Youth Employment Scheme

Youth employment is a critical issue for South Africa. The Employment Tax Incentive was launched in January 2014 to reduce the cost to employers of hiring young people in order to help with this issue.

This ETI incentive is due to come to an end on the 28 February 2019 but will be reviewed by National Treasury during 2018. If the benefits exceed the tax revenue foregone, the sunset clause in the ETI will again be extended.

In addition, the Harambee Youth Employment Accelerator public-private partnerships prepare young people for work through training and matching programmes.

To provide additional pathways for young people into the world of work, the state President recently formally launched the Youth Employment Service, known as YES. The YES initiative was initiated as a collaborated between government, business, labour and civil society. Companies such as Unilever, Sasol, Investec, ABSA and Netcare have come forward to provide work experience opportunities to the first 100 YES participants. The YES initiative aims to see more than one million young South Africans being offered paid work experience over the next three years.

How does YES work?

The programme has three channels through which employment opportunities can occur:

  1. Corporate work experiences – Business that participate in the programme create one year paid positions for youths aged between 18 and 35, in addition to their current headcount.
  2. SMME host placements – Businesses that do not have the capacity to place more people in their organisations, have the option of sponsoring the salary for a one-year placement in small and medium enterprise (in year one for 7 to 10 months); and
  3. SMME development – Young people are empowered to start and grow their own businesses, with support from YES in the form of training, seed funding and value – chain integration.

There have been meetings early in 2017 to involve computerised payroll systems in the initiative and this resulted in the establishment of a working committee, this committee has met several times with the YES initiative team during the latter part of 2017 with a view to relating the data required by the YES team to the data available in payroll Systems.

Current Position

The following documents have recently been issued for public comment:

  1. Draft Requirements for B-BBEE verification for the YES initiative.
  2. Draft Terms and Conditions: Youth Employment B-BBEE Recognition.
  3. Draft Amendment Bill to the Broad-Based Black Economic Empowerment Amendment Act that, amongst other key amendments, introduces the youth Employment Service initiative B-BBEE Recognition.

Employer Requirements to Check Employees before they Work with Children or Mentally Disabled Patients

Author: Guardian (www.theguardian.co.za)

Employer Requirements to Check Employees before they Work with Children or Mentally Disabled Patients

If you are an employer who employs employees, and those employees work in an environment where they may come into contact with children or mentally disabled persons, it is imperative that you ensure all your staff and service providers, whether they are remunerated or work as volunteers are checked against both the Sexual Offenders Register and the Child Protection Register.

What does the Legislation say?
Sexual Offenders Register – Chapter 6 of The Sexual Offences Amendment Act of 2007dictates that anyone employing staff who will in any way come into contact with children at any time whilst on duty or who manages them must have them and their staff cleared against the Sexual Offences Register. The staff who have to be cleared would be anyone who is either paid or not paid (volunteers). This ensures that no staff member who has been convicted of a sexual crime against children can access children through employment.

Child Protection Register – Chapter 7 of the Children’s Act of 2005 dictates that any person managing or operating, or who works with or has access to children either as an employee, volunteer or in any other capacity at an institution providing welfare services to children, including a child and youth care centre, a partial care facility, a shelter or drop-in centre, school, club or association providing services to children must be cleared against the Child Protection Register.

What are your obligations as an Employer (as contained in the Sexual Offences Amendment Act)?
(Section 45(1) of the Act) states that any employer who intends on employing a person or has employed any employee must, in the prescribed manner apply to the Registrar for a prescribed certificate, stating whether or not the particulars of the employee are recorded in the Register

What if an employee is on the register?
Any employer who determines that an employee is on the register at the time of the check or any time thereafter is required to terminate the employee’s employment or, where possible, move them to a position in which they will have absolutely no access or contact with a child.

What if you don’t check?
(Section 45(3)) – An employer, who fails to comply with any provision of this section, is guilty of an offence and is liable on conviction to a fine or to imprisonment for a period not exceeding seven years or to both a fine and such imprisonment.

Confidentiality
Once you, as the employer have received the results, the Act goes on to say that the information needs to remain confidential. Any person who wilfully discloses or publishes any information to any other person which he or she has acquired as a result of an application contemplated in section 44 or in any other manner, is guilty of an offence and is liable on conviction to a fine or to imprisonment for a period not exceeding three years or to both a fine and such imprisonment.

What are your obligations as an Employer (Children’s Act)?
Before a person is allowed to work with or have access to children the person managing them must establish whether or not that person’s name appears in Part B of the Child Protection Register.

