National Minimum Wage Amendment Bill public hearings; with Minister

Meeting report

The Minister of Labour, Mr Thulas Nxesi, graced the meeting with his presence. The Committee had received an apology from Deputy Minister, Ms Boitumelo Moloi, for not being able to attend the meeting. 

Opening remarks by the Committee Chairperson
The Chairperson stated that the National Assembly had already dealt with the Bill (in the Fifth Parliament) and it was thereafter referred to the National Council of Provinces (NCOP). Before the Committee could deal with the Bill the term of parliament had ended. Hence the Bill was now before the Committee for consideration. Procedurally all lapsed bills had to be formally revived and this had taken place. The Committee for had already been briefed on the National Minimum Wage Amendment Bill. What was now happening was the Committee attempting to normalise the process on the Bill. Advertisements had gone out for public comment to be made on the Bill. Two submissions on the Bill had been received, one from the Western Cape Provincial Government and one from the Confederation of South African Trade Unions (COSATU).

Mr T Brauteseth (DA, KwaZulu-Natal) pointed out that from the legal advice that the Committee had received the Bill was not a matter that the Committee needed to deal with. The Committee was unable to make amendments to the Bill or to the principle act ie the National Minimum Wage Act 9, 2018. The Bill was a section 75 Bill and did not affect provinces. He asked why the Committee was dealing with the Bill. Was the Committee noting the Bill? The Portfolio Committee on Labour had already dealt with the Bill. He did however not wish to preclude what the Committee intended to do on the Bill. He had brought up the issue to in not to waste the time of members.

The Chairperson responded that the Committee intended for the process to unfold on the Bill. The Western Cape Provincial Government and COSATU would make their respective submissions and thereafter members could ask questions around the submissions made.

Western Cape Provincial Government submission on the National Minimum Wage Amendment Bill
Ms Michelle Mellim, Legal Advisor, Western Cape Provincial Government, stated that the Western Cape’s Member of the Executive Council (MEC) had signed the submission that had been made on the Bill. She assumed that members had gone through the submission as the nature of the comments made was technical. In the Memorandum on the Objects of the Bill it was stated that the amendment that was being proposed was of a technical nature. It had been a reference error as section 4(6) should have been captured as section 4(8). The Memorandum on the Objects went further to state that the error had the effect of rendering section 17(4), read with section 4(6) absurd. The concern that she had was that the absurdity spoken about was not explained. In January 2019 section 4(8) could have taken effect. She was of the opinion that the amendment was not a technical amendment but was one of current amendment. The current legal position was that section 4(8) took effect on 1 January 2019. It was a change to the current legal position. She was of the opinion that the amendment was a substantive amendment and not a technical amendment. From a legal point of view, the effect of the Bill was to render section 4(8) as if it had been passed on 1 May 2017. In other words, if the Bill was to be passed it would be as if section 4(8) had been enacted on 1 May 2017. It would be of retrospective application. Section 4(8) spoke to unfair labour practices where there was a unilateral change by an employer in wages or hours of work. The Labour Relations Act already considered such a unilateral change in wages as an unfair labour practice. She added that the Labour Relations Act considered wages as a benefit. She reiterated that the Bill was calling for section 4(8) to be of retrospective application to 1 May 2017. The Bill would impact upon the Labour Relations Act. She explained that South African law made a distinction between weak retrospectivity and strong retrospectivity. She tried to practically explain the difference between the two. She did point out that retrospective laws were not necessarily unconstitutional. In Pienaar Brothers (Pty) Ltd vs Commissioner for the South African Revenue Service and the Minister of Finance in 2017 the test on the constitutionality of retrospectivity was set out. The question was whether retrospectivity impacted upon the Bill of Rights of the constitution. At face value, Clause 1 in the Bill retrospective application to 1 May 2017 did not limit the Bill of Rights. The second point to consider was what the reason was for section 4(8) to be of restrospective application. Was it rational? The test was one of rationality. This she felt ought to be explained in the Memorandum on the Objects of the Bill. Looking at what section 4(8) was calling for, the Labour Relations Act at 1 May 2017 already treated unilateral changes in wages by an employer as an unfair labour practice. What was the need for section 4(8) to be of retrospective application from 1 May 2017? The Labour Relations was already covering the wages issue as being an unfair labour practice. She added that all the aspects covered under section 4(8) such as wages, hours of work and conditions of employment were linked to the implementation of the National Minimum Wage Act. The National Minimum Wage Act became law on 23 November 2018 when President of SA assented to it. The National Minimum Wage Act took effect on 1 January 2019. The point being made was that the National Minimum Wage Act was only implementable on 1 January 2019 and did not exist in law on 1 May 2017. How then could the bill propose that section 4(8) be retrospective when there was no National Minimum Wage Act in 2017? Everything in section 4(8) related to the implementation of the National Minimum Wage Act. The rationality test called for in the Pienaar Brothers case was not clear. She felt that Clause 1 in the Bill could be challenged on its constitutionality. The Western Cape Provincial Government thus felt that Clause 1 needed to be reconsidered.

