Macro environment legislation Week 2 and 3

WEEK 2 & 3

TERM 1 TOPIC 1 MACRO ENVIRONMENT: IMPACT

OF RECENT LEGISLATION ON BUSINESS

Objectives

1.   The focus on the nature of the Act, the purpose, the advantages and disadvantages

2.   The rights of the business and consumers

3.   Compliance and penalties if the business does not comply 

4.   The actions regarded as discriminatory acts as listed in the EE Act

1 Introduction

Recap what you learnt in grades 10 and 11 about the different macro environmental factors that affect a business. The macro environment includes external and uncontrollable factors that influence a business decision making, and affect its performance. These factors include economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces.

Laws are an important part of the business world. The legal system is very complicated and people who run businesses need to have a good understanding of it. During the apartheid era, apartheid legislation determined where people were allowed to live and work. Foreign countries who had invested in South Africa disinvested in protest against apartheid policies and legislation.

Disinvestment is when businesses or countries remove all of their investments from a country to create an economic incentive for that country to change its policies. Disinvestment in South Africa resulted in capital flight. Capital flight happens when money flows out of a country’s economy very quickly as a response to a political event.

After 1994, many of South Africa’s laws, especially in the field of labour and the consumer, were revised to create fair employment and trade conditions for all South Africans.

The responsibility for compliance with any of the Acts rests with management alone. Failure to comply with the law can have serious consequences such as:

• Criminal or financial penalties

• Make members of a close corporation or directors of a company personally liable for the businesses actions

• Give the business a bad reputation.

2 The Skills Development Act 97 of 1998 and the Skills Development Levies

Act of 1999

2.1 Nature and purpose

The Skills Development Act and the Skills Development Levies Act were passed in 1998 and

1999 respectively.

The reason behind this was that South Africa was not equipped with the skills it needed for economic growth, social development and sustainable employment growth.

The National Skills Authority was established in terms of the Skills Development Act of 1998 and was made up of representatives from business, labour, government and other bodies that reflected community and South African society.

The National Skills Development Strategy aims to:

• Develop the skills and learning capacity of employees

• Make it possible for employers to become more productive and competitive

• Reverse apartheid imbalances

• Create a more inclusive and cohesive society.

Basic Guide to Skills Development Levies

Employers must pay 1% of their workers’ pay to the skills development levy. The money goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund to pay for training.

The Skills Development Levies Act applies to all employers except:

• The public service

• Religious or charity organisations

• Public entities that get more than 80% of their money from Parliament; and

• Employers – o whose total pay to all its workers is less than R 250 000 per year; and o who do not have to register according to the Income Tax Act.

SETAs:

• Develop sector skills plans in line with the National Skills Development Strategy

• Approve the workplace skills plans submitted by businesses in their sectors

• Promote and establish learner ships.

• Pay grants to participating businesses, provided that those businesses have submitted workplace skills plans and implementation reports to their SETA.

2.2 Implications for small and large businesses

• All business can benefit from the skills development initiatives

• A motivated and well-trained work force adds value to the business

• HR managers, line managers and staff managers must know the requirements and implications of the legislation

• The 1% Skills Development Levy must be paid within seven days after the end of the month

• To create a learner ship a formal learner ship agreement has to be entered into by both parties

• The employer has the following responsibilities: to employ the learner for the period specified in the agreement, to provide the learner with practical experience, and to give the learner time to attend the education and training specified in the agreement

• Employers can be fined or even imprisoned (for a period not exceeding one year) if they commit an offence under the Skills Levy Act

• The Income Tax Act (also applicable to SLA), requires all employers to keep a record of all the remuneration paid to every employee, as well as the Employees’ Tax deducted from the employees’ remuneration and levies paid.

2.3 National Skills Development Strategy and the Human Resources Development Strategy

The aim of the National Skills Development Strategy is:

• To improve the skills development system so as to be more responsive to labour market needs and social equity requirements.

• To integrate workplace training and theoretical learning

• To improve the skills level of graduates of secondary and tertiary education

• To address skills shortages in artisanal, technical and professional fields

• To reduce the over-emphasis on NQF level 1-3 learner ships

• To equip those in the workforce with sufficient technological skills

• To improve co-operation between universities, further education and training colleges and sector education and training authorities (SETA)

• To support economic growth and development through viable skills development

• To develop sufficient skills for rural development.

Co-operation and co-ordination from key stakeholders, such as government, the SETAs and employers, is essential for the realisation of the NSDS III goals. The Department of Higher

Education and Training (DHET), the SETAs and the National Skills Fund are the key drivers of

 3 Labour Relations Act (LRA) 66 of 1995

3.1 Nature and purpose

The Labour Relations Act (LRA), Act 66 of 1995 aims to promote economic development, social justice, labour peace and democracy in the workplace.

