Knowing your rights proves key to the South African labour market

Studying the market and approaching it from a holistic view is the best way to operate within its parameters in an effective manner. There needs to be a clear understanding between Employment Practices Liability (EPL) and Employer’s Liability and what it covered by both.

 

There is often confusion between the cover provided under EPL and Employer’s Liability. A sure way to remember the difference is that EPL covers claims arising out of unfair labour practices, while Employer’s Liability is pertinent to injury to employees at work. To grasp the intricacies of the exposure consider the summary of cover provided under each one.

 

EPL policies insure employers against allegations of unfair dismissals, sexual harassment, discrimination, and the failure to employ. The policy covers legal fees, damages, awards and settlements.

 

The actions are generally brought before the Commission for Conciliation, Mediation and Arbitration (CCMA), various bargaining councils, Labour Courts or an arbitration proceeding. With roughly 200 000 cases per year being heard in the various labour dispute forums, South Africa is clearly one of the most litigious countries in the world.

 

This makes the cover provided under an EPL policy particularly important in the South African context. If the employer is found guilty, employees are generally awarded a multiple of their monthly salary which can be up to 12 months for unfair dismissals and 24 months for automatically unfair dismissals. Automatically unfair dismissals are those which arise out of discrimination against people because of their race, sexual orientation, pregnancy status, and the like.

By contrast, Employer’s Liability is an extension under a General Liability policy and has nothing to do with unfair dismissals. It covers the employer’s liability arising out of injuries sustained by employees in the course of their employment. This excludes claims arising from prolonged exposure, as well as cover provided by the Compensation for Occupational Injuries and Diseases Act (COIDA).

Although COIDA has mostly eliminated the common law right of the employee to sue the employer for work related injuries, there is still a risk that the employer may be sued. A significant example of this is Mankayi v AngloGold Ashanti Limited [2011] where the constitutional court overruled legislation and awarded the employee R2.6m in damages. Another exception might arise where one employee intentionally injures another.

 

Since COIDA only covers injuries resulting from an accident, intentional injury caused by an employee might not be covered by COIDA. Fortunately the Employee to Employee part of the Employer’s Liability extension covers this. It is important to remember that COIDA does not apply outside of South Africa, nor does it apply to local, provincial and national state authorities, these entities are referred to as ‘individually liable employers’.

Perhaps the easiest way to illustrate the difference between EL and EPL is through an example.

 

Suppose your employee is injured while at work. As a result of this injury he suffers a loss of income and you suffer a loss of productivity. COIDA will not cover your loss of productivity but it would typically cover the employee’s loss of income.

If for some reason COIDA fails to respond satisfactorily, he/she might sue you for his loss. If that happens the Employer’s Liability extension would respond. Now suppose it becomes necessary to terminate his services because he is unable to work properly and as a result he takes you to the CCMA. If you lost the CCMA case then that would be an Employment Practices Liability claim.