remuneration at source and the employer is responsible for reporting and withholding the employees’ tax. Employers are required to provide few statutory benefits.
V RESTRICTIVE COVENANTS
Restraint of trade (i.e., non-compete or restrictive covenant) clauses can be included in employment contracts. Such clauses are in principle valid and enforceable and, as such, many restraints are enforced in South African courts every year. Nevertheless, when the employer seeks to enforce restraint provisions, the courts retain discretion as to whether to enforce the restraints and they will not enforce them if, in a particular case, such enforcement would be unreasonable or contrary to the public interest.
The reasonableness of a restraint is judged both on the broad interests of the public and the interests of the contracting parties themselves. Reasonableness as between the parties themselves depends on many factors, the most important of which is whether the employer has a proprietary interest that may legitimately be protected by means of a restraint agreement. Proprietary interests include confidential information and customer connections. The geographical area and duration of the restraint must also be reasonable.
It is not a prerequisite for the employer to financially compensate the employee in exchange for the employee undertaking restraint of trade obligations, although where such payments are made, this may enhance the enforceability of the restraint.
i Working time
Generally, no employee may work more than 45 ordinary hours a week and nine hours a day if he or she works a five-day week. Alternatively, the employee may not work more than eight hours a day if he or she works a six-day week. Total working hours may not exceed 12 hours a day. Wage-regulating measures specific to industries can have different provisions regulating working hours.
Night work (i.e., work performed after 6pm and before 6am the next day) may only be done with the employee’s consent and they must be compensated with an allowance, which may be a shift allowance or a reduction of normal working hours, and transport must be available between their residences and the workplace at the commencement and conclusion of the shift. If employees perform night work on a regular basis (i.e., work for longer than one hour after 11pm and before 6am at least five times a month or 50 times a year), the employer must inform them of health and safety hazards associated with night work and of their right to request a medical examination at the employer’s expense. If a regular night worker suffers from a health condition associated with the performance of night work, the employer must transfer the employee to suitable day work within a reasonable time if it is practicable to do so.
Employees generally enjoy the following statutory overtime benefits (excluding those who are not senior managerial employees, sales staff who travel to customers’ premises and regulate their own working hours, employees who work for fewer than 24 hours a month, or employees who earn above the BCEA earnings threshold:
- a An employer can only require an employee to work overtime where the employee’s agreement to do so has been obtained. If the employee’s agreement is obtained on commencement of employment or within three months thereof, the consent shall lapse after 12 months and must be secured again by the employer, after which the consent does not lapse. An employer must pay an employee at least one-and-a-half times the employee’s wage for overtime worked or grant the employee paid time off (e.g., 90 minutes off for every 60 minutes overtime worked).
- b Employees are not permitted to work more than 10 hours overtime a week or three hours overtime in a day if they work a nine-hour day.
iii National minimum wage proposal
A national minimum wage of 3,500 rand per month has been proposed, but is yet to be finally determined and enacted.
VII FOREIGN WORKERS
The employment of non-South African citizens who are not asylum seekers, refugees or permanent residents (foreign workers) is governed by the Immigration Act 2002, as amended, as well as the regulations thereto.
The Act and regulations impose obligations on any person or organisation that employs a foreigner, regardless of the business’s size or number of employees, although stricter compliance is required of any employer with more than five employees or who has been found guilty of a prior offence under the Act.
An authorisation to work is required irrespective of the duration for which services will be rendered within South Africa. A business visitor’s visa is suited to temporary placements of less than 90 days. Where a traveller, such as an academic, business person or frequent visitor, has established himself or herself as a bona fide frequent visitor, they may be issued with a two to three-year multiple entry visa. Longer placements require a temporary residence work visa such as an intra-company transfer, a general work visa or a critical skills visa.
There is no restriction on the number of foreign workers that an employer may employ or on the number of categories under which work visas may be applied for. Nonetheless, the work visa process guards against employing foreign workers in positions that can be filled by locals.
By way of example, the regulations provide that a company wishing to obtain a corporate visa or a business visa must have a workforce that is made up of at least 60 per cent South Africans, and that an application for a general work visa must include a certificate from the Department of Labour confirming that despite a diligent search the employer has been unable to find a South African citizen or permanent resident with equivalent qualifications and skills or experience. The Department of Labour’s application process for such certification includes the submission of proof of advertisement of the position as well as a letter of motivation from the employer and from a recruitment agency detailing the labour market test and disclosing the details of all unsuccessful applicants for the position and justifying the need to employ a foreign worker in that position.