The Labour Relations Act applies to all employers, workers, trade unions and employers’ organisations, but does not apply to members of the:

• National Defence Force

• National Intelligence Agency

• South African Secret Service.

Trade unions are recognized under the 1996 Constitution of South Africa, which provides for the right to join trade unions, and for unions to collectively bargain and strike.

Three institutions have been created to reduce industrial relations conflict, and eliminate unfair discrimination and redress past discrimination in the workplace: the National

Economic Development and Labour Council (NEDLAC), the Labour Court, and the Council for

Conciliation, Mediation and Arbitration (CCMA).

For most businesses the fact that the LRA prescribes rules on how to dismiss employees makes it a very important. However, the purpose of the act covers more than that – it promotes economic development, social justice, labour peace and the democratisation of the workplace through:

3.1.1 Freedom of association

Freedom of association means the right to come together with other individuals and collectively express, promote, pursue and defend common interests. This includes the right to join a union.

3.1.2 Organisational rights

The Act allows trade unions to gain access to the business’ premises to recruit members and hold meetings.

3.1.3 Bargaining and statutory councils

Bargaining councils are formed by registered trade unions and employers’ organisations.

They deal with collective agreements, attempt to solve labour disputes, and make proposals on labour policies and laws. As well, they may administer pension funds, sick pay, unemployment and training schemes, and other such benefits for their members.

3.1.4 Commission for Conciliation, Mediation and Arbitration

The Commission for Conciliation, Mediation and Arbitration (CCMA) is a dispute resolution body established in terms of the Labour Relations Act, 66 of 1995 (LRA). It is an independent body, does not belong to and is not controlled by any political party, trade union or business.

The LRA makes provision for disputes that cannot be solved in the workplace.

If this process fails the dispute is referred to the Labour Court.

3.1.5 The Labour Court and the Labour Appeal Court

The Labour Court has the same status as a high court. The Labour Court adjudicates matters relating to labour disputes. Appeals are made to the Labour Appeal Court.

3.1.6 Unfair dismissal

Dismissal is unfair if:

• A worker intended to or did take part in or supported a strike or protest

• A worker refused to do the work of a striking or locked out co-worker, unless his refusal will endanger life or health

• A worker is forced to accept a demand

• A worker intended to or did take action against an employer by – o Exercising a right; or o Taking part in proceedings; or

• A worker is pregnant or intends to be pregnant

• An employer discriminated against a worker because of race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility

• An employer cannot prove - o a worker’s misconduct or inability o that the employer’s operational needs are valid o that the dismissal procedure was fair.

3.2 Implications for businesses

The LRA follows the principle of collective bargaining and puts structures in place with which disputes in the workplace can be settled. This has advantages for both employers and employees and promotes a healthy relationship between them. Non-compliance with LRA rules and regulations also poses a very real risk to employers because there is an effective and inexpensive (free) option to employees in the form of the CCMA and the Department of Labour.

CCMA fees and costs

When asked by employees, employers, or other interested parties for advice or training te CCMA will assist. In 2012 the fee was between R1 650,00 and R1 835,00 for each day or part of a day.

4 Basic Conditions of Employment Act 75 of 1997

4.1 Nature and purpose

The 1996 South African Constitution (section 23) gives every worker and employer the right to fair labour practices. The Act applies to all workers and employers except members of the National

Defence Force, National Intelligence Agency, South African Secret Service and unpaid volunteers working for charities.

4.1.1 Working time

 A worker must NOT work more than:

• 45 hours in any week

• Nine hours a day if a worker works five days or less a week

• Eight hours a day if a worker works more than five days a week.

Overtime If overtime is needed, workers must agree to do it and they may not work for more than three hours overtime a day or ten hours overtime a week.

Overtime must be paid at 1.5 times the workers' normal pay or, by agreement, get paid time off.

 4.1.2 Leave

• Annual leave

A worker can take up to 21 continuous days' annual leave or by agreement, one day for every 17 days worked or one hour for every 17 hours worked.

Leave must be taken not later than six months after the end of the leave cycle.

An employer can only pay a worker instead of giving leave if that worker leaves the job

• Sick leave

A worker can take up to six weeks paid sick leave during a 36-month cycle.

During the first six months, a worker can take one day's paid sick leave for every 26 days worked.

An employer may want a medical certificate before paying a worker who is sick for more than two days at a time or more than twice in eight weeks.

• Maternity leave

A pregnant worker can take up to four continuous months of maternity leave. She can start leave any time from four weeks before the expected date of birth OR on a date a doctor or midwife says is necessary for her health or that of her unborn child. She also may not work for six weeks after the birth of her child unless declared fit to do so by a doctor or midwife.

A pregnant or breastfeeding worker is not allowed to perform work that is dangerous to her or her child.

