Calling a rose by any other name ...
Suspension vs special leave: employers must note both trigger the same legal obligations
By JOE MOTHIBI & TSHEPANG KGALADI ENS
The recent decision by the Road Accident Fund (RAF) to rescind its initial decision to place its CEO on special leave, replacing it with a precautionary suspension, has raised more than just eyebrows.
It has also brought into sharp focus the confusion that sometimes arises when employers are faced with a choice of whether to implement one or the other.
Precautionary suspension is usually unilaterally imposed when an employer reasonably believes that an employee might have breached a workplace rule that requires investigation, or which may result in disciplinary action. It is not punitive but precautionary in nature. It is imposed for reasons of good administration, often to safeguard the integrity of an investigation or to protect witnesses. There is no requirement for an employee to be provided with the opportunity to make representations before being placed on precautionary suspension, unless the employer has imposed such a duty on itself through its procedures or by agreement with unions. Special leave, on the other hand, is generally granted with the agreement of the employee and is sometimes at the employee’s behest. It generally serves the same purpose as a precautionary suspension, except that it does not carry with it the stigma associated with being placed on precautionary suspension. It is a case of a rose by any other name smelling as sweet.
As the Labour Court stated in Sibanyoni v Speaker of the City of Mbombela and others [2024] JOL 66313 (LC): Special leave imposed by an employer is essentially a euphemism for a precautionary suspension It is irrelevant whether special leave is imposed for a prolonged or short period. It remains a suspension regardless …”
In Heyneke v Umhlatuze Municipality
(Heyneke) (2010) 31 ILJ 2608 (LC), the court, when dealing with the placement of a municipal manager on special leave , had the following to say: “Special leave that is imposed on employees is effectively a suspension in the hope of subverting the residual unfair labour practice provisions of the Labour Relations Act No. 66 of 1995 (LRA) and all the time and other constraints that accompany suspensions.
“To discharge its onus of proving the ... lawfulness of the special leave the municipality has to show that the special leave was at all times at the instance of the employee and with his consent, that it was not imposed on him, that exceptional circumstances existed and that the special leave resolution was adopted in good faith,
and that it was rational, reasonable, proportionate and in the public interest. (own emphasis) Because special leave is treated as a form of precautionary suspension, it is essential employers comply with the requirements that govern suspensions. Even if the term special leave is used, the underlying nature of the action removing an employee from the workplace pending an investigation triggers the same legal obligations as a precautionary suspension. The terms of a suspension that typically apply to precautionary suspension also apply when an employee is placed on special leave, such as, for example, being barred from the workplace and contacting fellow employees.
Use correct procedures
The RAF matter serves as a timely reminder of how crucial it is for employers to use correct legal procedures when removing an employee from the workplace as a precaution pending an investigation or disciplinary action. While special leave might appear to be a neutral or softer option, it cannot be imposed unilaterally without consent; doing so may render the action unlawful. The cost of misunderstanding these concepts can be steep.
State dealings need to comply with EEA
By MELISSA COGGER, TALITA LAUBSCHER &
CHLOË LOUBSER Bowmans
A significant amendment brought about by the Employment Equity Amendment Act, 2022 is the coming into operation of section 53 of the Employment Equity Act, 1998 (EEA).
In terms of this section, every employer who makes an offer to conclude an agreement with any organ of state for the furnishing of supplies or services or for the letting or hiring of anything, must comply with the relevant provisions of the EEA and attach to that offer either a certificate or a declaration of compliance.
This applies to both designated and nondesignated employers. Accordingly, every employer that makes an offer to do business with an organ of state must, if it is a designated employer, comply with Chapters II and III of the
EEA; and if it not a designated employer, comply with Chapter II of the EEA.
A failure to comply with the relevant provisions of the EEA is sufficient ground for rejection of any offer to conclude an agreement with the state, or for the cancellation of the agreement.
The legislation contemplates two options for an employer: either it can request a compliance certificate from the employment and labour minister and attach that certificate to its offer; or it can attach a declaration that it complies with the relevant chapters of the EEA. A certificate is conclusive evidence of an employer s compliance. A declaration, on the other hand, is only conclusive evidence of compliance once verified by the Director-General.
While section 53(1) provides for these two options, the newly enacted Employment Equity
Regulations, 2025 (General Administrative EE Regulations) only deal with the first: the certificate of compliance. It does not provide any details on the verification process. If an employer chooses to attach a declaration of compliance, it is unclear at this stage how verification would be sought, and by whom.
Accordingly, while attaching a declaration of compliance is an option for proving compliance, whether organs of state will accept such declarations remains to be seen. Arguably, a decision by an organ of state to reject an offer by an employer to do business solely on the basis that the employer has attached a declaration as opposed to a certificate, may be open to legal challenge.
However, in the circumstances and for the sake of certainty, it is likely that employers will opt to provide certificates.
The ins and outs of conditional clauses
It is common in offers to purchase (OTPs) in respect of immovable property that such OTPs contain conditional clauses. These conditional clauses frequently deal with the raising of the capital necessary to pay the purchase price.
Our law requires that any acquisition of immovable property must be in writing and signed by both the seller and the purchaser or duly authorised representatives of such persons. Further, the terms and conditions of the OTP must express the intention of the parties in sufficient detail to ensure that the OTP is enforceable. These important terms deal with issues such as the description of the property, the purchase price, the payment of the purchase price and so on.
Where there is a conditional clause, effectively the requirement of certainty as to the meaning of the conditional clause also applies. So, for instance, the conditional clause would need to state its purpose in a manner which is able to be interpreted and understood by the parties. Where a conditional clause deals with the raising of finance, this would generally mean that its contents would carefully define the nature of the finance to be raised and the date by which such finance should be raised.
