PRESENTATION TO THE 23RD ANNUAL LABOUR LAW CONFERENCE

13 AUGUST 2010

The Role of the CCMA in dealing with Job Insecurity and Business Distress

PRESENTATION OUTLINE

EFFECTS OF THE GLOBAL ECONOMIC CRISIS

The full effect of the global economic crisis was felt in South Africa during 2008. The effect on the labour market was devastating.

For employers it brought varying degrees of reduced demand for goods and services, increased operating costs , depressed margins and cash flows, restructuring and business closures.

For workers, this translated into economic hardship, job insecurity and massive job losses.

The situation was dire, to say the least

BUSINESS CLOSURES

TOTAL EMPLOYMENT

LARGE SCALE RETRENCHMENTS REFERRAL TREND( > 50 employees)

SMALL SCALE RETRENCHMENTS REFERRAL TREND( < 50 employees)

LABOUR RELATIONS ACT

Section 189 - Dismissals based on operational requirements by employers with less than 50 employees.

Section 189A - Dismissals based on operational requirements by employers with more than 50 employees

NEDLAC FRAMEWORK DOCUMENT

“Employers and labour will be encouraged to explore all possible alternatives to retrenchments”

“They will be encouraged to utilize facilitation by the CCMA as provided for in section 189A of the LRA”

“The parties agree to explore ways to strengthen the CCMA in regard to its role in avoiding retrenchments”

NEDLAC FRAMEWORK DOCUMENT

“In addition to other measures to avoid retrenchment, one further option that the parties will consider is training layoffs, financed by the NSF and SETAs, for workers whose employers would ordinarily retrench them and which can be introduced on terms that would keep them in employment during the economic downturn but reskill them as an investment for the future economic recovery.”

LIMITATIONS OF THE MANDATES

Section 189 - Dismissals based on operational requirements by employers with less than 50 employees. CCMA involvement is conciliation after the retrenchments have been effected, and arbitration in certain circumstances.

Section 189A - Dismissals based on operational requirements by employers with more than 50 employees. CCMA involvement is facilitation when retrenchment is contemplated, if parties so agree

LIMITATIONS OF THE MANDATES

NEDLAC Framework document doesn’t really empower the CCMA - “will be encouraged to explore”, “will be encouraged to utilize”, “will be encouraged to consider”

Problem of the distance between the intentions of the parties at NEDLAC and the parties at the rock face

PRINCIPLES INFORMING THE RESPONSE

Extent of the problem called for creative thinking beyond the mandates, and a transition from ‘business as usual’ to ‘business unusual’

Conventional wisdom of business to shed jobs as the measure of first resort in bad trading times needed to be challenged and realigned

Inextricable link between job insecurity and business distress dictated that neither issue could be dealt with in isolation – can’t save jobs without saving businesses

PRINCIPLES INFORMING THE RESPONSE

Cyclical nature of the economy required promotion of a recovery focused mindset even though the future looked bleak

Needed a multi faceted approach informed by the intention of the NEDLAC framework that was both proactive and reactive; involving both an internal and external focus

Realisation that we could not solve the problem, but could make a difference

Realisation that we were at the centre stage in the quest to save jobs

COMPONENTS OF THE RESPONSE

HOLISTIC APPROACH

The Holistic approach informs the approach adopted by Commissioners when dealing with retrenchment matters, in line with the NEDLAC framework document

It places emphasis on looking through the problem for sustainable solutions, adopting a support and advocacy role and promoting mindset changes and innovative ideas, while maintaining impartiality

Includes the consideration of a wide array of alternatives to retrenchment

If retrenchment is inevitable, it involves facilitating access to survival and support services for retrenched employees

Also involves liaison with organisations such as Productivity SA and the Industrial Development Corporation for business improvement / rescue in appropriate circumstances.

