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BASIC CONDITIONS OF EMPLOYMENT AMENDMENT BILL, 2000

EXPLANATORY MEMORANDUM

This memorandum sets out the rationale for amendments in the attached Basic Conditions of Employment Amendment Bill, 2000.

1. Definition of employment law - Amendment to section 1

The definition of the term ‘employment law’ is amended to reflect the enactment of new labour legislation since the BCEA came into effect.

2. Regulation of overtime - Amendments to section 10

2.1 Section 10 regulates overtime work by setting the maximum overtime hours that may be worked daily or weekly. In terms of section 10(1) an employee may agree to work up to three hours overtime a day and ten hours overtime a week.

2.2 The daily limit of three hours is intended to limit the maximum overtime anemployee can work on an ordinary working day. However, it has the unintended consequence of preventing an employee working for more than three hours on days that the employee does not normally work. The effect is that an employee who normally works from Monday to Friday cannot work longer than three hours on a Saturday or Sunday as overtime.

2.3 It is proposed to remedy this by removing the daily limit on overtime in section 10(1). A new subsection 10(1A) will provide that an agreement to work overtime may not result in an employee working more than a total of twelve hours (both ordinary and overtime) on any day.

2.4 The weekly limit on the working of overtime is ten hours. 68% of applications

for variation determinations made by employers to the Department of Labour in

terms of section 50(1) of the BCEA are to extend the weekly limits on overtime.

In the majority of cases, these applications are supported by the trade union

representing the employees concerned.

2.5 It is therefore proposed that an employer and a trade union should be able to

conclude a collective agreement extending the weekly limit on permissible

overtime to 15 hours. This amendment will create greater capacity at plant-level

for regulating hours of work by collective agreement and will reduce the

administrative burden on the Department of Labour..12

3. Weekly rest period - Amendment to section 15

3.1 Section 15 provides that employees must have a 36-hour rest period which must

be on a Sunday unless otherwise agreed. A significant portion of the workforce

in sectors such as retail, hotel and catering, transport and public services are

required to work on Sundays.

3.2 Accordingly, it is proposed to repeal the qualification that the rest period must

be on a Sunday unless otherwise agreed. This amendment will not reduce the

entitlement of employees to a 36-hour weekly rest period. The day on which

the rest period will fall will be determined by collective or individual

agreement.

3.3 This amendment should be considered together with the following amendment

to section 16 which regulates payment for work on Sundays.

4. Payment for work on Sundays - Amendments to section 16

4.1 Currently work on Sunday is remunerated at premium rates. The rate is time

and a half if the employee ordinarily works on a Sunday and double time if the

employee works occasionally.

4.2 The proposed amendments seek to remove the legal right to a premium for three

reasons. Firstly, these premium rates place a considerable economic cost on

public services such as health care which operate around the clock and business

in service sectors such as retail, tourism and catering as well as continuous

operations that are required to provide full services on Sundays.

4.3 Secondly, in many sectors such as nursing, mining and retail employees and

employers have already agreed through collective agreement or by approaching

the Minister for a determination to forfeit the premium for work on Sunday.

Our law needs to be aligned to the current reality.

4.4 Thirdly, the proposed amendment strengthens the constitutional position of the

BCEA. It could be argued that both the requirement that a worker’s rest period

fall on a Sunday unless otherwise agreed and that premium rates be paid for

Sunday work could raise constitutional issues in the light of the Constitution’s

recognition of freedom of religion.

4.5 It is proposed to regularise work on Sundays by removing the legal requirement

for a premium. However, workers who work on Sunday can still agree through

an individual or collective agreement to receive a premium or additional time

off for working on a Sunday..13

5. Family responsibility leave - Amendment to section 27

This is a technical amendment to rectify the incorrect reference in section 27(5)

to subsection (1) instead of subsection (2).

6. Calculation of remuneration in BCEA - Amendment to section 35

6.1 The Basic Conditions of Employment Act (BCEA) sets rules for calculating

benefits such as overtime pay, leave pay, sick leave pay, notice pay and

severance pay. The calculation of leave pay, notice pay and severance pay is

based on the statutory definition of ‘remuneration’.

6.2 The concern has been raised that the application of the term ‘remuneration’ can

give rise to uncertainty in its practical application when calculating payments.

The Department accepts that there are always borderline cases which give rise

to differences of interpretation. For instance, does a travel or car allowance

form part of an employee’s remuneration. The value to be placed on benefits

such as accommodation or food supplied by an employer to an employee is also

a frequent cause of dispute.

6.3 It is proposed that the Minister should have the power to make an administrative

determination as to whether particular types of payment should be included in

or excluded from the calculation of remuneration. The Minister will only be

able to issue the notice after advice from the Employment Conditions

Commission and after receiving public comment.

