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Change in the air for SA labour laws

Jan 07 2013 12:21 Fin24

(Picture: Shutterstock) (Shutterstock)

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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. 

Labour brokers 

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 Cooper.

Employment equity 

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.

Medical expenses

“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,” said Cooper.

Retirement funds

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 funds. 

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. 

Virtual UIF 

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,” said Cooper.


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