Labour employment seminar 2016

LABOUR & EMPLOYMENT SEMINAR

13 SEPTEMBER 2016

INTRODUCTION OF A NATIONAL WAGE

ANASTASIA VATALIDIS

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TOPICS TO BE COVERED

> What is a National Minimum Wage?

> Why South Africa is wanting to explore a National Minimum Wage?

> What has the international experience been with National Minimum Wage?

> The proposals that have been tabled.

> Where are we in the process.

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WHAT IS A NATIONAL MINIMUM WAGE?

>Minimum Wage Floor.

>Employers will not be permitted to pay less.

>According to the ILO, the purpose is –

> to ensure wages cover basic needs of workers and their families;

> taking into account relevant economic factors.

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MINIMUM WAGE SYSTEMS

>Most European countries set living wage through a combination of wage floors and fiscal transfers.

>Sectoral wage floors: traditional approach in Germany, but statutory minimum wage introduced in 2015.

>National ‘growth wage’: French system, linked by law to annual increases in prices and at least half the increase in the purchasing power of wages.

>Statutory MW coupled with tax credits: UK system.

Slide from Prof. S Deakin, University of Cambridge

MINIMUM WAGES AND PRODUCTIVITY

Hourly minimum wages in OECD countries compared to labour productivity (GDP per hour worked) in USD constant prices, PPP, 2013.Slide from Prof. S Deakin, University of Cambridge

MIDDLE INCOME COUNTRIES: SOCIAL OR ECONOMIC UPGRADING?> It took the Netherlands 128 years to cross the middle

income zone (per capita income of $2,000-$7,250 in 1990 terms); Japan 25 years; China 17 years.

>Economic upgrading does not always equate with social upgrading (Whittaker, forthcoming).

>The minimum wage plays an important role in bridging the middle income trap.


THE ‘MIDDLE INCOME TRAP’

>MICs need to transition from growth based on low cost labour and capital, to productivity-based growth

>But many find that they are ‘unable to compete with low-income, low-wage economies in manufactured exports and unable to compete with advanced economies in high-skill innovations’ (Kharas and Kholi, 2011)


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NMW: WHY SOUTH AFRICA?

>Being explored as a tool to reduce inequality and transform the inherited apartheid wage structure.

>South Africa has the highest level of inequality in the world.

> In 2014, the average income of the top 10% of full-time employees was 82 times the average income of the bottom 10%.

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>Minimum wages only currently in –

>bargaining councils (“BC”) - BCs only for certain industries; or

>sectoral determinations.

>Major industries with no BC include the mining sector.

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SECTORAL WAGES

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Potential Advantages of a NMW -

> wage covers all workers;> is easier to enforce;> does not set lower minimum for sectors with high

proportions of vulnerable workers;> can take account of broad policy objectives such as

reducing inequality, and economy-wide economic impacts;

> higher wages could result in higher economic growth;

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PROPOSALS TABLEDIn terms of a NMW Research Initiative, it was found that –

> in middle-income countries MWs are on average set at 48% of the average wage;

> this translates into R4 161 (in April 2015) in South Africa;

> in 2015, the weighted average minimum wage for private-sector bargaining councils was R4 355;

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PROPOSALS TABLED

> for public- and private-sector bargaining councils R5 747.

> in April 2015 a family of four required R5 276 to meet their most basic needs and not live in poverty;

> the working-poverty line was R4 125 (based on an analysis of dependency ratios and multiple income sources).

>The relevant indicators therefore cluster between R4 000 and R5 500.

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PROPOSALS TABLED

>The State - between R2,000 to R3,000 a month.

>Business - about R1,800 — or a floor close to the lowest sectoral determination.

>COSATU - between R4,125 and R5,276.

ARGUMENTS FOR AND AGAINST A HIGH MINIMUM WAGE

>A low minimum wage (45% of the median) will not help improve productivity and will have minimal impacts on poverty, requiring a high level of fiscal transfers.

>A high minimum wage (60% of the median) will affect competitiveness, but how firms respond will also be shaped by the investment climate and state support for training and upgrading.


WHERE ARE WE IN THE PROCESS?

>Early days.

>Research and studies to be conducted.

>Negotiation between various stakeholders together with NEDLAC.

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NATIONAL MINIMUM WAGE UPDATES

FOR MORE INFORMATION AND TO KEEP UP TO DATE WITH THE

DEVELOPMENTS, VISIT –

http://nationalminimumwage.co.za/

THANK YOU

Legal notice: Nothing in this presentation should be construed as formal legal advice from any lawyer or this firm. Readers are advised to consult professional legal advisors for guidance on legislation which may affect their businesses.