6.4 In the proposed notice, the following kinds of items are most likely to be

included in the definition of remuneration:

§ Service increment;

§ Merit increment;

§ Car allowance;

§ Housing allowance, housing subsidy or housing received as a benefit in

kind;

§ Shift work allowance if worked regularly;

§ Standby allowance if received regularly;

§ Acting allowance if received regularly;

§ Overtime pay if overtime is worked regularly;

§ Food and accommodation allowance or value of food and

accommodation provided

§ Discretionary payments related to an employee's hours of work if

received regularly e.g. an attendance bonus;

§ Discretionary payments related to an employee's work performance if

received regularly e.g. production bonus based on the employee's

output;

§ Employer's contributions to medical and provident fund scheme;.14

§ Employer's contributions to death benefit scheme;

§ Employer's contributions to UIF and any other statutory insurance

cover;

§ Employer's contributions to personal accident insurance cover;

§ Transport/bus to enable employee to travel to and from work provided

as an in kind benefit or as an allowance;

§ Long service allowance if received regularly; and

§ Thirteenth cheque if not discretionary.

6.5 In the proposed notice, the following items are likely to be excluded from the

definition of remuneration:

· Relocation allowance;

· Gratuities e.g. a gold watch given as a long service award, or a farewell

gift on termination of employment;

· Discretionary payments not related to an employee's hours of work or

work performance e.g. profit-sharing scheme;

· Entertainment allowance;

· Phone allowance;

· Danger pay;

· Underground allowance;

· Inconvenience allowance;

· Dog allowance; and

· Education and schooling allowance

6.6 The proposed amendments will make the calculation of remuneration benefits

more certain. It will be quicker and cheaper for all concerned than resolving

those disputes by litigation. The composition of remuneration packages change

regularly and the Minister will have the ability to revise the relevant notice in

line with changing circumstances.

7. Notice of termination of employment - Amendment to section 37

7.1 Currently, a contract of employment may be terminated on one week’s notice

during the first four weeks of employment and on two weeks notice for the

remainder of the first year of employment.

7.2 The Labour Relations Amendment Bill, 2000, proposes that there should be a

probationary period of six months during which time if a dismissal takes place,

the employer only has to prove that the dismissal was effected in accordance

with a fair procedure.

7.3 To align the BCEA with the proposed amendments to the LRA, it is proposed to

set the notice period at one week during the first six months of employment. In

all other respects, the required notice periods remain the same.

8. Variation by agreement - Amendment to section 49.15

8.1 The BCEA seeks to achieve a balance between reducing the long hours,

particularly overtime hours, that many workers in South Africa work and

increasing the ability of employers and employees to negotiate working time

arrangements appropriate to their circumstances.

8.2 One of the provisions introduced to limit hours of work was the entrenchment in

section 49 of the limits on working time in section 9 as ‘core’ rights. This

means that collective agreements, whether concluded at plant level or at a

bargaining council established for a particular sector, cannot permit employees

to work more than 45 hours a week or to exceed the limits on the length of an

ordinary working week set in section 9.

8.3 The Department is concerned that this provision has led to a number of

unintended consequences. For example, employers and trade unions in the

maritime sector have indicated their support for the establishment of a

bargaining council. However, such a council could not operate effectively at

present because the 45-hour weekly limit and other limits on working time in

section 9 are inappropriate for work at sea. The ILO Convention in respect of

this sector allows for a 72-hour week.

8.4 It is proposed to remove section 9 from the list of ‘core’ rights that cannot be

varied by bargaining council collective agreements. This amendment will not

effect the limitation on other collective agreements (i.e. those not concluded in a

bargaining council) that cannot vary these rights without a ministerial variation

order. It is unlikely that this amendment will lead bargaining councils to

negotiate inappropriate increases in working hours. There are several other

mechanisms in the Act to prevent unreasonable increases in hours of work being

introduced. These include the duty on employers to arrange working time with

due regard to the health, safety and welfare of employees and the Minister of

Labour’s powers to make a determination limiting working hours in the interests

of health and safety.

9. Variation of ‘core’ rights by Ministerial determination - Amendments to

section 50 and section 55(6)

9.1 The basic conditions of employment set out in the BCEA can be varied by the

Minister of Labour in two circumstances: a variation determination in terms of

section 50 of the BCEA and a sectoral determination in terms of section 55.

9.2 The BCEA limits the extent to which these variations can vary basic conditions

of employment. Presently, the Minister may not vary certain of the ‘core’ rights

set out in section 49 by either a variation determination [section 50(2)] or a

sectoral determination [section 55(6)]. The ‘core’ rights that cannot be varied

include the limits on ordinary working time set in section 9..16

9.3 The consequences of the limitation on the Minister having the power to vary

‘core’ rights is best illustrated by the limits on ordinary hours of work set in

section 9. There are many circumstances in which either the circumstances of a

sector or the public interest requires that these limits be varied. These include a

sector such as maritime discussed previously, as well as emergency and other

public service such as fire-fighting and emergency medical services which have

to be provided on a round-the-clock basis. It is essential that the Minister should

have the power to consider applications to vary the application of ‘core’ rights to

these sectors and to grant variations in appropriate cases.

