Sale (transfer) of business and labour law

Sale (transfer) of business and labour law

Sale (transfer) of business and labour law

In terms of the Labour Relations Act (LRA), an employee’s employment contract is automatically transferred to the new employer when a business is sold as a going concern. Any dismissal associated with such a transfer of business, will be deemed as automatically unfair. An employer selling his/her business may also not dismiss the employees if the buyer does not want to keep the employed employees.
As with any form of alleged automatic unfair dismissal, the court will first have to determine that the dismissal is causally related to the transfer of the business. If the employee makes a prima facie case that the dismissal is linked to the transfer of the business, the employer must be able to prove that the dismissal was due to a valid reason or fair operational requirement. Otherwise, the dismissal can be automatically unfair.
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What about the new employer?

A new employer is entitled to restructure his business to the extend he deems necessary to accommodate the acquisition of another business, even if it involves the retrenchment of a transferred employee. Such restructuring may continue if there are sufficient and fair reasons to retrench a “redundant” employee shortly after the merger of the business, provided that the dismissal is justifiable. It is also very important that the employer follows the prescribed process in terms of labour law. The only way employers, who are involved in a transfer of business, can avoid a potential automatically unfair dismissal is to enter into an agreement with the employees or their recognised representatives, before the business is transferred.

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Bargaining Council – what about it?

Bargaining Council – what about it?

Bargaining Council – what about it?

Labour legislation applies to all employers and employees. The Basic Conditions of Employment Act (BCEA) defines the minimum terms and conditions of employment on which the parties may contract. However, if a business falls under an industry that is part of a specific Bargaining Council’s scope of application, the Bargaining Council’s collective agreement will regulate labour relations in that industry and employers are legally obliged to comply with this. Note that certain Bargaining Councils only apply to specific regions. The obligation rests with the employer to determine under which industry the business falls and then to comply with applicable legislation.

Employers that fall within a Bargaining Council’s scope of application must ensure that their employment contracts are drafted in line with this legislation.  Note that the minimum terms and conditions of employment as contained in the Bargaining Council’s collective agreement rank higher than those contained in the BCEA. If any labour disputes arise between the employee and employer, ʼn Bargaining Council will have jurisdiction to deal with these disputes, as opposed to referring the dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

Functions of a Bargaining Council include to:

  • conclude and apply collective agreements;
  • prevent and resolve labour disputes;
  • establish and administer a fund to resolve disputes;
  • encourage and establish training and education;
  • to establish and administer pension, provident, unemployment and medical aid funds, as well as sick pay, holiday pay and training schemes for the benefit of one or more of the Bargaining Council’s parties or their members.
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COVID-19 and disciplinary action against employees

COVID-19 and disciplinary action against employees

COVID-19 and disciplinary action against employees

All employers must comply with the Occupational Health and Safety Act. This law requires that employers, as far as is reasonably practicable, provide and maintain a work environment that is safe and without risk to the health of employees, customers, members, visitors, contractors, etc. who may be directly affected by their activities, or who enters the workplace.

In addition to this general obligation, additional regulations have been published in terms of COVID-19 that must be complied with. Each workplace is unique with regards to, among other things, the space and setup, activities, working methods, types of interaction, etc. Although COVID-19 regulations are legally enforced, it is a good idea to implement a COVID-19 policy and procedure in the workplace to clarify the required behaviour as well as the consequences in cases of non-compliance. In order to be able to apply discipline in the workplace, the employer must implement clear rules and also be able to prove that employees are aware of the rules as well as the consequences if these rules were broken.

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What should be included in the COVID-19 policy and procedure?

  • Availability and use of safety equipment
  • Daily screening
  • Handling of shared facilities, such as a kitchen, bathroom, cafeteria, etc.
  • Procedure when other persons enter the premises
  • Rules with corresponding sanctions

Beware of these pitfalls

It is an established principle in labour law that a violation of the employer’s health and safety policies and procedures will result in disciplinary action and may justify the termination of the employee’s employment. Apply discipline in line with the disciplinary code, but beware of these pitfalls:
  • Be fair and just
  • Act consistently
  • Always follow the correct procedure continuously
Employers should note that failure to comply with the Occupational Health and Safety Act may result in serious consequences such as fines, imprisonment and an order to cease business activities, depending on the nature and seriousness of the offence.

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CCMA processes and what employers should know

CCMA processes and what employers should know

CCMA processes and what employers should know

The Commission for Conciliation, Mediation and Arbitration (CCMA), was established as an independent, apolitical dispute resolution body in terms of the Labour Relations Act (LRA). CCMA processes aim to promote fair labour practices and resolve labour disputes in the workplace. An employee can refer a dispute to the CCMA on the basis of dismissal, wages and working conditions, unfair labour practice, workplace changes and discrimination. Most cases referred to the CCMA relate to unfair dismissal.

When can the employee approach the CCMA?

  • In the case of alleged unfair dismissal, the dispute must be referred tot he CCMA within 30 days after the date of dismissal.

  • If a dispute relates to unfair labour practice, it must be referred to the CCMA within 90 days after the unfair incident, or within 90 days after the employee becomes aware of the unfair labour practice.

  • If the dispute relates to discrimination, it must be referred to the CCMA within six days for conciliation and if it cannot be resolved, be referred to the Labour Court.
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Who is the LWO?

