I, Membathisi Mphumzi Sheperd Mdladlana, Minister of Labour, hereby publish for general information the undermentioned Social Plan which flowed from the Presidential Job Summit.
M.M.S. Mdladlana
Minister of Labour
South Africa is currently reeling from the news that several employers are planning to retrench large numbers of workers. The combined effect of all of these retrenchments, if they take place, is an alarming increase in unemployment and poverty. Whatever the underlying economic reasons, the effect on affected individuals and regions is severe, particularly in a context where unemployment is already way too high.
The Social Plan is an agreement concluded at the Presidential Job Summit last year. It seeks to put in place three sets of measures: the first set of interventions seek to prevent retrenchments taking place at all; the second seek to ensure that where they are unavoidable then they are managed humanely; and thirdly where large scale retrenchments have taken place then measures to assist the affected individuals and communities to find alternative forms of employment or sustainable livelihoods are in place.
Implementation of the agreement has already commenced: the National Productivity Institute is in the process of establishing the Social Plan Technical Support Facility. This facility is intended to support firms that establish Future Forums. We intend to more actively promote the establishment of Future Forums so that employers and workers can together anticipate crises and plan more constructive alternatives to retrenchment.
If retrenchments are unavoidable, my Department has already commenced with the delivery of retrenchment services and firms facing large scale retrenchments (over 500) are invited to contact the provincial Department of Labour offices for assistance in this regard. Over and above this, we have begun to work together with other agencies - particularly local authorities in areas affected by large-scale retrenchment - to assist individuals and communities to develop alternative forms of employment.
The success of the Social Plan depends on all of the social partners working together. Unless we do, we shall fail to assist affected individuals and regions and our society will suffer the consequences. The time to implement the spirit as well as the letter of this agreement is NOW.
M.M.S. Mdladlana
Minister of Labour
1. A proposal on a Social Plan Act was tabled by labour on 12 October 1995 in the Trade and Industry chamber of the National Economic Development and Labour Council (NEDLAC). It was agreed by the Management Committee of NEDLAC on 13 October 1995 to establish a task team comprising of delegates from the Trade and Industry and Labour Market chambers.
2. The task team has been meeting for over two years and has reached agreement on the framework to guide affected parties on the ways of dealing with large retrenchments in all sectors and includes a broad proposal on the implementation of the framework agreement.
1. Growth and job creation are urgent priorities, the social plan approach aims to avoid job losses and employment decline wherever possible. There would nevertheless be instances where large job losses are unavoidable. In such cases the social plan approach will seek to actively manage retrenchments and to ameliorate their effects on individuals and local economies.
2. The social partners accept that the burden of employment decline should not be borne by the affected individuals and regions alone. Rather a social plan approach should be adopted which helps to reintegrate retrenched people into the economy, and which helps to revitalise affected local economies.
3. The NEDLAC parties support the promotion of policies designed to ameliorate the consequences of employment decline and to manage the process of down-scaling.
1. The NEDLAC parties have committed themselves to the following principles which define the social plan approach:
2. A social plan approach is applicable where there is a threat of large scale retrenchments which impact on sectoral, regional or national interests.3. The social plan approach aims to ameliorate the social and economic impact for individuals, regions and the economy.
4. A social plan approach promotes negotiation about threats to employment security and measures which can be taken to avoid employment decline.
5. A social plan approach is essential in cases where there is a reasonable possibility that alternatives could be developed to save jobs.
2. The nature of the social plan approach
3. A social plan comprises a basket of instruments characterised by focused programmes directed at achieving short, medium and long term goals.
4. A social plan approach requires the participation of labour, government and business and will involve interventions at various levels.
5. The social plan approach is subject to the Labour Relations Act, 1995, and the Code of Good Practice on Dismissals for Operational Requirements.
6. While the social plan approach will assist parties with appropriate measures and in obtaining government assistance, it does not prevent them from pursuing alternative strategies to achieve the same goals.
