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AKHONA MATSHOBA: Thank you for joining us for yet another edition of the Small Business Conversations Podcast, Moneyweb’s weekly SME show highlighting critical issues affecting South Africa’s small business environment.
This week we continue our conversation around the role of law and regulation in business, diving deeper into the importance of getting into the habit of standardising processes in your operations, and looking at how this can better position your business for growth.
Assisting SMEs in this effort is the Commission for Conciliation Mediation and Arbitration, most commonly known to you as the CCMA. A few years ago, it joined forces with business body Business Unity South Africa (Busa) to develop a labour relations web tool that business owners, especially of small businesses, can refer to as a guide on how to apply labour law effectively.
Laurie Warwick, a senior commissioner at the CCMA, now joins me to tell us more about this web tool and how the organisation is trying to formalise labour relations for SMEs, as well as to look at how successful it has been since the tool’s implementation in 2019. Thank you so much for joining me on the pod, Laurie.
LAURIE WARWICK: Thank you very much for having me and the CCMA. Nice to be here.
AKHONA MATSHOBA: Laurie, before we look at the web tool, I want us to look at the state of labour relations between the employee and employer currently in South Africa. Can you as the CCMA give us a guide on where that relationship is right now in a broader sense?
LAURIE WARWICK: Akhona, the conditions are quite stressful at the moment for employers and employees, as you can see by the number of referrals we receive. If I can quickly delve [into] that it’ll give your listeners a better understanding.
If I look at the previous financial year – 1 April 2022 to 31 March 2023 – we received a total of 184 075 new referrals.
That’s an average of about 737 [complaints] a day, and 54% of those were alleged unfair dismissal disputes.
This also goes to the economy, the next point. The second highest referring area, about 23%, was based on money allegedly owed to employees by employers. That could be in terms of contract or sectorial agreement, etc.
A total of 47 909 cases were referred for that reason. The majority of those, about 83%, were people who said that they were owed money in terms of the Basic Conditions of Employment Act. So that could be for any of your statutory provisions like leave – anything to do with that – and overtime, etc. It tells you already there’s a problem there.
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And then also of interest, a much smaller percentage, only 0.04% or about 1 762, were linked to people saying, ‘I’m owed money in terms of the National Minimum Wage Act’. Those are mostly your small employers, the latter ones, but it also means that at least the numbers are a little lower.
I can just quickly tell you that in terms of May, if we look at this May compared to last May, in May 2022 we received 16 074 referrals, whereas this May it almost doubled to 30 803 referrals. That’s a difference of 14 729 referrals. So it does tell you that it’s not easy out there to be in the employment world. It really isn’t.
AKHONA MATSHOBA: Those are really large numbers that you’ve just given us there, Laurie. I’m wondering what the proportion of complaints emanating from small businesses is. Are we seeing more complaints coming from that part of the business sector, or are they from all businesses, corporates, large companies? Can you just paint a picture of where these complaints are emanating from?
LAURIE WARWICK: Well, one of the challenges is we don’t separate them entirely in terms of size of business. There are some areas – and I’ll get to that now – where we can, but if we look back at a study that Business Unity South Africa conducted in 2015/16, it showed then that about 80% of our cases originated from small business. So if that trend is still in existence it would tell you that a large portion would be [from small businesses].
But in terms of sectors, the larger proportion will have traditionally come from private security, followed by retail. Retail could obviously be any size, so that might give you an idea.
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Also, if I may, I’ll just look at the retrenchment figures because that sometimes gives you an idea because, if you are looking at large and small retrenchments, ‘large’ are employers who employ more than 50 people.
So we had 988 referrals, small-scale retrenchments. It doesn’t mean it’s just one person, it could be more over a 12-year period. But in this April alone, we received 262 referrals for small-scale retrenchments. Those employers [employed] fewer than 50 people. So if you think of April it’s about 26% of the entire referral of small-scale retrenchments for last year. That’s just over a quarter in one month of the entire last year, so it does give you an idea that small businesses are not in a healthy space.
AKHONA MATSHOBA: And with all these stats that you’ve given us, these figures of cases that you’re dealing with, how many would you say then are emanating or rooted in small business owners, the employers not understanding labour relations and what is expected of them as employers?
LAURIE WARWICK: Well, that’s quite a difficult one because, if I look at the stats on arbitration awards, a larger proportion of the awards are in favour of the employee. But we also have a huge amount of what we call ‘default awards’. That means that the employer is not attending.
Last year we had I think 9 636 awards where both parties attended, and there was a preponderance [of decisions] in favour of the employee. That could mean very often that it’s just a procedural defect or something like that, where the awards have gone in favour of the employee. And then the default ones – that’s a huge amount, even more.
