School-leavers would gain more employment if SA labour law was amended

Labour law concerns the inequality of bargaini...

Businesses have long been calling for amendments to the labour legislation to assist in the recruitment and dismissal of workers. According to Johan Botes, Director in Employment at Cliffe Dekker Hofmeyr business law firm, a critical re-think of South African employment law might  assist in motivating especially small businesses to reconsider their reluctance in employing inexperienced job applicants.“Presently, employees who are incapable of performing can only be dismissed from employment after the employer had determined that 1 the employee failed to meet the required work standard, 2 the employee was aware of the standard, 3 the employee was afforded sufficient opportunity to meet the standard and 4 dismissal is the appropriate sanction. This process is not always clearly understood by employers frustrated by an employee that is clearly not able to do the work,” Botes explains.According to a labour survey conducted by the Institute of Race Relations, fifty-one percent of South Africans between 15 and 24 are unemployed.The legislature brought some relief to employers in 2002 when introducing a lower threshold against which employers are tested should they dismiss a probationary employee for poor performance Schedule 8, Item 8 to the Labour Relations Act 66 of 1995.Botes notes that if the intention is truly to get businesses to act as institutions of learning, where on-the-job training is provided to workers fresh from school, university or colleges, a relaxation of the strict rules against dismissal for poor performance for first-time job seekers may be the way to go.“Employers are often reluctant to grow their business where such growth requires the hiring of new staff. One of the reasons for this is that it is difficult for the average employer to dismiss staff who is thought to be capable of doing the work required, but could then not come to grips with the work once employed.“If employers are able to readily terminate the service of new recruits who lack the necessary experience, they may be more inclined to give such youngsters a chance in the first place.Botes thinks that employers and needy job seekers may both be pleasantly surprised by the results.“If an employer knows that it can terminate the services of a new job-seeker at will or whilst being tested against for reasons that are automatically unfair only, the employer may decide to provide employment to a larger group of staff than those actually required, knowing that it can retain the best of them after a short trial period.“While the rest of the workers who were not the best at the tasks may then fail to remain employed with the same employer, they would have gained invaluable experience which may assist them greatly in obtaining further employment. The difficulty in getting that into the employment market presents a huge obstacle to our goals of meaningfully reducing unemployment.”He adds, “The current high hurdles laying in the path of employers before being able to dismiss employees for incapacity due to poor performance has not incentivised employers to become institutions of on-the-job training. A different approach is needed if business is expected to actively assist in addressing our skills shortage.”

via School-leavers would gain more employment if SA labour law was amended –  | Political Analysis South Africa.

New Companies Act supports honest directors

COMPANY directors who act honestly and reasonably while performing their duties under new company laws could have a valid defence if they face possible legal and criminal action, says a legal expert at Werksmans Attorneys.

Eric Levenstein, a director at Werksmans, said last week that directors who met their obligations and were able to show that they had discharged their obligations, would be able to defend themselves by showing they acted on the company’s behalf in a “reasonable” way.

“Personal liability is becoming an increasingly emotive issue for directors. They need to be aware of the circumstances in which they can be held responsible for company debts,” Mr Levenstein said.

The new Companies Act, which came into effect on May 1, penalises directors and holds them personally responsible for any losses incurred through knowingly carrying on business recklessly, or with the intent to defraud creditors and other stakeholders. It also created criminal liability for directors trading in a manner calculated to defraud creditors, Mr Levenstein said.

However, a director who meets his obligations under the new legislation would be seen as discharging his duties to the company.

George Tweedy, audit risk leader and national professional practice director at Deloitte, said the new laws also contained defence mechanisms for directors who had made bad decisions at board level.

Mr Tweedy said the new “business judgment” rule would give directors more protection from civil actions unless they were guilty of fraud or other unlawful activities.

“The Companies Act provides that a director will have satisfied his duties if he took reasonably diligent steps to become informed about the matter, does not have a personal financial interest, and has made a decision rationally in the belief that it was in the best interests of the company,” he said.

Mr Levenstein said: “Embracing honest, reasonable standards and meeting the requirements of the Companies Act would ensure that decisions made were defensible.”

via BusinessDay – New act ‘supports honest directors’.