Discussion
The Chairperson asked how she would have felt on the matter if there had not been an error in the National Minimum Wage Act itself.

Ms Mellim responded that the Western Cape Provincial Government had commented on the National Minimum Wage Act. She added that if section 4(8) was retroactive then the Western Cape Provincial Government would have commented.

Mr Brauteseth said that the main issue in section 17 was that the effective date was 1 May 2017. He and everyone else understood the date that the National Minimum Wage Act took effect was 1 January 2019. The date of application should thus be 1 January 2019 which reflected the will of the National Assembly and all its partners.

Ms Melim said that 1 January 2019 would be more acceptable than 1 May 2017 from a legal perspective. What was unacceptable was that she could not see the visible rationality in going back to 1 May 2017.

The Chairperson asked Ms Melim what her understanding of section 17(4) was.

Ms Melim explained that it was the commencement section of the National Minimum Wage Act. She understood what the Bill tried to achieve. There was however an absence of rationality.

The Chairperson asked Ms Melim whether she believed that section 4(6) was being amended to section 4(8) in the Bill. 

Ms Melim responded that the Bill proposed to correct a reference made to section 4(6) to a reference made to section 4(8). The impact of this change was to impact on a legal position i.e. retroactive application. The consequence of which in the absence of rationality was that it was unconstitutional. Plainly put it was thus not merely a reference correction. The impact was a legal amendment of law looking back as from 1 May 2017. She reiterated her earlier argument on what the reason was to make in section 4(8) certain practices unfair labour practices when it was already covered in the Labour Relations Act. Besides all provisions of section 4(8) could only be considered unfair labour practices if it was linked to the implementation of the National Minimum Wage Act. The National Minimum Wage Act however did not exist on 1 May 2017.The National Minimum Wage Act was only implementable on 1 January 2019. What was the rationality? Thus far the rationality was not apparent.

Mr M Mmoiemang (ANC, Northern Cape) stated that the Western Cape Provincial Government should have raised the concerns that it had whilst the National Minimum Wage Act had been dealt with in the National Assembly. The Committee was limited in what it could do.

Ms Melim responded that the purpose of her input was to take the Committee through the submission that the Western Cape Provincial Government had made. The Bill was amending something. The Bill was speaking to the text of the National Minimum Wage Act. The intention was not to draw focus to the principal act. The Bill proposed to amend section 17(4) which referred to section 4(6). She explained that when the Western Cape Provincial Government commented on the National Minimum Wage Act reference had been made to section 4(6) and not to section 4(8). If reference had then been made to section 4(8) then the Western Cape Provincial Government would have commented on it.

Mr Virgil Seafield, Deputy Director General: Labour Policy and Industrial Relations, Department of Employment and Labour, responded that the intention of the Bill was purely to correct a reference issue. It was a technical amendment. The Western Cape Provincial Government’s submission was trying to impress upon the Committee that the amendment was of a substantive nature and not of a technical nature. Substantive matters around sections 4(6) and 4(8) had been dealt with by both the National Assembly and the National Council of Provinces (NCOP). He pointed out that the Western Cape Provincial Government was saying that wages were seen as a benefit. Wages were not considered to be a benefit. Benefits were over and above wages. The Bill was not calling for a substantive amendment. It was purely a technical amendment. There had been a process error.

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, Department of Employment and Labour, pointed out that the Bill that had originally been published had made the correct reference. The correction that was being proposed was agreed to by all partners. A mistake had been made in the drafting of the Bill into an act. All parties at the National Economic Development and Labour Council (NEDLAC) had agreed to the correction and hence there were no submissions from them on the Bill. The idea in backdating a provision was to extend protection to workers. This was not unconstitutional. The Bill was proposing a technical amendment. There was a rational position. Section 64 of the Labour Relations Act provided for the right to strike and covered the issues raised by the Western Cape Provincial Government. The option was given to workers to go on strike. There was no link between bonuses and the National Minimum Wage. Conditions of service were linked to the National Minimum Wage Act. If it was not linked, then there was no rationale. Working hours too was linked to the National Minimum Wage Act. The idea was to protect workers. Business had come to the party and agreed to the proposed amendment in the Bill. There were no issues of constitutionality. Constitutionality had been tested. A clear rational decision had been taken.