• Family responsibility leave

Full-time workers employed longer than four months can take three days' paid family responsibility leave per year on request when the worker's child is born or sick or for the death of the worker's spouse or life partner, parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling.

An employer may want proof that this leave was needed.

4.1.3 Remuneration, deductions and notice of termination

The employee must be paid according to the agreement with the employer and deductions must be agreed to by the worker in writing or if the employer is required to do so by law (e.g. Income tax and UIF).

Notices must be given in writing.

The employer may pay for the notice period instead of giving notice.

The worker still has the right to challenge the fairness of the dismissal.

The worker must be paid for any accrued annual leave.

If the termination of employment is because of a change in business operations (retrenchment) then severance pay (one week for every full year worked) has to be paid to the worker.

4.2.4 Administrative obligations

Amongst other things employers must keep a record of at least:

• The worker's name and job

• Time worked

• Money paid

• Date of birth for workers under 18 years old.

.

4.3 Implications for businesses

Employers should have a good understanding of their obligations. It has become essential for all companies to have access to a specialist who is familiar with this legislation and its principles. Failure to comply with this Act can lead to fines or criminal prosecution.

5 Compensation for Occupational Injuries and Diseases (COIDA) Act 61

fo1997

5.1 Nature and purpose

The purpose of the Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees in the course of their employment, or for death resulting from such injuries or diseases, and to provide for matters connected therewith.

Businesses have the following responsibilities in terms of the Occupational Health and Safety Act of

1993:

• The working environment must be made safe for workers and there must be no risks to their safety

• Workers must receive information, instructions, training and supervision to ensure the health and safety of all employees.

5.2 Implications for businesses

• All businesses must register their business with the commissioner of the

Compensation Fund

• Each year the business must provide the commissioner with information on the workers employed, the wages paid to them and the time they have worked

• These records must also be kept safely by the business for a period of four years.

6 The Employment Equity Act (EEA) of 1998

6.1 Nature and purpose

The overall aim of the Employment Equity Act (EEA) is to achieve equity in the workplace through:

• The prevention of discrimination, which applies to all employers

• The implementation of affirmative-action measures.

The Act states that no person may unfairly discriminate (directly or indirectly) against an employee on one or more of the following grounds: race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, disability, HIV status, culture or birth.

6.2 Implications for the employer

• Employers must prepare employment equity plans in accordance with the Act

• These plans must be submitted to the Department of Labour for assessment

• Failure to comply with the Act may result in fines ranging from R1/2 million to R1 million.

7 Black Economic Empowerment Act of 2003 and the Broad-based Black

Economic Empowerment (BBBEE) Act

7.1 Nature and purpose

The Act seeks to correct the disparities caused by Apartheid by promoting new opportunities for, and increasing the levels of participation of, previously disadvantaged individuals and companies in the ownership, management and control of the South African economy.

7.2 Implications for businesses

BBBEE compliance is measured in the seven key BBBEE areas of the business. These are:

• Ownership: points are earned by selling shares to black people

• Management Control: points are earned by appointing black top managers and directors

• Employment Equity: points are earned by employing junior/middle/senior managers and for smaller businesses black workers

• Skills Development: points are earned by training employees through on the job training or formal training

• Preferential Procurement: points are earned by purchasing goods and services from other businesses with a good BEE Scorecard

• Enterprise Development: points are earned by assisting smaller black owned businesses to grow

• Socio economic Development: points are earned by supporting black social causes.

8 National Credit Act of 2005

8.1 Nature and purpose

The National Credit Act has put into place protection measures that aim to improve consumer rights as well as protect and streamline credit transactions.

 8.2 Implications for business

Credit providers must do an affordability assessment to ensure that the consumer has the ability to meet their obligations in a timely manner.

Some of the requirements of the Act are:

• All credit contracts must be in a language and form which are easily understandable and should be in at least two languages

• All credit providers are obliged to do an analysis of the consumer’s profile, to ensure that the provider can afford the credit applied for

• One of the main purposes of the Act is to prevent discrimination in the credit market and to ensure that credit is available to all South African citizens

• The Act gives a consumer, whose application for credit was refused, the right to written reasons for the decision

• A cooling off period is compulsory for all credit agreements

• Consumers under credit agreements have the right to return the purchased goods, at any given time during the contract, to the provider to be resold.

9 Consumer Protection Act of 2009

9.1 Nature and purpose

This Act has been brought into law to promote and advance the social and economic welfare of all consumers.

9.2 Impact of the Act on different aspects of business

Examples of the impact the Act may have on different aspects of doing business are:

• The Act prohibits discriminatory marketing

• The Act gives the consumer the right to select suppliers; to be given estimates; the right to choose or examine goods; the right to return goods and so-called unwanted goods.

• Consumers are entitled to information in plain and understandable language

• The Act prohibits unacceptable conduct; false or misleading representations.

HOMEWORK!!!