Considering the risks attached to employers (2014-04-01)

February 20, 2015  3983  3983   

Article by Terrance M. Booysen and reviewed by DLA Cliffe Dekker Hofmeyr Attorneys

Irrespective of whether the business is established in South Africa or abroad, there’s no doubt that more CEOs are becoming concerned about their increasing exposure regarding employment practices.  Whilst it’s difficult to ascertain the exact number of commercial employers in South Africa, it was last estimated by the World Bank that approximately 555,000 companies are registered in South Africa.  Considering this relatively small number of companies, the fact that the CCMA (Commission for Conciliation, Mediation and Arbitration) and various bargaining councils handle over 150,000 employee-related cases per annum, is good reason for concern.  Over the last two decades, the South African workplace has seen a number of far-reaching changes which is evidenced by a more modern Companies Act (2008) that aligns South Africa more closely with the modus operandi of companies in developed countries, not least the introduction of a host of employee protective legislation such as the Compensation for Occupational Injuries and Diseases Act (1993), the Basic Conditions of Employment Act (1997), the Employment Equity Amendment Act (2013), the Labour Relations Act (1995), the Broad-Based Black Economic Act (2003), the Occupational Health and Safety Act (1993) and the soon to be released Women Empowerment and Gender Equality Bill (2014).

In ordinary conditions, the introduction of laws such as these would usually be introduced over a much longer time span; however this has not been the case in South Africa since the dawn of our democracy in 1994.  Given these newly implemented pieces of onerous legislation, one can’t help but wonder whether companies operating in South Africa will be able to keep up with the implementation of the necessary changes that are required to protect the various stakeholders, not least also for the purposes of compliance.  Adding to this complexity, employers must also not forget the manner in which citizens (including employees and consumers) have been further empowered regarding the Bill of Rights in the South African Constitution, and which has further been bolstered by legislation such as the Consumer Protection Act (2008), the National Credit Act (2005) and the Protection of Personal Information Act (2013) to name a few.

Evidently by not complying with these laws, companies and their leaders will feel the effect of harsh punitive measures which will not only lead to a great deal of financial discomfort, but indeed may also collapse many companies in the process.  In some cases, non-compliance with some of these draconian laws could lead to a director or the company’s Chief Executive Officer being jailed for up to five years.  Of course any civil (and criminal) conviction is also -- in most instances -- grounds for future directorship disqualification.

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