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 courts and the Labour Appeal Court (LAC), which is, in principle at least, the final court of appeal for labour matters. However, when a dispute involves a constitutional issue, or the Constitutional Court (CC) is of the view that a matter raises an arguable point of law of general public importance that ought to be considered by that court, it is still possible to take the matter to the CC. 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 may make sectoral determinations setting basic conditions for a specific sector and area, a number of which have already been made. The National Minimum Wage Act No. 9 of 2018 (NMWA), which came into effect on 1 January 2019, sets a minimum wage for all workers in South Africa (except farmworkers, domestic workers and workers in the Expanded Public Works programme).
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 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 obtain 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 (the 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 that influence the execution and application of the law.
II YEAR IN REVIEW
This past year brought with it significant changes to the labour laws in South Africa, such as amendments to the LRA and the BCEA and the introduction of the NMWA. Regulations regarding picking rules and ballots in strikes have also been introduced, and a Code of Good Practice on Collective Bargaining, Industrial Action and Picketing. Besides changes to the labour laws, 2019 also saw the introduction of the proposed National Health Insurance Bill, which, if enacted, may affect employee benefits.
The NMWA sets a national minimum wage (NMW) of 20 rand per hour, payable by an employer for every worker ('worker' is defined in the NMWA as a person who works for another and receives payment or is entitled to receive payment for that work, whether in cash or kind), except farmworkers, domestic workers and workers in the Expanded Public Works programme who are exempt from the NMW. The latter are entitled to payment as follows: 18 rand per hour for farmworkers, 15 rand per hour for domestic workers, and 11 rand per hour for workers in the Expanded Public Works programme. These sectors are exempted for two years, after which the NMW will also apply to workers in these sectors. A NMW commission will review the NMW annually and make recommendations to the Minister of Labour on any adjustments thereto.
To enforce the provisions of the NMWA, amendments were made to the BCEA to provide for the monitoring and enforcement of the NMW and the extension of the jurisdiction of the CCMA to include enforcement procedures for claims relating t0 the failure to pay any amount owing to an employee in terms of the BCEA (or a worker in terms of the NMWA) or in terms of a sectoral determination, a collective agreement or a contract of employment. Workers now have a choice to enforce the payment of amounts due to them – such as leave pay, or overtime pay, or payment of the NMW – either through the Department of Labour or through the CCMA. The amendments to the BCEA also introduce three new categories of leave to which employees are entitled: parental leave, adoption leave and commissioning parental leave.
The amendments to the LRA provide for the mandatory establishment of, inter alia, picketing rules, which must be agreed between the parties to a dispute before the commencement of a protected strike. If no picketing rules are agreed by the parties, they can be unilaterally determined by the CCMA. No strike or lockout may take place without picketing rules being established. The LRA also provides that trade unions must now have provision in their constitution for a ballot of their members (about whether to strike) before going out on strike. The ballot must be recorded and secret.
Finally, the introduction of the Code of Good Practice on Collective Bargaining, Industrial Action and Picketing is intended to provide practical guidance on collective bargaining, the resolution of disputes of mutual interest and the resort to industrial action, and to guide those who engage or want to engage in collective bargaining, or who seek to resolve disputes of mutual interest by way of mediation, conciliation, arbitration, or industrial action as a last resort.
III SIGNIFICANT CASES
i Legal Aid South Africa v. Mayisela and Others3
Mayisela was employed as the Justice Centre Executive managing the Kimberley Justice Centre. He reported to the Regional Operations Executive for the Western and Northern Cape, Ms C Robertson (Robertson). Pursuant to a negative performance assessment, Robertson attempted to schedule a meeting with Mayisela but was unsuccessful. During this time, Mayisela sent a string of emails to Robertson informing her that he would take up the issue of his performance assessment with the portfolio committee (among other bodies). He further alleged racism on Robertson's part and vilification of 'African managers'. Mayisela was subsequently charged with, among other things, an attack on the honour, dignity or good name of Robertson in making tacit accusations of racism. He was found guilty of 17 charges during his disciplinary hearing. Thereafter, he referred the matter to the CCMA. The Commissioner found that Mayisela was guilty of this particular charge. On review, the labour court was sympathetic to Mayisela. It took the view that Mayisela was entitled to raise the matter and even take it to the Parliamentary Portfolio Committee. His mere announcing of the complaint, in its view, did not amount to misconduct. The matter was subsequently taken on appeal. The LAC took a dim view of Mayisela's allegations of racism and vilification, mainly of the manner in which Mayisela chose to raise the issues. The Court stated:
Although one naturally may be sympathetic to a colleague who has subjectively experienced a negative performance assessment as racial discrimination, unjustified allegations of racism against a superior in the workplace can have very serious and deleterious consequences.
