LRA: Amendment of section 213 of Act 66 of 1995 Section 213 of the principal Act is hereby amended by the:
(c) Substitution for paragraph (11) of the definition of an “employee”
“Employee” means any person who is employed by or who works for an employer and who receives or is entitled to receive any remuneration and who works under the direction and supervision of an employer.
(d) Insertion of paragraph 12 of the definition of an “employer”
“Employer” means any person, institution or organisation, including government who
employs and provides work to an employee, directly supervises, remunerates or tacitly or
expressly undertakes to remunerate such employee for services rendered by such
employee.
I) EXPLANATION/INTERPRETATION
According to the explanatory memorandum, the definition of employee is amended and the definition of employer is added “for alignment with other employment laws as defined in Occupational Health and Safety Act, to extend the definition to address the new developments in the labour market.”45 According to the new definition of employee, a person is only an employee if he/she works for, or is employed by an employer and is remunerated by the employer and works under the direction and supervision of an employer. The last two concepts are merged into “direct supervision” in the proposed definition of an employer (Benjamin & SBP, 2010).
II) COSTS/NEGATIVE CONSEQUENCES
As a result of the requirements listed in the new definitions of employee and employer, a person is only considered an employee if all the requirements are present.
It is very difficult to estimate the total number of employees that will be affected by the proposed definition as it is unclear exactly how the clause will be interpreted, and specifically how the requirement of “direct supervision” will be interpreted. The clearest and simplest examples of potentially affected employees are those who work away from the office and are not under the direct supervision of their employers, such as taxi-drivers, truck-drivers and commercial travellers (Benjamin & SBP, 2010).
In reality, however, many workers may no longer be considered employees and will as such no longer receive protection under the labour laws. It has been suggested that unscrupulous employers will take
45
It should be noted that while the specific reference here is to the amendment in the LRA, all four bills contain the amended definition of “employee” and the proposed new definition of “employer”.
advantage of provisions of the new definition to structure their workplace in such a way that they can avoid all the provisions of the labour legislation (See Benjamin & SBP, 2010). For example, an employer can split their business into two or more entities with different structures responsible for supervision and remuneration respectively.
The figure below shows that in the first quarter of 2010, 12.8 million workers were employed in the South Africa labour market (Statistics South Africa, 2010). Almost 75 percent of the workforce were employed in the formal sector, while informal sector employment accounted for a further 16.4 percent. Approximately nine percent of the workforce (or 1,2 million workers) were employed in Private Households. The majority of these workers were employed as Domestic Workers.
Figure 5: Composition of Total Employment, South Africa 2010
74.5% or 9.5 mil 16.4% or 2.1 mil
9.1% or 1.2 mil
Formal sector Informal sector
Private households Source: QLFS 2010 (StatSA); Own Calculations
The Quarterly Labour Force Survey (QLFS) does not record much detail on the nature of the employment relationship and it is therefore difficult to identify the employees “directly supervised” by their employer. If we assume that the majority of Domestic workers working in Private Households are directly supervised by their employer, these workers will continue to be considered employees for the purposes of labour legislation. The Informal Sector includes small enterprises with only one or two employees working for an employer, but again it is not clear to what extent these workers are directly supervised by their employer. Overall then, with the possible exception of domestic workers in Private Households and some workers in the Informal Sector, the majority of workers currently considered as
employees may possibly cease to be employees under the new definition and will therefore be excluded from all statutory labour rights.
The proposed amendment to the definition of an employee and the introduction of a definition of an employer will impose costs on institutions such as the CCMA, Labour Court and Civil Courts. Additional disputes will be referred to the CCMA in order to determine if a person is actually an employee according to the new definition. While it is difficult to predict the actual increase in the number of cases referred to the CCMA, the increased case-load will have significant time and cost implications for the Commission. It has previously been estimated that a ten percent increase in the number of cases referred to the CCMA will be associated with a 26 percent increase in the Commission's budget allocation.
On the other hand, workers who are no longer considered to be employees in terms of the new definitions will have to refer their workplace related disputes to the Magistrate and High Courts. While it is difficult to quantify the impact, these institutes will face increases in their case-load as a result of the additional cases referred to them.
The CCMA does not charge a fee for hearing a labour dispute, and depending on the nature of the disputes, it can be resolved in as little as half-a-day, and in most cases no longer than two days. Employees and employers will now have to incur the costs associated with acquiring legal representation when bringing matters to the civil courts. Estimates obtained from a legal expert indicate that the fee for drafting an application to the Court is approximately R7 000, while the fee for actual representation in the Court will be R26 000 for the first day and R12 000 per day for any subsequent days. In addition, litigation in the civil courts is also a much lengthier process than the average dispute resolution process at the CCMA.
To conclude, while the costs of the proposed amendment is difficult to quantify, as Benjamin has highlighted (Benjamin & SBP, 2010; personal communication), the proposed new definitions of employee and employer will have an enormous destabilising effect on industrial relations environment in particular, and the South African labour market in general.
III) BENEFITS
The proposed new definitions of employee and employer will have very little benefit for any parties in the labour markets. Some unscrupulous employers may benefit from splitting their businesses in two or more entities so that the actual employer has no assets to cover potential claims (Benjamin & SBP, 2010).
The CCMA may, in theory, benefit from more cases being referred to civil courts. While this can imply a reduction in the Commission's case-load, this may be offset by the increase in cases referred to the Commission to determine whether a person is an employee under the new definition.