Understanding Human Capital For Small Business – Part 3/3

Welcome back to another edition of DID YOU KNOW?, where we breakdown everything business and finance simply for SMEs to understand. This week we take a continued look at human capital the very life-blood of any business that is looking to grow, whether it is increasing sales, brand awareness, and social responsibility to maintain respect, loyalty, and transparency in their community.

• Outsourcing vs Offshoring
• Gig Economy vs Sharing Economy
• Department of Labour

Introduction

In this final part of the miniseries, we will focus on how labour in South Africa is structured, doing a 360° turn from the first two articles on where you can find human capital. Here we look at the departments that protect employees and employers from themselves and how they work, so sit back get comfortable.  If you have not read our first two articles Part 1 and Part 2 we suggest you take the time to read them too.

A Brief History of Labour Law:

The origins of labour law can be traced back to the remote past and the most varied parts of the world. While European writers often attach importance to the guilds and apprenticeship systems of the medieval world, some Asian scholars have identified labour standards as far back as the Babylonian Code of Hammurabi (18th century BCE) and the rules for labour-management relations in the Hindu Laws of Manu. Latin American authors point to the Laws of the Indies promulgated by Spain in the 17th century for its New World territories. None of these can be regarded as more than anticipations, with only limited influence on subsequent developments. Labour law as it is known today is essentially the child of the successive industrial revolution from the 18th century onward.

It became necessary when customary restraints and the intimacy of employment relationships in small communities ceased to provide adequate protection against the abuses incidental to new forms of mining and manufacture on a rapidly increasing scale at precisely the time when the 18th-century Enlightenment, the French Revolution, and the political forces that they set in motion were creating the elements of the modern social conscience. It developed rather slowly, chiefly in the more industrialised countries of Western Europe during the 19th century, and attained its present importance, relative maturity, and worldwide acceptance only during the 20th century.

For additional information: https://www.britannica.com/topic/labour-law

Department

Basic Conditions of Employment Act

• What is it? – The Basic Conditions of Employment Act prevents employers from exploiting their employees, as well as employeestaking advantage of employers. Neither party can ignore the Basic Conditions Act, working contracts must reflect and honour its provisions.
• What are they? – The Basic Conditions of EmploymentAct provides a basic guideline on regulations relating to:
  • Working times: including shift work, weekend work, public holidays, overtime.
  • Payment: including payment in kind and deductions.
  • Deductions: including those required by law and those you are allowed to make.
• Benefits of the Act:
• A safe work environment.
• Access to information related to potential hazards.
• Request changes to avoid potential hazards.
• Participate in workplace inspections.
• Not receive discrimination for exercising work health and safety rights.
• Refuse work that puts the employeein danger.

The Employment Equity Act

• What is it? – The Employment Equity Actrequires that Affirmative Action measures be put in place to transform organisations, eliminate unfair discrimination, and redress the disadvantages suffered by the designated groups due to the imbalances caused by the apartheid system.
• Why is it Important? – The Employment Equity Act is relevant because of its potential to improve employment standards. This, in turn, results in a long-term improvement in the quality of and trust in South African businesses. If this is implemented properly, it has the potential to stabilise and improve our economy, which is certainly relevant, especially for those who rely on such fairness to ensure their employment and development.
• Benefits of the Equity Act:
  • Eliminate employment
  • Remedy past discrimination.
  • Prevent future barriers.
  • Improve designated group members’ access and distribution throughout all occupations and at all levels

The Commission for Conciliation, Mediation & Arbitration (CCMA)

• What is it? – The Commission for Conciliation, Mediation and Arbitration (CCMA) is a dispute resolution body established in terms of the Labour Relations Act. It is an independent body, does not belong to, and is not controlled by any political party, trade union, or business.
• Benefits of the CCMA:
  • Conciliate workplace disputes
  • Arbitrate certain categories of disputes that remain unresolved after conciliation
  • Facilitate consultations regarding large-scale dismissals due to operational requirements
  • Conduct inquiries by arbitrators
  • Establish picketing rules
  • Determine disputes about the demarcation between sectors and areas
  • Facilitate the establishment of workplace forums and statutory councils
  • Compile and publish information and statistics about its activities
  • Consider applications for accreditation and subsidy by bargaining councils and private agencies
  • Administer the Essential Services Committee

