New Employers Fall Prey To LRA Provisions

Ivan Israelstam

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 new age employers which 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. These companies, whose line management is otherwise engaged, need to hire a labour law expert to keep their industrial relations and labour law compliance on an even keel. Then, as soon as possible, the management need to be trained in the requirements and pitfalls of labour law.

For example, 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 as follows:

• The definition of dismissal includes the employer's failure to renew a fixed term contract on equal terms where the employee expected the contract to be renewed. Many new employers make extensive use of fixed-term contractors. This is because:
• They are often unsure, early on in the company's life, of how much work there will be;
• They may not have time to do proper recruitment and screening of permanent employees;
• They do not want to spend money on permanent employee benefits such as medical aid and pension;
• They prefer the flexibility of being able, so they think, of firing the employee at a moments notice.

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 obliges arbitrators and Labour Court judges presiding over dismissal disputes to reinstate/re-employ unfairly dismissed employees as the chief remedy for such dismissals. This is in sharp contrast to traditional practice which often saw employees receiving financial compensation instead of reinstatement.
• Compensation for unfair dismissal is very costly for employers. For example, certain unfair dismissals could cost the employer up to 24 months' pay.
• 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.

While the new LRA does require employers to be much more careful about taking disciplinary action it does not prevent employers from disciplining employees. But employers need to ensure that they operate within the bounds of the law. Those employers who wish to do so and to be able to control employees effectively should implement the following strategy as a matter of urgency.

• Ensure that every existing and newly appointed employee fully understands all company rules, especially those pertaining to conduct and performance requirements and standards.
• Train those employee representatives who will, together with management, be determining disciplinary codes and rules of conduct.
• Train/retrain management/supervision in IR, leadership and disciplinary skills.
• Redesign disciplinary policies (jointly with employee representatives) so that the implementation of discipline are based on constructive, effective but fair corrective measures.
• Develop a culture of responsibility and self-discipline on the part of management and employees.
• Use the services of a qualified expert to assist with training and facilitation of a disciplinary code agreement. Such an expert will 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 new LRA together with affirmative action legislation on the one hand, and the practical requirements of an effective disciplinary and HR policy on the other hand.

Our appreciation to Ivan and The Star newspaper for permission to publish this article.