Labour Relations Amendment Bill: deliberations; Auditor-General briefing on Labour portfolio

This premium content has been made freely available

Employment and Labour

20 April 2018
Chairperson: Ms S van Schalkwyk (ANC) (Acting)
Share this page:

Meeting Summary

The Portfolio Committee on Labour continued with deliberations on Labour Bills. The Auditor-General South Africa also presented a preliminary report on the audit areas of the Department and its entities.

The Auditor-General South Africa (AGSA) provided the Committee with insights on the audit areas of the Department and entities in order to add value to oversight functions as well as the audit of the 2018/19 annual performance review. AGSA review of the draft 2018/19 annual performance plans (APPs) assessed the process followed by the Department to prepare and submit strategic plans and APPs. AGSA noted that findings relevant to the interim review did not have an impact on the audit conclusion on the usefulness or reliability of the selected programs for the PFMA 2017/19 yearend audit.

The review was performed at the Department, Compensation Fund (CF) and Unemployment Insurance Fund (UIF) for the period ending 31 December 2017. The outcomes thereof were discussed with the accounting officer on 12 February 2018. Key matters of attention were identified. On CF’s financial health, it was a challenge to assess financial health due to disclaimer opinion issued. On the three entities’ oversight and monitoring, audit action plan has not been fully effective to enable timely correction of prior year material misstatements and the related internal control deficiencies. In the case of the Department, there were still weaknesses in the following areas of the financial statements: financial lease commitments; employee benefits; and intangible assets. On the Department’s procurement management, there were no material findings from the head office review. However, the Department’s functions are mainly decentralised therefore processes followed on supply chain management will be assessed at each region to determine if there was material non-compliance on the Department. This increases the risk of irregular expenditure to the Department. For the CF, inadequate contract management to monitor performance lead to IT contract extension and possible fruitless and wasteful expenditure on other contracts. Notably, compliance management at UIF was of concern. The fund has a high number of fraud cases. Of concern were cases for which an investigation had not yet started (14 out of 116). Twelve of these cases have been on the register for more than a year and have an estimated value of R6.6 million.

Overall recommendations from AGSA’s review of CF were as follows: a culture of a good and strong work ethic that is characterized by an emphasis on quality of work should be demonstrated and cascaded down from top management to the lower staff members; management should communicate clear expectations to staff and hold staff accountable for poor performance at all levels. In addition, IT systems within the CF environment must be stabilized to ensure optimal use of systems by employees before changing them. On status of key focus areas, management had demonstrated commitment by developing and monitoring the implementation of action plans to improve the audit outcomes of the prior year. If management’s effort are consistent throughout the year then the internal control status and audit outcomes may improve at yearend.  

Members commented that it seemed nothing had changed since the previous year’s preliminary review by AGSA. There seems to have been no improvement since last year. However, it was pleasing that the financial performance of the UIF was still good. He asked if it was normal that the functions of the Department are decentralised as identified. They asked whether AGSA was continually providing guidance on how the key issues identified could be improved. They requested a full and more detailed report from AGSA so that the Department could be comprehensively scrutinised by the Committee.

Secondly, the Committee deliberated on the Labour Relations Bill (LRA). The Committee was satisfied with the progress made in processing the national minimum wage Bill and related legislations. The process would now shift to the Department and the Bills would be sent for redrafting to effect the input received from the public, as agreed to by the Committee. The Department must take its time and rework the Bill for submission again to the Committee. The pieces of legislation were critical in the country, not only in fighting inequality, but also addressing abuse of the vulnerable workers in some sectors, and they ought to be close to perfection when tabled before the National Assembly.

Meeting report

Briefing by the Auditor-General South Africa (AGSA)
Ms Modiehi Skosana, Auditor: Compensation Funds, Auditor-General South Africa, provided the Committee with audit insights on the audit areas of the Department and entities in order to add value to oversight functions as well as the audit of the 2018/19 annual performance review. AGSA review of the draft 2018/19 APPs assessed the process followed by the Department to prepare and submit strategic plans and APPs. She noted that findings relevant to the interim review did not have an impact on the audit conclusion on the usefulness or reliability of the selected programs for the PFMA 2017/19 yearend audit.

