Navigating SA's cumbersome labour legislation

South Africa is currently regarded as having the worst labour-employer relations in the world, ranking 137 out of 137 countries in the latest World Competitiveness Report, released by the World Economic Forum. A contributing factor to this poor ranking, according to Kgomotso Ramoenyane, Executive General Manager: Human Resources at Business Partners Limited(BUSINESS/PARTNERS), is how complex the labour legislation in South Africa can be for a business to navigate.

“This is true for businesses of any size, but small and medium enterprise (SME) business owners are particularly vulnerable to the cumbersome nature of the compliance and reporting requirements of the labour legislation, which drains valuable time and resources that should rather be spent strategising and growing their business. Considering that SME economic activity accounts for roughly 34% of South Africa’s GDP and about 60% of the labour force, this could have wide-reaching effects on the country.”

On a national scale, Ramoenyane says that this impacts economic growth as it contributes towards business owners having some level of hesitation before employing more staff. “The risk associated with hiring is particularly high in South Africa because it can be a difficult, onerous, and sometimes exorbitantly expensive exercise for business owners to dismiss staff members who are not a fit for the company.”

It comes as no surprise then, says Ramoenyane, that the most recent BUSINESS/PARTNERS SME Index revealed that only 41% of SMEs are confident that the current labour laws are conducive to the growth of SA businesses. “This means that more than half of the SME business owners in this Index have had an experience with labour legislation that has led them to believe that these laws are not conducive to the growth of their business.”

It is therefore understandable why SME owners would prefer to avoid labour disputes wherever possible, notes Ramoenyane. “This can usually be done by establishing clear and logical rules in the business, along with cultivating an atmosphere of trust between management and employees in order to minimise disciplinary confrontations.”

In cases where a labour dispute is seemingly unavoidable, however, Ramoenyane urges business owners to be as prepared as possible. “Should the dispute end up being dealt with in the Labour Court, it is essential for business owners to have a record of all matters pertaining to the employment relationship, such as the employment contracts; records of training courses offered; and minutes of any meetings held.

“Furthermore, should the SME owner feel that their knowledge is inadequate, they are encouraged to seek assistance from labour lawyers or professionals within the field,” she adds.

Lastly, Ramoenyane makes mention of an exciting new CCMA web tool aimed at guiding smaller businesses on labour relations matters and processes. “The Commission for Conciliation, Mediation and Arbitration (CCMA) has partnered with Business Unity South Africa (BUSA) to develop a free-to-use web tool which will provide South African businesses with up-to-date information on the Basic Conditions of Employment Act, such as labour practices, the National Minimum Wage Act, as well as contract templates and information sheets.

“As this tool is designed to cut red tape and associated costs of labour relations compliance for small businesses, it should make for slightly easier legal navigation going forward and hopefully, in time, create a more conducive labour environment for SME growth.”

However, while tools such as this one are making for easier navigation of the legal environment, the ideal solution would be a more conducive legal framework, says Ramoenyane. “Considering the negative impact that South Africa’s cumbersome labour legislation is having on SME economic activity, a much simpler framework, regarding labour laws, in which SMEs can operate, and without all the red tape, is needed,” she concludes.