9.4 Parliament recently had to make an amendment to the Transitional Schedule to

the BCEA dealing with the reduction of hours for security guards in the private

security sector. This was required because the Minister did not have the power

to vary the 45-hour week in terms of section 50.

9.5 Sectoral determinations are designed to set conditions that differ from those in

the BCEA but are appropriate to the circumstances of a particular sector. The

limitation of varying hours of work prevents sectoral determinations from being

able to accommodate sectoral diversity in respect of hours of work.

9.6 It is therefore proposed to repeal section 50(2) and 55(6) which limit the

capacity of the Minister to vary core rights by variation and sectoral

determinations respectively. There are sufficient safeguards in the Act to

prevent a variation or sectoral determination resulting in an inappropriate

reduction of ‘core’ rights. These include the fact that the Minister must consult

with the Employment Conditions Commission before issuing a sectoral

determination or a variation determination applicable in a category of employees

as well as the fact that all determinations are subject to review by the Labour

Court.

9.7 The proposed amendment enables the Minister to vary all the conditions of

employment in the Act by sectoral determinations or variation determinations.

10. Variation of ‘core’ rights by sectoral determination - Amendment to

section 55(6)

This amendment is discussed in paragraph 9 above.

11. Issue of compliance orders - Amendment to section 70(d)

11.1 The BCEA envisages that a compliance order may only be issued for claims

arising in the preceding year. Questions have been raised as to how that period

is calculated..17

11.2 Section 70(d) is amended to clarify how the period is calculated.

12. Status of compliance order - Deletion of section 73(3)

12.1 Section 73(3) provides that a compliance order issued in terms of the BCEA has

the same status as an arbitration award issued in terms of the LRA.

12.2 The Labour Relations Amendment Bill, 2000, proposes that arbitration awards

should have the same status as orders of the Labour Court. If this amendment is

made, the cross-reference created by section 73(3) will be inappropriate.

13. Claims for amounts owing in terms of the Act - Amendment to section

74(1)(b)

13.1 Section 74 regulates the circumstances in which a claim under the BCEA can be

brought jointly with a claim for unfair dismissal.

13.2 In line with the proposed amendment to section 70(d), section 74(1)(b) is to be

amended to clarify that a claim may only be instituted in such proceedings in

respect of claims arising in the year before the dismissal.

14. Payment of interest - Amendment to section 75

This is a technical amendment to clarify the meaning of this section as originally

drafted.

15. Power of Labour Court to issue fines - New section 77A

15.1 Section 77 regulates the jurisdiction of the Labour Court in terms of the BCEA

but does not confer specific powers on the court in the same manner as, for

example, section 58 of the LRA or section 50 of the Employment Equity Act.

The proposed amendment addresses this shortcoming.

15.2 The proposed amendment to the BCEA clarifies the Labour Court’s power in

terms of the BCEA, including an express power to issue fines for failure to

comply with the Act. The proposed draft follows the formulation of section 50

of the Employment Equity Act and seeks to give greater substance to the

jurisdiction of the Labour Court as set out in section 77 of the BCEA..18

16. Presumption as to who is an employee - insertion of a new section 83A

16.1 The BCEA, like the LRA, defines an employee as any person, excluding an

independent contractor, who is in paid employment and who in any manner

assists in carrying on or conducting the business of an employer. The term

‘independent contractor’ is not defined. The distinction between an ‘employee’

and an ‘independent contractor’ reflected in the definition of an employee has its

origins in Roman law which distinguished between the contract of service

(employee) and the contract for services (independent contractor).

16.2 The definition of an ‘employee’ does not specify criteria that should be used to

distinguish employees from independent contractors. This is left for the courts to

determine. The court’s approach is that a contract must be classified on the basis

of the ‘dominant impression’ gained from examining its terms. This approach

has been criticised for offering little guidance in practice to employers and

employees. The view has also been expressed that the court’s approach involves

a formalistic consideration of the differences between a contract of service and a

contract for services rather than examining whether it is appropriate that the

worker should be protected by labour legislation.

16.3 It is possible to distinguish two categories of workers who do not receive the

protection of labour law –

(a) those who fall within the definition of an employee but who are in

practice unable to assert their rights as employees;

(b) those who the courts classify as independent contractors but are

nevertheless in a position of dependence on the organisations or the

persons to whom they provide services.

