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The Employment Law Review
Law Business Research
Editor
Erika C Collins
Th
e Emplo
ymen
t Law R
eview
Edito
rEr
ika C
Co
llins
LawBusinessResearch
The employmenT law Review
Reproduced with permission from Law Business Research.
This article was first published in The Employment Law Review, (published in March 2009 – editor Erika C Collins).
For further information please email [email protected]
The Employment
Law Review
Editor
eRika C Collins
law Business ReseaRCh lTd
PubLiShERGideon Roberton
buSinESS dEvELoPMEnT MAnAGERAdam Sargent
MARkETinG ASSiSTAnTHannah Thwaites
EdiToRiAL ASSiSTAnTnick drummond-Roe
PRoduCTion EdiToRJonathan Cowie
SubEdiToRSJonathan Allen
kathryn SmulandCharlotte Stretch
EdiToR-in-ChiEFCallum Campbell
MAnAGinG diRECToRRichard davey
Published in the united kingdom by Law business Research Ltd, London
87 Lancaster Road, London, W11 1QQ, uk© 2010 Law business Research Ltd
© Copyright in individual chapters vests with the contributors no photocopying: copyright licences do not apply.
The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein.
Although the information provided is accurate as of March 2010, be advised that this is a developing area.
Enquiries concerning reproduction should be sent to Law business Research, at the address above. Enquiries concerning editorial content should be directed
to the Publisher – [email protected]
iSbn: 978-1-907606-00-7
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Printed in Great britain by Encompass Print Solutions, derbyshire
Tel: +44 870 897 3239
ACknoWLEdGEMEnTS
The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:
ALRud LAW FiRMbAShAM, RinGE Y CoRREA, SC
bAYkAnidEA LAW oFFiCESCuATRECASAS, GonçALvES PEREiRA
dELoiTTE AdvokATFiRMA ASdEnTon WiLdE SAPTE
EdWARd nAThAn SonnEnbERGS GiAnni, oRiGoni, GRiPPo & PARTnERS
GidE LoYRETTE nouELGiLbERT + Tobin
GRAF & PiTkoWiTz REChTSAnWäLTE GMbhhEEnAn bLAikiE LLP
koChhAR & CokRoMAnn REuMERT
kYRiAkidES GEoRGoPouLoS & dAnioLoS iSSAiAS LAW FiRMLEE And Li, ATToRnEYS-AT-LAW
LiEPA, SkoPiA/boREniuS ATToRnEYS AT LAWMAnnhEiMER SWARTLinG AdvokATbYRå Ab
MARvAL, o’FARRELL & MAiRAL MAThESon oRMSbY PREnTiCE
PALACioS, oRTEGA Y ASoCiAdoSPAuL, hASTinGS, JAnoFSkY & WALkER LLP
PinhEiRo nETo AdvoGAdoSShin & kiM
SoŁTYSin Ski, kAWECki & SzLEzAkSTAMFoRd LAW CoRPoRATion
TAYLoR WESSinG vAn dooRnE nv
vAn oLMEn WYnAnTWALdER WYSS & PARTnERS LTd
zYSMAn, AhARoni, GAYER & AdY kAPLAn & Co LAW oFFiCES
ConTEnTS
Editor’s Preface ............................................................................................................. 1
Erika C Collins
Chapter 1 ARGEnTinA..............................................................................................5
Enrique Stile and Javier Enrique Patrón
Chapter 2 AuSTRALiA .................................................................................. 16
Dianne Banks, Peter Feros, Kim McGuren, James Pomeroy, Sarah Gray
and Hanh Chau
Chapter 3 AuSTRiA ........................................................................................ 28
Jakob Widner
Chapter 4 bELGiuM ...................................................................................... 45
Chris Van Olmen
Chapter 5 bRAziL ........................................................................................... 59
Luis Antonio Ferraz Mendes and Mauricio Froes Guidi
Chapter 6 CAnAdA ........................................................................................ 67
Jeffery E Goodman and Christopher D Pigott
Chapter 7 ChinA ............................................................................................ 79
K Lesli Ligorner
Chapter 8 dEnMARk.................................................................................... 92
Marianne Granhøj
Contents
Chapter 9 FRAnCE .......................................................................................103
Jérémie Gicquel
Chapter 10 GERMAnY ..................................................................................118
Thomas Griebe
Chapter 11 GREECE ......................................................................................133
Effie Mitsopoulou, Nicholas Maheriotis, Ioanna Kyriazi and
Ioanna Argyraki
Chapter 12 honG konG ............................................................................146
Michael J Downey
Chapter 13 hunGARY ..................................................................................162
Dániel Gera and Nelly Prokec
Chapter 14 indiA ...........................................................................................176
Manishi Pathak and Sehba Kanwal
Chapter 15 iRELAnd ....................................................................................189
John Dunne
Chapter 16 iSRAEL .........................................................................................204
Mor Limanovich and Tal Keret
Chapter 17 iTALY ............................................................................................214
Raffaella Betti Berutto and Filippo Pucci
Chapter 18 JApAn ...........................................................................................226
Setsuko Ueno
Contents
Chapter 19 koREA .........................................................................................239
Young-Seok Ki and John Kim
Chapter 20 LATviA......................................................................................... 250
