Topic 1
Topic 1
Topic 1
1. INTRODUCTION
The government gas enacted several laws in response to demands for redress and
quity in small and large businesses. This chapter deals with the following laws:
The above laws regulate and protect the rights of consumers and businesses.
Effective implementation of the above laws will ensure a fair and orderly labor and
factor market.
2. KEY CONCEPTS
Term Definition
Skills The main aim of this Act is to improve the skill levels of people who are
Development already employed in the business.
Act/SDA
Skills It was introduced to ensure that businesses contribute to the
Development development of skills of employees.
Levy/SDL
PDI’s Previously Disadvantaged Individuals or designated group.
Labour Relations This Act was introduced to promote simple procedures for the resolution
Act/LRA of labour disputes in the workplace.
Negotiations between employers’ association and trade unions on
Collective matters such as wages/conditions of employment.
bargaining
Collective Agreement between the employer organisations and trade unions.
agreement
Dispute A disagreement between the employer and the employee
Employment The main aim of this Act is to ensure that equal job opportunities are
Equity Act/EEA given to all people regardless of
race/culture/language/age/religion/disability etc.
Affirmative Action It was designed to ensure that suitable and qualified previously
disadvantaged individuals are given equal job opportunities.
Affirmative action forms part of the Employment Equity Act.
Basic This Act sets the minimum standard for employment in order to
Conditions of promote fair labour practice.
Employment
Act/BCEA
Compensation The Act gives employees who are injured or contract diseases while
for on duty the right to claim compensation.
Occupational
Injuries and
Diseases
Act/COIDA
Broad-Based The Act was introduced in order to ensure full economic participation
Black Economic of previously disadvantaged individuals.
Empowerment
Act/BBBEE
National Credit This Act was introduced to protect consumers against unfair and
Act reckless credit granting by businesses.
Credit providers All businesses that offer goods and services on credit
National credit The NCR is responsible for the regulation of the South African credit
Regulator/NCR industry. This means that all businesses that offer good and services
on credit must be registered with the NCR.
Debt review/ This is a debt solution targeted at South African consumers who are
Debt over indebted and struggling to manage their finances.
counselling
Consumer The main aim of this Act is to promote/protect the economic interests
Protection Act of consumers by providing them information so that they make
informed choices.
Discriminatory Treating a person/people differently, from the way in which you treat
actions other people.
3. ACTS
ADVANTAGES
Increases the number of skilled employees in areas where these skills are scarce.
DISADVANTAGES
The SETAs may not be well organised and many courses offered by companies
may not have unit standards that relate to the course content.
Many service providers that offer training services are not SAQA accredited.
Employees are expected to attend learnerships during work hours which could
affect the production process/productivity.
The time and money spent on improving employee skills is wasted if they leave
the business.
Businesses should register with SARS in the area in which their business is
classified (in terms of the SETA).
Employers should submit a workplace skills plan and provide evidence that it
was implemented.
Preventing employees from signing for a learnership due to their age or position
in the workplace.
Businesses that do not pay the Skills Development Levy may not offer
learnerships/claim grants from the SDA.
A labour inspector could order the business to stop operating should the
business be found guilty of illegal practices.
SETA – SECTOR EDUCATION AND TRAINING AUTHORITY
ROLE/FUNCTIONS OF SETAS
Develop skills plans in line with the National Skills Development Strategy
Pay out grants to companies that are complying with the requirements of the Skills
Development Act.
FUNDING OF SETAS
- Indicates how Sector Education and - Develops short term and long term
Training Authorities (SETAs) should workforce skills.
use the money allocated from the
Skills Development Levy.
Promotes simple procedures for the registration of trade unions and employer
organisations.
Provides for the right to lock-out by the employer as a reaction to lengthy strikes.
Clarifies the transfer of employment contracts between the existing and new
employers.
ADVANTAGES
LRA provides for the principles of collective bargaining and puts structures in
place with which disputes in the workplace can be settled.
Employers and employees have guidelines regarding correct and fair dismissal
procedures.
Employers are entitled to compensation from the Labour Court if they suffered
damages as a result of unprotected strikes.
