Select Committee on Foreign Affairs Minutes of Evidence

Written evidence submitted by Cofesa (Confederation of Employers of Southern Africa)

  I only received notice of your inquiry this morning. Please accept my memorandum.

  Relations with the UK is of the utmost importance for us and your inquiry is necessary and highly appreciated.

  Cofesa was registered at the Department of Labour as Confederation of Employers of Southern Africa on 6 November 1990. Presently we assist our 4,000 employer members with all aspects of labour relations- employment contracts, disciplinary hearings, conciliations, arbitrations, court cases, union negotiations etc. (

  In 1990 South Africa had 10.8 million job opportunities. Today only 4.6 million jobs are left while more than 300,000 people enter the job market every year. This is a result of rigid labour legislation. The result is 60% unemployment, rampant crime levels and socio economic problems including HIV Aids.

  We actively support the African Economic Renaissance vision of president Thabo Mbeki. To realise this vision we need to create more entrepreneurs. We did extensive research on the establishment of entrepreneurs and actively promote entrepreneurs. We presented papers at various conferences on this subject in (Stockholm, Malaysia, Dublin and Grenoble).

  Research indicated that their production is between 60% and 300% better than that of employees.

  At the recent session of the ILO, South African trade union representatives launched a campaign to extend the definition of "employee" to include dependent contractors.

  This will seriously affect the establishment of entrepreneurs, micro enterprises and incubators.

  Our Minister of Labour, Mdladlana and trade union spokesmen launched this campaign.

  If this campaign succeeds it will stop development in many Third World countries and will harm the African Economic Renaissance.

  It will be appreciated if you will take this up at the international forums to make the development of entrepreneurs a priority.

  Malaysia appointed a minister for entrepreneurship. We need your support for the establishment of a minister of entrepreneurship in the RSA and in every state in Africa.

  Our countrywide network of advisors established more than 1.5 million micro enterprises for entrepreneurs in support of government policy of black empowerment and our policy to establish micro enterprises.

  For many years the contract between parties determined the nature of the relationship between them.

  In 2002 our Parliament (on initiative of the Department of Labour) added clause 200A to the Labour Relations Act. The amendment is in the form of a presumption to regard contractors as "employees".

  "200A Presumption as to who is employee:

  (1)  Until the contrary is proved, a person who works for, or renders services to, any other person is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present:


    the manner in which the person works is subject to the control or direction of another person;


    the person's hours of work are subject to the control or direction of another person;


    in the case of a person who works for an organisation, the person forms part of that organisation;


    the person has worked for that other person for an average of at least 40 hours per month over the last three months;


    the person is economically dependent on the other person for whom he or she works or renders services;


    the person is provided with tools of trade or work equipment by the other;


    the person only works for or renders services to one person.

  (2)  Subsection (1) does not apply to any person who earns in excess of the amount determined by the Minister.

  (3)  If a proposed or existing work arrangement involves persons who earn amounts equal to or below the amounts determined by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act, any of the contracting parties may approach the Commission for an advisory award on whether the person involved in the arrangement is an employee.

  NEDLAC (a national forum of government, labour and employers) must prepare and issue a Code of Good Practice that sets out guidelines for determining whether persons, including those who earn in excess of the amount determined in subsection (2) are employees".

  Cofesa is not represented on NEDLAC and was not invited to the ILO.

  Our legislations must be interpreted 1(b) to give effect to obligations incurred by the Republic as a member state of the International Labour Organisation and in terms of our Constitution section 27 which is the Chapter on Fundamental Rights in the Constitution entrenches the following rights:


    Every person shall have the right to fair labour practices.


    (2)  Workers shall have the right to form and join trade unions, and employers shall have the right to form and join employers' organisations.


    Workers and employers shall have the right to organise and bargain collectively.


    Workers shall have the right to strike for the purpose of collective bargaining.


    Employers' recourse to the lock-out for the purpose of collective bargaining shall not be impaired . . .

  Section 3 of the LRA provides for the interpretation of this Act Section c: in compliance with the public international law obligations of the Republic. (including the Convention on Freedom of Association).

  This presumption violates a number of our constitutional rights:


    Equality—people are regarded as employees and not as contractors/entrepreneurs and therefore miss the opportunity to be developed as entrepreneurs who are equal in status. Employees are regarded as subordinate persons who are under supervision.


    Freedom of association: Our freedom of association is curtailed since we cannot recruit these presumed employees as members.


    The concept of a presumption is unfair and unconstitutional in itself.


    Freedom of trade: Section 22 provides: "Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law". In terms of the presumption, the contractors are now presumed as employees without their choice.


    Persons contracting with these presumed employees are unfairly presumed "employers". They are suddenly liable to pay minimum wages, (catch up with arrear payments), leave, sick leave, family responsibility leave, maternity leave, etc. Compliance orders and court orders may be issued against them.


    This presumption discriminates against new entrants, unskilled, untrained, inexperienced people who are excluded from the labour market and excluded from doing contract work.


    The presumption jeopardises our governments' policy and efforts to empower the disadvantaged, to promote micro enterprises, entrepreneurs and to create opportunities. Our Department of Trade and Industry and of Finance have projects in place to promote micro enterprises.

  It is important that your government support Mr Trevor Manual, Minister of Finance, and Mr Alec Ervin, Minister of Trade and Industry to stop this campaign against contractors and entrepreneurs.

  With your support Mr Manuel will be able to convince the Minister of Labour to discontinue the campaign.


  We are doing our utmost to protect these entrepreneurs by helping them with the contracts and with the implementation of the concept of entrepreneurs.

  Some bargaining councils persecute these entrepreneurs. We need a strong independent lobby to curb these campaigns and to focus on the establishment of entrepreneurs.

  PS: The ILO debate is to be seen on

  Our Australian friends summarised this issue on their website

Hein van der Walt

Cofesa (Confederation of Employers of Southern Africa)

October 2003

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