Employees who allege tacit racism should do so only on the basis of persuasive objective information leading to a compelling and legitimate inference, and in accordance with grievance procedures established for that purpose. Unfounded allegations of racism against a superior by a subordinate subjected to disciplinary action or performance assessment, referred to colloquially as 'playing the race card', can illegitimately undermine the authority of the superior and damage harmonious relations in the workplace.
The LAC found that Mayisela was guilty of this charge and that the labour court erred in concluding that the Commissioner decided the issue unreasonably.
ii Stokwe v. Member of the Executive Council: Department of Education, Eastern Cape and Others4
In this case, the CC dealt with procedural unfairness caused by delays in a disciplinary process. The applicant had referred an unfair dismissal dispute to the Education Labour Relations Council in terms of which she alleged that her dismissal was substantively and procedurally unfair. The arbitrator for the Council found that the dismissal was substantively fair but did not make a finding in relation to procedural fairness. The applicant took the matter on review to the labour court, which dismissed the review application and denied leave to appeal. The LAC also denied leave to appeal. The applicant then approached the CC and applied for leave to appeal, which was granted.
First, the CC held that the requirement of speediness is applicable both to completion and to the institution of disciplinary action. Second, the Court noted that if an employee is kept in employment for a long period after the institution of disciplinary action, it may indicate that the employment relationship has not broken down. The Court further held that an appeal is a separate part of the disciplinary procedure and must be conducted with the same readiness as other disciplinary procedures for the standard of procedural fairness to be met.
The CC reiterated the principle that any delay in the resolution of labour disputes undermines the primary object of the LRA. The CC held that whether the delay would negatively affect the fairness of disciplinary proceedings would depend on the facts of each case. The Court also referred to factors used to determine what constitutes an unfair delay. These factors are:
- the unreasonableness of the delay (for example, the longer the delay, the more likely it is that it would be unreasonable);
- the explanation for the delay;
- the employee's conduct in asserting his or her right to a speedy process;
- whether the delay caused material prejudice to the employee; and
- the nature of the alleged offence.
According to the CC, the applicant's disciplinary process was not completed within the shortest possible time. This was especially true in circumstances where the excessive delay remained unexplained by the respondent. Consequently, the applicant's dismissal was held to be procedurally unfair in view of the extreme delay in instituting and concluding the proceedings.
The appeal was upheld with costs and the matter was remitted to the labour court for an appropriate remedy.
iii Ramaila v. Minister of Justice and Correctional Services and Others5
The applicant was appointed as a state law adviser from outside the public service against the backdrop of a provision in Resolution 1 of 2012 of the Public Service Co-ordinating Bargaining Council (PSCBC) (the Resolution), and other applicable policies. These prescripts entitled him, as a new employee in public service, to 'pay progression' only after a qualifying period of 24 months' employment. This was in contrast to two other newly appointed colleagues, who started in the same type of job at the same time, were appointed on exactly the same terms and conditions of employment, who received exactly the same performance rating as the applicant after one year of employment and who benefited from a pay progression after only one year of employment as a state law adviser. These two employees had been appointed from within the public service and had already completed 24 months of employment in public service. The result was that there was an obvious differentiation between the applicant and the other two employees in pay and that the basis for the differentiation was the applicant's status as a 'new employee in the public service'. The stated goal of the Resolution was to 'develop and professionalise the public service'. Elsewhere it was stated that the policy 'will enhance or ensure proper in-service training of new appointees'.
The applicant referred his matter to the labour court. He based his case on two causes of action, namely unfair discrimination and an administrative law review. In dealing with the unfair discrimination claim, the court applied Section 11(2) of the EEA requiring a finding on irrationality, discrimination and the unfairness or otherwise of the discrimination. The court started its analysis with an overview of the actual effect of the employer's conduct, namely the pay disparity, acceptance that the pay disparity will continue indefinitely and that, for the applicant, his 100 per cent performance rating counted for nothing. The court found that the conduct of the employer was irrational, constituted discrimination and also was unfair. The court relied on Harksen v. Lane6 and viewed rationality as requiring an 'appropriate and effective' measure. More important is the court's approach to the existence of discrimination which, of course, required recognition of 'being a new employee in the public service' as an unlisted, or arbitrary, ground of discrimination. The court accepted that 'being a new employee' is an 'attribute or characteristic' for the purposes of the existence of discrimination.
