A number of far-reaching labour law reforms are on the table at the National Economic Development and Labour Council (Nedlac) that are to be welcomed by business.
The proposals being discussed by the Nedlac partners — the government, business and labour — cover wide-ranging amendments to the Labour Relations Act and associated Codes of Good Practice, the Basic Conditions of Employment Act and Employment Equity Act.
First and foremost is the proposal by the government to exempt start-up businesses employing fewer than 50 employees from the conditions of employment laid down by extended collective bargaining agreements. This would allow them to pay wages within their means as they try to establish a commercial foothold.
It takes several months, if not years, for a small business to break even and in SA small businesses have a relatively low survival rate. Any measure that can nurture them into becoming flourishing enterprises that contribute to employment and tax revenue is to be encouraged.
In terms of international comparisons SA’s small business sector is small relative to the size of the economy but it has the potential to spur economic growth and job creation. It has for too long been hampered by red tape and wages too high for fledgling companies to afford.
Of course, labour opposes the proposed blanket exemption which carries the danger of gross, untrammelled exploitation in a situation of high unemployment but this is where trade unions can play a role, negotiating wage rates appropriate to each business enterprise rather than subjecting them to agreements thrashed out with dominant firms. A financial threshold could be introduced to avoid wealthy small companies qualifying for the exemption.
We would strongly urge against the adoption of another proposal by labour to extend the facilitation period for negotiations over large-scale retrenchments to 120 days from 60 days under section 189 of the Labour Relations Act. Sixty days is already a generous period for negotiations.
Retrenchments are usually a last resort measure adopted by companies in trouble and delaying them for so long when the outcome is probably inevitable will just worsen their financial difficulties. Companies need to be able to adapt speedily to changed circumstances.
Business rightly opposes labour’s proposal to give workers a severance pay of two weeks instead of one week per year of service. While this may be an incentive for workers to leave voluntarily it will impose onerous financial obligations on firms.
Also to be welcomed is the proposal supported by all Nedlac partners for representative trade unions to conduct secret ballots of employees covered by a closed shop agreement to determine whether the agreement should be terminated. The proposal includes a provision that if three years have elapsed since the commencement of the agreement, or the last ballot was conducted, the agreement will lapse. Closed shops are a powerful weapon in the hands of trade unions and needs to be tempered by employee consent.
The proposal to preclude individuals earning more than R1.8m a year from resorting to the Commission for Conciliation, Mediation and Arbitration (CCMA) to resolve their employment disputes is a sensible one. These individuals can afford to pay lawyers to conduct their legal battles and should not clog up an already overburdened CCMA.
Lawmaking processes both in the government and in parliament take a long time to reach fruition, so these progressive measures will not get onto the statute books soon, but are welcome nevertheless.
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