1. A social plan approach is most effective when it arises from timeous analysis of problems in a particular sector or company, because this makes it possible to explore appropriate solutions and to implement these in a properly planned way.
2. If attempts at developing a social plan wait until a retrenchment proposal is tabled, then there are often serious time limitations on the process, and the options available are therefore far more limited.
3. NEDLAC parties should therefore promote ongoing discussions between workers' representatives and employers about the future of their industries, and enterprises, and set up 'early warning systems' that can identify problems timeously.
4. The establishment of future forums, whether separately or part of existing bargaining forums, is therefore proposed. These forums will involve employees and their representatives and management, to look ahead at problems, challenges and possible solutions.
2. It is agreed that the Productivity Advisory Council will be renamed as the Social Plan and Productivity Advisory Council (SPPAC).
3. The Department of Labour will establish a Social Plan Technical Support Facility (SPTSF), under the auspices of the SPPAC.
4. In consultation with the SPPAC and after approval by the Minister, the SPTSF shall publish the rules of operation and the criteria for assistance which will be based on the principles of the Social Plan framework.
5. Future forums may agree to approach the proposed SPTSF for technical assistance in the careful analysis of problems and solutions facing the sector or enterprise.
6. Subject to the agreed criteria and availability of resources, the SPTSF may provide or commission the expertise necessary to provide technical or advisory services to the parties as required. Resources available at the National Productivity Institute (NPI) will also be accessed where appropriate, and the NPI will be used to give infrastructure assistance to the SPTSF. The terms of reference would need to be agreed with the parties.
7. The implementation of proposals arising from the SPTSF process would need to be agreed to by the employer and worker parties affected.
8. The SPTSF process will operate within the requirements of the law dealing with fair retrenchment procedures.
3. Services available to all companies and unions:
4. Services available to "troubled" sectors or industries:
The SPTSF will meet with sectors or industries prioritised as above, to agree on a programme to identify and/or address the problems. The SPTSF will provide or access the following standard services:
The SPTSF will facilitate access to government assistance programmes for the implementation of agreed solutions where jointly requested by the parties.
In addition, the SPTSF will provide or secure the following additional services on a shared cost basis:
5. Services available to companies outside the "troubled sectors"
The SPTSF would provide or secure the following services, on a shared cost basis, to successful applicants:
6. Notwithstanding clauses 5.2.2 and 5.2.3, the parties are free to seek alternative remedies.
1. In the event that a retrenchment in excess of 500 people or 10% of the labour force of a company (whichever is the greater) is proposed, within a one year period, the Minister of Labour must be notified by the employer.
2. Where the Labour Relations Act procedures and codes have been followed, and large scale retrenchments are anticipated, assistance may be requested from the Department of Labour.
1. When a large scale retrenchment is unavoidable, the retrenching enterprise may approach the Department of Labour's provincial offices for assistance. The provision of various services will aim to assist in easing the process of retrenchment. This assistance will include offering information and delivering services to retrenched workers and employers to promote re-absorption of retrenched workers into the labour market. To maximise the potential benefit of the services the parties are encouraged to jointly approach the Department of Labour.
2. The services which will be provided by the Department of Labour are divided into two separate categories, namely:
3. Standard generic services offered, as set out in 7.4, across the board to employers, groups and individuals without charge.
4. Additional services offered, as set out in 7.5, by agreement only and which will probably require payment.
3. Delivery of Services:
4. When requested by an enterprise facing retrenchments of 500 workers or 10% of the workforce, whichever is greater, the Department of Labour will:
Set up a Retrenchment Response Team (RRT) competent in employment services, human resource development and the unemployment insurance fund (UIF). Where necessary services linked to Labour Relations and Occupational Health and Safety will also be included. The RRT will liaise with the enterprise at the request of the workers and employers. The Department of Labour, with both workers' representatives and employers, will form a committee to determine:
Mechanisms on how to inform retrenchees on the purpose of the Job Advice Centre (see below).
