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April 08, 2013

South Africans Eye Possible Labor Law Amendments

by Peter Cox

What do you do when your employee stabs a co-worker in your warehouse? Fire him. At least, that's what Simon Arcus thought before his employee took him to labor court for wrongful termination.
 
After spending several days in court — even after the employee admitted to knifing his co-worker — Arcus eventually decided it was not worth his time or money to continue in labor court, the Commission for Conciliation, Mediation and Arbitration (CCMA).
 
After spending nearly $7,000, he settled with the employee.
 
"I really shouldn't have been in a position to have had to spend anything," he said. "The actual money part didn't bug me as much as the fact that I had to give my time and other staff members and go to considerable expense, when in my opinion it was an open-and-closed case."
 
In South Africa, where stringent labor laws comprehensively protect the country's workforce, some businesses and economists say the overly restrictive policies are stifling economic growth. With unemployment rates hovering around 25 percent, a growing number of business owners want to modify labor laws.
 
Current legislation stipulates that employers must first issue a verbal warning and two separate written warnings before pursuing termination. After the three warnings are issued, a hearing provides the employee a chance to state their case before being fired.
 
If a terminated employee feels they were unfairly dismissed, labor court allows them to dispute the firing.
 
In 2012, a survey found that more than half of metro-area South Africans said the country's labor laws are slowing job growth. And when the World Economic Forum released its Global Competitiveness Report earlier this year, it ranked South Africa nearly dead last: 143 out of 144 countries for hiring and firing practices.
 
But labor attorney Nick Robb says the laws were initially needed to address serious inequities stemming from the country's apartheid era.
 
"The first piece of legislation they dealt with was the labor relations act, which wasn't surprising — it made complete sense," said Robb. "They actually installed it as a very important piece of legislation. It ranked second only to the constitution among all statutes in this country."
 
But nearly 20 years after the law's passage, its utility and application are being questioned by business owners like Arcus.
 
"Generally speaking, it’s to the disadvantage of the labor market, particularly the have-nots, for there to be such a barrier to entry," he said. "Employers would rather have less staff and more machines than have to put up with the [hassles] that follow."
 
Shamima Gaibie, a labor attorney who has worked closely with unions, disagrees with arguments that labor laws limit growth. She argues that protected workers must be the priority.
 
"Given the imbalances and given the past — and given the issues that have arisen from that past — I think that for the first time in this country's history, employees have the basic rights, which I think all employees should have around the world," she said.
 
The laws, she says, remain necessary when considering today's bitter unrest and inequality for, say, miners, whose situation turned tragic in Marikana last year, when 34 striking workers were gunned down by police.
 
"I think that until and unless the employers and the trade unions achieve an amicable relationship, that generates trust and almost generates an atmosphere of working together, I think that for the moment, and maybe for the foreseeable future, legislation is needed," she said.
 
Lucy Holborn, a researcher with the South Africa Institute of Race Relations, says businesses are in a difficult position.
 
"There's huge pressure on the private sector in South Africa to sort of play its part in dealing with unemployment, dealing with poverty, dealing with inequality," she said. "The government has taken quite a big expectation on the private sector to play along in terms of job creation and that sort of thing."
 
Many of those private business owners are feeling even more pressure with the prospect that the government will enact even more protective amendments to current labor laws currently under consideration.