No labour market testing is required when applying for a critical skills visa, which facilitates applications for foreigners who meet the minimum qualifications and experience listed on the critical skills list published in terms of the Regulations.
Similarly, no labour market testing is required when applying for an intra-company transfer work visa. However, an undertaking must be given to develop a skills transfer plan.
Intra-company transfer work visas may be issued for a maximum of four years and cannot be renewed. Upon expiry of the visa, the holder must depart from South Africa and apply for a new visa abroad if they are required to remain in South Africa.
There is no general legislative cap on the period for which a foreign worker may be employed in aggregate, although the Immigration Act does provide maximum periods for which certain categories of work visas may be granted.
Any foreigner worker needs to obtain a work visa to render services in South Africa irrespective for the time frame for which they are required to render services locally, and notwithstanding the fact that they may be employed through a foreign entity. Foreign workers and their employers can be fined, jailed, or both, for non-compliance with their obligations in this regard.
South African employment laws are of universal application for employees that fall within their jurisdiction. They therefore apply to foreign workers working in South Africa, even if they are working illegally in contravention of their visa status.
To ensure regulatory compliance, an employer in South Africa must maintain documentary records for each foreign employee for two years after the termination of employment. The employer must also report to the authorities the termination of a foreign worker’s employment and any breach by the worker of his or her status. Employers must also make a reasonable effort in good faith to ensure that they have no illegal foreigners in their employ and to ascertain workers’ status or citizenship.
South African immigration laws provide for strict identification methods for children, such as requiring the production of unabridged birth certificates and other consent and identification documentation in visa applications for accompanying minors.
VIII GLOBAL POLICIES
Schedule 8 of the LRA provides for a Code of Good Practice on Dismissals, the purpose of which is to establish guidelines for employees and employers. Section 3 of the Code of Good Practice suggests that employers should adopt disciplinary rules that establish the standard of conduct required of their employees, to create certainty and consistency in the application of discipline. Although advisable, employers are under no legal obligation to have written internal discipline rules and individual employers may decide whether they want to establish written rules to regulate conduct in the workplace.
In general, an employer does not require the approval or agreement of its employees or their representative body when deciding to introduce discipline rules, unless the rules form part of their employment contracts and the employer wishes to amend the rules. Approval and agreement may also be required where there is a collective agreement between the employer and the representative body stipulating that employees or their representative body must approve or agree to discipline rules before the rules may be introduced or amended. There is also no requirement for the rules to be filed with or approved by any government authorities but such disciplinary rules must be lawful and fair.
Although there are no mandatory discipline rules, issues of discrimination and sexual harassment are prohibited by specific legislation, most notably the EEA and codes published pursuant to the EEA. Employers must also report acts of corruption to the authorities.
There is no requirement that the rules governing discipline in the workplace be signed. It is nonetheless good practice to get employees to sign some form of acknowledgement that they are aware of the existence of the rules and have been given an opportunity to familiarise themselves with them. This may be done electronically.
The rules should be accessible to all employees and, if possible, copies of the rules should be given to all employees. If this is not possible, then copies should be available from designated persons, such as human resources managers, for inspection by employees. An intranet site is insufficient if the employees do not have access to it or do not know how to access it.
Individual employers are free to decide whether or not they want to incorporate the disciplinary rules into employees’ employment contracts, but generally it is not advisable to do so. In cases where the disciplinary rules are incorporated into the employee’s contract of employment, any minor breach of the rules will constitute a breach of contract that may be actionable. In addition, the rules will then become part of the employees’ terms and conditions of employment and may not be changed without the employees’ consent.
There is no legal requirement that employment-related documents be translated, unless the employee is not able to understand them, in which case the employer should ensure that the contents of the documents are explained to the employee in a language and in a manner that the employee understands.
There are no penalties if the document is not translated. However, if it is not translated (in circumstances where it is required as described above), the risk is that the employer may be directed by the Department of Labour to translate the documents or they may be unenforceable against the employee in question.