Sigita Kravale
Chapter 21 MExiCo .......................................................................................263
Oscar de la Vega and Monica Schiaffino
Chapter 22 nEThERLAndS ....................................................................... 275
Els de Wind and Aedzer Oreel
Chapter 23 noRWAY .....................................................................................294
Gro Forsdal Helvik
Chapter 24 PoLAnd ......................................................................................306
Roch Pałubicki and Sławomir Paruch
Chapter 25 PoRTuGAL ................................................................................319
Maria da Glória Leitão and Diogo Leote Nobre
Chapter 26 RuSSiA ..........................................................................................332
Irina Anyukhina
Chapter 27 SinGAPoRE ...............................................................................347
Daniel Lim and Min-tze Lean
Chapter 28 SouTh AFRiCA ........................................................................358
Susan Stelzner, Stuart Harrison, Bradley Conradie and Zahida Ebrahim
Chapter 29 SpAin ............................................................................................373
Juan Bonilla
Contents
Chapter 30 SWEdEn .....................................................................................387
Henric Diefke
Chapter 31 SWiTzERLAnd ........................................................................397
Ueli Sommer
Chapter 32 TAiWAn .......................................................................................408
T C Chiang
Chapter 33 TuRkEY ......................................................................................417
Serbülent Baykan and Handan Bektas
Chapter 34 uniTEd ARAb EMiRATES ...................................................426
Ibrahim Elsadig
Chapter 35 uniTEd kinGdoM ...............................................................436
Christopher Walter and Helena Laughrin
Chapter 36 uniTEd STATES ......................................................................449
Patrick Shea
Chapter 37 vEnEzuELA .............................................................................460
José Manuel Ortega P
Appendix 1 AbouT ThE AuThoRS .........................................................475
Appendix 2 ConTRibuTinG LAW FiRMS’ ConTACT dETAiLS .... 505
358
Chapter 28
south africaSusan Stelzner, Stuart Harrison, Bradley Conradie and Zahida Ebrahim*�
* susan stelzner, stuart harrison and Bradley conradie are directors and Zahida Ebrahim is a senior associate at Edward Nathan sonnenbergs.
I INTRODUCTION
south africa has a constitution that entrenches fundamental rights and contains several provisions relevant to employment and labour. Section 23 deals specifically with labour relations and confers on ‘everyone’ the right to fair labour practices. it also provides for freedom of association for workers and employers and the right to participate freely in the activities of a trade union or employer’s 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 regulate collective bargaining, resulting in the enactment of the Labour relations act (‘the Lra’).
the Lra provides for resolution of labour disputes through the establishment of the commission for conciliation, Mediation and arbitration (‘the ccMa’), the Labour court and the Labour appeal court. it is possible to appeal further to the supreme court of appeal, and to the constitutional court where the dispute involves a constitutional issue. Employees can also enforce contractual employment rights in the high court (as well as the specialised fora referred to above).
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 by reason of the operational requirements of the employer (retrenchments) and the rights of employees 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 (‘the BcEa’). the BcEa applies to all employers and employees except ‘soldiers and spies’ and unpaid volunteers working for charity. the BcEa does not set minimum wages. it regulates working time, leave, particulars of employment
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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 (such as by collective agreement) and for the monitoring and enforcement of the act. under the variation provisions, a particular sector or industry can regulate its own terms via a bargaining council agreement, which then takes precedence over the BcEa. a bargaining council comprises representative employers and unions in the industry concerned. in addition, the Minister of Labour may make sectoral determinations for a sector and area, a number of which have been made.
Discrimination and affirmative action issues are regulated by the Employment Equity act (‘the EEa’). the occupational health and safety act (‘the 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 (‘the coiDa’).
Unemployment benefits are regulated by the Unemployment Insurance Act and the unemployment insurance contributions act. Both the employer and the employee must make monthly contributions to the unemployment insurance fund, which provides unemployment benefits to individuals who are temporarily unemployed. Retirement funding and provision for medical insurance in south africa is private unless regulated under a bargaining council agreement.