© 2016 Werksmans Incorporated trading as Werksmans Attorneys. All rights reserved.

Anastasia VatalidisT: 011 535 8472E: [email protected]

DISCIPLINARY ENQUIRIES

BANKEY SONO

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THE DISCIPLINARY PROCESS

>The usual manner in which a disciplinary process is conducted is -> notifying the employee of the holding of an

enquiry;>Giving the employee at least 48 hours notice of

the holding of the enquiry;>Allowing the employee an opportunity to

respond –> to the evidence of the employer;>To the witnesses for the employer.

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DISCIPLINARY PROCESS

> In the disciplinary process, the employee is allowed to present his defence to the allegations, and also to present his own witnesses.

> It is usually critical for the employee to be able to challenge the company’s witnesses/evidence.

>This is why evidence on affidavit should not be allowed by a chairperson, as the employee cannot cross examine the deponent on their version. The witnesses usually gives testimony live.

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>This process is intended to achieve the result that –> the chairperson is able to determine the guilt of

the employee;> if guilty of at least one allegation of

misconduct, the chairperson can consider and recommend the appropriate disciplinary sanction;

> the employer is able to assess the findings and recommendations and implement them.

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>Is this the only method of dealing with workplace discipline and disciplinary infractions?

>Answer - No.

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THE TRUNCATED OR ABRIDGED DISCIPLINARY PROCESSPoint of departure: The Code of Good Practice: Dismissal

Item 4(1)

“Normally, the employer should conduct an investigation to determine whether there are grounds for dismissal. This does not need to be a formal inquiry. The employer should notify the employee of the allegations using a form and language that the employee can reasonably understand. The employee should be allowed the opportunity to state a case in response to the allegations. The employee should be entitled to a reasonable time to prepare the response and to the assistance of a trade union representative or fellow employee. After the enquiry, the employer should communicate the decision taken, and preferably furnish the employee with written notification of the decision.”

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CASE LAW SUPPORT

> In Moropane v Gilbeys Distillers and Vintners (Pty) Ltd [1997] 10 BLLR 1320 (LC) the Labour Court held that procedural fairness in terms of the 1995 Act - > “demands less stringent and formalized compliance

than was the case under the unfair labour practice jurisdiction of the industrial court”.

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CASE LAW SUPPORT

>Avril Elizabeth Home for the Mentally Handicapped v CCMA [2006] 9 BLLR 833 (LC) Van Niekerk AJ held ->“The right for workers lies in a right to an

expeditious and independent review of the employer’s decision to dismiss. Because managers are not experienced judicial officers, it follows workplace efficiencies should not be unduly impeded by onerous procedural requirements. Provided that there is a dialogue and an opportunity for reflection before any decision is taken to dismiss, the requirement of procedural fairness will be satisfied.”

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CASE LAW SUPPORT

> In Choene v Mitsui & Co Southern Africa (Pty) Ltd (2012) 33 ILJ 2872 the court endorsed the notion of an attenuated hearing but suggested that the attenuated process should be canvassed with the employee at the outset of the process.

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CASE LAW SUPPORT

>Nitrophoska v CCMA 2011 LC; JDG Trading (Pty) Ltd t/a Price ‘n Pride v Brudson (2000) 21 ILJ 501 (LAC) -

> “The intention of the LRA to do away with rigid procedural requirements, and the principle that an employee need merely be given an opportunity to “state a case”, applies even more strongly where senior managerial employee are involved.”

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CASE LAW SUPPORT

> In Ngutshane v Arivia.Kom (Pty) Ltd, it was held that where an employee’s misconduct is manifest, common cause or not in dispute, a less formal process will suffice. Examples of misconduct that is manifest - >publishing false statements about the employer; > theft of the employer’s property;>fighting at work witnessed by a colleague.

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CASE LAW SUPPORT

> publishing disrespectful and false information about the board members of the employer company;

> destroying employer’s property during strike action, particularly were the misconduct is recorded on video;

> participating in an unprotected strike.

>These are examples where the employee is less likely to able to disprove guilt.

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TRUNCATED PROCESS IN LARGE SCALE MISCONDUCT> In BEMAWU v SABC 6 BLLR 595 (LC) -

> the Court endorsed the truncated disciplinary process saying that the such process is appropriate when dealing with large scale misconduct;

> "That is exactly the conundrum that the SABC faces in these proceedings. To have individual hearings for each individual employee numbering more that hundred, along the lines of a criminal justice model, will impede the very workplace efficiencies that Van Niekerk spoke about….“.

