Proposed Amendments to the Labour Relations Act
Introduction
South Africa’s labour landscape is poised for significant changes through proposed amendments to key legislation, which aim to balance employee protection with economic growth and flexibility for employers. This article, which will be published in three parts, will provide an overview of the main proposed changes to assist employers in understanding and preparing for their potential impact.
Following extensive negotiations between organised business, organised labour, and the government at the National Economic Development and Labour Council (NEDLAC), which began in April 2022, the NEDLAC Report on the Labour Law Reform Process has been released.
The report captures the proposals tabled and the outcomes of these discussions and has been submitted to the Minister of Employment and Labour, accompanied by four proposed amendment bills. These bills suggest 47 amendments to the Labour Relations Act, 1995 (LRA), 13 amendments to the Basic Conditions of Employment Act, 1997 (BCEA), two amendments to the National Minimum Wage Act, 2018 (NMWA), and three amendments to the Employment Equity Act, 1998 (EEA). Part I will address the proposed amendments to the LRA, Part II will address the proposed amendments to the BCEA, NMWA and the EEA; and finally, Part III will address the implications of such amendments.
While these proposed reforms mark significant progress, they are still subject to the legislative process. The draft bills will undergo vetting by the State Law Advisor before proceeding through Parliament. Once this process begins, there will be opportunities for public comment. Given that many of the final proposals did not secure unanimous support from all three social partners, further debate and potential amendments are expected.
Labour Relations Act (LRA)
Limitation of Remedies for Unfair Dismissal of High-Earning Employees
A notable proposal introduces a new section to the LRA, limiting remedies for unfair dismissal claims by high-earning employees. Employees earning above R1.8 million per annum (adjusted annually with the consumer price index) would be entitled to reinstatement only in cases of automatically unfair dismissals (for example dismissals involving discrimination). For other unfair dismissal claims (for example misconduct dismissals), only compensation can be awarded and this would be capped to a maximum of the amount prescribed by the Minister in terms of a new section 208B of the LRA.
Clarification of Procedural Fairness in Dismissals
The proposed amendments seek to clarify that, subject to applicable collective agreements, a fair dismissal procedure requires giving the employee an adequate and reasonable opportunity to respond to the reasons for dismissal. This aligns with the draft Code of Good Practice on Dismissal, moving away from formal, adversarial pre-dismissal processes.
Exemptions during the probation period
A new section 188(4) proposes that protection against unfair dismissal does not apply during the first three months of employment or a longer, reasonable, and operationally justifiable probation period specified in the employment contract. However, protection against automatically unfair dismissals remains during this period. This aims to encourage the hiring of new employees, particularly those without prior work experience.
Changes to Large-Scale Retrenchment Processes
The amendments propose transferring the authority to make rules related to facilitation from the Minister to the Commission for Conciliation, Mediation, and Arbitration (CCMA). Additionally, the current regime which only allows for the procedural fairness in retrenchments to be challenged prior to the retrenchments, would change, allowing all aspects of a retrenchment dismissal to be challenged after the dismissal, thereby rolling back to the legal position which existed prior to the introduction of section 189A(13) – (17) of the LRA.
Bargaining Councils & Collective Agreements
New businesses (operating for less than 2 years and with under 50 employees) are exempt from bargaining council agreements unless formed through a merger or split of an existing business. Businesses acquired through the transfer of a going concern, in terms of section 197(1) of the LRA and businesses formed through the division or dissolution of an existing entity, will remain subject to bargaining council agreements.
Trade unions must conduct a secret ballot every three years to determine whether to continue closed shop agreements (compulsory union membership arrangements).
Essential Services & Minimum Service Agreements
The amendments clarify that workers in essential services can strike, but only if minimum service agreements allow it.
Narrowing the Definition of an Unfair Labour Practice
Disputes over promotion, demotion, probation, training, and benefits will no longer be classified as unfair labour practices under the LRA. Such disputes will now need to be determined within the company through its internal grievance procedures, or alternatively through a dispute on the grounds of a breach of contract.
Stricter Financial Regulations for Trade Unions & Employers’ Organisations
These organisations must now comply with financial reporting standards set under the Companies Act, 2008, including keeping records of its income, expenditure, assets and liabilities, as well as the preparation of annual financial statements.
Dismissal Procedures & Code of Good Practice
The Code of Good Practice on Dismissal has been updated to clarify fair procedure, ensuring that employees have a reasonable opportunity to respond before dismissal.
Small businesses will have less stringent procedural requirements for dismissals.
Conclusion
The proposed amendments to South Africa’s labour laws signify a major shift. Allowing strikes in essential services, redefining unfair labour practices, enforcing financial regulations for trade unions and employers’ organisations, and updating dismissal procedures aim to balance employee protection with employer flexibility. These changes enhance operational efficiency and protect workers’ rights.