II YEAR IN REVIEW
Employees have increasingly sought to enforce employment law rights in the ordinary courts and some of these cases have enjoyed the attention of the highest courts in the country. the most recent decision of the constitutional court on the subject is that of Gcaba v. Minister of Safety and Security and others,� in which Mr Gcaba approached the high court with an application to review a decision not to appoint him as station commissioner at Grahamstown police station. the high court said that it lacked jurisdiction to entertain the application as it was an employment matter and the matter ended up in the constitutional court, which found that the failure to promote and appoint Mr Gcaba was a labour issue based on the right to fair labour practices. the court said that the Labour court and other Lra structures have been created as a special mechanism to adjudicate labour disputes such as alleged unfair dismissals. in these matters the Labour court has exclusive jurisdiction. the court however stressed that only labour and employment related disputes for which the LRA creates specific remedies fall within the exclusive jurisdiction of the Labour court. all other remedies that might lie in other courts such as the high court and Equity court will still be adjudicated by these courts. this suggests that the high court retains jurisdiction over disputes such as alleged breaches of employment contracts. in light of this and preceding decisions, we are likely to see a continuation of the trend where many employment disputes are brought in the high court.
� (2009) 30 iLJ 2623 (cc).
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Unemployment statistics have risen to 23.5 per cent in the first quarter of 2009 partly as a result of the global economic crisis, which has seen large-scale retrenchments especially in industries like mining and manufacturing. The first quarter of 2009 saw 208,000 jobs lost. These are the official statistics, which do not take account of the informal labour market, which means real unemployment figures are likely to be a lot higher. Unions have claimed the figure to be as high as 40 per cent. Despite the high unemployment figures the year has featured demands for above-inflation wage increases and a high level of strike activity across both the public and private sectors.
the hot topic for the year has undoubtedly been the debate over use of labour brokers (or temporary employment services). the strongest union federation, supported by some in the government, has called for a total ban on the use of labour brokers. however, representations have also been made calling for better regulation of this aspect of the employment market rather than an outright ban. the issue is of concern to many employers in south africa who make regular and extensive use of labour brokers, and to the labour broking industry itself. there are also concerns that a ban would lead to increased unemployment. the outcome of this remains uncertain but what does seem clear is that there will be change and increased regulation at the least.
Protection of employee information is set to be regulated comprehensively for the first time as a result of the Protection of Personal Information Bill, 2009, which should come before parliament in 20�0. if enacted, south africa will be brought in line with international standards (including the iLo convention).
III SIGNIFICANT CASES
the Labour appeal court has decided that section �97 of the Labour relations act (south africa’s transfer of undertaking provisions) can apply where a service that was previously outsourced is either taken back by the original employer or passed on to a new service provider. the Lac supported a purposive interpretation of section �97 in its decision in Aviation Union of SA v. South African Airways and others.2 the court said that both purposes of section �97 as previously articulated by the constitutional court have as their common denominator the continuation of employment of employees involved in the business (or service) that is transferred as a going concern. Neither of those purposes is served by an interpretation of section �97 that entails job losses or prevents continuation of employment for those employees who moved with the work when the outsourcing first took place. In this case therefore where SAA previously outsourced its infrastructure and support services departments to a company called LGM and then terminated its contract with LGM, those employees would either transfer back to saa or to such other party as saa might contract with to provide the services in the future. this decision has far-reaching implications for employers that engage in outsourcing and will require a reassessment of strategy where an employer wishes to cancel its contract with one service provider in favour of another.
2 (2009) 30 ILJ 2849 (LC).
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in Mogothle v Premier, Northwest Province,� the Labour court dealt with suspension of an employee as a preventive measure pending the finalisation of disciplinary proceedings and cautioned employers against hastily resorting to suspension when the circumstances do not justify so doing. the court pointed out that employers have a general duty to act fairly towards employees when taking any decision that affects them. in the context of suspension this takes on a substantive and a procedural component. the employee must be suspected of serious misconduct and there must be a good reason why he or she should be removed from the workplace pending finalisation of the investigation and the hearing. the good reason must relate either to the integrity of the investigation or harm (such as to another employee or to the business) that could take place if he or she is not removed. finally, the employer must give the employee an opportunity to be heard, which need not be a formal hearing but rather a simple process of dialogue and reflection, before taking a decision to suspend. The import of this case is that employers must think twice about whether suspension is justified.