Mr Michael Prince, Parliamentary Legal Advisor, said that Mr Mkalipi had eloquently covered what he had intended to say. The Bill was introduced in 2017 and Clause 17(4) read as it did now that section 4(6) took retrospective effect. This was a policy decision that had been taken by both houses of parliament. Two clauses had been added to section 4 as the processes unfolded so essentially section 4(6) dropped down two places to section 4(8). There had been an error in not changing section 4(6) to section 4(8). This was all that the Bill was proposing.

Ms Melim replied that she had already belaboured the point that she was trying to get across and did not wish to repeat herself. The Bill spoke to the National Minimum Wage Act. From a legal perspective the Western Cape Provincial Government had commented on the Bill. The Bill’s Memorandum on Objects did not give explanations on the process etc. The Western Cape Provincial Government had not been privy to what had happened behind the scenes.

The Chairperson asked whether the Western Cape Provincial Government should not have done research on what had happened behind the scenes.

Ms Melim responded that the Memorandum on Objects should have elaborated on what had happened. It was why people relied on the Memorandum on Objects. If there was a technical error it did not give the reason as to why.

The Chairperson read out the Introduction under the Memorandum on Objects on the Bill. He said that it was clear and everything was clarified.

Ms Melim said that the point was that in the Memorandum on Objects on the Bill there was no explanation that was given as to why section 4(8) needed to be retroactive in application. It should be explained in the Bill. The rationality was not apparent.

Mr M Dangor (ANC, Gauteng) asked whether the issues at hand were discussed by the Western Cape Provincial Legislature.

Ms Melim responded that she had not been privy to the processes in the provincial legislature. She represented the MEC’s Office.

Mr Prince explained that the reason why retrospectivity was not explained in the Bill had not been the intention to do so. It was not the subject matter of the Bill. The intention was a technical change ie changing section 4(6) to section 4(8). 

Mr Mmoiemang asked whether the Western Cape Provincial Government had considered, in making its submission, what the Committee was able or not able to do on the Bill. The Committee was a creature of statute. The Bill was a section 75 bill and the Committee could not make amendments to it. The Western Cape Provincial Government should have made a submission on the National Minimum Wage Act ie the principal act. 

Mr Brauteseth stated that it was unfair to question why the Western Cape Provincial Government or anybody else for that matter had made submissions on the Bill. People had the right to share their views on proposed legislation. He was concerned about retrospective application from 1 May 2017. What stopped an individual from demanding back pay from that date? One had to be careful. He pointed out that from 1 January 2019 when the National Minimum Wage Act came into play there had been a great deal of retrenchments. If all parties were in agreement why was the 1 January 2019 not the accepted date that the National Minimum Wage Act too effect.

Mr Mkalipi stated that claims could be backdated. What was having retrospective application was where there had been unilateral changes to working conditions of workers prior to the National Minimum Wage coming into effect. Employers in anticipation of the National Minimum Wage for instance could reduce the working hours of its workers whilst still paying the same wage. This was deliberate changes to conditions of employment to undermine the National Minimum Wage.  Business was in agreement with the proposed amendment. After 1 January 2019 the National Minimum Wage applied.

Ms B Mathevula (EFF, Limpopo) asked how prepared the Department of Labour was to explain the Bill to the public.

Mr Mkalipi explained that the Department had been communicating with workers about the rights that they had. There was as yet no evidence to show that the National Minimum Wage had caused job losses. Research which was being done by the University of Cape Town would show what the effect was. The question on whether or not the National Minimum Wage had a negative impact on employment remained to be seen.

Mr T Apleni (EFF, Eastern Cape) stated that the Western Cape Province was becoming like a country within a country. People were giving false impressions about having concerns for workers. The Western Cape Provincial Government was opposing things that were intended to address injustices of the past.

The Chairperson noted that any local or provincial government could make submissions on the Bill. There was nothing untoward a submission being made. People should not be castigated for making submissions. When the Committee was done with the Bill it would be referred to the House where political parties could feel free to make declarations on it. The Committee was merely hearing views from stakeholders on the Bill. The Committee would not express its views on the Bill. The Committee would in its next meeting make a decision on the Bill after it had obtained responses from the Department and from Parliament’s Legal Advisers. The Committee would then vote on the clauses of the Bill. He asked Ms Melim to conclude.

Ms Melim concluded that if any further clarity was needed members could refer to the submission made.

The Chairperson thanked Ms Melim and said that the Committee was not expressing any view. Presentations were done for clarification.