DISADVANTAGES
Some businesses may feel that the LRA gives employees too much power as it
creates lengthy procedures, e.g. consulting with workplace forums.
Strike actions always result in loss of production for which employers may not
claim.
Some trade unions may not promote the mandate of their members but embark
on industrial action, which is harmful to labour relations between employers and
employees.
Refusing to give workplace forum members paid time off for attending meetings
during working hours.
Businesses will be fined if they fail to comply with the agreements reached
during the dispute resolution process.
Businesses that fail to comply with this Act may risk financial costs e.g.
legal/CCMA fees and fines.
THE RIGHTS OF EMPLOYERS AND EMPLOYEES ACCORDING TO LRA
RIGHTS OF EMPLOYERS
Right not to pay an employee who has taken part in a protected strike for
services/work they did not do during the strike.
RIGHTS OF EMPLOYEES
Trade union representatives may take reasonable time off work with pay, to attend
to trade union duties.
This Act states that employees who do the same work (work of equal value) must
be paid equally (equal pay).
Protects employees from victimisation if they exercise the rights given to them by
the EEA.
ADVANTAGES
Provides employees with legal recourse if they believe they have been unfairly
discriminated against.
Ensure that there is equal representation of all racial groups in every level of
employment.
Clearly define the appointment process, so that all parties are well informed.
Not employing a young woman because she would want to have children in
future.
Fines may be imposed on businesses that fail to comply with its reporting
obligations.
Regulates the right to fair labour practices as set out in the Constitution.
Adheres to the rules and regulations set out by the International Labour
Organisation.
ADVANTAGES
Work hours are specified so that the employer cannot exploit employees.
The rules and regulations are very specific, which clearly guides the employer on
how to deal with employment issues.
Employees are permitted to consult labour unions in cases where the BCEA
conditions are violated.
Employees may submit complaints to labour inspectors who can address it.
DISADVANTAGES
Businesses may regard employment contracts negative and may not implement
it, which result in non-compliance/penalties.
No employer may force an employee to work more than 45 hours in a week. This
may result in reduced productivity.
Hiring cheap labour is no longer possible, so businesses cannot exploit workers.
BCEA forces businesses to comply with many legal requirements, which may
increase labour costs.
Businesses not complying to the Act, may be charged with high penalties, which
may affect their cash flow negatively.
Workers should only work 9 hours per day in a 5 day work week./8 hours per day
in a 6 day work week./Overtime should not exceed 10 hours per week.
Workers can take up to six weeks paid sick leave during a 36-month cycle
PENALTIES BUSINESSES MAY FACE FOR NOT COMPLYING WITH THE BCEA
Businesses that are found guilty of non-compliance may face heavy fines/
penalties.
Overtime
Workers must agree to work overtime.
Workers cannot work more than three hours overtime per day/10 hours per
week.
Overtime must be compensated as follows:
One and half times the normal rate of pay for overtime worked on week days and
Saturdays.
Double the normal rate of pay for overtime worked on Sundays and public
holidays.
Overtime must be paid either at specified rate for overtime or an employee may
agree to receive paid time off.
Minister of Labour may prescribe the maximum permitted working hours,
including overtime, for health and safety reasons for a certain category of work.
Sick leave
Workers are entitled to:
Six weeks paid sick leave in a period of 36 months/1 day paid sick leave for
every 26 days worked during the first six months of employment.
A medical certificate may be required before paying an employee who is absent
for more than two consecutive days/who is frequently absent.
Maternity leave
A pregnant employee is entitled to four consecutive months' leave.
A pregnant employee may not be allowed to perform work that is hazardous to
her unborn child.
The starting date is usually any time from four weeks before the expected date of
birth or on advice of a doctor/midwife.
Public holidays
Workers must be paid for any public holidays that fall on a working day.
Work on public holidays is by agreement and paid at double the rate.
Termination of employment
A contract of employment may only be terminated following one week’s notice, if
the worker has been employed for six months or less.
A minimum of four weeks’ notice must be given, if the worker has been
employed for a year or longer.
The employee must be given notice in writing.
