Labour law sets strict requirements that employers must comply with. To comply with legislation is not negotiable. The scope of labour law can be overwhelming as it is a highly regulated environment. The World Economic Forum published the annual Global Competitiveness report in October 2019. This report measures performance according to 144 indicators that influence a nation’s productivity, benchmarking the drivers of long-term competitiveness. In the report 141 economies were evaluated, accounting for 98% of the world’s GDP.
Out of 141 countries, South Africa was rated as follows with regards to the labour environment:
- Cooperation in labour-employer relations: 139/141
- Hiring and firing practices: 129/141
- Flexibility of wage determination: 134/141
- Ease of hiring foreign labour: 123/141
- Pay and productivity: 83/141
- Worker’s rights: 26/141
A persistently insufficient labour market flexibility is indicated in the report as one of the key factors holding back South Africa’s competitiveness.
What can employers do to protect their businesses?
Firstly, make sure you comply with labour law. Secondly, use labour law to protect your business and minimize risk by proactively addressing possible future disputes between the employer and employee.
The employment contract is the most important document in the relationship between the employer and employee. One of the biggest mistakes employers make is to settle for a generic employment contract that offers minimal protection when there is a dispute in the workplace. When drafting an employment contract, the employer must take care to ensure that the contract complies with all applicable labour legislation depending on the specific industry.
Also include proactive clauses in the employment contract to eliminate possible future disputes and put the employer in the best position with regards to the employment relationship going forward.
Proactive clauses includes:
- Reference to policies, procedures and a disciplinary code that describes rules and procedures the employer and employees must adhere to.
- Time periods – probation period, retirement age, short time, lunch breaks, etc.
- Consent – medical testing, alcohol and drug testing
- Consent – deductions for damages, training, etc.
In addition to the employment contract, the employer can add annexures to further protect the business going forward.
Typical annexures include:
- Declaration of duties – what is expected form the employee with regards to duties and the employer’s fixed operational standard
- Restraint of trade and confidentiality agreement – this is crucial for more specialised business activities to protect confidential information, unique methods and procedures, patents, etc. and prevent this sensitive information ending up with competition
By addressing labour risk proactively, the employer can greatly contribute towards the business’s sustainability and profitability. This can also ensure a working environment with reduced conflict, friction and misunderstanding, which in turn creates a structured environment receptive of growth.