The most important of these submissions was the indication that the exclusion of senior managers from the CCMA could be unconstitutional.
The proposed amendments to the Labour Relations Act will allow the Minister of Labour to establish an earnings threshold that will exclude high-earning employees. In the explanatory memorandum to the draft Bill, the legislature explains that it intends addressing the "disproportionate cost, complexity and impact on an employer's operations" where high earners' employment is terminated.
While this may provide the business rationale for the changes, there can be little doubt that the prevalence of senior executives claiming unfair dismissal at the CCMA influences the popular view that the hard-fought protections in the Labour Relations Act were not intended to protect high-rollers, but to protect vulnerable employees who were not in an advantageous bargaining position when negotiating employment contracts, workplace conditions or the termination of their employment.
There is a strong view in the market that there are executives that carefully use the CCMA processes to extract additional consideration from their employers. The threat of protracted CCMA proceedings, often involving other executives as witnesses, is often used by disgruntled executives to negotiate favourable settlement terms when their employer seeks to part ways with them.
The counter-argument to the amendments is that all employees deserve protection and have a constitutional right to fair labour practices.
Eroding this right for senior executives may be seen by some as the thin edge of the wedge. The reality is that, even at present, there are various protections that are not afforded to employees earning above a certain earnings threshold. Employees earning above R183 008 per year do not enjoy statutory right to overtime, maximum working hours or minimum off times, for instance. Benefits under the Unemployment Insurance Fund are also capped for high-earning employees.
The amendment should assist employers in achieving workplace change where this involves the removal of executives. Executives should not be significantly worse off when considering that, statistically, employees successful in CCMA unfair dismissal proceedings do not get much more than the three months remuneration to which executives may be automatically entitled should the Bill be promulgated into law.
The Labour Department is of the view that the proposed amendment is a justifiable limitation on the rights of senior managers as they would still enjoy protection from unfair dismissal. Senior managers are also able to negotiate protection through their contracts of employment, for instance, to notice periods and to make provision for private arbitration. They would still be able to refer disputes to the Labour Court for certain categories of dismissal cases.
The impact of dismissal cases of senior managers on the CCMA has been referred to as a relatively small number of cases. The real impact should, however, be assessed in relation to the time that these cases take in the CCMA relative to other cases and not just the number of cases.
If these amendments are passed there may be a constitutional challenge. If not, we could see senior managers approaching our courts to assert that they have not been treated fairly. The Department of Labour is of the view that the amendment does not stop senior employees from seeking redress for unfair labour practices at our courts. If they do so, we may find that employment disputes in respect of senior employees may take considerably longer to resolve. This may have an impact on the manner in which employers plan for the future of their businesses.
