CCMA Red Tape Costs SA Billions

By Ethel Hazelhurst

Johannesburg - Flaws in labour practices were costing the country billions of rands in direct costs each year, labour consultant Andrew Levy said yesterday. And, although the practices were intended to protect workers, they were in fact marginalising them, he said.

While employers tended to blame the 1995 Labour Relations Act, Levy argued that the problem did not lie with the law but with the way in which it was being implemented. And the Commission for Conciliation, Mediation and Arbitration (CCMA) was largely responsible.

The CCMA is an independent statutory body, set up in 1996 to resolve workplace conflicts. While the concept is generally praised, Levy and others - including the main architect of the Labour Relations Act, Halton Cheadle - say the CCMA overemphasises procedure.

"Over time, the CCMA's requirements have created a situation where companies have been obliged to institute a mini judicial process," said Vic van Vuuren, the chief operating officer of Business Unity SA.

Cheadle said the CCMA and the labour courts had "misunderstood what they were meant to do". He criticised the "over-proceduralisaton of disciplinary hearings, where commissioners now think they are judges and want their awards printed in law reports, when what they are meant to do is produce a simple set of reasons and get on with it".

Largely because of the CCMA's emphasis on procedures, internal company proceedings are draining at least R14.7 billion from employers each year, according to research by Levy between 2003 and 2005.

In a report on labour dispute resolution just released, he said: "[Commissioners] apply the wrong standards of proof, make material errors in assessing evidence and reach conclusions that seem to have no relationship to the facts before them. This is borne out by the comments made by the labour court in review applications." It was also borne out as "when employers take CCMA decisions to the labour court for review, two out of three are overturned".


The cumbersome procedures have created a huge grey market of unmonitored employment. Because the procedures add so much to the normal cost of employment, employers are taking avoiding action. Workers are being casualised and are more vulnerable than before.

"People are being taken from the core of full-time permanent employment in the labour market and are being displaced into a peripheral nether world of quasi work where labour law doesn't apply," said Levy. For example, eight years ago there were about 430 000 people employed in the metal industry. There are still 430 000 workers but there are now only 230 employees.

A review process is under way. Research was commissioned by the presidency in July 2005 and according to CCMA director Nerine Kahn, a series of research initiatives are in the pipeline. So it will be a while before changes are made.

Changes are not necessarily opposed by Cosatu. Rudi Dicks, the federation's labour market policy co-ordinator, said he was not against informal hearings. "But less onerous procedures doesn't mean employers can circumvent procedures. The dismissal must be fair."

Meanwhile, a third consequence of the obsession with procedure, said Levy, was that perceptions of an unfavourable labour environment deterred foreign investors. "The irony is that the Labour Relations Act doesn't require these procedures."