Where an employee is on sick leave owing to depression, employers should note the decision in New Way Motor & Diesel Engineering v Marsland.4 the company treated Mr Marsland very differently after he returned to work having suffered a nervous breakdown. so much so that he eventually resigned and approached the Labour court on the basis that he was constructively dismissed and that his dismissal was automatically unfair because he had been discriminated against based on his condition. the Labour court found in his favour. the employer appealed and the matter ended up in the Labour Appeal Court. The LAC defined depression as a form of mental illness and held that even where this condition is not considered to be a form of disability, the discrimination suffered by Mr Marsland was unquestionably as a result of his ‘mental health problem’. the conduct of the company had clearly constituted an egregious attack on the dignity of the employee and accordingly fell within the automatically unfair dismissal grounds set out in the LRA. The LAC upheld the Labour Court’s decision and confirmed that Mr Marsland was entitled to 24 months’ compensation. From this case it is clear that an employee must not be treated differently than before the diagnosis as any sense of alienation or exclusion may add to the mental struggles of the employee. Where appropriate, the employee should be accommodated to enable the employee to perform the essential requirements of the job.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
the existence of a contract of employment 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
3 Mogothle v. Premier, Northwest Province (2009) 30 iLJ 605 (Lc).4 New Way Motor & Diesel Engineering (Pty) Ltd v. Marsland (2009) 30 iLJ 2875 (Lac).
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employers even though they may not be formally employed by them. Nevertheless, most employees in south africa are hired under contracts.
it is preferable for an employment contract to be contained in a written contract signed by both parties. signature of a contract is not legally required subject to two limited exceptions, namely merchant seaman (for whom written employment contracts are required under the Merchant shipping act) and learners (also referred to as apprentices) under the skills Development act (‘the sDa’).
What employers must do, however, in terms of the BcEa, is provide employees with written particulars of their employment conditions when they commence work, such as: a brief description of the work for which he or she is employed; ordinary hours of work and days of work; wages or the rate and method of calculating wages; any deductions to be made from the employee’s remuneration; any leave entitlement; the period of notice required to terminate employment, or if employment is for a specified period, the date when employment is to terminate; a list of any other documents that form part of the contract, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained.
the basic conditions of employment provided for under the BcEa constitute terms of any employment relationship except to the extent that any other law or term of the contract of employment is more favourable, or where the basic conditions have been varied under the BcEa. collective agreements, where applicable, can also impose contractual terms that vary from the basic conditions.
Parties to an employment contract may only amend the contract by agreement. agreement can be obtained either by negotiation or, if this fails, after taking certain procedural steps parties can resort to industrial action (a strike in the case of employees or a lockout in the case of employers) to try and compel the other party to agree.
ii Probationary periods
Probation periods are permitted for new employees. the purpose of probation must be to give the employer an opportunity to evaluate the employee’s performance before confirming his or her appointment. The period of probation should be determined in advance, be of reasonable duration and be determined with reference to the nature of the job and the time required to ascertain the employee’s suitability.
the employee’s performance should still be assessed during the probationary period and employers are still required to give the employee reasonable evaluation, instruction, training, guidance or counselling to allow the employee to render satisfactory service. if the employer determines that the employee is failing to meet the required standards, the employer should advise the employee of any aspects in which it considers the employee to be failing, after having afforded the employee the opportunity to make representations in this regard, the employer may then either extend the probationary period or dismiss the employee. the extension of the probationary period should not be disproportionate to the legitimate purpose that the employer seeks to achieve.
an employer must thus still show a fair reason and follow a fair procedure for the dismissal of a probationary employee. the only real dispensation given to employers that terminate the employment during the probation period is that the reasons for the
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dismissal of an employee on probation can be ‘less compelling’ than would be the case otherwise.
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 or to officially register. In terms of the income tax act, a non-resident employer is not obliged to withhold employees’ tax from remuneration (provided that it does not have a representative employer 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. Generally, this will be done through provisional tax payments.
if a foreign employer appoints a south african resident entity to pay remuneration on behalf of the foreign employer, the south african entity will be regarded as a representative employer and will be required to register as the employer and withhold employees’ tax from remuneration.
a foreign employer will be liable for tax on south african-sourced income. however, if there is a double taxation agreement in place between the jurisdiction within which the foreign employer is tax resident and south africa, 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 employer is a tax resident, unless the 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).
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 where the business of the enterprise is carried out. There must be a fixed location or facility used for the conduct of business activities, and it must be utilised for continuous 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.
