Importance of labour insurance highlighted by uptick in public labour disputes
Simon Colman, Underwriting Executive at SHA Specialist Underwriters.
Last month we saw the Department of Home Affairs issue stern warnings to workers cautioning them against taking part in illegal strikes. Then, in this past week, we’ve seen the Post Office dismiss several workers for violating a court order prohibiting workers from taking part in an illegal gathering. These types of events highlight the need for insurance against labour disputes.
This is according to Simon Colman, Underwriting Executive at SHA Specialist Underwriters – the largest liability underwriting management agency (UMA) in Southern Africa – who says that these types of labour dispute scenarios are becoming increasingly prevalent in South Africa and are prime examples of the labour relations ‘tightrope’ that employers are constantly treading on.
The recent remarks by the National Union of Mineworkers (NUM) that they will be seeking pay hikes of up to 100% for some of the lower paid workers - with reference to the pending wage agreement negotiations for the gold mining sector set to take place in June - also draw attention to the often adversarial environment in which employers and employees must co-exist.
“While no employer should treat employees unfairly, the heavy case-load at the Commission for Conciliation, Mediation and Arbitration (CCMA) each year, clearly indicates that labour disputes are increasing rapidly and one way that employers can mitigate some of the costs involved in disputes, is through comprehensive labour dispute insurance.”
“In South Africa, unfair dismissal events make up around 80% of the cases at the Commission for Conciliation, Mediation and Arbitration (CCMA) each year, with almost 700 cases being referred to the CCMA every day.”
Due to the fact that the CCMA is a free resource to employees, one often finds that a case where the dismissal was more than justified (in a fraud or theft case for instance) is still reported to the CCMA, with the aggrieved employee simply angling for a settlement and hoping the employer will back down because of the inconvenience associated with the process, he says.
“Employers should realise that the split between successful and unsuccessfully defended cases at the CCMA is almost 50/50, which means that the commission presents a very fair way of dealing with disputes.”
Colman explains that unfortunately many employers still perceive the CCMA as a biased entity and will therefore go out of their way to avoid engaging. “However, in reality, employers who endeavor to follow procedure and have good reasons for taking action against employees actually have very little to fear.”
Taking out appropriate insurance ensures that the financial risk associated with labour disputes is mitigated and that employers cannot be ‘blackmailed’ or threatened by disgruntled employees who submit unjustified grievances, says Colman.
He says Employment Practices Liability (EPL) is the only form of labour dispute insurance available to employers. “It is designed to respond to labour disputes that are reported to the Courts, CCMA or Bargaining Councils by employees who allege that they have been unfairly dismissed, discriminated against or even sexually harassed.”
However, it is important to note that EPL cover is not there to enable employers to avoid their obligations under the law, but rather to remove the uncertainty of the decision making process at the various dispute resolution forums, he says. “The policy does not condone mistreatment of employees and in fact does not respond at all to deliberately malicious acts on the company’s part.”
Employers can also involve the CCMA before they proceed with dismissals to engage in a pre-dismissal arbitration which can assist organisations in ensuring a fair process, concludes Colman.
