Will amended laws make retail labour compliance better or worse?

Intent on bringing non-compliant employers to book, the Department of Labour has amended the labour laws to provide for a far simpler process for enforcement. Whether these amendments will have the desired impact or merely increase costs of enforcement litigation for employers and government alike remains to be seen.

These issues and more were interrogated at the 2014 Retail Association Employment Conference at Focus Rooms, Johannesburg on Wednesday, 17 September, hosted by the Retail Association and facilitated by LexisNexis South Africa.

Essentially the amendments to the enforcement provisions in the Basic Conditions of Employment Act and the Employment Equity Act change the enforcement procedure from a 5-step process to a 3-step process. Voluntary compliance, objections to compliance orders and appeals against compliance orders are all out. Under the new law, an inspector could simply visit a workplace, issue a compliance order and the employer, if unwilling to comply for whatever reason, would then meet the inspector in Court. This may look quick and efficient at first glance, but potentially counter-productive given the challenges.

The intention behind the amendments emanates from a general recognition that there is limited capacity within the State to adequately monitor and ensure compliance with the labour laws. The limited capacity is both in terms of the number of inspectors (approximately 1000 for the entire country) and also in terms of capability. The minimum entrance qualification to become an inspector is a matric and there is little in the way of formal qualifications. Where inspectors do become competent over time there is the challenge of attrition to the private sector. There is also the ongoing challenge of managing performance and delivery within the inspection services over such a large geographical area.

In June 2013 the South African Parliament ratified ILO Labour Inspection Convention 81 which requires ratifying States to ensure that labour inspectors are adequately qualified and trained, have conditions of service that ensure stability of employment and that there are a sufficient number of labour inspectors to discharge their duties relative to the number, nature, size and situation of workplaces. This poses a massive challenge for the Department and would require a major overhaul of inspection services within the country in order to make enforcement effective.

The Minister of Labour reported in her July 2014 Budget Speech to Parliament that they inspected 164 868 workplaces during the 2013/4 financial year of which 25% were not compliant. Given that there are approximately 1000 inspectors in the Department of Labour, this translates into about 164 inspections per inspector per year, of which approximately 40 cases per inspector required further processes. The time consuming nature of further processes cannot be under-estimated.

Imagine now how this will be changed with the amended 3-step enforcement process. Presumably, there will be much more time required by inspectors for preparing for court and attending court proceedings. My guess is that the numbers will shift – there will be both fewer inspections and fewer cases with further court processes per inspector. The Department will have to commit additional resources to conducting inspections more carefully; screening cases; and preparing for Court. They will also have to secure legal services to attend to court matters. Overall, it is very likely there will be less oversight by the inspectorate, rather than more.

Enforcement costs will also escalate for unwitting employers who find themselves in court in the first instance, without having had an opportunity to either understand what they are required to do to comply, or to convince the inspector that they are in fact compliant. The economic cost of enterprises spending employee time and money on court proceedings can really not be afforded, particularly in smaller enterprises where every employee needs to be productivity engaged. This is the type of red tape that the economy and society cannot afford.

Business’s proposal in Nedlac was to provide for an employer initiated, time-bound, conciliation at the CCMA as an optional step prior to court proceedings taking place. This would have offered a far greater prospect of compliance, building capacity to support compliance, with lower costs and less of the adversarialism that comes with the nature of court proceedings.

Had the Department spent more time understanding their capacity constraints and the impact of the amendments they may well have considered other more suitable avenues to improve enforcement. Only time will tell whether the amendments will serve the purpose of enhancing enforcement of the labour laws.

Author: Jozi Meth from LexisNexis South Africa.
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Tanya Cohen (director of the Retail Association and speaker at the 2014 Retail Association Employment Conference) Photo: Supplied

Tanya Cohen (director of the Retail Association and speaker at the 2014 Retail Association Employment Conference) Photo: Supplied

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