On the review findings on draft 2018/19 annual performance plans (APP), there were no material issues identified. The review was performed at the Department, Compensation Fund (CF) and Unemployment Insurance Fund (UIF) for the period ending 31 December 2017. The outcomes thereof were discussed with the accounting officer on 12 February 2018. Key matters of attention were identified. On CF’s financial health, it was a challenge to assess financial health due to disclaimer opinion issued. On the three entities’ oversight and monitoring, audit action plan has not been fully effective to enable timely correction of prior year material misstatements and the related internal control deficiencies. In the case of the Department, there were still weaknesses in the following areas of the financial statements: financial lease commitments; employee benefits; and intangible assets. For CF and UIF, the two were in the process of consolidating investments in unlisted companies into financial statements. Transactions with a related party at CF may not be at arm’s length particularly in view of the fact that there has been no contract management. On the Department’s procurement management, there were no material findings from the head office review. However, the Department’s functions are mainly decentralised therefore processes followed on supply chain management will be assessed at each region to determine if there was material non-compliance on the Department. This increases the risk of irregular expenditure to the Department. For the CF, inadequate contract management to monitor performance lead to IT contract extension and possible fruitless and wasteful expenditure on other contracts. Notably, compliance management at UIF was of concern. The fund has a high number of fraud cases. Of concern were cases for which an investigation had not yet started (14 out of 116). Twelve of these cases have been on the register for more than a year and have an estimated value of R6.6 million.

Overall recommendations from AGSA’s review of CF were as follows: a culture of a good and strong work ethic that is characterised by an emphasis on quality of work should be demonstrated and cascaded down from top management to the lower staff members; management should communicate clear expectations to staff and hold staff accountable for poor performance at all levels. In addition, IT systems within the CF environment must be stabilized to ensure optimal use of systems by employees before changing them.

On status of key focus areas, management had demonstrated commitment by developing and monitoring the implementation of action plans to improve the audit outcomes of the prior year. If management’s effort are consistent throughout the year then the internal control status and audit outcomes may improve at yearend.  

Discussion
Mr M Bagraim (DA) commented that it seemed nothing had changed since the previous year’s preliminary review by AGSA. There seems to have been no improvement since last year. However, it was pleasing that the financial performance of the UIF was still good. He asked if it was normal that the functions of the Department are decentralized as identified. Were the highlighted issues on consequence management new or outstanding from last year? It was pleasing to note that vacant executive positions had been filled. Also, it seemed the consultants engaged by the Department were actually not assisting. He asked why they were still engaged then. 

Mr P Moteka (EFF) expressed concern about the lack of improvement in various performance areas even after the AGSA’s intervention the previous year. The Department, which should be the one leading by example was one of the poorest performers. He asked if the non-performing entities were willing to cooperate with AGSA Office as there seemed to be key issues of concern as identified. What was the explanation AGSA was getting from the Department for the non-performance?

Mr D America (DA) expressed his disappointment about the Department’s performance. Evidence of little improvement since previous review must be squarely blamed on the Committee as it indicated that its oversight work had not been effective. He requested a full and more detailed report from AGSA so that the Department could be comprehensively scrutinised by the Committee.

Mr W Madisha (COPE) agreed that there seemed to have been no changes or improvements to the Department’s performance. He asked for proposals from AGSA on what should be done going forward. On the perpetual resignation of staff; was this due to incompetence, or was shying away from prosecution due corruption? There was need for robust and proper redress within the Department.

The Acting Chairperson asked whether AGSA was continually providing guidance on how the key issues identified could be improved. How recent were the identified cases of suspected fraud at CF? She pointed out the AGSA report was preliminary, not final. 

Ms Skosana, in response, reiterated that the objective of the review was to identify key areas of concern and advising management before the yearly audit. These were highlights about what the management should address while it was still early. AGSA presented the report to the Director-General to make sure that management within the Department addressed key the areas of concern and had received commitments from the DG and AGSA was following closely to ensure the concerns are addressed. It was unclear what was prompting the resignations. Sprucing up controls was crucial as a means of reducing cases of suspected fraud. On lack of improvement in performance, perhaps management could change their strategies in an effort to change outcomes of the AG reports. She indicated the AG preliminary report was not a public document at this stage but the Committee could request it directly from the Department.

Deliberations on the Labour Relations Bill (LRA)
The Acting Chairperson took the Committee through the Department’s responses to public comments on the LRA.

Section 32: Extension of collective agreements concluded in bargaining councils

The Free Market Foundation had proposed different wording citing its vagueness and that it conflicted with section 32(5). Also, the amendment flies in the face of majoritarianism and will protect entrenched interests. The Department’s response was that this was a misreading of the amendments.  There is no conflict with section 32(5) as the two sections are intended to deal with requests from parties that are representative and those that are only sufficiently representative.  In the latter case, the Minister has discretion to extend an agreement in terms of section 32(5).

Mr Bagraim said the Free Market Foundation believed the Minister’s discretionary powers should be somewhat curtailed. He suggested the relevant discretion rest entirely with the Committee.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Labour, said it was not the case that the Minister’s powers were unfettered. There were checks and balances and the Minister was expected to operate within the confines of the relevant statutes.

Mr Mashile said the notion that the Minister should not have discretionary powers was incorrect. As an accountable political head, the Minister should intervene as and when necessary, guided by existing laws.

Mr Madisha stated that the Minister should operate within the confines of the law and having him/her exercise powers outside the legislation would not be ideal.