X EMPLOYEE REPRESENTATION
Employees are permitted to form and join a registered trade union of their choice. Employees, through their trade unions, are also permitted to establish workplace forums in their workplace where the employer employs more than 100 employees to consult on numerous defined workplace issues. Such workplace forums are rare.
A majority union in a workplace in which at least 10 of its members are employed may elect union representatives from its members in accordance with the following ratio:
- a 10 members in the workplace: one representative;
- b more than 10 members: two representatives;
- c more than 50 members: two representatives for the first 50 members plus one representative for every additional 50 members (up to a maximum of seven);
- d more than 300 members: seven representatives for the first 300 members plus one representative for every additional 100 members (up to a maximum of 10);
- e more than 600 members: 10 representatives for the first 600 members plus one representative for every additional 200 members (up to a maximum of 12); or
- f more than 1,000 members: 12 representatives for the first 1,000 members plus one representative for every additional 500 members (up to a maximum of 20).
Unions that do not have majority representation may nonetheless elect union representatives from their members if a collective agreement is concluded with the employer concerned that allows for this. The constitution of the trade union (together with any constraints and obligations that may exist in terms of a collective agreement, if any) will govern the nomination, election, term of office and removal from office of the representatives. It will also regulate the holding of meetings and the issues related thereto. In terms of the amendments to the LRA, any registered trade union which represents a ‘significant interest’ or a ‘substantial number of employees’ in the workplace may be entitled to be recognised for organisational rights, irrespective of a collective agreement to the contrary.
Representatives have the right to assist and represent employees in grievance and disciplinary proceedings, to monitor the employer’s compliance with labour laws and any collective agreements and to report any contraventions of these laws and agreements. They also have the right to perform any other functions as agreed with the employer and to take reasonable time off work for trade union activities. Representatives may not be discriminated against in any way, or dismissed, for their involvement in trade union activities. However, representatives remain employees of the employer, and generally remain subject to its rules on discipline and its other workplace rules.
Depending on the level of representation of the union, an employer must allow it access to the workplace in order to recruit members, communicate with them, hold meetings, and otherwise serve them and grant stop orders due to the union from the employees’ wages.
XI DATA PROTECTION
i Requirements for registration
Comprehensive legislation regulating data protection was published in 2013 in the form of the Protection of Personal Information Act 4 of 2013 (POPI), but this has not fully come into effect yet. The many substantive obligations provided for in POPI are thus not yet binding or applicable, and it is unknown when these substantive provisions will come into operation. Once the substantive provisions of POPI are made effective, companies will be given a one-year grace period to comply with its provisions, unless this grace period is extended. Once operative, POPI will place restrictions on what information may be collected from employees and applicants and processed by employers. POPI does not require employers to register with a data protection agency or other government body, but an employer can only collect and store personal information about its employees if it has notified the Information Protection Regulator and the employees, and it is necessary or related to a lawful and permitted purpose under the legislation.
Personal information may only be collected by an employer directly from and with consent of the employee, who must be informed of the purpose of any collection and who the intended recipients are when the information is collected. Personal information should not be kept for longer than necessary to achieve the (permitted) purpose for which it was collected and it must be distributed in a way that is compatible with the purpose for which it was collected. The employer must take reasonable steps to ensure that the information is accurate, up to date and complete.
Under POPI the employer must ensure that the employee’s information is protected against risks of loss, damage destruction or unauthorised access. The employees must also be allowed to access their personal information and can demand that their information be corrected if it is found to be inaccurate.
ii Cross-border data transfers
POPI prohibits cross-border (and onward) transfers of personal information to countries that do not have substantially similar protections for the information (except under limited circumstances). Notification of transfers of sensitive personal information or the personal information of children must be given to the Information Regulator, and an employer must obtain the Information Regulator’s prior authorisation before processing such information. The employee’s consent to the transfer is generally required. The transfer must also be necessary under contractual arrangements involving the employee. Authorisation from the Information Regulator need only be obtained once and not each time that personal information is received or processed, except where the processing departs from that which has already been authorised.
iii Sensitive data
POPI considers the following information to be ‘special personal information’ for which additional protections are required: information concerning children; religious or philosophical beliefs; race or ethnic origin; trade union membership; political persuasion; health, sex life or biometric data of a data subject; and criminal behaviour in certain instances.
This special personal information may not be processed by an employer unless specifically permitted under exemptions provided for in the legislation. An example of an exemption would be the processing of racial information because the employer is required to comply with laws designed to protect or advance persons from groups historically disadvantaged by unfair discrimination (in terms of the EEA).
iv Background checks
Background checks are generally permitted provided they do not involve checks that amount to unfair discrimination under the EEA.
A Code of Good Practice issued under the EEA stipulates that an employer should only conduct an integrity check – such as contacting credit references and investigating whether the applicant has a criminal record – if this is relevant to the requirements of the job. The National Credit Act No. 34 of 2005 also stipulates that a credit bureau can only issue a credit report to a prospective employer when the employer is considering the candidate for a position that requires trust and honesty and entails the handling of cash or finances, and only with the prior consent of the candidate.
Medical testing is only permitted if legislation permits or requires it or if it is justifiable in the light of medical facts, employment conditions, social policy, the fair distribution of employee benefits, or the inherent requirements of the job. Testing an employee for his or her HIV status is prohibited unless determined to be justifiable by the Labour Court. Psychological testing and other similar assessments are also prohibited unless the test has been scientifically shown to be valid and reliable and that it can be applied fairly to all employees and is not biased against any employee or group of employees.
The Immigration Act and regulations thereto provide that medical reports and chest X-rays must be submitted in support of temporary and permanent residence visa applications. Police clearance certificates are also required from all countries where the temporary or permanent residence visa applicant has resided for more than a year since their 18th birthday.
v Information Regulator
On 7 September 2016, the chairperson and members of the Information Regulator were appointed. The Regulator will be responsible for education on POPI, the monitoring and enforcement of compliance with POPI, handling any POPI related complaints as well as performing research functions and facilitating cross-border compliance.
XII DISCONTINUING EMPLOYMENT
Employees in South Africa may not be dismissed without cause as dismissals are required to be for a fair reason and effected pursuant to a fair procedure.
There are no requirements to notify government authorities of dismissals. In some instances, an employer must consult a trade union about pending dismissals, for example where the employee is a trade union representative or where union members are to be made redundant.
The grounds upon which an employer can fairly dismiss an employee are misconduct, incapacity (which can be in the form of medical incapacity or poor performance) and the operational requirements of the employer (i.e., redundancy, which is dealt with below in more detail). Dismissal may be summary where this is warranted (e.g., in cases of serious misconduct) but otherwise the employee must be given notice (the BCEA stipulates minimum notice periods of one week for employees with less than six months’ service, two weeks for employees with service between six months and one year, and four weeks for employees with service over a year). Employers may pay their employees in lieu of notice.
An employee whose employment is fairly terminated for misconduct or poor performance is not entitled to any separation or severance pay. For the severance pay requirements in cases of redundancy, see the section below. It is possible for employers to conclude separation or settlement agreements with departing employees.
An employee may be dismissed for a reason relating to the employer’s ‘operational requirements’, namely, requirements based on the employer’s economic, technological, structural or similar needs. A dismissal based on operational requirements must be both procedurally and substantively fair, as is the case with any other dismissal in South Africa.
The process that must be followed when considering dismissals for operational reasons is set forth in Section 189 or 189A of the LRA. The basic Section 189 provisions apply to all retrenchments and Section 189A imposes additional procedural requirements, where large businesses conduct large-scale retrenchments. An employer is a large employer if it employs 50 or more employees.
Section 189 requires consultation with the employees who may be affected or their representatives (e.g., trade union, workplace forum) on the proposed retrenchments. There is no requirement to notify a works council or the government.
The employer must commence the consultation process as soon as it contemplates retrenchments. The employer must consult on ways to avoid retrenchment, to minimise the number of retrenchments, to change the timing of retrenchments, to mitigate the hardships caused to employees who are retrenched, to select the employees to be retrenched, and on severance pay. Consultation must commence with the employer issuing a written notice inviting the other party to consult and disclosing relevant information to enable the other consulting party to engage in the consultation process. Facilitation is an additional process available to the parties to a large-scale retrenchment on request. Facilitation occurs alongside the normal consultation process and is essentially consultation with the assistance of a commissioner appointed by the CCMA. The facilitator’s job is to help the parties with their discussions and their attempts to reach agreement on as many issues as possible in relation to the proposed retrenchment.