That means that people are not understanding the need to come to these hearings – the employers.
It often leads to things like enforcement or sheriffs coming and taking [steps].
So there’s a great need for education (a) to try and prevent dismissals and (b), if you’re going to dismiss, then at least follow the law and the procedures prescribed by the law.
AKHONA MATSHOBA: And just to follow up on that then, Laurie, I would get the sense that if employers are not participating in these negotiations or talks or labour-dispute resolution efforts that the CCMA is trying to resolve, it kind of breaks the trust between the employer and the employee. What would you say that attitude does to the trust between these two parties, and also just general trust for employers and business growth then as a consequence?
LAURIE WARWICK: I think it’s sort of a two-pronged approach. So there’s a feeling maybe on the one side by some employees that perhaps business doesn’t care about their wellbeing and about their rights. And on the other side businesses might feel that it’s very onerous and they might feel that there’s so much to know and they don’t have the resources to do [what is necessary], and that the cost of doing business is just too high.
So you get both sides, and somewhere in the middle is the truth. That’s really where we would like to help them.
We would like to say to them: ‘You don’t have to carry the burden alone. We can try to assist you. We can assist you in more than one way, but the one thing we really can do is try to provide you with the guidance that (a) may prevent dismissals or disputes, and (b) on the other side, if you’re going to do it, then we can show you in a step-by-step way how you can do it, and how you can actually do it in a way that is fair.
AKHONA MATSHOBA: Let’s talk about that assistance then. Talk to me about the web tool. What capabilities does it have, and what does it offer those who are interested in formalising their operations much better and more effectively?
LAURIE WARWICK: Thanks for that. That’s really the crux of where we are at the moment. So just a slight background. The whole aim between Busa and ourselves is to look at how we can help small businesses, especially in the informal sector, to try to get the guidance they need – because it’s expensive to try and get legal advice all the time.
We’re not saying don’t go to a lawyer. That’s never the case. It’s just that sometimes you don’t need to, you just need certain guidance. So what we try to do with this web tool is we try to take the institutional knowledge and obviously knowledge of the law and apply the laws of the CCMA, plus mix those with the experienced HR practitioners within the business community to come up with step-by-step guidance and templates.
This [the web tool] is all free to use, by the way. You can download this on your phone, your mobile app, [or] on the website. You don’t have to pay a cent.
You’ve got to start by hiring. To hire you need to advertise your job. We look at what pitfalls [there might be]. Don’t go and have discriminatory requirements like say[ing] ‘You must be a woman or a man or a blonde’ or whatever it is.
You need to avoid that. So we try and show people that, if you’re going to advertise, this is what you need to comply with to make it sort of equal and non-discriminatory.
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We look at contracting, and we even provide templates for contracts that you can adapt, you can download, put your own logo on, and do what you need to, how to induct people [with] probation.
And then the big one – and this is the one where we always get cases – is how to manage that employment relationship. Everybody thinks, oh, now I’ve got this person and they’re a nuisance, what do I do? We give you guidance on performance management. We tell you what the rights are, both sides, because remember the right to fair labour practices in the Constitution talks about both sides. Everybody has a right.
Statutory rights
So we are looking at how you can uphold those statutory rights in terms of labour law. And we once again also provide those templates so you can download them if you’re wanting to have a performance review, meeting or inquiry, a disciplinary, etc. We give you those templates. You don’t need to go and pay for them.
And then of course, the nasty one. If it’s necessary to terminate the relationship we provide all the information you need in terms of making sure that it’s a fair process, and also looking at alternatives, where possible, to retrenchment.
And then one other area is we do provide resources, including giving you copies of labour statutes, CCMA rules, various codes of good practice, etc, so that you can just download them when you need them. There may be additional assistance that we’re going to be entering into with the International Labour Organisation to perhaps expand some of these resources. We’re in early discussions, but it’s looking quite exciting.
AKHONA MATSHOBA: Like I mentioned, Laurie, this was launched by the president, I think, in 2019. So you’ve had a couple of years to implement it, to test it. What has been the response from small businesses? Are they receptive of this? Are they appreciative of this tool, or is there still resistance or a lack of understanding of its importance?
LAURIE WARWICK: I think what there is at the moment is perhaps just a lack of understanding, a lack of knowledge on it. The uptake isn’t as great as we would like it to be. We’re trying to work on that and to get search-engine optimisation functions, etc, to see if we can increase it.
Although we have I think over 80 000 people who are registered for it, we would like to expand it more because we’d like to make people understand that there’s a lot of benefit to this that we can give them.