The court further accepted that this characteristic has the potential to, and in fact did, prejudice the employee 'in a comparably serious manner', thus focusing on the second part of the Harksen test.
The court reiterated the actual effect of the distinction between new and existing employees and also stated that the discrimination exists 'particularly if regard is had to the fact that the stated objective of the differentiation bears no rational connection to the differentiation which is used as a mechanism to achieve the stated object'.
In effect, the court said that, because the employer's conduct was irrational, there must be discrimination and that one needs to recognise the distinguishing feature identified in the case as an arbitrary ground. Discrimination is and remains a special type of differentiation and only exists if a special type of ground is the reason for the differentiation. It is not the irrationality of the ground that makes it discrimination, it is its nature. And it is not the effect or the unfairness of the employer's conduct that constitutes discrimination to begin with. The court then proceeded to find the discrimination unfair to the applicant and other newly appointed employees.
iv Long v. South African Breweries (Pty) Ltd and Others7
Mr Long (the employee) was employed by South African Breweries (SAB) as a district manager. Among other things, the employee was responsible for ensuring that SAB complied with all legal requirements in his district, which included ensuring that SAB's fleet of delivery trucks was properly licensed and that all the vehicles were roadworthy. During late 2012, it was discovered that a number of the vehicles and trailers were unlicensed or not roadworthy. The employee issued instructions to certain subordinates to remedy the situation, but did not proactively involve himself in ensuring that this was done.
In May 2013, a fatal accident involving one of the unroadworthy vehicles occurred. The employee was placed on suspension pending an investigation into the issues relating to the fleet. Approximately three months later, the employee was subjected to a disciplinary hearing and dismissed. He referred disputes relating to his suspension and his dismissal to the Commission for Conciliation, Mediation and Arbitration (the CCMA). The CCMA found that the employee had been unfairly suspended on the basis that the suspension was 'unduly long' and because the employee was not provided with an opportunity to make representations before a decision to suspend was taken. SAB referred the matter to the labour court on review.
The labour court found that the CCMA had erred in finding that the employee's suspension was unfair and overturned the award. The court held that there is no requirement for an employee to be provided with the opportunity to make representations before being placed on precautionary suspension.
The employee applied to have the court decision reviewed but this was refused. The employee then took the matter on appeal to the CC, alleging that the finding by the labour court did not pass constitutional muster, and that the finding contradicts the principles established in the case law. The CC held that the finding of the labour court regarding the issue of an opportunity to make representations could not be faulted.
The CC aligned itself with the labour court's findings. Specifically, the labour court set out the important differences between the two possible types of suspensions – one being as a disciplinary sanction, and the other being as a 'holding operation' (or a precautionary suspension). A suspension as a disciplinary sanction can only follow a fairly conducted disciplinary proceeding, and is usually as an alternative to dismissal. This is distinguished from a precautionary suspension. The labour court found that this distinction is consistent with the case law on the subject.
The labour court held that the reason for the distinction between the two types of suspensions is that the standards of fairness differ between the two.
The labour court further held that in the case of a precautionary suspension, there is no requirement for an employee to be given an opportunity to make representations before the employer decides to place that employee on suspension. The court found that a precautionary suspension could still constitute an unfair labour practice if the employer does not have a fair reason for it, if it causes undue prejudice to the employee, or if the suspension is unduly long without a valid reason. In relation to the facts of this case, the court held that the Commissioner's reliance on the perceived right to make representations was misplaced, and the suspension was not unfair.
The labour court also held that it is not necessary for the employer, at the stage of implementing a precautionary suspension, to substantiate the allegations of misconduct. It is sufficient for the employer to hold a reasonable belief that the misconduct took place.
The CC confirmed that a suspension pending an investigation and possible disciplinary action is a precautionary measure and does not constitute disciplinary action, and, as such, the requirements in terms of the LRA relating to fair disciplinary action do not apply.
v Pailprint (Pty) Ltd v. Lyster NO and Others8
A number of employees were dismissed for misconduct during a protected strike. They had been seen carrying sticks, lengths of piping, a golf club and an axe while picketing. This contravened picketing rules agreed by their union, the National Union of Metalworkers of South Africa (Numsa) and their employer, which stated that picketers may not engage in unlawful or violent actions and that no weapons of any kind are to be carried or wielded by picketers; and that the employer may take disciplinary action if an employee's actions during a picket are in breach of the organisation's disciplinary code. In addition, the employer's strike policy unequivocally set out its zero tolerance of 'any violent acts, intimidation or vandalism' during strikes and stated that 'any employee caught behaving in a violent manner (which includes verbal abuse), vandalising property, preventing anyone from entering or participating in work or intimidating any other person in any form or manner, would be disciplined.