An employee who is retrenched/ dismissed for restructuring reasons is entitled to
one week’s severance pay for every year of service.
COIDA applies to all casual and full-time workers who become ill/injured/
disabled/killed due to a workplace accident/disease
ADVANTAGES
Employers are protected from financial burden should an accident occur in the
workplace provided that the employer was not negligent
Makes businesses more socially responsible as they cannot just employ workers
at random in dangerous working conditions.
Workers are treated with dignity and respect as businesses view them as
valuable assets and not just as workers.
Covers all employees at the workplace if both parties meet all the necessary
safety provisions in the Act.
DISADVANTAGES
Employers may be forced to pay heavy penalties if they are found guilty of
negligence/not enforcing safety measures.
Register with the Compensation Commissioner and provide the particulars of the
business.
Keep records of employees' income and details of work for four years.
Employers may not make deductions for COIDA from employees' remuneration
packages.
Businesses must ensure that claims are lodged within twelve months of the date
of the accident.
Employers who do not allow claims for injuries, discriminates against injured
employees.
Employers that take too long to process claims/delay the claiming process.
Compensation that is set off against any debt of the person entitled to the
compensation.
Businesses can be fined for refusing to lodge the claim/contravening the Act.
Businesses can be forced to make large payments if it did not take the necessary
precautions according to the Act.
They may be forced to pay any recovery costs required by the Compensation
Fund.
Employees may take BI to court for not registering him/her with the Commissioner
of the Compensation Fund.
If businesses are found guilty of any misconduct, they will have to pay large
penalties/face imprisonment.
ACT 6: Broad Based Black Economic Employment Act
(BBBEE)
Outline areas that would give the government a platform for bringing equitable
spread of wealth.
ADVANTAGES
Businesses that comply with BBBEE regarding the pillars will be rated high on
the BEE scorecard/may get government tenders/may attract other BBBEE
business partners/-suppliers.
Once rated, the business will understand how to develop BBBEE strategies that
will increase its BBBEE ratings on an annual basis.
DISADVANTAGES
Businesses that want to do business with the government must have their BEE
status assessed annually.
Many businesses have been disadvantaged due to BBBEE ratings as they may
not be able to meet all the scoring.
Processes and procedures may be costly for a business as there are many legal
requirements for scoring enough points to be compliant.
Businesses will have to spend money in areas covered by the seven/five BBBEE
pillars to obtain a good BBBEE rating.
Business licenses may not be renewed ]and authorisations may not be issued
Government will cancel any contract awarded that was based on false
information regarding B-BBEE status.
BBBEE PILLARS
OLD PILLARS REVISED PILLARS
Management/Management Control
Business must ensure that transformation is implemented at all levels.
Appoint black people in senior executive positions/to management.
Involve black people in the decision making processes.
Ensure that black females are represented in management.
Businesses score points in both management and ownership when selling
more than 25 % of their shares to black investors so that some of them can
become directors.
Due to a shortage of skilled black managers/directors, some businesses find it
difficult to make appointments.
Businesses are directly penalised√ for not implementing this pillar.
Ownership
Business should include black people in shareholding/partnerships/franchises.
Exempted Micro Enterprises (EMEs) with an ownership of 50% or more of
black people are promoted to level 3 of the BEE scorecard.
More opportunities are created for black people to become owners/
entrepreneurs.
Encourage small black investors to invest in big companies and share
ownership.
Large businesses should form joint ventures with small black owned
businesses and share business risks.
Businesses sometimes find it difficult to locate suitable black business
partners/ shareholders.
Many black people cannot afford shares in companies/contributions to
partnerships.
OPTION 1
OR
OPTION 2
AND/OR
Enterprise development
Businesses are encouraged to invest/support black owned SMME's.
Contribution can be monetary e.g. loans/investments/donations.
Contribution can be non-monetary e.g. consulting services/advice/
entrepreneurial programmes, etc.
Businesses should invest in/support black owned SMME's.
SMME's will be encouraged to use their own business initiatives to make them
sustainable.
Small/Large businesses may not be able to afford enterprise development
investment/support.
Black owned SMME's may become too reliant on support from other
businesses/ unable to take their own initiatives.
Employment Equity
Business should employ suitable and qualified employees regardless of
gender/race/culture/etc.
Workplace should represent the demographics of the country.
Voluntary employment equity targets are set and then monitored by the
government.
Creates a brain drain e.g. qualified expertise emigrate to other countries
where there
will be no discrimination.
Businesses must have Employment Equity Plan in place
May lead to conflict between management and employees/colleagues.
Skills development.
Business must engage black employees in skills development initiatives.
Provide learnerships and learning programmes to black employees.
Business must contribute 1% of their payroll to fund the skills development
programmes.
Business benefits from the increased pool of skilled/trained workers.
Business must go the extra mile to train staff where learnerships are not
offered.
Productivity is compromised as mentors/coaches have to find the time to
participate in learnerships/training.
Social responsibility/Socio-economic development
Businesses should CSI focus on critical areas which can affect growth and
development in the country e.g. environmental awareness/education/ housing,
poverty/unemployment etc.
They should distribute scarce CSI resources to selected beneficiaries in the
community.
- Focuses only on three pillars√ that did not - Focuses on seven/five pillars√ which includes
include all previously disadvantaged all sectors of the society, especially the
people.√ previously disadvantaged.√
- Any other relevant answer related to BEE. - Any other relevant answer related to BBBEE.
ACT 7: NATIONAL CREDIT ACT (NCA)
ADVANTAGES
The whole credit process is transparent e.g. both businesses and customers
know their responsibilities
Leads to more customers through credit sales as they are now protected from
abuse.
DISADVANTAGES
The paperwork and administrative process required by the act are costly and
time consuming.
The business needs to appoint additional staff to deal with the extra
administration.
Should the credit agreement be declared reckless the business can forfeit the
outstanding debt and the goods.
Businesses that are official credit providers, must submit a compliance report
every year.
A business must make sure that all attempts have been made to recover the
debt before blacklisting the customer.
Credit providers cannot collect from consumers who are under debt reviews.
More working capital is needed as businesses cannot sell many goods on credit
due to stricter credit application processes.
Businesses that do not comply with the NCA may face legal action.
Conduct affordability assessment to ensure the consumer has the ability to meet
his/her obligation.
Conduct a credit check with a registered credit bureau and could also consult the
National Credit Register.
Credit providers must have procedures in place to comply with the provision of
the Financial Intelligence Centre Act (FICA).
The court may declare the granting of credit by the business reckless and may
order consumers not to repay the credit/or part thereof to the business.
The business may not demand payment, sue or attach the clients/consumers
salaries/assets.
The business may not charge any fee/interest/other charges under that specific
credit agreement.
The National Credit Regulator may impose a fine/penalty on the business for
non-compliance.
The business will bear all costs of removing the negative information of clients/
consumers who were blacklisted as a result of reckless lending.
Promotes fair/accessible and sustainable places for people to sell their products
Ensures that consumers have access to information they need to make informed
choices
Empowers consumers to take legal action if their rights are not upheld
Protects consumers against contracts that include unfair terms which limit the
liability of suppliers
ADVANTAGES
Businesses may build a good image if they ensure that they do not violate
consumer rights.
DISADVANTAGES
Staff need to be trained /Legal experts need to be consulted, which can increase
costs
Businesses may face fines or imprisonment for a period not exceeding 10 years.
Government agencies may conduct audits, enact fines or even dissolve your
business entirely.
Right to choose
Consumers have the right to:
choose suppliers and/or goods.
shop around for the best prices.
reject goods that are unsafe/defective for a full refund.
cancel/renew fixed term agreements.
request written quotations and cost estimates.
Right to complain
Consumers may use various methods/channels to complain about poor quality
goods/services.
They can complain via customer care desks/consumer hotlines/ombudsman etc.
Right to privacy/confidentiality
Consumers have the right to stop/restrict unwanted direct marketing.√
They can object to unwanted promotional e-mails and telesales.√
They have the right to stop/lodge complaints about sharing personal details.√
Businesses that are found guilty of non-compliance may face heavy fines/
penalties.