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CASE LAW SUPPORT

> In BEMAWU v SABC 6 BLLR 595 (LC) (continued) -

> “Exceptional circumstances have necessitated the corporation to adopt a procedure other than the normal procedure envisaged by its Disciplinary Code. Those circumstances are the number of employees involved and the operational efficiencies of the organisation. I would, therefore, have formed the view on the merits that the union has not established a clear right as is required for final relief.”

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WHAT DOES THE LAW REQUIRE?

>Audi alteram partem -

> the employer must be still give effect to the audi rule;

> the employer cannot unilaterally decide guilt without having provided the employee with an opportunity to be heard;

> the audi rule ensures fairness to the process.

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HOW TO ENSURE COMPLIANCE WITH AUDI IN TRUNCATED DISCIPLINARY

>Draft a charge sheet listing the allegations against the employee.

>Advise the employee to enter a plea/stated case.> In the charge sheet indicate that the employee

must respond in writing by a certain date.>Appoint an independent chairperson to decide the

issue of guilt in the event that the employee pleads not guilty.

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HOW TO ENSURE COMPLIANCE WITH AUDI IN TRUNCATED DISCIPLINARY?

> In the event that the chairperson finds the employee guilty, he or she must request the parties to make representations on the appropriate sanction.

>The chairperson can then make a finding as to the appropriate sanction.

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TRUNCATED PROCESS v COLLECTIVE AGREEMENT> If the procedure is stipulated in a Collective

Agreement, the employer –> may not depart from the procedure stipulated in the

Collective Agreement;

> even if the procedure followed was fair. See SAMWU obo Abrahams v City of Cape Town [2008] 7 BLLR 700 (LC);

> employer must conduct the hearing in terms of the procedure stipulated in the Collective Agreement.

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TRUNCATED PROCESS v CONTRACT OF EMPLOYMENT> Disciplinary procedure stipulated in the employment contract –

> the employer must follow the process agreed upon with the employee;

> The agreed process is binding and the employer cannot abandon same.

> Classical example: Mchuba v Prasa [2016] 6 BLLR 612 (LC) -

> the employment contract provided for a pre-dismissal arbitration hearing in terms of section 188A;

> employer initiated the section 188A process under the auspices of Tokiso Dispute Settlement. Employee raising an objection to the accreditation of Tokiso. Arbitrator finding the Tokiso was not accredited at the time of the hearing;

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TRUNCATED PROCESS v CONTRACT OF EMPLOYMENT >Mchuba v Prasa [2016] 6 BLLR 612 (LC)

(continued) ->Tokiso did not have jurisdiction to entertain the

matter;>employer deciding the conduct a truncated

disciplinary hearing by issuing the employee with a charge sheet and requesting him to respond to the allegations in writing;

> the Labour Court held that the termination of the applicant’s contract constituted a breach of Prasa’s contractual obligations.

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TRUNCATED PROCESS v DISCIPLINARY CODE>When the truncated procedure is not provided for in

the employer’s disciplinary code and procedure -> Khula Finance Limited v Dr Madinane JR 660/02 –

> although this case did not deal with the truncated process it dealt with instances where an employer would be justified in departing from the disciplinary code;

> court held that that the arbitrator failed to consider authorities in support of the proposition that the provisions of a disciplinary code must not be applied mechanically but an arbitrator or court must decide the matter ultimately on whether, having regard to all the circumstances, the procedure as followed was fair.

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TRUNCATED PROCESS v DISCIPLINARY CODE>Conclusion -

> the decision to embark upon a truncated disciplinary process is not without risk;

>However as can be seen in a number of the cases reviewed today an abridged disciplinary process – if conducted properly does ensure compliance with the audi rule and requirements of the LRA;

>has the time come for employers to adopt this process and to make the abridged process the norm?

THANK YOU



Bankey SonoT: 011 535 8257E: [email protected]

RETRENCHMENT DO’S AND DON’TS

PETER MOSEBO

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RETRENCHMENTS

>What constitutes operational requirements?>Defined in s213 of the LRA.> requirements based on the -

>economic;> technological; >structural; or >similar needs of the business.

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RETRENCHMENTS

>Simply means that -> the employee is available and capable of doing

the work, but there is no work for him to do;> the employee is not at fault and is not to blame;> the employer’s needs motivate why the

employment relationship should be terminated.

