Implications for Employers
Introduction
In light of the proposed amendments detailed in Parts I and II of this article, which discussed the proposed amendments to the Labour Relations Act, 1995 (LRA), the Basic Conditions of Employment Act, 1997 (BCEA), the National Minimum Wage Act, 2018 (NMWA), and the Employment Equity Act, 1998 (EEA), Part III will examine the broader implications of the proposed amendments to South Africa’s labour legislation for both employers and employees. It will offer a nuanced analysis of how these changes might impact workplace dynamics, employee rights, and employer responsibilities.
As noted in Parts I and II, the proposed reforms must still go through the legislative process. The State Law Advisor will review the draft bills before they proceed through Parliament. Public comment will be invited once this process starts. As not all social partners unanimously supported many of the final proposals, further debate and amendments may occur.
Implications for Employers
More flexibility in dismissing high-earning employees and new hires within the first three months.
Employers will have greater discretion in managing high-earning employees, as their remedies for unfair dismissal will be limited to capped compensation, except in cases of automatically unfair dismissals. This will limit the business risk to employers where a tribunal finds that they have acted unfairly.
New hires within their first three months of employment (or a reasonable probation period) will have restricted access to unfair dismissal protections, allowing employers to assess suitability without immediate legal risk.
Less exposure to unfair labour practice claims in disputes over promotions, benefits, and training.
The proposed amendments remove disputes related to promotions, demotions, training, and benefits from the definition of unfair labour practices, reducing the risk of costly and prolonged litigation for employers. This change provides businesses with greater autonomy in making operational decisions regarding employee development and career progression.
The compensation awarded to an employee in respect of an unfair labour practice is to be capped to a maximum of the amount prescribed by the Minister in terms of the new section 208B of the LRA, though this cap does not apply to cases involving whistleblowing.
Exemptions for start-up businesses from bargaining council agreements provide cost relief.
New businesses operating for less than two years and employing fewer than 50 employees will no longer be automatically bound by bargaining council agreements, unless they result from a merger or division of an existing entity. This exemption lowers compliance costs and administrative burdens, making it easier for start-ups to establish themselves in the market.
More Accessible Dispute Resolution
Employers may see an increase in CCMA cases relating to harassment-based discrimination claims, because employees will have an easier avenue to bring cases without requiring Labour Court adjudication.
Retrenchments and Bargaining Council Jurisdiction
The risk inherent in retrenchment processes and dismissals will be increased, because procedural fairness challenges can now be brought after dismissals and may expose economically vulnerable employers to claims for significant compensation in large scale retrenchments.
Employers operating under sectoral collective agreements should be aware that disputes could now be directed to accredited bargaining councils rather than the CCMA or Labour Court.
Legal Consistency
The updated definition of “employment law” in the EEA ensures alignment with modern labour legislation, but does not impose new substantive compliance obligations.
These changes focus on procedural efficiencies rather than major shifts in employment equity obligations. Employers should review internal dispute resolution mechanisms to align with these potential amendments, particularly regarding harassment complaints and bargaining council dispute handling.
Employees below the earnings threshold can now have their discrimination claims arbitrated at the CCMA, avoiding the costly Labour Court process.
Conclusion
The proposed amendments to South Africa’s labour laws introduce significant changes aimed at balancing employee protection with increased flexibility for employers. Key reforms include streamlined dismissal processes for high-earning employees and new hires, reduced exposure to unfair labour practice claims, and regulatory relief for start-ups.