Are labour laws weakening the business economy?


Government intervention in post Corona recovery has to focus heavily on freeing employers of legal restrictions that constrain flexibility and productivity. Currently employers are hampered from surviving, prospering, growing and employing staff by many laws including: 


  • Fixed-term employment contracts are illegal if the employer cannot justify them on grounds that the work itself is genuinely limited in duration. Employers have to convert all unjustified fixed-term contracts to permanent contracts and give the employees the relevant benefits. 
  • Employers have to give to fixed-term employees some benefits enjoyed by their permanent colleagues. 
  • Fixed-term employees and those employed via placement agencies are able to take employers to CCMA if they have a reasonable expectation of being offered permanent employment. 
  • Employers have the primary legal responsibility for the rights of people placed with them by temporary employment agencies and labour brokers. 
  • The con/arb process is being used more often. 
  • Bargaining councils may charge a levy to finance their dispute resolution services. Thus, employers could be making direct payments to enable employees to take them to conciliation and arbitration. 
  • Section 197 of the LRA protects employees involved in second generation outsourcing. 
  • The Minister of Labour has the power to dictate the representivity thresholds at which employers are required to give trade unions organisational rights. 
  • The Labour Minister has the power to increase actual wages and not only minimum wages. Thus, those employers paying wages well over the legal minimum could nevertheless be forced to pay even higher wages. 
  • The Minister can dictate remuneration levels and other employment conditions in industries and sectors that are as yet not affected by sectoral determinations. 
  • Prosecution of non-compliant employers has been strengthened. And prison terms and penalties for breaches of the Basic Conditions of Employment Act and for Employment Equity Act breaches have been increased. 
  • Employers are required to pay equal salaries to their employees doing the same or similar work. Failure to comply with this requirement will constitute unfair discrimination. 
  • Employers are no longer able to use their financial circumstances and the lack of available candidates as excuses for failing to implement affirmative action. 
  • Employers are required to report to the Department of Labour the details of every job vacancy they have and to report when these are filled. 
  • Brokers/agencies dealing with temporary and permanent jobs will not be able to operate without a licence and such licences could be withheld or revoked should these agencies fail to comply with statutory requirements.

While many of these laws are good for protecting employees they unfortunately backfire because their restrictions on businesses threaten the jobs of the very employees they are designed to help. 

In the wake of Corona and with the restrictive labour laws many local business are likely to step up their tendency to mechanise and to move their workplaces to the far east. Overseas businesses will be more deterred than ever before from investing here in labour intensive projects. The ANC’s stated policy of creating ‘decent employment’ will be contaminated by fast accelerating ‘indecent unemployment’.  


BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: [email protected]. Go to: 

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