As South Africa grapples with persistent unemployment and the need for inclusive economic growth, significant reforms to the country’s labour laws have emerged from a protracted negotiation process at the National Economic Development and Labour Council (NEDLAC). These negotiations, launched in April 2022, have culminated in the release of the NEDLAC Report and four proposed amendment bills that signal a potential turning point in labour regulation. 

This article examines the proposed changes to the Labour Relations Act, 1995 (LRA).  

Legislative Background: The Road to Reform 

The proposed amendments, 47 in the LRA alone, reflect an effort to recalibrate the balance between worker protection and employer flexibility. They aim to reduce regulatory burdens that may discourage job creation, while upholding constitutional protections and maintaining fairness in the workplace. 

These changes are not yet law. The draft bills must still pass through the State Law Advisor’s scrutiny and Parliamentary procedures, which will include a period for public comment. It is also important to note that consensus was not achieved on all proposals, suggesting that further debate and potential revisions lie ahead. 

Key Proposed Amendments to the Labour Relations Act 

1. Redefined Remedies for High-Earning Employees 

A particularly impactful proposal is the introduction of a new section that limits the remedies available to high-earning employees in cases of unfair dismissal. Employees earning over R1.8 million per annum, adjusted annually for inflation, would only be eligible for reinstatement if their dismissal is deemed automatically unfair (e.g., due to discrimination or whistleblowing). In other cases, such employees would be entitled only to capped compensation, as determined by the Minister in terms of a proposed new section 208B. 

This approach aims to reduce the litigation risk associated with terminating senior staff, affording employers greater discretion in managing their leadership teams. 

2. Clarifying Procedural Fairness in Dismissals 

The amendments propose aligning the LRA with the Draft Code of Good Practice on Dismissal by stipulating that fair procedure requires giving the employee an adequate and reasonable opportunity to respond to the reasons for dismissal. This move seeks to demystify what constitutes fair process and lessen the procedural rigidity that often hampers small businesses. 

3. Probation Periods and Unfair Dismissal Protections 

The proposed section 188(4) establishes that employees in their first three months, or in an operationally justifiable extended probation period, are not protected from unfair dismissal, except where the dismissal is automatically unfair. 

The Department of Employment and Labour has clarified that this measure is designed to address employer reluctance to hire first-time job seekers by lowering the perceived legal risk. 

Automatically unfair dismissals, such as those based on discrimination or union activity, remain prohibited from day one. 

4. Retrenchment Reforms: Shifting the Timing of Challenges 

A rollback of section 189A(13) - (17) is proposed, which currently allows procedural challenges to large-scale retrenchments before they take effect. The amendment would restore the position to what it was prior to 2002, enabling such challenges to be brought post-dismissal as part of a general unfair dismissal dispute. 

This change seeks to reduce rushed litigation and allow more meaningful consultation between employers and employees, avoiding disruption from urgent court applications. 

5. Exemptions for New and Small Businesses 

New businesses, being those in operation for a period under two years with fewer than 50 employees, will be exempt from bargaining council agreements, unless in cases where the business is a result of a mergers or split. This offers regulatory relief to start-ups and aims to stimulate entrepreneurial activity. 

6. Collective Bargaining and Union Practices 

Trade unions will now be required to conduct a secret ballot every three years to decide whether to continue closed shop agreements. 

In essential services strikes will be permitted, but only if minimum service agreements have been negotiated, preventing total shutdowns of critical operations. 

7. Narrowing the Definition of an Unfair Labour Practice 

The scope of “unfair labour practice” under section 186(2) of the LRA is significantly curtailed. Disputes related to promotion, demotion, probation, training, and benefits will be excluded from this definition. Employees must instead pursue these matters via internal grievance channels or contract law claims. 

The objective of the amendment is to reduce duplication and streamline the dispute resolution system, ensuring that the CCMA and Labour Court focus on more serious infringements. 

8. Financial Oversight of Trade Unions and Employers' Organizations 

These bodies must comply with financial record-keeping and reporting standards similar to those under the Companies Act. This includes maintaining financial statements and disclosing income, expenditure, assets, and liabilities. 

The measure seeks to bolster transparency and governance within the institutions central to South Africa’s collective bargaining framework. 

Conclusion 

The proposed amendments to the Labour Relations Act represent a comprehensive reworking of several long-standing provisions. They reflect a policy shift toward pragmatism: easing regulatory burdens to spur employment while maintaining essential worker protections. 

For employers, the key takeaway is preparedness. The proposed reforms, if enacted, will reshape many aspects of employment management, from hiring and dismissals to retrenchment and collective bargaining. Employers are encouraged to begin reviewing internal policies, probation clauses, and dispute resolution mechanisms in anticipation of the changes. 

Written by Kerri Stewart, Attorney, SchoemanLaw Inc