In addition, if employees of a foreign employer spend significant periods of time in south africa, it is possibile that these employees will 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.
the south african companies act also requires an entity to register as an external company (commonly referred to as a ‘branch’) with the south african registrar of companies within 2� days of establishing a ‘place of business’ in south africa. a place of business is defined as a place where the company transacts business or holds itself out as transacting business.
if a south african resident company employs workers in south africa, employees’ tax must be deducted at source and the employer is responsible for reporting and withholding. Employers are required to provide few statutory benefits. There is no general minimum wage (although some industries have compulsory wage-regulating
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measures in place) nor is there a general obligation to provide medical aid or retirement fund benefits. However, the BCEA does stipulate maximum working hours, overtime and the like, and minimum leave, notice periods and severance pay benefits apply.
there is no social security as such in south africa. Nevertheless, a south african employer is liable to make contributions to the unemployment insurance fund, pay a skills development levy and make contributions to the Workmen’s compensation fund.
V RESTRICTIVE COVENANTS
restraint of trade (i.e., non-compete) clauses can be included in employment contracts, usually for more senior employees that are privy to the employer’s most confidential information or critical customer relationships. such clauses are in principle valid and 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 contrary to the public interest or unreasonable.
the reasonableness of the 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 include 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.
VI WAGES
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, or eight hours a day if he or she works a six-day week. total working hours may not exceed �2 hours a day. Wage regulating measures specific to industries can have different provisions regulating working hours.
Night work, which is defined as work performed after 6:00 p.m. and before 6:00 a.m. 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 of longer than one hour performed after ��:00 p.m. and before 6:00 a.m. at least five times per month or 50 times per 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.
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ii Overtime
Employees generally enjoy the following statutory overtime benefits: a an employer can only require an employee to work overtime where the employee’s
agreement to do so has been obtained and if the employee’s consent is obtained on commencement of employment or within three months thereof, the consent lapses after �2 months and must be secured again by the employer, whereafter the consent does not lapse again.
b 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).
c Employees are not permitted to work more than �0 hours overtime a week or three hours overtime in a day if they work a nine-hour day.
senior managerial employees, sales staff who travel to customers’ premises and regulate their own working hours, employees who work for less than 24 hours a month, or employees who earn more than an earnings threshold (currently 149,736 rand per annum), are not eligible for overtime benefits.
VII FOREIGN WORKERS
the employment of non-south african citizens is governed by the immigration act 2002, which imposes record-keeping and sanction provisions on every employer, regardless of the business’s size 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.
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 permit arrangements. 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.
there is no restriction on the number of foreign workers that an employer may employ or on the number of work permit categories under which work permits may be applied for. Nonetheless, the work permit process guards against employing foreign nationals in positions that can be filled by locals. For example, an application for a general work permit must be accompanied by a letter of motivation disclosing the details of all unsuccessful applicants for the position and justifying the need to employ a foreign national in that position.
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 permits may be granted. for example, a visitor’s visa with consent to work may be issued for a maximum of 90 days and can be renewed once for a further 90 days. A quota work permit is usually first issued as a three-month work seeker’s permit, which may be extended for up to five years once
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employment is secured (it may also be renewed if the qualification remains an identified scarce skill). A general work permit is usually granted for a maximum of five years and may be renewed.
intra-company transfer work permits may be issued for a maximum of two years and cannot be renewed. upon expiry of the permit, the holder must either depart from south africa or apply for a change of conditions to a different category of permit if they are required to remain in south africa. a corporate permit can be open-ended, allowing a company to employ a number of foreign workers in specific pre-determined positions over a period, but the corporate employee’s permit is generally limited to three or five years.
any foreigner who is not a permanent resident and wishes to render services in south africa needs to obtain a work permit. Both criminal and civil sanctions against employers of foreign nationals can be imposed 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 nationals working in south africa, even if the foreign nationals are working illegally.
VIII GLOBAL POLICIES
Employers are under no legal obligation to have internal discipline rules. it is up to individual employers to decide whether they want to establish 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. There is also no requirement for the rules to be filed with or approved by any government authorities. the approval or agreement of employees may, however, be required where the rules form part of their contracts of employment 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. Nevertheless, this type of agreement in respect of discipline rules is rare.
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 legal requirement that rules be written in the local language but, to hold employees to account for breaches of such rules, the employer would need to show that the employees were aware or ought reasonably to have been aware of the rules. therefore, it would be advisable for the rules to be communicated in a language that the employees understand. Nor is there a requirement that the rules 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.
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the rules should be accessible to all employees. 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 they want to incorporate the disciplinary rules into employees’ contracts of employment. if they do, then unless stated otherwise in the contract, the rules become part of the employee’s terms of employment and may not be changed without the employees’ consent.