If the employer falls under a bargaining council, it is advisable to check whether or not the bargaining council agreement has any special provisions relating to retrenchment with which it must comply.
No social plan is required but as part of its duty to avoid retrenchment wherever possible the employer must explore alternatives to retrenchment. Where the employer has alternative work that an affected employee can do (even if some training is required), the employer should accommodate the affected employee. The employer must also consult about the method of selecting employees to be retrenched and in the absence of agreed criteria must adopt fair and objective criteria. There is no category of employee protected by law from retrenchment where genuine operational requirements exist.
There are statutory rights to severance pay for retrenched employees. An employer must pay an employee dismissed for operational requirements severance pay equal to at least one week’s remuneration for each completed year of continued service with that employer. Where the employer and employee have agreed, in advance or otherwise, to a higher amount of severance pay, the rights under such agreement are unaffected by the lower statutory minimum. Employees who unreasonably refuse offers of alternative employment with the retrenching employer, or any other employer, are not entitled to severance pay.
The employer must consult about the possibility of rehiring retrenched employees if business picks up or if it is later considering hiring people for the sort of work that the retrenched employee performed. Usually the parties agree on how long the rehiring arrangement will apply and make it subject to the employees remaining contactable.
Employers may conclude settlement agreements with retrenched employees that entail a release of claims from the former employee.
The employer is obliged to notify the Department of Home Affairs upon discontinuation of the employment of a work visa holder.
XIII TRANSFER OF BUSINESS
In terms of Section 197 of the LRA, if a transfer of a business takes place, unless otherwise agreed, the new employer is automatically substituted in place of the old employer in respect of all employment contracts in existence immediately before the date of transfer and all rights and obligations between the old employer and an employee at the time of the transfer continue to be in force, as if they had been rights and obligations between the new employer and the employee.
Various statutory requirements must be met in order for a transaction to fall within the ambit of Section 197 of the LRA. Whether Section 197 of the LRA applies to a specific transaction, depends on the following:
- a the relevant business transaction must be a ‘transfer’ envisaged by Section 197 which means that the business must be transferred as a ‘going concern’; and
- b the entity being transferred must be a ‘business’ (which is defined to include a part of a business, a trade, an undertaking or a service).
The test for whether or not there is a going-concern transfer is an objective one, where the substance of the transaction is considered, rather than its form. The courts have formulated a test that involves taking a ‘snapshot’ of the entity before the transaction and assessing its components. This is then compared with a snapshot picture of the business after the transaction is concluded to establish whether it is essentially the same business but in different hands. There is, however, no inflexible test and each transaction is considered on its own merits.
The buyer of the transferred business (the new employer), must provide employees with terms and conditions that are generally not less favourable than those that applied before the transfer. However, the buyer can transfer employees to different retirement plans or similar schemes. Employees cannot be dismissed due to the transfer of a business or any reason related to the transfer.5 A dismissal that breaches this provision is automatically unfair.
It is possible to contract out of the provisions of Section 197 but only if the requirements of Section 197(6) are met. This means that the employers must negotiate with the same body that would have had to be consulted in the event of a retrenchment and must make full disclosure of all relevant information during the negotiation process.
Work visas are employer and position specific, and a work visa holder may not continue working on the existing work visa but must apply for an amendment to the visa to authorise work for the new employer.
The changes to South African employment legislation as a result of the amendments to the EEA, the BCEA and the LRA, will continue to have a profound effect on the South African employment landscape, particularly in relation to the regulation of forms of atypical employment, which includes the use of labour brokers (agency workers), fixed-term and part-time employees, and in relation to organisational rights, picketing and other areas. Employers who make extensive use of temporary employment services (labour brokers and agency workers) and whose employees earn below the BCEA threshold should reconsider their staffing and operational requirements in light of the extensive liability introduced by the amendments to the LRA. This includes the potential for the labour broker’s client to be deemed to be the employer of the labour broker worker, with joint unfair dismissal liability, and the worker being entitled to treatment, on the whole, no less favourable than an employee of the client performing the same or similar work, unless there is a ‘justifiable reason’ for different treatment. It also includes the potential for fixed-term contract employees, employed for a period longer than three months without a justifiable reason, being deemed to be employed indefinitely and treated, on the whole, no less favourably than an employee employed on a permanent basis, performing the same or similar work, unless there is a justifiable reason for different treatment.