The Acting Chairperson said the Department had explained the existing checks and balances during a previous engagement. Mr Mashile’s view would be taken to be the majority position of the Committee on the provision.

Collective bargaining & section 32 amendments
NUMSA asserted that collective bargaining is under attack in councils such as the MEIBC and MIBCO. The NUMSA submission accepted the proposed amendments to section 32 of the LRA. The Department That is why we are making the changes in section 32 to protect collective bargaining.
The Department was not giving the Minister additional powers other than the current existing discretions.

Mr Bagraim disagreed with the Department’s position and maintained the discretionary powers of the Minister should be reduced. 

The majority of Member however agreed with the Department’s response.

NEASA
Reference to s32(5) is confusing as it contains additional criteria and it is not clear whether these criteria will apply. 

Section 32 and the amendments to this section aim to clearly separate requests to extend collective agreement within a 60 day period where the request complies with the criteria contained in section 32 (3) versus requests where the Minister may exercise his/her discretion whether to extend a collective agreement after considering public comment. 

The latter route allows for 90 days as per section 32(5) of the LRA.  The criteria are not changed, but the majority status of the parties is the deciding factor.

Members agreed

Deletion of 32(6)(b)
Stakeholders submitted that the deletion of this section will allow the Minister to extend the period of operation of agreements without having to adhere to the provisions of section 32(3) and (5). This would allow parties with low representativity to keep agreements alive with no legitimate right to do so. It will impact on the legal right of non-parties to be heard and will not pass constitutional muster. The Department’s response was the amendment seeks to ensure that agreements that enable the continued existence of a council, the delivery of its services and its benefit funds are not at risk due to the inability of parties to reach an agreement.  Non-parties still have a remedy via the exemption process. The deletion of 32(6) (b) is consequent on the insertion of section 32A.

Mr Bagraim objected.

Members agreed.

Section 32A: Renewal and extension of funding agreements
Clause 2

The Provincial Minister of Economic Opportunities, Western Cape Government proposed that the new proposed sections 32A(4)(a) and (b) be reconsidered and redrafted as this is a restatement of the common law.  The clause is unnecessary. The Department’s response was that the common law does not address reviews of the Minister’s decision in relation to the extension of agreements. The applicability of decisions cannot be assumed to remain in force until set aside. There have been conflicting views on this previously.

Members agreed unanimously.

Section 69 & section 95: Picketing and meaning of a ballot
The Centre for Applied Legal Studies (CALS) submitted that the amendment in relation to clarifying the definition of secret ballots will reduce the autonomy of trade unions as well as to make it more burdensome to hold a protected strike and picket. The Department’s response was that provision for a secret ballot is intended to ensure that individual union members are able to exercise their right to decide about strike action in a democratic manner. Strike action that is decided on democratically by a majority of those affected is unlikely to be accompanied by violence and intimidation. CALS also suggested that the requirement to have picketing rules will impair the right to protest. The Department’s response was every strike must have picketing rules and parties may agree on their own rules other the default rules will apply.

Section 69 subsection 4, 5 and 6 (Picketing Rules)
SAFTU viewed the amendments to section 69 as an infringement on the right to strike as it bans picketing unless picking rules have been agreed or decided on by a Commissioner of the CCMA. The Department said picketing is not banned by the amendments. The LRA 711 referral form will make reference to the picketing rules. If no rules are agreed between the parties, default rules will be issued together with the certificate of non-resolution of the dispute. The purpose of this limitation is to require trade unions to take responsibility for pickets to ensure that the constitutional rights of others are not infringed. The levels of picket line violence that has come to characterise strikes in the last few years requires more stringent regulation to ensure the orderly conduct of pickets during strike action. 
Mr Moteka agreed with SAFTU and argued that the provision was an attempt by government to ban picketing. It was incorrect to characterise all strike and picket action as violent and disorderly.

Mr America said the design of picketing rules should be decided through collective bargaining.

Mr Mashile said it had to be understood that if there were differences and disagreements at the workplace, employees should not resort to violence and anarchy. This had to be managed and union leaders were called upon to provide leadership and ensure pickets do not infringe upon other individuals’ rights.

Section 95- Secret balloting
SAFTU had submitted that secret ballots undermine the essential collective decision making of a strike. The forced imposition of a secret ballot on strike action is a major restriction on the right to strike. It not only individualises an otherwise collective decision but more fundamentally it wrests from the control of workers their ability to choose their own democratic processes and procedures. The introduction of compulsory secret ballots takes away the fundamental right that workers and unions should have to determine their own internal democratic processes. The forced conducting of a secret strike ballot puts enormous obstacles in the way of organising effective strike action. Conducting secret ballots will put considerable organisational and institutional strain on trade unions at a time when they are already severely weakened. It exposes unions to an array of possible legal actions from employers who will have the opportunity to interdict strikes on the basis of how the secret ballot was conducted. The Department’s response was this provision applies to both trade union and employers’ organisation that they should provide in their constitutions for secret balloting. A secret ballot gives individual workers the final say in contributing to a decision that has major implications for them. This decision is central to good, democratic practice. The provision for secret ballots in a constitution is already in the LRA and does not restrict the right to strike. 