IX EMPLOYEE REPRESENTATION
Employees are permitted to form and join a trade union of their choice. Employees, through their trade unions, are also permitted to establish workplace forums in their workplace.
a majority union in a workplace in which at least �0 of its members are employed may elect union representatives from its members in accordance with the following ratio: a �0 members in the workplace: one representative; b more than �0 members: two representatives; c more than 50 members: two representatives for the first 50 members plus 1
representative for every additional 50 members (with a maximum of 7); d more than 300 members: seven representatives for the first 300 members plus 1
representative for every additional �00 members (with a maximum of �0); e more than 600 members: 10 representatives for the first 600 members plus 1
representative for every additional 200 members (with a maximum of �2); f more than 1000 members: 12 representatives for the first 1000 members plus 1
representative for every additional 500 members (with a maximum of 20).
The constitution of the trade union will govern the nomination, election, term of office and removal of office of the representatives. It will also regulate the holding of meetings and the issues related thereto.
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.
Depending on the representivity 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. it must also deduct subscriptions due to the union from the employee’s wages.
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X DATA PROTECTION
i Requirements for registration
there is currently no legal obligation on employers to register with a data protection agency or other government body in connection with data protection. Nevertheless, new and comprehensive legislation regulating data protection is due to be introduced in the near future (the Protection of Personal information Bill, 2009 has been drafted and is scheduled to be considered by Parliament). the proposed legislation is designed to regulate the protection of personal information in the public and private sector and will provide employees with a number of rights and employers with a number of obligations regarding how the information is handled. it will be enforced by an information Protection commission.
the proposed legislation 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. it must also not unreasonably intrude on the privacy of the employee.
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 also not be kept for longer than necessary to achieve the (permitted) purpose for which collected and it must be distributed in a way which is compatible with the purpose for which it was collected. the employer must also take reasonable steps to ensure that the information is accurate, up to date and complete.
under the proposed legislation the employer must also take steps to protect its employees against risks of loss, damage or destruction of or unauthorised access to their personal information kept by the employer. the employees must also be allowed access to their personal information and can demand to correct any information found to be inaccurate.
ii Cross-border data transfers
the Protection of Personal information Bill, 2009 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). such transfers must be notified to the Information Protection Regulator and the employee and the employee’s consent to the transfer is generally required. the transfer must also be necessary under contractual arrangements involving the employee.
iii Sensitive data
the Protection of Personal information Bill, 2009 considers the information related to the following as special personal information for which there are additional protections: children, religious or philosophical beliefs, race or ethnic origin, trade union membership, political opinions, health, sexual life or criminal behaviour. this special personal information may not be processed by an employer unless specifically permitted under exemptions provided for in the legislation. Examples of exemptions are processing race
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information where this is required for the employer to comply with laws designed to protect or advance persons disadvantaged by unfair discrimination, which would include the EEA, which contains affirmative action obligations for designated employers.
iv Background checks
Background checks are permitted in general but must not involve checks that amount to unfair discrimination under the EEa. an educational background check is generally acceptable, if aimed at selecting the job applicant who best satisfies the requirements of the job, but an employer must assess an applicant’s ability to do the job not only with reference to formal qualifications, but also with reference to prior learning, relevant experience or the capacity to acquire within a reasonable time the capacity to do the job.
a code of Good Practice issued under the EEa stipulates that an employer should only conduct an integrity check – such as verifying the qualifications of an applicant, 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 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 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, can be applied fairly to all employees and is not biased against any employee or group.
XI DISCONTINUING EMPLOYMENT
i Dismissal
Employees in south africa may not be dismissed without cause. an employer is prohibited from dismissing an employee unfairly and thus must have a fair reason and follow a fair procedure before it can lawfully dismiss an employee.
there are no requirements to notify government authorities of dismissals. When dismissing an employee, however, the employer should notify the employee of his or her right to refer a dispute about unfair dismissal to the applicable statutory dispute resolution body. in some instances, an employer must consult a trade union about dismissals before they take place (e.g., where the employee is a trade union representative or where union members are to be made redundant).
the grounds on which a dismissal of an employee may be fair 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). Whether a dismissal for misconduct (which would be pursuant to a disciplinary process) or for poor performance (pursuant to a performance management process) is for a fair reason and following a fair procedure is determined by the facts of the case and the appropriateness of dismissal for the misconduct or poor performance.
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‘a code of Good Practice: Dismissal’, issued pursuant to the Lra, provides some elaboration on how employers might handle these grounds of dismissal.
