October 2012

We are entering the last quarter of the year, and we do live in interesting times. The strikes are relentless and becoming increasingly violent. Legislation is being challenged and in the HR space life continues to be very challenging.

 

NEW LEGAL DEVELOPMENTS
UNEMPLOYMENT INSURANCE FUND

The Minister of Labour has increased the UIF ceiling on the scale of benefits and contributions, from R149 736 per annum to R178 464 per annum.

This means that:

  • The maximum monthly contribution per employee will be become R148-72 per month.
  • The maximum employer contribution will be R148-72 per month, i.e. 1% of R14 872-00 per month

Employees earning below R14 872-00 will continue to contribute 1% of salary.

This is good news as it means that the maximum benefit from UIF will increase from R4 741-64 to R5 651-36 per month. This can be claimed for eight months. The fund maximum was last increased in February 2008.

 

BROAD BASED BLACK ECONOMIC EMPOWERMENT

The Department of Trade and Industry has announced that Cabinet has approved changes to the BBBEE codes. The revised codes will be open for public comment from 2 October 2012 for 60 days. The proposal is to reduce the measurement elements from 7 to 5. This will be achieved by:

ELEMENT CHANGE SCORE STATUS
Ownership No change to targets 25% Priority
Management Control Merging with employment equity with slightly different targets. Junior management excluded from measurement 15%
Skills Development Target increasing from 3% of payroll to 6% of payroll. New target for absorbing learners into the company as employees 20% Priority
Enterprise and Supplier Development Merging procurement with Enterprise Development. Procurement targets increased to 80%. More focus on Black owned suppliers 40% Priority
Community Social Investment Moving to recognise initiatives which facilitate capacity to work and creates sustainable access to the economy for its beneficiaries 5%
Total 105%

Bad news is that QSE’s will have to comply with ownership and one other of the priority elements. If a company does not comply with one of the priority elements they will be moved down one level (for QSE’s) two levels (for Generic Companies). Also, in order to qualify as a BBBEE Company you will have to score more than 40% on the scorecard,

The good news is that the threshold limits will change as follows:
Exempt Micro Enterprises: R0 – R10 Million
Qualifying Small Enterprises: R10 Million – R50 Million
Generic Enterprises: More than R50 Million.

Cabinet has also approved the amendment to the Broad-Based Black Economic Empowerment Bill which has now been referred back to parliament and together with the Amendments to the Basic Conditions of employment Act and the Labour Relations Act, are targeted to be passed before the end of the year.

 

SKILLS DEVELOPMENT

TThe skills development act was promulgated with effect from 11 May 2012. The Quality Council for Trades and Occupations is in the process of setting up policies and procedures and recruiting its management team.

 

EMPLOYMENT EQUITY AMENDMENT BILL

The proposed Amendment to the Employment Equity Bill was approved by cabinet on the 9th September 2012 and has been published on the Department of Labour Website. The purpose of the amendments is to further enforce the Act by expanding the reasons for which a penalty can be imposed on a company who fails to comply with the act and to increase the fine.

Currently a company can be fined if it is found to have not complied with the following clauses of the Act:

  • Clause 16: Consultation with Employees
  • Clause 19: Analysis
  • Clause 20: Employment Equity Plan
  • Clause 21: Report
  • Clause 22: Publication of Report
  • Clause 23: Successive Employment Equity Plans

In addition to the above clauses it is proposed that the fines be extended to the following additional clauses:

  • Clause 24: Designated Employer Must Assign Manager
  • Clause 25: Duty to inform
  • Clause 26: Duty to keep Records
  • Clause 27: Income Differentials
  • Clause 43 (2): the right of the Director General to review the Companies records and to request meetings with the employer and any employee or trade union consulted in terms of section 16
  • Clause 44 (b): the Director-Generals recommendation to an employer after conducting a review

The Department is suggesting a minimum fine of R1.5 Million and a maximum fine of 10% of Turnover for companies who do not comply with these clauses. The bad news is that the Act is suggesting that all companies report to the Department of Labour every year. The good news is that the turnover threshold for compliance is set to increase which means that some smaller companies will become exempt.

 

UNEMPLOYMENT INSURANCE FUND ANNUAL REPORT

The UIF Annual Report was recently published on the Department of Labour’s website and it makes interesting reading. In the 2011 financial year the fund received contributions of R12.44 Billion, up 10% on the contributions received the year before. The fund currently has total assets of R65.4 Billion. They are therefore far from being bankrupt, which is the perception of most employees.

In the last year they paid out the following benefits:
Unemployment Benefits:
(Paid to employees who are dismissed or retrenched)
R4.3 Billion
Illness Benefits:
(paid to employees who are ill and have exceeded sick leave entitlements)
R 234 Million
Maternity Benefits:
(Paid to mothers on maternity leave)
R 707 Million
Adoption Benefits:
(Paid to employees who adopt a child under the age of 2)
R 874 000-00
Dependants Benefits:
(Paid to the dependents of employees who die in service)
R 315 Million
Total R5.6 Billion

A total of 705 855 people lodged claims during the year compared with 732 158 last year. This is out of a total of 8 125 575 registered employees. This means that 8.7% of the working population claimed benefits last year, of which 6.84 claimed unemployment benefits.

As they have funds in excess of their requirements, the UIF fund has financed a number of initiatives to create jobs and contribute to the skills development requirements of the Country. So, in addition to paying UIF Benefits the UIF Fund has contributed:

  • R1.5 Billion to the IDC for the purpose of job creation
  • R327 Million to the Training-Lay-Off Scheme to assist retrenched employees to be retrained
  • R129 Million has been set aside to assist the Mining Qualifications Authority and Merseta to train 2 500 artisans. Of this R5.5 Million has already been withdrawn.

This does seem to be money going in the right direction and the dedication of the UIF staff to prevent fraudulent claims is to be congratulated.

 

PERFORMANCE MANAGEMENT

We have recently formed an alliance with Select Strategy Inc., a company based in Boston USA. We have entered an agreement to market their Computer Based Performance Management System to our clients. It is a system which can be adapted to any work place and allows companies to control and drive their performance management measures more effectively. If you are interested in seeing a demonstration of the system please contact Desrae or Kevin.

 

Kind regards,
Desrae & staff

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