  • Conciliation: This is an informal process where a commissioner is appointed to meet with the parties to a dispute within 30 days after the referral and explore ways to resolve the dispute by mutual agreement. Separate meetings between the commissioner and each party may also be held. If the case is settled, a settlement agreement is signed and the dispute is resolved.
  • Arbitration: This is a hearing process where the parties have the opportunity to state their case. During the process, oral evidence is presented as well as any other forms of evidence in support of a party’s case. Thereafter the commissioner will issue an arbitration awards within 14 days. An arbitration award is binding and the equivalent of a court ruling.
  • Conciliation/Arbitration (“Con/Arb”): This is an ongoing process where conciliation and arbitration follow directly after each other on the same day. If conciliation (settlement) is not reached, arbitration will take place on the same day. Both the employer and employee can object to the ongoing process on the same day. However, the ongoing process is mandatory in matters concerning:
  • dismissal for any reason relating to a probation period;
  • any unfair labour practice relating to a probation period;
  • the failure of any payment in respect of the national minimum wage.

Who can represent an employer at the CCMA?

CCMA processes can be intimidating and it is a good idea to get expert advice. The only time when a legal practitioner, such as e.g. an attorney, will be allowed during the proceedings, is when:
  • The commissioner and all the other parties agree to it.

  • The commissioner concludes that it is unreasonable to expect a party to handle the dispute without legal representation.
An employer can be represented by any employee/director of the business, by an office bearer or an official of a registered employers’ organisation (such as the LWO).

The LWO is registered as an employers’ organisation with the Department of Employment and Labour and automatically has the right to represent LWO members in forums such as the CCMA, Bargaining Councils and the Labour Court.

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“Inspections” by false officials

“Inspections” by false officials

“Inspections” by false officials

It has come to the Department of Employment and Labour‘s attention that people falsely pose as inspectors from this Department. In some instances employers are coerced and intimidated into buying “new” posters.

Make sure to do the following during an inspection by the Department of Employment and Labour:

  • Insist on positive identification of the person who introduces him-/herself as an inspector or an official.
  • First verify this information before giving the person access to your premises.

Inspections – please note the following:

  • No inspector may charge a fee for the inspection, investigation, advice or any assistance.
  • The Department of Employment and Labour does not delegate any third party to conduct an inspection on behalf of the Department – none of the Department’s powers may therefore be delegated.
  • No inspector may sell posters, products or information.
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Who is the LWO?

The LWO is an employers’ organisation that is registered with the Department of Employment and Labour. Our main goal is to assist employers to comply with labour law – typical services include:
  • Free labour law audit upon joining with 100% compliance in mind for your business (based on your specific business industry and setup)
  • Free telephonic labour law advice – members are encouraged to phone in as many times as needed
  • Free labour law documentation – including employment contracts, warnings, notices, policies, procedures, etc.
  • Assistance to implement rules in the workplace and enforce discipline – poor work performance, consultations, warnings, disciplinary hearings, etc.
  • Representation at the CCMA, Bargaining Council and Labour Court – our registration status with the Department of Employment and Labour gives us the right to automatically represent our members during conciliation/arbitration.
  • Assistance with restructuring, retrenchment, strikes, trade union negotiations, inspections, etc.
  • Anything labour law related between the employer and employee, the LWO protects the employer.
The LWO also established a Book shop, through which we provide labour law related articles to our members to assist employers to proactively manage labour as a business risk.

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3 types of labour inspections

3 types of labour inspections

3 types of labour inspections

Our South African labour laws are extensive and rigid, leaving no room for negotiation. Many employers conduct their business with the sincere belief that they are adhering to the required labour regulations, although in reality this is often not the case. Failure to comply with these labour laws can result in significant financial repercussions, needlessly jeopardising your business.

The Department of Employment and Labour possesses the authority to enforce these labour regulations and carries out regular workplace inspections to ensure adherence thereto.  There are three categories of inspections, each focusing on ensuring compliance with a specific set of laws, namely:

  • The Basic Conditions of Employment Act, which encompasses Sectoral Determinations and Main Collective Agreements;
  • The Employment Equity Act; and
  • The Occupational Health and Safety Act.
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The three categories of labour inspections:

Employers should be diligent in distinguishing between these distinct types of inspections to ensure overall compliance. The three categories of labour inspections encompass the following aspects:
  • Inspection under the Basic Conditions of Employment Act:

    This inspection focuses on ensuring compliance with the minimum terms and conditions of employment that both the employer and employee can mutually agree upon, encompassing industry-specific legislation where applicable. The inspector will examine:

    • The Employment contracts (written particulars of employment);
    • Attendance records;
    • Remuneration details – pay slips/envelopes, minimum wage, overtime, paid leave, working hours, etc.;
    • Verification of UIF and COIDA registration along with proof of payments made; and
    • Comprehensive list of employee names and corresponding ID numbers.

In case of non-compliance, the inspector will issue a dated compliance order to the employer. Subsequently, this can lead to the imposition of monetary penalties or even imprisonment.

  • Inspection under the Employment Equity Act:

    This inspection’s focus is on the compliance of the Employment Equity Act, which strives to eradicate unjust discrimination in the workplace, while promoting equal opportunities and equitable treatment. Employers meeting specific criteria are known to be “designated employers,” with additional responsibilities. Employers must verify whether they classify as a “designated employer” to ensure conformity and compliance.

     Non-compliance for a “designated employer” may result in a fine of R1.5 million for the first offense or 10% of the employer’s annual turnover (whichever is greater), and/or up to 10 years of imprisonment.

  • Inspection under the Occupational Health and Safety Act:

    This inspection concentrates on compliance with health and safety regulations, aiming to establish a secure and healthy work environment. The inspector will scrutinize aspects like legislative posters, health and safety representatives and committees, relevant signage, personal protective equipment, and more.

If non-compliance is found, the inspector will provide the employer with a dated compliance order. Depending on the severity of the non-compliance, this could lead to temporary cessation of business activities or even penalties. Continuous non-compliance might result in penalties, imprisonment, and potential criminal prosecution.

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