16.4 Many vulnerable workers employed in forms of employment such as part-time

work, homework or casual work fall into the former category. They are in fact

excluded from the protection of labour legislation even though the courts regard

them as employees. Both the lack of guidance in the definition of ‘employee’ and

the manner of its interpretation by the courts undermine the effectiveness of

protection offered to these vulnerable workers.

16.5 Often their employers advise these employees that they are independent

contractors. Organisations such as Confederation of Employers of South Africa

(COFESA) advise employers that they can avoid labour legislation merely by

stipulating in contracts that the workers are independent contractors without any

fundamental change in the employment relationship. The consequences of this

approach are not limited to excluding these workers from legislation such as the

LRA and the BCEA. These employers do not register with or contribute to the

unemployment insurance and worker’s compensation funds or meet their

obligations in terms of health and safety legislation. This weakens these funds.19

and imposes the costs of ill health and occupational accidents on the workers,

their families and the state.

16.6 It is also important to note that there is a constitutional dimension to clarifying

which workers are protected by statutes such as the LRA and the BCEA. Section

23 of the Constitution extends the right to fair labour practices to all persons and

basic labour rights such as the right to join trade unions to all workers. It is

conceivable that the Constitutional Court might accept that the language used in

the Constitution is broader than the statutory definition of an ‘employee’ and that

the failure to extend protection to certain categories of workers constitutes an

unreasonable and unjustifiable limitation of their constitutional rights.

16.7 The need to review definitions of employment and adapt these is an international

phenomenon and the proposal to adjust the BCEA and the LRA in this regard are

in line with international trends to clarify or adapt the scope of the regulation of

the employment relationship in the country’s legislation in line with current

employment realities.

16.8 It is proposed to include a series of rebuttable presumptions in the BCEA as a

new section 83A and new section 200A in the LRA. These presumptions

concern proof of whether an employment relationship exists. The effect of these

is to provide that where a particular factor is present in the relationship between a

worker and the person for whom he or she works, the worker is presumed to be

an employee unless the contrary is proven.

16.9 The factors listed are those commonly present in an employment relationship.

They include –

· if the manner in which the worker works is subject to supervision by

another;

· if the worker’s hours of work are subject to control by another person;

· the worker forms part of the employer’s organisation or is economically

dependent on the employer.

16.10. Where an employer adopts the attitude that, despite the presence of one of these

factors, there is no employment relationship, they will be required to prove this.

The employer has full knowledge of the working relationship and will therefore

be in a position to present evidence to discharge the onus in appropriate cases.

16.11. A set of rebuttable presumptions will create greater certainty containing the

existence of employment relationship while allowing for the fact that

employment relationships are in practice extremely varied.

16.12. This proposed amendment should go together with guidelines clarifying the

distinction between independent contractors and employees and determining

when an employment relationship exists. Such guidelines can be in the form of a.20

Code of Good Practice. Both the BCRA and LRA provide provisions for

NEDLAC or the Minister to issue such Codes.

16.13. Guidelines would promote greater certainty concerning this distinction and assist

employees to assert their rights and would also assist officials such as

Department of Labour officials and bargaining council agents evaluate

borderline cases for the purposes of enforcement.

17. Minister’s power to make Codes of Good Practice - Amendments to

section 87

17.1 Presently, Codes of Good Practice issued in terms of labour legislation can

only be taken into account for the purposes of that Act. Often, however

Codes of Good Practice are relevant to several Acts. For instance, it is

proposed to issue the Code of Good Practice on HIV/AIDS in the Workplace

in terms of both the LRA and the Employment Equity Act.

17.2 It is proposed to introduce a new section 87(5) which will permit the Minister

to stipulate in a Code of Good Practice, issued in terms of the BCEA, that the

code should be taken into account when interpreting or applying other

legislation administered by the Department of Labour.

17.3 A similar amendment is included in the Labour Relations Amendment Bill,

2000.

18 Wage determination - Amendment to Schedule 3

18.1 The transitional provisions in terms of the BCEA have created uncertainty

concerning the status of wage determinations issued in terms of the Wage

Act, and which remain in effect.

18.2 The provision has been redrafted so that wage determinations remaining in

effect on the date that the Amendment Act takes effect are deemed to be

sectoral determinations made under the BCEA.

18.3 The Minister will be able to amend, cancel or suspend a wage determination

as if it were a sectoral determination in terms of section 56 of the BCEA.

Likewise, the surviving wage determinations will be enforced in the same

manner as sectoral determinations made under the BCEA.

Quick Links

Regulation Gazette, No. 21407
Foreword by Minister
Executive Summary of Issues & Amendments
Labour Relations Amendment Bill 2000
Explanatory Memorandum to LRA

Basic Conditions Amendment Bill
Explanatory Memorandum to BCEA
Insolvency Amendment Bill 
Explanatory Memorandum to Insolvency Bill

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