And the same with the mobile app. You can just download it on your phone. Once you’ve downloaded it, all you need is data. You don’t need to pay for it. It’s there. We are sponsoring it, if I can put it that way. So yeah, that’s really it.
I think it’s more a case of not knowing that it’s there and that’s why this opportunity is really, really helpful. Thank you.
AKHONA MATSHOBA: This link then – with the lack of uptake and something that I found interesting in the founding research that was conducted by Busa before the web tool went live – is that poor understanding of labour law could lead to a reluctance to formalise a business, as well as reducing willingness to employ. We do know that South Africa is in desperate need of job creation and small businesses. Businesses – generally SMEs – are known to be the key to creating those jobs.
So how do we kind of smooth out that dynamic of lack of uptake? Also we have this need and we know that without this formalisation there won’t be the resource that we hope to see of job creation. Can you speak to me about that dynamic, and how crucial it is that businesses start paying attention to this?
LAURIE WARWICK: Definitely. I think if we want to make the country work, we have to work as a team so we can get back to the spirit of team South Africa. As I mentioned, the feeling very often is, well, if I’m going to make it known that I’m a formal business, then I’m going to have to comply with all of these things and I don’t have the money to comply. Therefore I’m just going to pick the people up, put them on the back of my bakkie, and go and run whatever my service is.
So the problem is that actually it’s not effective. It means that we don’t protect our employees. At the same time the employers stand to become very vulnerable because it’s not going to stop the employees from challenging cases and them coming to us.
We do understand, as I said, that the cost of getting advice is expensive and this tool can help with that.
We also understand that employers also believe that employees have the balance of rights and they don’t. And employees sometimes think that everything is in the employer’s favour in terms of the balance of power.
So by actually giving this information to them, we feel that we can (a) make employees understand their responsibilities and rights. But also, then, of course the employers can see that actually it’s not so difficult to manage an employment relationship if you follow the right steps. And we understand that at the moment there’s such a low demand for labour and a high supply, and that increases that vulnerability.
So we would really appreciate it if more people could try out the tool and give us feedback as to what else we could do to make it more helpful for them to run their businesses, as well as [for] employees in the workplace.
AKHONA MATSHOBA: I understand that point there – that employers feel if they were to enter this process then they are going to be disadvantaged in a way, because it seems that, like you said, the balance of rights is always leaning towards the employee. But, as we look forward, you’ve already mentioned that there’s been an uptick in disputes this year compared to the previous year and, given the state of our economy, things are already tough and there’s no sense that it’s going to end soon [with] the challenges that the economy is facing.
What is your sense of the relationship of labour relations between the employer and employee moving forward? Is trust waning, or are we seeing a strengthening in that togetherness of family or working together in the workplace? What is your sense of where we are going?
LAURIE WARWICK: I can only really base that on the statistics. And, as I mentioned, already April is seen as [having] basically the same status as in a quarter of the entire last year.
So I think some of the factors that are going to be challenging are not so much the employment relationship, but the sort of other factors in our country that are impacting jobs – electricity being one of them, etc. But I think what we can do from our side is to at least try and make it a little easier for employers to at least comply with the law.
So if it turns out that they really do need to retrench, and that they can’t look at any alternatives, because the alternatives we [have] are to partner with organisations like Productivity SA and others who do a lot of work to try and assist.
Maybe we should also be looking at other relationships with organisations like the Department of Small Business, etc, to see how we can sort of package information that can assist.
But I think the least we can do is to try and make sure that there’s fairness in all approaches, and that employers are able to consider alternatives to retrenchment so as to avoid the fatal blow – if I can put it that way.
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The other problem of course, even with large scale retrenchments or large businesses, is that those people then can’t go and buy goods. They don’t have money. Your small businesses in the communities are also impacted as soon as others lose their jobs, because now they can’t go and buy what they used to buy because there’s no money.
So it’s a vicious circle and that’s why, at least from our side, if we can contribute with knowledge and support we would like to do so.
AKHONA MATSHOBA: That right there is Laurie Warwick, senior commissioner at the CCMA, explaining to us the efforts that the CCMA has undertaken to strengthen labour relations knowledge for SME businesses in the country, teaching them about certain processes crucial to ensuring a smooth labour relationship with employees.
Thank you Laurie, for joining us on the pod. I really appreciated your insights.
LAURIE WARWICK: Great pleasure. Thank you.
AKHONA MATSHOBA: If you enjoyed this podcast please like and follow Small Business Conversations, and don’t forget to share our episodes. If you want to contribute to the conversation, you can tweet me @Matshoba A, or you can email us at [email protected] to share your thoughts and suggestions for future conversations.
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