During July 2014, the striking employees in question each carried a stick while picketing outside the employer's premises. One employee carried a PVC pipe and another, in addition to a stick, carried a sjambok. Another of the striking employees had a golf club and another had an axe. The employees were charged by the employer with 'brandishing or wielding of dangerous weapons during [the] strike' and, following disciplinary hearings, they were dismissed.
During the arbitration proceedings, undisputed photographic evidence was placed before the arbitrator that showed injuries sustained by two individuals at the hands of strikers were admitted into evidence. The arbitrator found that the objects carried by the strikers were indeed dangerous, but there was no evidence that the strikers intended to threaten or intimidate anyone; therefore, the employees were only in partial breach of the valid and reasonable rule of the employer. The arbitrator found the dismissal of the employees substantively unfair and ordered their reinstatement, with final written warnings valid for 12 months.
On review, the labour court held that there was no reason to interfere with the arbitration award since it was not unreasonable and dismissed the review application. In an appeal against this, the LAC had to consider whether the arbitrator committed a reviewable error or irregularity, which led him to arrive at a decision that a reasonable decision maker could not reach on the material before him. The picketing rule of which the employees were found to have been aware expressly prohibited the employees from carrying or wielding any weapons during the strike picket and the evidence, which was not disputed, showed that the employees did carry weapons during the strike. The conduct of the employees was clearly in breach of the express terms of the picketing rule, which barred weapons of any kind from being 'carried or wielded' by picketers. There was no dispute that the rule was valid and reasonable. The LAC found it difficult to understand how the arbitrator could have concluded, on the evidence placed before him, that the rule had only been partially breached. It held further that in assessing the sanction, the arbitrator was required to approach the matter impartially, with due regard to all the circumstances, such as the reason for the imposition of the sanction and the basis of the employees' challenge.
The LAC therefore found that the arbitrator committed a reviewable irregularity and arrived at a decision that a decision maker acting reasonably could not have reached on the material before him, and that the labour court erred in finding that the decision of the arbitrator fell within the bounds of reasonableness required. The appeal was thus upheld as an important matter for regulating misconduct during strikes, which become violent all too often in South Africa.
vi Minister of Home Affairs v. Ahmed
In a significant win for asylum seekers in South Africa, the Supreme Court of Appeal decision in this case, which held that holders of asylum seeker permits in terms of Section 22 of the Refugees Act 130 of 1998 are precluded from applying for status under the Immigration Act while they are within South Africa, was successfully challenged in the CC.
The Director General of the Department of Home Affairs' blanket ban on asylum seekers applying for visas without provision for an exemption application under Section 31(2)(c) of the Immigration Act 13 of 2002 was declared inconsistent with that Act and therefore invalid. The prohibition on asylum seekers applying for permanent residence permits while inside South Africa was also declared inconsistent with Regulation 23 of the Immigration Regulations 2014, and thus invalid.
IV BASICS OF ENTERING INTO 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. However, most employees in South Africa are 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 whose earnings are below the BCEA threshold.9
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 a work visa before commencing employment.
ii Probationary periods
Probationary periods are permitted for newly hired employees 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 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. However, a foreign employer may be required to register as an external company (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.10
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 its behalf, 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 the 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's 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 that is used to conduct the business activities of the enterprise, and it must be used regularly 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. In principle, these clauses are valid and enforceable and, as such, many restraints are enforced in South African courts every year. Nevertheless, when an employer seeks to enforce restraint provisions, the courts retain discretion as to whether to enforce the restraints and will not enforce them if, in a particular case, the 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.
The restraint may also operate in combination with garden leave in appropriate cases. In such cases, when assessing the reasonableness of the restraint period, the period of garden leave will be taken into account.11
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, an 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 he or she must be compensated with an allowance, which may be a shift allowance or a reduction of normal working hours. Transport must be available between his or her residence and the workplace at the commencement and conclusion of the shift. If employees regularly perform night work (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 whose earnings are above the BCEA threshold):
- An employer can only require an employee to work overtime if 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 (i.e., 90 minutes off for every 60 minutes of overtime worked).
- Employees are not permitted to work more than 10 hours of overtime a week, or three hours of overtime in a day if they work a nine-hour day.