• What the CCMA Can Do:
  • Supervise ballots for unions and employer organisations
  • Provide training on any aspect of employment law; including the establishment of collective bargaining structures
  • Workplace restructuring
  • Consultation processes
  • Termination of employment
  • Employment equity programmes
  • Dispute prevention

Labour Unions | Trade Unions

• What is it? – Labour Unions unite workers, they are meant to make things better for everyone. That’s why unionswere created to stand up together for fair wages, safe workplaces, and decent work hours. Four major union members in South Africa know that by standing together, they can accomplish great things for themselves and all workers.
• What is it? – A trade unionis an organisation of workers that promotes and protects the interests of its members in issues such as wages and working conditions, especially through negotiations with employers. Trade unions do not have to be registered with the Department of Labour, but registered unions have additional rights.
• The benefit of a union? – Workers who join a Labour | Trade unionhave the benefit of being part of an organised group that pulls together around workplace issues. Topics ranging from paid maternity leave to salary increases to safety in the workplace are all dealt with as a group. You don’t have to tackle them on your own, as an individual.

South African Bargaining Counsels

• What is it? – Bargaining councilsdeal with collective agreements, solve labour disputes, establish various schemes and comment on labour policies and law.
• What do they do? – Bargaining Counsels make and enforce collective agreements, preventing and resolving labour disputes establishing and managing a dispute resolution fund, promoting and establishing training and education schemes.
• Benefits of Bargaining Counsels? – When it comes to dispute resolution the commissioners assisting with the disputes in the bargaining council are specialised in that specific industry and collective agreement. Therefore parties will receive expert advice and assistance from the commissioner with regards to dispute resolution.

Unemployment Insurance Fund

• What is it? – The Unemployment Insurance Fund gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependants of a deceased contributor.

• How does it work? – Every employee pays 1% of their salaries to the fund, and employers match that 1% so that there is a monthly 2% contribution. The onus falls on employers to make sure all workers are registered with the UIF, and they have to make sure that an employee’s contribution is deducted from their salary every month.

• Benefits of Unemployment Insurance Fund –
  • Illness benefits: If the employee cannot work because they are sick and have been booked off for two weeks, they could be eligible. The benefits will be paid from the starting date of when the employee stopped working.
  • Maternity benefits: The employee is entitled to claim while on maternity leave, and can claim for up to 17 weeks of the pregnancy.  In the tragic case of a miscarriage, they can claim for 6 weeks after. What’s more, once the paternity leave amendments are officially signed into law, fathers will be entitled to 10 days’ leave and claim up to 66% of their earnings from the UIF.
  • Adoption benefits: If the adopted child is younger than two years of age and the adoptive parents are receiving less money while on adoption leave, they can claim benefits. Do note: only one parent can claim adoption benefits over this period.
  • Death benefits: The spouse or child under 18 of a person who has passed away can claim death benefits, provided that the deceased contributed to a UIF fund.

For additional information https://www.lawforall.co.za/work/claiming-uif-south-africa/

Workman’s Compensation

• What is it? – Workman’s compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.
• How does it work? – You pay a yearly fee, determined as a percentage of the amount your business spends on salaries, and in turn, the fund will help cover all your employees’ medical bills or compensation in the case of death. However, you need to register first. Registration is immediate if you sign up online via the Labour Department.
• Benefits of Workman’s Compensation:
  • It’s the law – the Labour Department requires any employer with one or more employees to register for Workman’s Compensation.
  • It can save you from bankruptcy – large, unexpected medical bills can easily sink a small business, as hospital fees or ongoing medical expenses may amount to thousands per year.
  • It helps with Tender applications – Tender applications usually require a Letter of Good Standing. As the law requires employers to register for Workman’s Compensation, you can only get a Letter of Good standing, if your Workman’s Compensation payments are up to date.

Conclusion

The Labour Force in South Africa is complex but extremely diverse due in part to the education system that South Africans have access to.  Those who can learn from the comfort of their home, stand a far better chance at being more successful when being considered for employment whether it is freelance work or working for a corporate entity.

This article highlights the different paths employers and employees can take to inform themselves about their labour rights. It is our view that small business owners should rather outsource or sub-contract to quality-driven specialists rather than have staff internally which can reduce the need for all the staff compliance regulation.  

And that is a rap for part 3 of our miniseries highlighting when a small business needs Human Capital for their brand as well as looking at how the labour market has changed over the years to fit into the modern digital economy. We recommend you read parts 1 and 2 of this miniseries to gain context of how we believe it will work in the not-so-distant future.