Cape Town - Proposed changes to the South African Labour
Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA) are on
the cards for 2013 in the wake of massive protest action that has crippled the
country, said Rob Cooper, Director of Legislation at Softline VIP.
“Some of the proposed changes include the fact that minimum
wages can be prescribed by the minister of labour. Public officials are also
proposed to have the power to prohibit strikes in their sectors.
"It is also proposed that unions must ballot and get
majority agreement to strike or picket, but there is strong opposition from
Cosatu who see this as a curtailment of their freedom to strike and one wonders
whether this will be in the final legislation,” said Cooper.
Fortunately, the debate whether labour brokers should be
closed down or regulated seems to have gone the way of stricter regulation. A
decision has however been passed that "atypical" employees become
"deemed" employees after six months.
The upheaval in the industry has seen the number of labour
brokers dramatically reduced from 3 234 in 2010 to 2 685 in 2011.
“These proposals have been pushed through Nedlac, despite
labour and business differences. Parliament’s labour portfolio committee is to
finalise last ‘discussions’ with amendments to the respective bills having been
published on 22 October 2012. The effective date is yet to be announced,” said
Nedlac recently released Employment Equity Act proposals
that will see the act continuing to focus on provincial targets instead of
national demographic ones. “Increased fines and powers are proposed in addition
to the introduction of the concept of equal pay for work of equal value.
"These proposals could quite possibly be rolled out in
conjunction with the BCEA and LRA amendments,” said Cooper.
South Africa has a total of 19.5 million unemployed people,
of whom 4.5 million are officially unemployed, in addition to 60% not having a
matric. Of the youth under the age of
25, around 50% are unemployed.
Unfortunately the youth subsidy, which had reached a fairly
advanced stage, was given the political boot at the ANC’s June policy
conference, to be replaced by a "jobseeker grant". At the ANC's elective conference in Mangaung it was announced that the ANC was set to approve a comprehensive package of grants for unemployed youths, estimated to cost R30bn a year.
“Tax relief for medical expenses is expected to change in
either March 2013 or March 2014, from a deduction calculation to a ‘medical tax
credit’ method of calculation,” said Cooper.
“Contribution expenses for all taxpayers are to be defined,
while an assessment method to calculate the tax relief on total medical
expenses is to be tabled. These
proposals will result in a gradual reduction of the value of our current tax
relief which has been the trend over the past two years.”
The National Health Insurance project is set to be a 14-year
plan, whose total cost is still being debated.
“The budget 2012 funding options were to increase the VAT
rate, or to increase the surcharge on taxable income, or to introduce a payroll
tax contribution. Thus far the Medium-Term Budget Policy Statement remained
silent on the subject, though a Treasury discussion document is expected soon,”
There will be a major move towards the standardisation of
retirement funds and there are many reasons for the proposed changes. “The poor
performance by some private retirement funds is a major catalyst, as is the
prevailing low retirement savings level in the country. Also the tax and
administration rules around retirement funds are simply too complex,” said Cooper.
The purpose of the change is to ensure that all retirement
funds have the same administration and tax rules. “The intention is to utilise
the tax and administration rules that are applicable to retirement annuities
and to replicate it for retirement funds.
"There are many ‘vested interests’ to be protected and
it will only be applicable to South African residents. The roll-out is
tentatively planned for March 2014,” said Cooper.
National retirement fund
Proposals for a national retirement fund have also been
tabled, which will take the form of a mandatory statutory fund that provides
pension, life insurance and disability benefits. The fund is to be phased in
over the next four years and will place pressure on private sector retirement
Unemployment Insurance Act
Proposed changes to the Unemployment Insurance Act will
affect "credit days" which is proposed to be calculated as one
calendar day for every four calendar days employed. “The proposal will also see
an increase in the income replacement rate and may remove certain exclusions or
limitations in the act,” said Cooper.
The introduction of the virtual Unemployment Insurance Fund
(UIF) office system allows individuals to apply for UIF benefits
electronically. “It effectively
eliminates the need to queue at the labour office, reduces the cost of
‘accessing’ the benefit and reduces the benefit approval time from about four
weeks to 48 hours,” said Cooper.
“These are just some of the changes lined up for 2013 and we
will continue the discussion as we near the budget speech in the New Year,”