The National Minimum Wage Bill was signed into law on 23 November 2018 and came into effect on 1 January 2019. A national minimum wage of 20 rand per hour (with slightly lower minimums for farm and domestic workers) has been approved and will be reviewed annually (by a yet-to-be-appointed commission).
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, as amended, and the regulations thereto.
The Act and regulations impose obligations on any person or organisation that employs a foreign national, regardless of size of the business or number of employees, although stricter compliance is required of any employer with more than five employees or that 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 fewer than 90 days. If a traveller, such as an academic, business person or frequent visitor, has established himself or herself as a bona fide frequent business visitor, he or she may be issued with a multiple-entry visa valid for two to three years, usually for visits of 30 days. Longer placements require a temporary residence work visa, such as an intra-company transfer, a general work visa, a critical skills visa or corporate worker visa, or another appropriate visa authorising the work. 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 local people.
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 this certification includes the submission of proof of advertisement of the position and 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 foreign nationals 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. Many foreign missions insist on the filing of a skills transfer plan, which identifies the South Africans to whom skills will be transferred.
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. 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. If the worker wishes to apply for a different category of visa, he or she must bring the application abroad.
In general, work visa holders become eligible to apply for permanent residence after holding a temporary residence work visa for a continuous period of five years, provided that they have received a permanent offer of employment. Holders of critical skills visas may apply for permanent residence sooner. Although not legislated, the Department of Home Affairs would usually insist on proof of work experience in the relevant area of skill. Critical skills holders who have obtained a qualification listed as a critical skill in South Africa are also able to apply for permanent residence on the basis of those qualifications without the need to obtain an evaluation of their qualifications from the South African Qualifications Authority or to demonstrate prior work experience.
Any foreign worker needs to obtain a work visa to render services in South Africa irrespective of 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 or jailed, or both, for non-compliance with their obligations in this regard.
South African employment laws are of universal application for employees who 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.
VIII GLOBAL POLICIES
Employers are under no legal obligation to have written rules on internal discipline, 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 disciplinary 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 if there is a collective agreement between the employer and the representative body stipulating that employees or their representative body must approve or agree to disciplinary 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 they must be lawful and fair.
Although there are no mandatory disciplinary 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 to incorporate the disciplinary rules into employees' contracts of employment, but generally it is not advisable to do so. If the disciplinary rules are incorporated into employees' contracts 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 a 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 document or it 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. At an undertaking where there are more than 100 employees, the employees, through their trade unions, are permitted to establish workplace forums to consult on numerous defined workplace issues. However, workplace forums are rarely set up.
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:
- 10 members in the workplace: one representative;
- more than 10 members: two representatives;
- 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);
- 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);
- 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
- 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 (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 recent amendments to the LRA, any registered trade union that 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 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 No. 4 of 2013 (POPIA), but this has not fully come into effect. The many substantive obligations provided for in the POPIA are thus not yet binding or applicable, and it is unknown when they will come into operation, despite the development referred to below. Once the substantive provisions of the POPIA are made effective, companies will be given a one-year grace period to comply with its provisions, which may be extended. Once operative, the POPIA will place restrictions on what information may be collected from employees and applicants, and processed by employers. The POPIA 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. In September 2017, draft regulations were published for public comment. The final regulations were published on 14 December 2018.
Personal information may only be collected by an employer directly from and with the consent of the employee, who must be informed of the purpose of any collection and who the intended recipients are once 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 the POPIA, an employer must ensure that all personal information about its employees 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 the information be corrected if it is found to be inaccurate.
ii Cross-border data transfers
The POPIA 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 Protection Regulator, and an employer must obtain the Regulator's prior authorisation before processing any 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 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
The POPIA 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, 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 information about race because the employer is required to comply with laws designed to protect or advance persons from groups historically disadvantaged by unfair discrimination (under the 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 integrity checks – such as checking credit references or investigating whether the applicant has a criminal record – if they are 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 if an applicant for a temporary or permanent residence visa has resided for more than one year in South Africa since their 18th birthday.
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 if an employee is a trade union representative or if union members are to be made redundant.
The grounds upon which an employer can fairly dismiss an employee are misconduct, incapacity (which can be either medical incapacity or poor performance) and the operational requirements of the employer (i.e., redundancy, which is dealt with in Section XIII.ii in more detail). Dismissal may be summary when it 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 of between six months and one year, and four weeks for employees with service of more than one 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. See Section XIII.ii regarding the severance pay requirements in cases of redundancy. It is possible for employers to conclude separation or settlement agreements with departing employees.