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, to 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 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. Employers may conclude separation or settlement agreements with departing employees.
ii Redundancies
an employee may be dismissed for a reason relating to the employer’s operational requirements. Operational requirements are defined in the LRA as requirements based on the employer’s economic, technological, structural or similar needs, usually in the context of closure of operations, downsizing or restructuring of business activities, resulting in the contemplation of retrenchment. a dismissal based on operational requirements must be both procedurally and substantively fair, as is the case with any dismissal in south africa. therefore, the employer must be able to show the operational or business rationale for the decision leading to job losses. if the decision to retrench is not shown on the facts to make business sense, the dismissal could be set aside by the Labour court. the courts, however, are slow to interfere with the employer’s prerogative to run the business as it sees fit and have also held that it is not unfair to retrench even when the business is financially sound but wishes to become more profitable.
the process that must be followed when considering dismissals for operational reasons is set forth in section �89 or �89a of the Lra. the basic section �89 provisions apply to all retrenchments and section �89a imposes additional requirements, and prescribes different procedures for disputes where large businesses conduct large-scale retrenchments. an employer is a large employer if it employs 50 or more employees. a retrenchment is identified as large or small-scale depending on the number of employees to be retrenched with reference both to the current retrenchment exercise and to any employees retrenched in the preceding �2 months.
section �89 requires consultation with the employees who potentially will be dismissed, or their representatives, on the proposed retrenchments. the employer must consult with the first body on the following list that applies to it:a any person (or body, such as a trade union) with whom it is required to consult
pursuant to a collective agreement;b a workplace forum, if there is one which applies to the workplace where the
employees it proposes retrenching work, and any registered trade union whose members are likely to be affected by the proposed retrenchments;
c any registered trade union whose members are likely to be affected by the proposed retrenchments; or
d the employees likely to be affected or their representatives, nominated for that purpose. If none of the first three apply, employers must consult with the employees themselves.
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there is no requirement to notify a works council or the government. the employer must start consulting when it contemplates retrenching 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, and 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. section �89(3) of the Lra provides that the notice must, at a minimum, cover the following:a the reasons for the proposed retrenchments;b the alternatives the employer considered before proposing retrenchment, and the
reasons for rejecting each of them;c the number of employees likely to be affected, and their job categories;d the criteria the employer proposes using to select which employees to retrench;e when retrenchments are likely to take effect (a specific date or a period of time);f the severance pay proposed for retrenched employees;g any assistance that can be offered to employees likely to be retrenched;h the possibility of future re-employment of retrenched employees;i the number of employees employed by the employer; andj the number of employees the employer has retrenched in the last �2 months (the
last two are included so that the employees or their representatives can identify whether a large-scale retrenchment is applicable and whether section �89a procedures should be followed).
There is no fixed rule in ordinary retrenchments as to how long the consultation must last but there must be proper consultation and canvassing on all the relevant issues. if the union or the employees make representations during the process, the employer must respond to them and state reasons for disagreeing, if applicable. if representations are made in writing, the employer must respond in writing. facilitation is an additional (voluntary) process available to the parties to a large-scale retrenchment on request. facilitation occurs alongside the normal consultation process. if a facilitator is appointed, then the employer may not give notice of dismissal until 60 days have elapsed from the date on which the section �89(3) notice has been sent. the period of notice given must be the statutory minimum or the contractual notice period if longer. an employer may elect to pay in lieu of notice. if a facilitator is not appointed, a party cannot refer a dispute to a council or the ccMa unless 30 days have elapsed from the date on which the section �89(3) notice has been given. Thereafter, a further 30 days must elapse or a certificate indicating that the dispute has not been resolved must be issued, before notice of termination can be given. Practically this usually amounts to the same 60-day period.
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. for example, some agreements require that notice of any retrenchments also be given to the bargaining council. the agreement will provide what form the notice must take and when it must be given.
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
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work that an existing employee can do (even if some training is required) then the employer should accommodate the existing 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. Nevertheless, it is possible to provide for protection to certain categories within the selection criteria proposed, for example to protect an employer’s employment equity (affirmative action) programme.
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. remuneration for purposes of the severance pay calculation means any payment in money or in kind made or owing to the employee in return for the employee working for the 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. to ensure that such a settlement is valid and binding the usual requirements relating to compromise agreements apply. the parties to the agreement must understand its terms, for example, that they are giving up potential claims and conclude it voluntarily and without duress (i.e., their consent to the agreement must be informed).