PROJECT OFFICE

Funded by the Employment Promotion Project

Staffed by a Project Manager and Assistant Project Manager

Responsible for promotion & effective implementation of the Training Layoff Scheme and the development & application of the holistic approach to dealing with job insecurity and business distress

LINKING WITH INSTITUTIONS

WORKER ASSISTANCE Unemployment Insurance Fund

National Youth Development Agency

Employment Services South Africa

Sector Education and Training Authorities

South African Business Coalition on HIV/AIDS

BUSINESS ASSISTANCE Productivity South Africa

Industrial Development Corporation

ENHANCING INTERNAL CAPACITY & BUSINESS PROCESSES

Appointment of a dedicated Commissioner in each regional office to coordinate all job insecurity and business distress activities

Appointment of a panel of Commissioners (Facilitators) in each regional office to deal with retrenchment matters

Intensive and regular briefing of Commissioners

Implementation of guidelines to ensure priority screening, effective allocation and management of retrenchment and severance pay disputes

INFORMATION SHARING & AWARENES RAISING

Over 200 information sharing & awareness events held over the past 10 months in all CCMA regions to promote the holistic approach to dealing with job insecurity and business distress, and the Training Layoff Scheme

Events included presentations, briefings, inputs at seminars, workshops & road shows, community radio stations

Constituencies involved – trade unions, employers, bargaining councils & SETA’s

Brochure on “Dealing with Job Insecurity” published and distributed

THE TRAINING LAYOFF SCHEME

The Training Layoff Scheme is an alternative to retrenchment

It is available to businesses that are experiencing distress due to the economic crisis and that are intending to retrench workers.

It involves a temporary layoff of workers for up to 3 months, during which time workers attend training provided by a SETA.

Workers are not paid a salary while on the scheme, instead they receive a training allowance funded by the NSF to the value of 50% of their wages to a maximum of R6,239 pm . The employer bears the cost of a basic social benefit package (risk benefits, pension / provident fund)

THE TRAINING LAYOFF SCHEME

The scheme serves to assist workers facing retrenchment to avert retrenchment while at the same time allowing them an opportunity to upskill themselves thereby improving their career prospects with the same employer or a new employer, should retrenchment become inevitable

The scheme serves to assist businesses in distress by affording them short tem financial relief by way of a reduction in the payroll.

“We will support the work of the Commission for Conciliation, Mediation and Arbitration to assist employers and workers to find alternatives to retrenchments through the relevant legal process.

To date, CCMA Commissioners have saved over four thousand (4,000) jobs through facilitation processes, and provided ongoing advice and support to retrenched workers”

President Jacob G. ZumaState of the Nation Address, 3rd June 2009

Employeeslikely to be

affected

TotalRetrenchments

ForcedRetrenchments

VoluntaryRetrenchments

OtherJobs

Saved

1st Quarter 13, 362 5, 034 3, 655 1, 379 617 3, 790

2nd Quarter 8, 523 3, 017 2, 215 802 824 2, 407

3rd Quarter 13, 285 4, 272 3, 622 650 837 6, 776

4th Quarter 10, 674 2, 957 2, 302 655 778 1, 533

TOTAL 45, 844 15, 280 11, 794 3, 486 3, 056 14, 506

FACILITATION OUTCOMES (2009)

Employeeslikely to be

affected

TotalRetrenchments

ForcedRetrenchments

VoluntaryRetrenchments

OtherJobs

Saved

1st Quarter 9, 257 2, 635 2, 036 599 938 1, 240

2nd Quarter 19, 007 1, 487 1, 469 18 0 436

3rd Quarter

4th Quarter

TOTAL 28, 264 4, 122 3, 505 617 938 1, 676

s189A FACILITATION OUTCOMES (2010 To date)

THE IMPACT

TRAINING LAYOFF SCHEME (TLS)

• 55 applications generated through CCMA processes and from parties in the labour market involving 8, 686 employees

• 35 applications recommended for participation • 19 applications not recommended• 6 applications withdrawn

10 cases training in progress involving 5, 271 employees

2 cases training completed involving 184 employees

CHALLENGES

Parties in NEDLAC are far removed from parties at the rock face, as a result of which agreements do not necessarily filter through

Business mindset of shedding jobs as measure of first resort in troubled trading times is still prevalent

Scant correlation between jobs lost in the economy and the caseload of retrenchment matters, indicates that the bulk of these matters have no CCMA (or Bargaining Council) involvement

CHALLENGES

Linking all government offerings into a synchronised coherent format

Inadequate and fragmented information flow on available external resources and support

External challenges regarding working together with implementation partners in case of Training Layoff Scheme.

Revolutionising

Workplace Relations