An employer is obliged to notify the Department of Home Affairs upon discontinuation of the employment of an employee who holds a work visa.
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 and 189A of the LRA. The basic Section 189 provisions apply to all retrenchments and Section 189A imposes additional procedural requirements for when 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) regarding the proposed retrenchments. There is no requirement to notify a works council or the government.
As soon as an employer contemplates retrenchments, it must commence consultation about 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 about 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. If 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 the 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 employees 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 employees.
XIII TRANSFER OF BUSINESS
Under terms of Section 197 of the LRA, if a transfer of a business takes place, unless otherwise agreed, the new employer automatically substitutes 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 for a transaction to fall within the ambit of Section 197 of the LRA. Whether this Section applies to a specific transaction depends on the following:
- 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
- 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 of the business after the transaction is concluded to establish whether it is essentially the same business but in different hands. There is no inflexible test, however, 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 because of the transfer of a business or any reason related to the transfer.12 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 an employer 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 specific to an employer and a position, and holders of a work visa may not continue working on their existing work visa but must apply for an amendment to the visa to authorise work for a new employer.
On 18 October 2018, the Minister of Labour published both the Compensation for Occupational Injuries and Diseases Act (COIDA) Amendment Bill 2018 and the proposed regulations on the compensation fund new assessment model for public comment. The proposed amendments to COIDA follow from an application in the North Gauteng Division of the High Court seeking to declare the provisions of COIDA that exclude domestic workers from its ambit unconstitutional and that the declaration of unconstitutionality apply retrospectively. In response to the application, the Acting Compensation Commissioner filed an answering affidavit on behalf of the Minister of Labour and the Director General, in which he indicated that the Department of Labour intended to introduce a bill amending COIDA to include domestic workers within its scope. The Commissioner further stated that the reason for the delay in extending coverage to domestic workers was due to the fact that the Department of Labour was in the process of developing its institutional capacity to administer the coverage of domestic workers under the terms of COIDA.
The COIDA Amendment Bill seeks to amend COIDA to extend coverage to domestic workers. With the inclusion of domestic workers under COIDA, the Department of Labour will need to have a firm administrative framework in place. Should the COIDA Amendment Bill be adopted in its current form, employers of domestic workers will be required to register with the Compensation Commissioner, furnish the Commissioner with the full particulars of their business, keep a record of the earnings of their domestic workers, furnish returns of earnings to the Commissioner and pay an assessment to the compensation fund. The Department of Labour will have to be prepared to manage the administrative load that this will bring about.
Other proposed changes to COIDA of importance to employers are the following:
- definition of 'an employee';
- definition of 'an employer';
- meaning of the financial year (currently March to February) to be changed to start on the first day of April in any year and end on the last day of March in the following year;
- insertion of a definition for 'remuneration';
- provision for the rehabilitation, reintegration and return to work of employees who have suffered an occupational injury;
- provision for the regulation of the use of healthcare services;
- provision for the reopening of claims;
- provision of criminal and administrative penalties;
- regulation of compliance and enforcement, and provision for a no-fault-based compensation system and matters connected therewith; and
- replacement of 'concept mandators' with contractors and sub-contractors.
At the same time, the draft changes to the Regulations on the Compensation Fund New Assessment Model under COIDA have also been published for public comment.
The main proposals are to reduce the existing 102 assessment subclasses to five main assessment classes to simplify the process of dealing with the Compensation Fund. The reason for this change is because the Compensation Fund assesses employers based on the industry in which they operate and are assigned to a specific assessment class for the basis of determining their liability to the Fund. However, because of the number of classes, employers often are registered in incorrect classes, resulting in inaccurate collection and recording of the Compensation Fund's financial performance. The current classes also contribute to fraudulent conduct by different stakeholders who may not want to pay the assessment fees relating to the industry in which the employer operates.
A new assessment class for households has been introduced as part of this proposal.
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 (CA9/17)  ZALAC 1.
4 (CCT33/18)  ZACC 3; (2019) 40 ILJ 773 (CC).
5 (C479/2017)  ZALCCT 4.
6 N.O. 1997 (11) BCLR 1489 (CC).
7 (CCT61/18)  ZACC 7.
8  10 BLLR 1139 (LAC).
9 As of 17 December 2019, this is 205,433.30 rand per annum.
10 Companies Act, Section 23(2).
11 Vodacom (pty) Ltd v. Motsa and another 2016 (3) SA 11 6 (LC).
12 Labour Relations Act No. 66 of 1995, Section 187(1)(g).