XII OUTLOOK
Employers that make regular and extensive use of labour brokers should start considering contingency plans for how they will meet their staffing requirements in the event that the use of labour brokers is banned or increased regulation makes it unpalatable to continue using them. the use of labour brokers will remain a hot topic irrespective of whether it is subjected to increased regulation or banned outright – if a ban is introduced, this will in all probability be challenged in the constitutional court on the basis of an alleged infringement of the constitutional right to freely choose a trade, occupation or profession.
Employers would also be well-advised to consider the impact of the Labour appeal court’s decision that south africa’s transfer of undertaking provisions can apply where a service that was previously outsourced is either taken back by the original employer or passed on to a new service provider. this will impact on the decision whether to outsource and on the decision to cancel a contract with one service provider in favour of another.
About the Authors
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SuSan Stelzner
Edward Nathan Sonnenbergs
Susan Stelzner is a director in the employment law department at Edward Nathan Sonnenbergs. She has 22 years of experience in advising mainly corporate but also individual clients and unions in all aspects of industrial relations and employment law. This advice is very often of a pro-active nature but includes litigating in respect of disputes which may arise.
Susan has been involved in a number of important reported cases over the years and has acted as a judge of the current Labour Court on four occasions. She has provided the HR/labour law input on a number of mergers and acquisitions and corporate restructures. She has helped clients through many years of changing legislative provisions, through targeted advice on specific individual problems, through the adaptation of contracts and procedures to keep pace with changing requirements and through informative seminars, training courses and newsletters.
Susan is a leader in her field in South Africa and is recognised by the international PLC Which Lawyer Yearbook 2009/10 as a leading lawyer and her department as a leading department. She is also the 2006 winner of the Business Women’s Association Western Cape Business Achiever award in the professional category and won CEO Magazine’s Most Influential Women in Business and Government Award in the legal sector for 2007.
Stuart HarriSon
Edward Nathan Sonnenbergs
Stuart is a director of Edward Nathan Sonnenbergs (ENS) and has over 15 years of experience in all aspects of employment law and leads a team of attorneys within the ENS employment law department. He has advised employers in managing discipline, poor performance, absenteeism and other forms of incapacity and rooting out theft rings operating within workforces. He has also led large-scale retrenchment exercises for employers to successful conclusions.
Stuart generally runs his litigation himself and has appeared in the Labour Court, the High Court and the CCMA, and conducted matters in the Labour Appeal Court and the Land Claims Court.
He has particular experience in restraints of trade and in employee benefits and pension law, including acting as an independent trustee for a group of five commercial umbrella pension, provident, preservation and retirement annuity funds.
He has also worked extensively on issues surrounding restructuring in the public sector as well as board and executive responsibilities under the Public Finance Management Act. He also deals frequently with the employment law considerations and consequences of mergers and acquisitions, including pension fund arrangements.
Some of his more unusual experience includes dealing with and litigating on interesting aspects of discrimination law, drafting unusual employment contracts (including split employment contracts for employees working partially in SA and partially in foreign countries, agreements with temporary employment services/service providers, constitutions for employers’ organisations and bargaining councils, and bargaining council main agreements.
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He also specialises in litigation involving the eviction of dismissed former employees and other occupiers under the onerous security of tenure legislation applicable to farm land in South Africa.
He has contributed the chapter on pension law in the Juta’s annual labour law publication since 2002 and has contributed to Labour Law for Managers: A Practical Handbook and to various international publications on comparative labour law. He is also a regular presenter at seminars, training courses and workshops for clients and a speaker at public seminars and conferences on numerous issues, including white collar crime, pension law and ensuring legal and tax compliance in employment contracts and policies. He practises out of both Cape Town and Johannesburg.
Bradley Conradie
Edward Nathan Sonnenbergs
Bradley is a director in the Edward Nathan Sonnenbergs (ENS) employment law department and has 13 years experience in employment law. He acts on behalf of major corporations, government departments and municipalities in all aspects of employment law.
Bradley has acted as instructing attorney and personally argued several precedent setting cases in South Africa. He has also been involved in various employment law publications and regularly gives talks on topical employment law issues.
He is currently the National President of the South African Society for Labour Law. In 2009 Bradley was chosen for inclusion in the Best Lawyers list of solicitors for South Africa in the specialty of labour and employment law and was appointed an acting judge in the Labour Court.
zaHida eBraHim
Edward Nathan Sonnenbergs
Zahida Ebrahim has seven years experience and specialises in immigration law, with a particular emphasis on the immigration requirements of multi-national companies. Zahida has contributed to a number of texts and publications and has presented at numerous seminars on immigration issues. She has presented to the Parliamentary Portfolio Committee charged with oversight of the Department of Home Affairs, in regard to changes to the immigration legislation.
About the Authors
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edward natHan SonnenBergS
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