No person who is on the register may:

  • Manage or operate, or participate or assist in managing or operating, an institution providing services to children.
  • Work with or have access to children at an institution providing services to children, either as an employee, volunteer or in any other capacity.

What if you don’t check?
Section 124 (2) states that If an employer is found guilty of failing to establish if an employee’s name is on Part B of the register the employer is liable, on conviction to a fine or to imprisonment for a period not exceeding 10 years or both. If convicted of a second offence the person can be liable to a fine or imprisonment for a period not exceeding 20 years or both.

Changes to the Official Interest Rate for Fringe Benefits

The Official Interest Rate for calculating Fringe Benefits decreased by 0.25 % effective 1 April 2018.

Where an employer gives an employee a loan that is less than the official interest rate or interest free, the difference between the two must be treated a taxable Fringe Benefit.

This Fringe Benefit should be processed via the payroll and reported on the Employees IRP5 against SARS Code 3801.

The Official Interest Rate is defined in the Seventh Schedule as the rate of interest that is equal to the Repo Rate, plus 100 basis points (1%).

The repo rate decreased to 6.5% on the 28th March 2018, and the official interest rate therefore became 7.5% effective 1st April 2018.

Please note that HRTorQue Outsourcing have updated all their payroll outsourcing clients effective 1st April 2018.

Labour Brokers and the “Assign Services Case”

The Assign Services case on the “deeming” provision in the Labour Relations Act is apparently due to be heard in February by the Constitutional Court with a judgement expected in April 2018. This ruling has a material impact on all employers who use employees through a labour broker.

As a reminder, the original ruling in the Labour Appeal Court (now being appealed in the Constitutional Court) held that employees deemed to be employees of the employer under the Labour Relations Act were solely the employers of the end client and not employers of the Labour Broker (or other party) with whom they were contracted. This ruling created an odd situation where employees held a contract with one party and were managed by that party, but were actually employers only of another party with whom they had no contract of employment.

Essential Services Ruling

Essential Services Ruling – Social Work, ResCare, Protective Workshops and Day Care

All Social Work Services and services to ResCare, Protective Workshops and Day Care have been legislated as essential services. This means individuals employed in these industries are not permitted to strike!

Section 23(2) of the Constitution of the Republic of South Africa, 1996 (“the Constitution”) states that… “Every worker has the right… (c) to strike.”

Section 65 (1) (d) (i) of the LRA states that… “No person may take part in a strike… if that person is engaged… in an essential service”.

An ‘essential service’ is defined in section 213 of the Act as:
I. a service the interruption of which endangers the life, personal safety or health of the whole or any part of the population; the Parliamentary service; the South African Police Service.

Having considered the written and oral submissions of the parties, as well as the applicable law referred to above, the Panel were of the view that the following services should be designated as essential:

  • Mental health care
  • Diagnostic assessments of new referrals in respect of people with intellectual and psychiatric disabilities
  • Psychological assessments
  • Therapeutic counselling services or any other counselling services
  • Mental health crisis management
  • Court preparation and assistance for victims who fall within the category of “users”
  • Rehabilitation services
  • Treatment (including assistance with adherence to medication)
  • Training (only to the extent that it is offered to the mental health users)

Potential Changes to Employment Legislation

In November 2017, the Department of Labour released three amendment bills for comment. Should they be implemented they would have an impact on employment relationships. This article serves to act as pre-warning to watch this space over the coming months.

  1. Basic Conditions of Employment – proposed changes include:
    1. Provide for daily wage payments for certain employees
    2. Repeal the provisions dealing with sectoral determinations and create transitional arrangements for sectoral determinations
    3. Extend the jurisdiction of the CCMA
    4. Extend labour inspector powers to Unemployment Insurance and National Minimum Wage enforcement
  2. Labour Relations – proposed changes include:
    1. Provide for the extension of funding agreements
    2. Provide for picketing arrangements
    3. Provide for a ratified minimum service
    4. Extend the meaning of “ballot”
  3. National Wage Amendment Bill (discussed in detail in the first article of this newsletter)
    1. Provide for a National Minimum Wage
    2. Establish a National Minimum Wage commission
    3. Provide for a review and annual adjustment of the National Minimum Wage
    4. Provide for exemption from paying the National Minimum Wage
    5. Provide for transitional arrangements for farm and domestic workers

National Minimum Wage Bill

On Friday, 17 November 2017 the Department of Labour published the National Minimum Wage Bill, 2017 (“the NMW Bill”) and the Basic Conditions of Employment Amendment Bill (“the BCEA Bill”) for public comment, pertinent aspects of both are discussed below.