Mr Moteka maintained the provision was taking away the right of workers to strike.

The Acting Chairperson said the issue was not new and had been dealt with during previous engagements.

Strike Ballots
SAFTU demands the repeal of section 95 of the LRA.  Unions who do not represent their members will be brought to book by those members. They asked about who would organise the ballot?  Many small unions will not have the capacity to organise such a ballot. The Department’s response was that guidelines will be issued in relation to ballots, but trade unions could be assisted by the CCMA or an accredited agency to conduct ballots.
Section 95 deals with the requirements for registration of a trade union including the requirements of a union constitution.  This section has been in place since 1995 and is key to the registration process.  There have been a number of instances where union members have not been able to call their leadership to account and the checks and balances contained in section 95 are important to provide oversight of trade union activity by the Registrar of Labour Relations.

Members agreed.

Section 127 & 128: Accreditation of agency and council
PSCBC had submitted that according to the memorandum on the objects of the proposed amendments to the Labour Relations Act (the Act), the amendments to section 127 provide that a council or accredited agency may apply for the accreditation of its dispute resolution panel. This amendment must also be read with the proposed amendment to section 128 that will now allow for a council accredited to perform dispute resolution functions to only appoint a person to resolve a dispute if that person is accredited by the governing body of the commission.
It is believed that such amendments may be contrary to the provisions of the power and functions of a bargaining council as listed in section 28 of the Act. The Department’s response was the amendment is intended to give authority to the CCMA for accreditation and not to interfere with other aspects of a Councils dispute resolution functions. Accreditation by the CCMA should apply both to the Council as the dispute resolution agency and to the panellists of the Council. This does mean that the CCMA appoints panellists. This is the same as the body that register the company and Auditors. 
Mr America was of the view that bargaining councils are capable of accrediting their own panellists that would deal with dispute resolutions.

Mr Bagraim gave reasons why it should not be the CCMA appointing and accrediting panellists. Bargaining councils in the current conjuncture were independent and the Department was now seeking to assume control over them through the ‘backdoor’. He pointed out that there were some industry-specific issues such that some of the disputes could only be settled by people with a specialised and clear grasp of the nature of the job. Having the CCMA outsiders, without any real quality control applied in the accreditation of panellists would make dispute resolution inefficient.

Mr Mashile said the bargaining council, although autonomous, could not be independent from the Department. There was no problem with having the CCMA appoint and accredit panellists. He disagreed with Mr Bagraim and Mr America.

The majority of Members agreed with the Department’s response.

Section 150A, 150B, 150C and 150D: Matters concerning the advisory arbitration panel
PSCBC submitted that the principle of introducing advisory arbitration is one that is supported. Parties need to have an alternative mechanism to “unlock” deadlocks. However this cannot be done at the cost of the ideologies of our labour legislation.  The Department replied that the main proposal that a request for an advisory arbitration should be by a majority of the parties would defeats the purpose of the amendments. It was intended to trigger an advisory arbitration in the public interest if the conditions specified in the bill are present. The amendment will apply to the public sector as much as it will to private sector. There should be no additional requirements for public sector disputes where an advisory arbitration process is triggered.

Members believed the provision as well as the Department’s response was in order.

General
PSCBC further submitted that the LRA should have a clear right to approach the Labour Court for an interdict declaring a strike unprotected where there is violence and intimidation during a strike. However, the Department felt such a provision could interfere with the right to strike.
Mr Bagraim disagreed with the Department and pointed out that what stakeholders were looking for was the right to approach the courts. This right should also find expression in the legislation.

Mr Mashile said anyone could approach the courts at any time if aggrieved on anything. There was no need to bring this into the legislation. The call by PSCBC in this regard was not necessary.

The DA expressed its reservation on the provision.

Members agreed.
Closing remarks
The Acting Chairperson said the Committee was satisfied with the progress made in processing the national minimum wage Bill and related legislations. The process would now shift to the Department and the Bills would be sent for redrafting to effect the input received from the public, as agreed to by the Committee. The Department must take its time and rework the Bill for submission again to the Committee. The pieces of legislation were critical in the country, not only in fighting inequality, but also addressing abuse of the vulnerable workers in some sectors, and they ought to be close to perfection when tabled before the National Assembly. The Committee had demonstrated commitment when dealing with the pieces of legislation and Members had shown maturity in expressing their positions on the matter.

The meeting was adjourned.


 

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: