4 Oupa Mopaki Chief Executive Officer OVERVIEWOupa Mopaki Chief Executive Officerx 5% =8 100 Black Employees8 100 x R 35k = R 284m (284m/540m) x 1% = 0,53% of Leviable Amount
5 National Skills Accord Signed 13 July 2011 by Organised Labour, Business, Government and the Community Constituency
6 National Skills Accord Commitments Commitment One: to expand the level of training using existing facilities more fullyCommitment Two: to make internship and placement opportunities available within workplacesCommitment Three: to set guidelines of ratios of trainees: artisans as well as across the technical vocations, in order to improve the level of trainingCommitment Four: to improve the funding of training and the use of funds available for training and incentives on companies to trainCommitment Five: to set annual targets for training in state-owned enterprisesCommitment Six: to improve SETA governance and financial management as well as stakeholder involvementCommitment Seven: align training to the New Growth Path and improve Sector Skills PlansCommitment Eight: improving the role and performance of FET Colleges
7 National Skills Accord Commitments Commitment 4: (extract from the Skills Accord)Business commits to improve spending on training that companies undertake beyond the 1% compulsory training levy that is currently in place. Business will urge companies to spend between 3 % and 5 % of payroll (total salary bill) on training, with as many companies as possible at the high end of this range. The parties clarify that this commitment relates to the voluntary spending by companies, for example, in addition to the 1% compulsory training levy. All businesses will be requested to annually disclose publicly the training spend in absolute terms and as a percentage of payroll through the annual report they are required to produce in terms of the Companies Act.
8 The ICT Sector Skills Development commitments ICT Sector Code, gazette no. 35423, 6 June 2012.
9 THE ICT SECTOR CODE SKILLS DEVELOPMENT COMMITMENTS Introduction and BackgroundSkills Development ScorecardSector Skills Development CommitmentsPrinciples for Measuring Skills DevelopmentStatus of the CodesDefinition of ICT SECTORSignatories to the Codes
10 Introduction and background To claim contributions towards skills development a company must;comply with the Skills Development Actbe registered with MICT SETA as an employerhave developed a Workplace Skills Plan and implemented programmes targeted at Priority Skills in the Sector.
11 Introduction and background The purpose of this Gazette is to quantify the Rand value committed by the ICT Sector on the training of black employees.In 2012, Minister of Trade and Industry, Dr. Rob Davis Gazetted the ICT Sector Codes of Good Practice (ICT Sector Codes) in terms of section 9(1) of the Broad-Based Black Economic Empowerment Act (B-BBEE Act, Act no. 53 of 2003).This Gazette comes after a period of nine years (9) since the First Draft ICT Charter was released for public comment as part of the Sector’s commitments to B-BBEE.In terms of the B-BBEE Act no. 46 of 2003 the ICT Sector Code is binding to all stakeholders operating in the ICT Sector.Skills Development is one of the seven (7) elements of B-BBEE to promote skills development in the Sector.
12 DEVELOPMENT COMMITMENTS SECTOR SKILLSDEVELOPMENT COMMITMENTSSkills Development PrincipleThe Skills Development Code defines the Sector’s financial commitment towards skills development spend on black employees, agreed targets and how skills development is calculated and measured.training OF black employeesBlack employees are defined as Africans, Indians and Coloureds who are South African by birth or naturalised before 1996.
13 DEVELOPMENT COMMITMENTS SECTOR SKILLSDEVELOPMENT COMMITMENTSThe Sector committed to spending at least 3% of the total leviable amount on training black employees every year. This translates to R1.6b.The Sector also committed to spending another 0.3% on disabled black employees. This translates to R162m.The R1.6b and the R162m, between April 2014-March 2015, are based on the MICT SETA’s total 1% Skills Development Levy income for period 2012/13 which amounts to R540m.
14 DEVELOPMENT COMMITMENTS SECTOR SKILLSDEVELOPMENT COMMITMENTSThe Sector committed to have the number black employees participating in Learnerships or Category B, C and D Programmes as 5% of total employees. This translates to black employees based on the total of employees in the MICT sector.In order to determine the percentage of Leviable Amount relating to the training of black employees, an average training cost of R 35k per employee per year is envisaged. The total training cost of R 284m is assumed to include the employees’ salaries and training providers’ fees whilst they are undergoing training. The percentage of Leviable Amount then translates to 0.53% of payroll.The total ring-fence should then be R 1.6b + R 162m + R 284m = R 2b
15 DEFINITION OF ICT SECTOR The “Information & Communications Technologies Sector” shall mean the sector in which employers and employees are associated for the carrying on of any one or more of the following activities:Marketing, manufacturing, assembling, servicing, installing, maintaining and/or repairing systems, software, equipment, machines, devices and apparatus, whether utilising manual, photographic, optical mechanical, electrical, electrostatic or electronic principles or any combination of such principles, that are primarily intended for the recording and/or processing and/or monitoring and/or transmission of voice and /or data and/or image and/or text or any combination thereof for use in any one or more of the following activities:accounting, calculating, data processing, data transmission, duplicating, text processing, document reproduction, document transmission, record keeping and record retrieval, broadcasting or transmission for entertainment or information purposes of voice and/or image and/or text or any combination thereof and/or; the provision of services relating to the above.
16 SIGNATORIES TO THE ICT SECTOR CODE Black IT Forum (BITF); Communications Cabling Association of South Africa (CCASA); Computer Society of South Africa(CSSA); Electronic Industry Federation (EIF); Independent Communications Authority (ICASA); Information Industry South Africa (IISA); Internet Service Providers Association (ISPA); Information Technology Association ( ITA); ISETT SETA; MAPPP SETA; National Association of Broadcasters (NAB); National Community Radio Forum ( NCRF); National Independent Telecommunications Organisations of S.A (NITOSA); NEDLAC- Community; NEDLAC – Labour; South African Communications Forum (SACF); South African Contact Centre Community (SACCCOM); South African SMME Forum (SMME Forum); South African VANS Associations (SAVA); Business Unity SA (BUSA).
18 PURPOSE OF THE EMPLOYMENT EQUITY ACT To promote the constitutional right of equality and the exercise of true democracyTo eliminate unfair discrimination in employmentTo ensure the implementation of EE to redress the effects of discriminationTo achieve a diverse workforce broadly representative of our peopleTo promote economic development and efficiency in the workforceTo give effect to the obligations of the Republic as a member of the International Labour Organisation.
19 PURPOSE OF THE AMENDMENTS To further regulate the prohibition of unfair discrimination against employeesTo further regulate the certification of psychometric testing used to assess employeesTo provide for the referral of certain disputes for arbitration to the CCMATo make further provision regarding the evidentiary burden of proof in allegations of unfair discriminationTo further regulate the preparation and implementation of the EE plans and the submission of reports by designated employersTo further regulate undertakings by designated employers to comply with request by labour inspectors
20 …PURPOSE OF THE AMENDMENTS To further regulate the issuing of compliance ordersTo provide afresh for the assessment of compliance by designated employers with EE and the failure of those employers to comply with requests and recommendations made by the DGTo extend the powers of commissioners in arbitration proceedingsTo provide for that fines payable in terms of the Act must be paid into the National Revenue FundTo extend the Ministers power to issue a code of good practice and to delegate certain powersTo increase and provide for the increase by the Minister of certain fines which may be imposed under the ActTo amend and to provide for the amendment by the Minister of annual turnover threshold applicable to designated employers
21 IMPORTANT CONSIDERATIONS Companies with more than 50 employees (or a turnover above the designated threshold) are required to have an EE Plan and report in line with the requirements of the act by 01 OctoberEmployees to be consulted when developing the EE PlanThe Employment Equity Commission is taking action against companies who fail to comply with the requirements of the EE ActEmployers are required to appoint a Senior Manager to ensure that EE is implemented within respective organisationsThe Department of Labour does random inspections to ensure compliance with the Act and fines can be issued for non-compliance with the Act.
23 THRESHOLDS: DESIGNATED EMPLOYERS Sector Total Annual Turnover Old ThresholdNew ThresholdAgricultureR2 millionR6 millionMining and QuarryingR7.7 millionR22.5 millionManufacturingR10 millionR30 millionElectricity, Gas and WaterConstructionR5 millionR15 millionRetail and Motor Trade andRepair ServicesR45 millionWholesale Trade, CommercialAgents and Allied ServicesR25 millionR75 millionCatering, Accommodation andother TradeTransport, Storage andCommunicationsFinance and Business ServicesCommunity, Special and Personal Services
24 DEFINITIONS: DESIGNATED GROUP The definition of a “designated group” has been expanded to read:“Designated Groups” mean black people, women and people with disabilities who –Are citizens of the Republic of South Africa by birth or descent: orBecame citizens of the Republic of South Africa by naturalisation –Before 27 April 1994; orAfter 26 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date but who were precluded by apartheid policies.This effectively means that affirmative action measures do not apply to anyone who falls outside this definition. Please bear in mind that this will have an impact on your B-BBEE scorecard as well.
25 PROHIBITION OF UNFAIR DISCRIMINATION Section 6 (Prohibition of unfair discrimination) sees the inclusion of a clause which states that “a difference in terms and conditions of employment between employees of the same employer performing the same or substantially the same work of equal value that is directly or indirectly based on the grounds of race, gender, pregnancy, marital status, family responsibility, ethnic or social origin, colour, belief, political opinion, culture language, birth or any other arbitrary ground amounts to unfair discrimination.The Minister, after consultation with the commission, may prescribe the criteria and prescribe the methodology for assessing work of equal value contemplated in section (4)Should this be the case, the employer is bound by an amendment to Section 27 (Income differentials) to take measures to progressively reduce the income differentials/disparities.
26 PSYCHOMETRIC ASSESSMENTS Section 8 (Psychometric testing) has an additional paragraph which compels an employer who conducts psychometric assessments on employees or job applicants to ensure that the test has been certified by the Health Professions Council of South Africa or any other body which is authorised by law to certify psychometric test or assessments.
27 Section 10: DISPUTE RESOLUTION PROCESS In addition to the existing clause 1, which stipulates that the first port of call for alleged unfair discrimination is a referral to the appropriate body for conciliation and arbitration or adjudication in terms of chapter VIII of the LRA, the following clauses are included:An employee may refer the dispute to the CCMA for arbitration if:The employee alleges unfair discrimination on the grounds of sexual harassment; orIn any other case, that employee earns less than the amount stated in the determination made by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act; orAny party to the dispute may refer it to the CCMA for arbitration if all the parties to the dispute consent to arbitration of the dispute.These amendments will allow a party to lodge an appeal against an unfavourable arbitration award by the CCMA to the Labour Court. The party appealing has 14 days from the date of the award to lodge an appeal with the Labour Court.
28 Section 11: BURDEN OF PROOF If unfair discrimination is alleged on a ground of race, gender, pregnancy, marital status, family responsibility, ethnic or social origin, colour, belief, political opinion, culture, language and birth, the employer against whom the allegation is made, must prove on a balance of probabilities that:The discrimination did not take place as alleged; orIs rational and not unfair, or is otherwise justifiableIf unfair discrimination is alleged on an arbitrary ground, the complainant must prove, on the balance of probabilities, that:The conduct complained of is not rational;The conduct complained of amounts to discrimination; andThe discrimination is unfairThis amendment places a burden of proof on the complainant, which was not explicitly stated in the original Act.
29 DESIGNATED EMPLOYERS’ DUTIES Section 15 (Affirmative action measures) S16 (Consultation with employees) Section 19 (Analysis) S20(Employment equity plan) S21(Reports) which deal with the designated employer’s duty to consult; conduct an analysis of its workforce profile, policies practices and procedures; prepare and implement an employment equity plan; and report to the Director General have been changed in terms of reference to “occupational categories and levels.” The amendments take into account only “occupational levels.”The reason for this is that when consulting, analysing, planning and reporting across “occupational categories”, we see sufficient representation of designated groups; however, the real disparity with regards to equitable representation lies in the “occupational levels”.This change will force employers to focus on the real burning platform which affects transformation, i.e. underrepresentation of designated groups within “occupational levels” in their workplaces.
30 PENALTIESSection 20 (Employment equity plan) introduces a clause which allows the Director General to apply directly to the Labour court to impose a fine in accordance with Schedule 1 on an employer who fails to prepare or implement an employment equity plan in line with Section 20, without the option of first obtaining a written undertaking to comply or issuing a compliance order.This has been introduced to highlight the importance of preparing and implementing an employment equity plan, which, in the past, was seen by some employers as merely a suggestion rather than a legal imperative. This will drive the principles of the B-BBEE Act and Codes of Good Practice.
31 …PENALTIES Previous Contravention Contraventions of any provisions of sections 16, 17, 19, 22, 24, 25, 26 and 43(2)Contraventions of any of the provisions of sections 20, 21, 23 and 44(b)No previous contraventionFrom R500 000 to R1 The greater of R1 500 000 or 2% of the employers turnover A previous contravention in respect of the same provisionFrom R600 000 to R1 The greater of R1 800 000 or 4% of the employers turnover A previous contravention within the previous 12 months or two previous contraventions in respect of the same provision within three yearsFrom R700 000 to R2 The greater of R2 100 000 or 6% of the employers turnover Three previous contraventions in respect of the same provision within three yearsFrom R800 000 to R 2 The greater of R2 400 000 or 8% of the employers turnover Four contraventions in respect of the same provisions within three yearsFrom R900 000 to R2 The greater of R2 700 000 or 10% of the employers turnover
32 …PENALTIESAn amendment to Section 21(Reports) is that; the Director General may apply to the Labour Court to impose a fine in accordance with Schedule 1 (see table above) if the employer:Fails to submit a report in terms of this section;Fails to notify and give reasons to the Director General for failing to report by the deadline;Has notified the Director General of failure to submit, but the reasons are false or invalid.To avoid unnecessary complications, reporting by the deadline is paramount.
33 REPORTINGSection 21(Reports) Introduces significant changes to reporting when submitting an EEA2 report to the Director General. In the past, there was a distinction made between reporting periods of Large employers (150+ employees) and Small and Medium employers (0 – 149 employees)With the amendments, all employers must now submit an EEA2 and EEA4 report every year, by the first working day of October or on such other date which may be prescribedFurthermore, an employer who becomes designated on or after the first working day of April, but before the first working day of October, must submit its first report by the first working day of October the following year, or on such other date that may be prescribed.Example:An employer who is designated on 18 June 2014 must submit a report by the first working day of October 2015, or on such other date that may be prescribedAn employer who is designated on 15 March 2014 must submit a report by the first working day of October 2014, or on such other date that may be prescribedShould the employer not be able to report by the first working day of October, they are obliged to notify the Director General in writing by the last working day of August in the same year and give reasons for the failure to report by the deadline.
34 WRITTEN UNDERTAKING TO COMPLY Section 36 (Undertaking to comply) which deals with a “written undertaking to comply” has been amended to state that a labour inspector may obtain a written undertaking to comply from the designated employer who has failed to:Consult as per Section 16 (Consultation with employees)Conduct an analysis as per Section 19 (Analysis)Publish a report as per Section 22 (Publication of report)Assign responsibility as required by Section 24 (Designated employer must assign manager)Inform employees of the Act as per Section 25 (Duty to inform) orKeep records as per Section 26 (Duty to keep records)The list above excludes the duty to prepare and implement an EE plan as well as report. Failure to observe these two duties will allow for progression straight to the Labour Court upon application by the Director General.Furthermore, if an employer fails to comply with a written undertaking within the time period stipulated in it, the Director General may apply to the Labour Court to make the undertaking or part thereof.
35 COMPLIANCE ORDERSection 37 (Compliance order) which deals a “compliance order” has been amended to state that a labour inspector may issue a compliance order to a designated employer who has failed to:Consult as per Section 16 (Consultation with employees) on the topics dealt with in Section 17 (Matters of consultation)Conduct an analysis as per Section 19 (Analysis)Publish a report as per Section 22 (Publication of report)Assign responsibility as required by Section 24 (Designated employer must assign manager)Inform employees of the Act as per Section 25 (Duty to inform) orKeep records as per Section 26 (Duty to keep records)
36 …COMPLIANCE ORDERThe previous provisions which stated that the inspector can issue the compliance order if the employer refuses to sign a written undertaking to comply or has failed to adhere to the written undertaking by the deadline, have been taken out. With this change, inspectors will be faced with a choice of either securing a written undertaking or issuing a compliance order. Furthermore, if an employer fails to comply with a compliance order within the time period stipulated in it, the Director General may apply to the Labour Court to make the undertaking or part thereof an order of the court. Section 39 (Objections against compliance order) and Section 40 (Appeal from compliance order) which deal with and objection and appeal against a compliance order are repealed. Thus, the designated employer is left with no recourse other than to wait for his day in the Labour Court should he believe he has complied with the provisions of the compliance order.
37 ASSESSMENT OF COMPLIANCE Section 42 (Assessment of compliance) clauses on governing the Director General’s “Assessment of Compliance” have been substituted with the following clauses:In determining whether a designated employer is implementing EE in compliance with this Act, the Director General or any person or body applying this Act, may in addition to factors listed in Section 15, take the following into account:The extent to which suitably qualified people from designated groups are equitably represented within each occupational level of the employer’s workforce in relation to the demographic profile of the national and regional economically active population;Reasonable steps taken by the designated employer to train suitably qualified people from the designated groupsReasonable steps taken by the designated employer to implement its EE planThe extent to which the designated employer has made progress in eliminating employment barriers that adversely affect people from designated groupsReasonable steps taken by the employer to appoint and promote suitably qualified people from designated groups.
38 FAILURE TO COMPLYSection 45 (Failure to comply with DG recommendation) which describes the consequences in “failing to comply with Director General’s request or recommendation” has changed significantly. The amendment now stipulates that if an employer fails to comply with a request made by the Director General for the employer to:submit copies of its analysis or Employment Equity Plan;submit any record, book correspondence or information which could be relevant to this Act;honour a request for a meeting with the employer to discuss its employment equity plan and implementation thereof;allow a meeting with an employee or union, workplace forum or other relevant person;The Director General may then apply to the Labour Court for an order directing the employer to comply with the request or recommendation; orIf the employer fails to justify the failure to comply with the request or recommendation, to impose a fine in accordance with Schedule 1.
39 …FAILURE TO COMPLYFurther to this, if an employer notifies the Director General in writing within the period specified in the request or recommendation that it does not accept the request or recommendation, the Director General must institute an application to the Labour Court in accordance with (a) and (b) above within:90 days of receiving the employers notification, in the case of a request; or180 days of receiving the employer’s notification, in the case of a recommendation.Should the Director General not institute proceedings in the timeframe stipulated above, the request or recommendation lapsesShould an employer challenge the validity of the Director General’s request or recommendation, the challenge can only be made in Labour Court proceedings as described aboveThe introduction of these timeline will give more clarity to employers regarding how to deal with a request or recommendation but will place a large amount of pressure on the employer to firstly, adhere to both a request and recommendation and secondly, on the Director General to enforce compliance.
40 POWERS OF A COMMISSIONER Section 48 (Conflict of proceedings) which deals with the “powers of a commissioner in arbitration proceedings”, has been amended to state that an award made by the commissioner of the CCMA hearing a matter in terms of Section 10 may include any order which can include payment of compensation by the employer to that employee, payment of damages by the employer to that employee and / or an order directing the employer to take steps to prevent the same discrimination or a similar practice from occurring, but, an award of damages must not exceed the amount stated in terms of Section 6(3) of the Basic Conditions of Employment Act.This clause was amended to ensure congruence between the EE Act and the BCEA.
41 POWERS OF THE LABOUR COURT Section 50 (Powers of the Labour Court) which stipulates the “powers of the Labour Court” has introduced an additional clause which states that fines payable in terms of the Act must be paid into the National Revenue fund. In the original Act, there was no mention of where fines were to be paid into.This section has also indicated that the Labour Court has the power to review an administrative action in terms of the Act or on any grounds that may be permissible by law.
42 GENERAL PROVISIONSSection 53 (State contracts) which deals with the awarding of state contracts includes a new subsection which states that the Minister may, in the code of good practice, set out factors that must be taken into account when assessing whether an employer complies with Chapter 2 or Chapter 3 of the ActSection 55 (Regulations) has seen minor changes in that the Minister may, by notice in the Gazette make regulations providing for separate and simplified forms and procedures in respect to sections 19, 20, 21, 25 and 26 for employers who employ less than 150 employeesSection 59 (Breach of confidentiality) which deals with breaching confidentiality with respect to information acquired during duties concerning the employers implementation of this Act, has seen the maximum permissible fine move from R10 000 up to R30 000Section 61 (Obstruction, under influence and fraud) which highlights the penalties for obstruction, undue influence and fraud has seen the maximum permissible fine move from R10 000 up to R30 000Section 64 (Repeal of laws and transitional arrangements) has changed with the insertion that the Minister may, after consultation with the commission, by notice in the Gazette, amend the annual turnover thresholds in Schedule 4 to counter the effect of inflation.