The National Minimum Wage Bill, 2017

The purpose of the NMW Bill is to advance social economic development and social justice by improving the wages of the lowest paid employees, by protecting employees from unreasonably low wages, by preserving the value of the national minimum wage and by promoting collective bargaining and supporting economic policy.

In order to achieve the aforementioned goals, the NMW Bill seeks to provide for a national minimum wage and establish a National Minimum Wage Commission (“the Commission”) which is intended to implement the provisions of the National Minimum Wage Act, 2017 (“the Act”).

The NMW Bill, in its current form, specifies a national minimum wage of R20,00 for each ordinary hour worked. The NMW Bill further specifies that farm workers, domestic workers and workers employed on an expanded public works programme should be paid a minimum wage of R18,00, R15,00 and R11,00 per hour, respectively. Workers who have concluded learnership agreements will also be entitled to allowances, depending on their qualifications, ranging from R301,01 to R1 755,84 per week.

The NMW Bill further prescribes that the payment of a national minimum wage takes precedence over any contrary provision in any contract, collective agreement or law, except a law amending the Act. The national minimum wage must also constitute a term of the employee’s contract except to the extent that the contract, collective agreement or law provides for a wage that is more favourable to the employee.

Furthermore, the national minimum wage is calculated as being the amounts above excluding any payment made to enable an employee to work including transport, equipment, food or accommodation allowance, any payment in kind, which includes board or accommodation, gratuities including bonuses, tips or gifts and any other prescribed category of payment.

If an employee is paid on a basis other than the number of hours worked, the employee may not be paid less than the minimum wage for the ordinary hours of work. Furthermore, it would constitute an unfair labour practice where employers unilaterally alter hours of work or other conditions of employment when the national minimum wage is implemented.

However, the NMW Bill empowers the Minister, on application by an employer, to grant exemptions for payment of the national minimum wage in certain circumstances. The exemption granted must specify the period for which it is granted, which may not be longer than a year, it must specify the wage that the employer is required to pay its employees and any other relevant condition. This may offer some relief to small employers that are genuinely unable to pay employees wages in line with the prescribed minimum.

The NMW Bill also makes provision for the establishment of the Commission to review the national minimum wage and to make recommendations annually for the adjustment of the national minimum wage. The Commission may also investigate the impact of the national minimum wage on the economy, collective bargaining and income differentials.

The Act is to commence on 1 May 2018.

Metal & Engineering Industry Bargaining Council (MEIBC) – Notice

Metal & Engineering Industry Bargaining Council (MEIBC) – Notice by MEIBC on dispute resolution collective agreement.

This notice is replicated from a circular by the MEIBC dated 24 July 2017.

On 21 July 2017 a Special MANCO of the MEIBC resolved to amend and extend the period of operation of the Dispute Resolution Agreement which provides for the dispute resolution procedures in the industry as well as a dispute levy, for a further period ending 31 March 2020.

Parties have also resolved that an application be made to the Minister of Labour to extend this agreement to non-parties.

DISPUTE RESOLUTION LEVY (Per employee):

Per Week Per Fortnight Per Month
R0.71 R1.42 R3.07

The employer pays a matching contribution per employee – thus total contributions per month per employee:

Dispute Resolution Levy Total: R6.14 per month

Note that the dispute resolution levy is also payable by administration staff.

Changes to the Official Interest Rate for Fringe Benefits

The Official Interest Rate for calculating Fringe Benefits decreased by 0.25 % effective 1st August 2017.

Where an employer gives an employee a loan that is less than the official interest rate or interest free, the difference between the two must be taxed as a taxable Fringe Benefit. This Fringe Benefit should be processed via the payroll and reported on the Employees IRP5 against SARS Code 3801.

The Official Interest Rate is defined in the Seventh Schedule as the rate of interest that is equal to the Repo Rate, plus 100 basis points (1%).

The repo rate was decreased from 7% to 6.75% on the 21st of July 2017, which means the deemed interest rate dropped from 8% to 7.75% effective 1st August 2017.

Temporary Workers Ruling – Assign Case – Impact of Appeal on Employers

In our July edition, we talked about the recent Assign Case in which the Labour Appeals Court concluded labour broker supplied temporary workers who worked for an employer (and earned below the BCEA threshold) were effectively employees of that employer and not dual employed with their labour broker.

The case has been appealed to the Constitutional Court.

The implication for employers is that the practical situation reverts back to the treatment of these temporary workers as being “dual” employees of the labour broker and the client until the Constitutional Court rules on the matter.