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RETRENCHMENTS

>When can an employer retrench?>When its operational requirements justify –

>a downscaling;> reduction of staff;> restructuring of its organization;>outsourcing [consider section 197].

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RETRENCHMENTS

>When to issue a notice ->when the employer contemplates dismissing one

or more employees for operational reasons.>Contemplates?

>When an in principle decision to retrench has been made.

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RETRENCHMENTS

> In Principle Decision ->earlier case law -

>an in principle decision is made when the cause of the need to retrench has been identified;>possible remedies have been identified and/or rejected;> retrenchment appears to be necessary due to lack of alternatives.

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RETRENCHMENTS

> In Principle Decision ->current case law -

> required information set out in the notice of possible retrenchments;> the employer must have seriously considered all the issues in the notice before issuing same.

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RETRENCHMENTS

> [A] Reason for the proposed dismissals (substance) -> there must be a valid reason related to a section

213 operational requirement ->economic; > technological;>structural;>similar needs of the business.

> (documentary proof)

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RETRENCHMENTS

> [A] Reason for the proposed dismissals (substance) ->alternatives -

> retrenchments;>what else did you consider?>why did you reject these alternatives?> (Minutes/notes as proof).

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RETRENCHMENTS

> [B] Employees to be affected -> the number of employees;> the job category / categories of employees;> (Minutes/notes as proof).

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RETRENCHMENTS

> [C] Proposed method of selection ->Voluntary -

>voluntary retrenchment packages plus critical skills retention;>voluntary early retirement plus critical skills retention;> (minutes/notes to proof critical skills).

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RETRENCHMENT

> [C] Proposed method of selection -> forced -

>LIFO;>LIFO plus retention of critical skills;>LIFO plus affirmative action;>LIFO plus employment equity; >LIFO plus bumping;>outsourcing.

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RETRENCHMENTS

>Timing of dismissals ->2 to 3 months from issue of notice to last day of

work ->1 month consultation section 189;>2 months consultation section 189A;> refer to contracts of employment/BCEA minimum notice periods).

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RETRENCHMENTS

>Severance Pay – recommendations ->economic reasons: 1 week per completed year of

service;>other reasons: 2 – 3 weeks per completed year

of service.>Assistance -

> training.>Future re-employment – recommendations -

>maximum 24 months post dismissal with FIFE, employment equity and skills.

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RETRENCHMENTS

>Also consider ->number of the workforce;

> to apply either s189 or s189A.>previous 12 months -

> to determine if s189 or s189A applies.

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RETRENCHMENTS

>Who to consult with ->hierarchy is set in terms of section 189 -

>any person whom the employer must consult in terms of a collective agreement;> recognised trade unions -

>collective agreement;>main collective agreement;>2 or more recognised trade unions;>minority trade unions in terms of collective agreement.

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RETRENCHMENTS

>Who to consult with -> individual employees;>unrecognized unions;>once a decision is taken to consult with both

recognized trade unions and unrecognized trade unions/employees associations, then obliged to consult with all of them fully in terms of section 189.

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RETRENCHMENTS

>Consultation Process (attempt to reach consensus) ->section 189(2) -

>proof of compliance with section 189 consultation process;>proof of attempts to comply with section 189 (substantial compliance);

>proof ->notice and correspondence with parties to the meetings;>“minutes” of consultation meetings.

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RETRENCHMENTS

>Consultation Process (attempt to reach consensus) ->consult / negotiate -

>negotiate: if no agreement reached – deadlock;>consult: If no agreement reached –make an attempt - record- and then proceed to the next item;> the above are practically the same but philosophically different.

>The LRA requires CONSULTATION not NEGOTIATION.

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RETRENCHMENTS

> Consultation Process (attempt to reach consensus) –> if any consultation party does not attend a

scheduled meeting, record this and proceed unless there are reasonable grounds to postpone;

> the employer is obliged to comply with the process of section 189 and to provide the consulting parties with an opportunity to participate;

> in the event of disagreement, attempt to resolve same, with an eye on compliance with the LRA;

> it is a consensus seeking process – attempt to reach consensus.

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S189 AND S189A OF THE LRA

> Distinction between small scale (s189) and large scale (189A) retrenchment -

> When does s189A apply?> employer employing more than 50 employees contemplates retrenching -

> 10 of 200;

> 20 between 200 and 300;

> 30 between 300 and 400;

> 40 between 400 and 500;and> 50 if more than 500.