In light of the looming and imminent threat of South Africa’s sovereign credit rating being downgraded to junk status, the report of the Expert Advisory Committee on the National Minimum Wage generates hope for the South African labour relations environment. This is so because it is believed that a national minimum wage will restore stability in times ahead. It has been reported that government, labour and businesses are reaching a broad consensus on the implementation of a national monthly minimum wage of 3,500 rand a month. The Expert Advisory Committee’s report recommends that a minimum wage be phased in over two to three years, and that provision be made for employers to apply for exemptions.
Notwithstanding the above, the recommendations of the Expert Advisory Committee report remains a contentious issue for now, with some contending that employees are placed in good stead with the possibility that the national minimum wage will address income inequality. Alternatively, some hold the view that the introduction of the national minimum wage will put a further damper on South Africa’s already high unemployment rate, which is 27.1 per cent according to Statistics South Africa.
It has also been reported that government, labour and businesses are reaching a broad consensus on measures aimed at preventing long and violent strikes.
South Africa’s Deputy President, Mr Cyril Ramaphosa, has indicated that it has broadly been agreed between government, labour and businesses that balloting should take place before a strike is initiated. Since the obligation to have a ballot prior to a commencement of a strike would require trade unions to amend their constitutions to incorporate this requirement, provision for a transitional period would have to be made for the trade unions to do so. In this regard, consensus, to a large extent, has been reached between government, labour and businesses that the LRA should be amended to provide for a compulsory mediation and arbitration process to ensure peaceful strikes and to prevent strikes from continuing on an indefinite basis.
Practically, the introduction of a ballot may see democratisation on the shop floors. Notably, however, the requirement for a ballot is likely to lead to strikes that would otherwise be lawful being interdicted on technical points (i.e., on the basis that a proper ballot was not held). It remains to be seen whether a deal will be struck between government, labour and businesses. It would seem, however, that labour relations in South Africa are headed in a positive direction – at least for investors, in that the proposed amendments to the LRA may lead to less militant and violent strikes.
Recently, in Casual Workers Advice Office and Others v. the CCMA, the Labour Court held that Commissioners of the CCMA have the discretion to authorise that any party to CCMA proceedings may be represented by any other person if good cause can be shown. The CCMA, having been ordered by the Labour Court to do so, has since issued a practice note that provides that Commissioners are now required to give consideration to applications for representation made by parties’ representatives, other than a legal practitioner, a director or employee of the party (and if it is a close corporation, also a member thereof), and any member, office bearer or official of that party’s registered trade union or a registered employers’ organisation. In light of this development, one can expect to see an increase in the number of applications for representation by labour consultants and ‘community advice offices’ before the CCMA in the near future.
Given the effect of the recent LAC decision in CCMA v. MBS Transport CC and Others, CCMA v. Bheka Management Services (Pty) Ltd and Others, employers will have to carefully consider the merits of taking unfavourable CCMA arbitration awards on review. The reason for this is that this judgment has rendered certified CCMA arbitration awards executable, even in circumstances where security has already been furnished by the party launching the review application. Accordingly, employers may now need to obtain undertakings from trade union representatives or former employees in which they agree that they will not execute against the arbitration award in circumstances where a review application has been launched by the employer in the Labour Court. Employers are therefore advised to err on the side of caution and to carefully evaluate the prospects of success of a review application prior to launching one. This will only assist the employer should it wish to stay the execution of a certified CCMA arbitration award.
It is clear from the above that the South African labour market remains ever changing and dynamic and appears to be moving in a more positive direction for investors.
1 Stuart Harrison, Brian Patterson and Zahida Ebrahim are directors at ENSafrica. Susan Stelzner was also a director of ENSafrica. She sadly passed away on 5 January 2011 but this chapter continues to reflect her invaluable contribution and it remains dedicated to her memory.
2 The Constitution of the Republic of South Africa, 1996.
3 As of 1 December 2014, this is 205,433.30 rand per annum.
4 Section 23(2) of the Companies Act.
5 Section 187(1)(g) of the LRA.