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New employers fall prey to LRA provisions

It is widely accepted that the development of new and small business is key to South Africa’s economic future but obstacles to such development abound. The labour law jungle is amongst the biggest of these obstacles. Many well established employers, especially the larger ones are starting to develop an understanding of labour legislation and are trying to comply with it. However, there is a growing number of smaller or new age employers that are too busy with the stabilisation of company finances, market penetration and growth to realise that they are not labour law compliant.

The result is that, while the company is trying to become established and to grow it is bypassing labour legislation and landing up at the CCMA or bargaining council. Therefore, they need to be made aware that Labour Relations Act (LRA) codifies several principles which will substantially affect the ability of the new employer to manage its employees. Some important provisions of the LRA are:

•The definition of dismissal now includes the employer’s failure to convert a fixed term contract to a permanent one where the employee reasonably expected the contract to be so converted. Many new employers make extensive use of fixed-term contractors. However, because, unbeknown to the uninitiated employer, the LRA protects fixed-term employees, new employers land up spending their valuable time and money at the CCMA.

•The LRA enables arbitrators and Labour Court judges presiding over dismissal disputes to force employers to make temporary employees permanent. This means in effect that thousands of employers have ‘permanent employees in waiting’ without the employer even being aware of this.

•Where employees have illegally been hired as temps they can get compensation as a remedy for this technical unfair dismissal instead of being made permanent. However, compensation for unfair dismissal is very costly for employers. For example, certain unfair dismissals could cost the employer up to 24 months’ pay.

In addition, an employer who unfairly demotes an employee, for example, as part of the penalty for misconduct, could find itself at the wrong end of an unfair labour practice arbitration hearing.

The new legislation on equal pay for equal work now poses an added danger for employers who all need to protect themselves by implementing proper job grading systems.

Those employers who wish to operate within the bounds of the law while still controlling employees effectively should implement the following strategy:

?Provide ongoing training of management/supervision in labour law, IR, leadership and disciplinary skills.

?Redesign disciplinary policies so that the implementation of discipline is based on constructive, effective but legally acceptable corrective measures.

?Develop a culture of responsibility and self-discipline on the part of management and employees.

?Implement objective job grading systems.

?Use the services of a qualified expert to assist with the implementation of the above. Such an expert will also be required to advise on the legal and practical aspects of discipline. For example, specialist advice will be required on the changes to be made to policies, procedures, practices, letters of appointment, induction programmes and training courses related to the disciplinary approach of the organisation. Expertise will be required in the combining of the requirements of the LRA with affirmative action legislation on the one hand, and the practical requirements of an effective disciplinary and HR policy on the other hand.

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Article by lvan lsraelstam, Chief Executive of Labour Law Management Consulting.

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