5. Where there is a large scale retrenchment which affects fewer than 500 workers, either party may approach the Department of Labour's provincial office or Labour Centre for standard services outlined in 7.4 below. These services will be provided at the Department of Labour's offices. Additional services may be provided on agreement between the parties and on condition that resources are available.
4. Standard services to be offered
5. A set of information packs in preferred official languages will be made available to workers who are facing retrenchment and to managers planning retrenchments. The information packs will consist of comprehensive information and support measures available to retrenchees on such issues as UIF benefits, financial management, training and job seeking skills.
6. The Department of Labour will be responsible for the registration of workseekers.
7. Where available, information would be disseminated on the labour market, local economic development possibilities (in collaboration with Department of Constitutional Development) and on skills required in the area or in the workers' home area to assist workers in identifying other employment opportunities.
5. Additional services to be offered as agreed in point 7.3.2 above
6. In addition, the Department of Labour will be able to offer further services on the basis of specific agreements between the Department, employers and the workers' representatives at the enterprise.
7. Funding of additional services will have to be agreed to between the parties. These services may require contracting professional consultants. In which case a reasonable notice period may be necessary. The additional services may include:
There may be people affected by down-scaling operations who are keen to start their own enterprise. In this context, the following options may be considered jointly by workers' representatives and enterprises:
1. Facilitation of links with a Local Business Service Centre or other appropriate support institutions.
2. Delivery of business support services to workers while they are still at work and can explore the options.
3. Assistance and mentoring in feasibility studies and the development of business plans.
4. Inclusion of business and technical training for self-employment in the range of the Department of Labour's services.
5. Provision of time-off so that workers can undergo such training before they leave thei
r workplace.6. Identification by the company of opportunities to supply it with goods or services. (1)
7. Development of a joint workers' representative and enterprise programme to assist employees to open bank accounts. (2)
8. Engagement with the banks and other lending institutions to explore and facilitate arrangements for workers who want to use all or part of their retrenchment packages as collateral security for business loans.
9. Approaching of Ntsika, the Department of Trade and Industry's (DTI's) SMME support agency, to look at specific provisions for training and support from Local Business Service Centres to retrenchees.
(1) Where these are not already provided internally.
(2) Retrenchees are often unable to open bank accounts without proof of employment.
2. Once a large scale retrenchment which impacts on a region or local area becomes unavoidable, the process of social planning needs to start to look outside the enterprise to developments and opportunities in the local or provincial economy.
3. The parties support the call for the formulation and implementation of plans for the rehabilitation of areas that are being negatively affected by large scale retrenchments.
4. Government is committed to providing support to communities that take the initiative to drive economic development in their areas. Government support for such initiatives will need to be co-ordinated and be consistent with other economic and employment strategies in the area.
5. The Department of Provincial Affairs and Constitutional Development will provide a co-ordinating mechanism for communities seeking assistance in the context of large scale retrenchments.
3. As soon as a company or sector realises that there will be large scale retrenchments which will negatively affect a local economy the following process should be followed:
4. Government is committed to providing support to this planning process by means of a centrally co-ordinated fund.
4. Once a local or provincial government has developed a plan, it will be advised by the co-ordinating government department, as to possible sources of assistance for the implementation of this plan. The sources will include existing and new support measures available from various government departments.
5. Such measures will include the following:
1. The social partners note the establishment of enterprise level social plan funds and agree that these should be encouraged to assist, inter alia, the funding of programmes to save jobs and social development programmes.
2. The social partners accept that government funds will not be centralised in one social plan fund at this stage but will be channelled through the relevant implementing agencies including the Departments of Labour, Trade and Industry and Constitutional Development.
Government undertakes, within the first six months of the implementation of the national framework agreement on the social plan, to investigate the feasibility of providing additional forms of financial assistance for the development and implementation of social plans, the delivery of the Department of Labour services and for regional economic development initiatives as outlined above provided that such support:
1. Is justified within the context of a broader employment strategy.
2. Takes due account of the cost of job loss in respect of taxes to be lost and insurance to be paid.
3. Does not subsidise activities which the parties should normally undertake anyway.
4. Resources are available.
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