(NB: calculation of number of employees includes employees retrenched in 12 month period preceding notice )

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>Similarities: both require -> notice;>consensus seeking consultative process;> information disclosure; and>no decision regarding retrenchment to be

taken prior to conclusion of the consensus seeking consultative process.

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> Differences -> Large scale retrenchment -

> within 15 days of notice of retrenchment either party may request facilitation by CCMA (Preferred - Regulations and mediation/buffer);> if facilitator is appointed –

> employer may not dismiss any employee for 60 days from date of notice;> trade union and the affected employees may not give notice of a strike nor refer a dispute about whether there is a fair reason for their retrenchment to the Labour Court for 60 days from date of notice.

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CCMA FACILITATION REGULATIONS

> Published in terms of the Labour Relations Act, under s189A.

> Provides guidelines on -> the dates of the first and subsequent facilitation

meetings (not less than 7 days after the request is filed);

> the process to be followed during facilitation;> the powers of the facilitator (final and binding)

to –> decide procedural issues;> order / refuse information disclosure.

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> If facilitator is appointed –> after 30 days an employee may refer a dispute

to the CCMA;> employer may not dismiss any employee for 60

days from date of notice;> trade union and the affected employees may not

give notice of a strike nor refer a dispute about whether there is a fair reason for their retrenchment to the Labour Court for 60 days from date of notice.

[NB: employee may either refer a dispute to the CCMA or engage in a strike, not both]

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RETRENCHMENTS - COMMON MISTAKES>Taking a decision before hand -

>Fait accompli;>Displays mala fides in engaging in consultation

process.

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RETRENCHMENTS - COMMON MISTAKES>Cherry picking which employees they want to

keep -> fair selection criteria applied uniformly;>LIFO; >LIFO subject to skills;>LIFO subject to Affirmative Action;>DO NOT USE -

>disciplinary records;>poor work performance issues.

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RETRENCHMENTS - COMMON MISTAKES>Not Communicating with regard to the

proposed changes ->suggest providing -

>an organogram showing the current structure;>an organogram showing the proposed structure clearly revealing the departments/ positions which may be affected; >NO NAMES!

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RETRENCHMENTS - COMMON MISTAKES> Involving TOO many / unnecessary

employees -> restructuring of a single department / level / tier

does not need all employees to be issued with notices in terms of s189;

>can compartmentalize / silo to focus on –> individuals;>discrete departments (sales / IT / Finance and accounts etc.).

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RETRENCHMENTS - COMMON MISTAKES>Rushing the process -

>section 189 consultation- consensus seeking;>no prescribed period, intention to reach

consensus;>Allowing a union’s attempts to delay the process

to bring process to a close or to skip steps/issues.

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RETRENCHMENTS - COMMON MISTAKES>Adopting a checklist approach -

>give effect to the intention of the consultation process;

> the parties must attempt to reach consensus;>not just going through the motions.

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RETRENCHMENTS - COMMON MISTAKES> Closing too soon -

> must provide employees with a fair opportunity to propose alternatives , make suggestions, offer ideas to prevent dismissals or reduce the number of intended dismissals;> indicate the last date on which consultation meetings are proposed to be completed> if employees agree that there is no need to meet any further, a clear indication that the process is closed> written consent IDEAL!> do not unreasonably refuse to extend to another pre-determined date, should it be necessary.

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RETRENCHMENTS - FREQUENTLY ASKED QUESTIONS> What happens if an employee is sick /

pregnant / on leave / on suspension and we cannot consult?> The fact that an employee is sick does not

obviate the need to consult. Consultations should be scheduled when employee returns to work.

> How do I know if employees are union members?> Check stop orders / union deductions from

payroll.> Request shop stewards / union officials to

confirm.

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RETRENCHMENTS - FREQUENTLY ASKED QUESTIONS>The union / employees are demanding access

to sensitive financial information -> relevant information to enable the parties to

consult must be provided;>unions also have rights to information in terms of

section 16 of the LRA;>should be adhered to if the reason for the

retrenchments is ECONOMIC;>can be made subject to non-disclosure,

confidentiality or block some sensitive information.

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RETRENCHMENTS - FREQUENTLY ASKED QUESTIONS>The union refuses to attend meetings / is

obstructive -> the process is intended to be MUTUALLY co-

operative;>create a record of attempts and/or opportunities

provided to the union to participate;>warn the union of the consequences of not co-

operating;> record the attempts made and proceed; >err on the side of caution and extend the process

as long as possible.

THANK YOU



Peter MoseboT: 011 535 8474E: [email protected]

Law

Labour employment seminar 2016