COSATU submission on the National Minimum Wage Amendment Bill
Mr Mathew Parks Parliamentary Coordinator, COSATU stated that the COSATU supported the National Minimum Wage Act and was in support of the Bill. The intention was to see an improvement in the lives of workers and around 6 million vulnerable workers would benefit from the National Minimum Wage. It was a bit concerning that 8000 minimum wage disputes had been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) but on the other hand it was good that workers were asserting their rights. Yes, there were a large wave of retrenchments but it was mainly employers who paid above minimum wage and these included retrenchments by Telkom, Eskom etc. He noted that employers could also apply for exemptions from the National Minimum Wage. Retrenchments were mainly due to the bad state of the economy and the impact that load-shedding was having on businesses.

On background to the retrospective clause in the Bill, the National Minimum Wage Act was supposed to come into effect on 1 May 2018 which was exactly one year on from 1 May 2017. Thereafter the date was shifted from 1 May 2018 to 1 January 2019 when it did come into effect. COSATU supported the Bill in full and the retrospective clause was there to protect workers. He was pleased to hear that the retrospectivity clause was not unconstitutional. If it was unconstitutional he felt by now that there would have been a constitutional challenge. It has already been one year two months since the National Minimum Wage Act has been promulgated. He had no problem with the Western Cape Provincial Government re-emphasising what was already in legal precedent. The Bill was correcting a simple typing mistake. Human error did occur. The Bill should be passed. He suggested that a discussion be held to come up with a faster mechanism to rectify such typing errors that the Bill was attempting to correct. The current process was far too laborious.

He was aware that the Committee was limited in terms of what it could do in terms of the Bill. He nevertheless would have liked two things to have been included in the Bill. The first was a proposal by the CCMA to strengthen the law from a workers point of view since employers had the means to drag out matters at the Labour Court. The second was a suggestion by the Department of Labour on including actors and performers under the banner of workers. Even though these two things could not be incorporated into the Bill by the Committee he would appreciate it if it was mentioned in the report of the Committee on the Bill that was to be submitted to the House. On contextual matters, the National Minimum Wage Act was now in place but there were teething problems. For one, employers did not consult with employees when it came to applying for exemptions. Employers were also making false claims for exemptions. Labour inspectors from the Department could only do so much as there were capacity constraints. The Department should enforce the National Minimum Wage Act better by naming and shaming employers that were contravening. Where exemptions were granted to employers the Department should publish them. He noted that the National Minimum Wage Commission was established to review the National Minimum Wage but this was not done in 2019. There had been agreement on R20 per hour for the National Minimum Wage but inflation had to be taken into account. He hoped that there would be a fast tracking of the Value Added Tax (VAT) increase. There was also the equalisation of the domestic and farm-workers issue. He continued that parental leave in the Labour Relations Act had come into effect on 1 January 2019 but government departments refused to implement it as they said that they were unaware of it. He in conclusion also raised concerns around delays by the Department on three bills i.e. the Occupational Health and Safety Bill, the Compensation for Occupational Injuries and Diseases Bill and the Basic Conditions of Employment Bill.

Discussion
The Chairperson was pleased that the COSATU was aware of the limitations of the Committee in relation to the Bill. He asked Ms Shamara Ally Procedural Officer: NCOP to speak to the Committee’s procedural limitations when it came to the Bill.

Ms Ally stated that the intention of the Bill was to correct a cross reference to the National Minimum Wage Act. The recommendation that was made to the Committee was that it was not permissible for the Committee to propose amendments to the Bill. The proposed amendment to section 17 as contained in the Bill should be the only amendment. No additional amendments could be proposed by the Committee. However, on the suggestion by Mr Parks there was nothing in the NCOP Rules which precluded the Committee from including the two recommendations by COSATU in its Committee Report on the Bill which was to be submitted to the House.

Mr Brauteseth welcomed the input by the COSATU and from all those who had made submissions.

Mr Parks reiterated that COSATU supported the Bill and that it should be passed as quickly as possible. He appreciated the Committee including the COSATU’s two issues in its Committee Report.

Mr Seafield stated that the outstanding Bills referred to by Mr Parks would be brought to the House. He could make an inspectors’ report available but the responsibility of compliance was with employers. The Department did enforcement where there was non-compliance. On the enforcement of the National Minimum Wage Act, he conceded that there were capacity constraints on the numbers of inspectors but that the Department did its best.

Mr Mkalipi explained, on actors and performers falling under the banner of workers, that it would not be done in terms of a bill but would be done by the Minister of Labour through regulations. It should be finalised by mid-June 2020.

The Chairperson said that when the Committee considered its Report on the Bill it would include COSATU and the Department’s inputs. He asked Mr Prince and the Department to consider the proposals by the Western Cape Provincial Department and COSATU and to come up with a template document setting out the submission proposals with relevant responses. The document should be tabled in the Committee’s next meeting the following week. The Committee Secretaries would also have a Report which would speak to the briefing and submissions etc on the Bill. The Committee Report would be ATCed (Announcements, Tablings and Committee Reports).  

The meeting was adjourned.