Our case law is clear that when a conditional clause fails to be met in accordance with its own terms, then the OTP itself lapses and ceases to exist. In addition, the OTP cannot be revived by way of an addendum or by way of some other form of ancillary letter or partial agreement.
In short, an OTP which has ceased to exist (because a conditional clause of such OTP has not been complied with in accordance with its own terms) has to be replaced by a new OTP.
It is essential therefore that sellers and purchasers alike, and property practitioners, are aware that when a conditional clause is inserted into an OTP noncompliance with such conditional clause automatically renders the OTP invalid and of no further legal consequence: there is nothing in law to be revived. A new OTP must be entered into by all the parties and signed by all the parties.
This principle was established once again in the Supreme Court of Appeal case Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024] ZASCA 136 (October 10 2024). Notwithstanding that all the parties involved intended to revive the OTP (which had lapsed through failure of a conditional clause) by way of an addendum which was signed by all the parties concerned, Schippers JA held in a majority judgment that the addendum was incapable of reviving an OTP which itself no longer existed in law.
-Peter Blanckenberg is a Director at Blanckenberg & Associates Inc.
PETER BLANCKENBERG COLU
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Case highlights issues with guardianship over children
It also underscores the importance of correctly following customary law procedures
By ASLAM MOOSAJEE & OLONATHANDO NXUMALO ENS
The Eastern Cape High Court’s judgment in Tshali v Nandi and Others highlighted a significant and recurring issue within many African communities, namely the appointment and recognition of guardianship over children and the frequent failure to comply with the requisite procedures prescribed by both the common law and customary law.
This noncompliance sometimes arises from a genuine belief that customary law has been followed, when in actual fact customary law procedures have not been observed. This judgment also highlights the need to follow the correct customary procedures and further illustrates the need for making customary law more accessible to those who want to rely on it.
In the abovementioned case, Nandipha Tshali and her child Lubabalo Tshali sought inter alia the following declarations from the Eastern Cape Division of the High Court of SA:
● 1. Nandipha Tshali and Lubabalo are customarily adopted children or descendants of the late Nompumelelo Veronica Tshali (the deceased), who passed on without a will and, consequently, are her intestate heirs; and ● 2. The siblings of the deceased who were cited as the first to sixth respondents are not the intestate heirs of the deceased.
There were other ancillary orders that were sought by Nandipha and Lubabalo, such as the setting aside of the liquidation and distribution account that reflects the deceased s siblings as the heirs of the deceased, a declaration that any distribution made pursuant to the liquidation and distribution account is null and void and the ownership of the assets of the deceased s estate be restored to the estate.
In support of the relief sought, Nandipha and Lubabalo argued that the deceased accepted and raised them as her own children. They contended that this relationship was evidenced by several factors: first, their inclusion on the deceased s medical aid card; second, records from the department of transportation, where the deceased was employed, which listed Nandipha and Lubabalo as her children; and third, the fact that they are named as beneficiaries and referred to as the deceased s descendants in her Sanlam retirement annuity.
Nandipha and Lubabalo also relied on section 1
of the Reform of Customary Law of Succession and Regulation of Related Matters Act, 2009 (act).
Section 1 of the act defines a descendant as a person who is not a descendant in terms of the Intestate Succession Act, but who, during the lifetime of the deceased, was accepted by the deceased person in accordance with customary law as his or her own child . [Own emphasis added] It was noted by the court that Nandipha and Lubabalo did not meaningfully dispute the averments on the requirements for customary law adoption, which were set out by Prof Ndima, a customary law expert, in his report on adoption.
In his report, Prof Ndima asserted that: “… while common law adoption is a public affair that is achieved through a court order, customary law adoption is a private matter that does not involve any state institution. Nevertheless, it calls for due
In support of the relief sought, Nandipha and Lubabalo argued that the deceased accepted and raised them as her own children
attention to the significant formality of the child s natural father and the adoptive parent(s) entering into an adoption agreement in a meeting of the families in the presence of the community leader. In this meeting the adoptive parent announces that he/she is taking the child as his/her successor. The latter acquires all the succession rights from the adoptive parent/house; and loses those of the biological unit. (None of these happened in this matter.) All that this means is that adoption happens neither automatically nor quietly it happens at a significant ritual attended by relevant clan members because it affects the adopted child’s family membership and or his/her clan.
In opposing Nandipha s claim, Nandipha s biological father (who is the deceased s brother) contended that he has never relinquished his parental rights and obligations in respect to Nandipha. He further argued that the deceased merely took care of Nandipha on his behalf. In respect to Lubabalo, Nandipha s father asserted that he received damages from Lubabalo s biological father. In this regard, Nandipha’s
biological father denies there had been any customary law adoption of both Nandipha and Lubabalo.
Court’s findings
The court ultimately found that Nandipha and Lubabalo failed to discharge the onus resting upon them for the relief sought and dismissed their case for the following reasons:
● 1. Section 1 of the act requires the deceased to have considered Nandipha and Lubabalo as her own in accordance with customary law. Thus, the act envisaged the act of acceptance by the deceased to be done in accordance with customary law.
● 2. There was no evidence that the deceased’s act of acceptance was in accordance with customary law. The deceased had not approached Nandipha s biological parents to have them relinquish their rights, nor had families undertaken a public ceremony prior to deceased’s acceptance.
● 3. Nandipha also did not mention that she had relinquished her rights and obligations in respect to Lubabalo.
● 4. Nandipha did not provide evidence which contradicts her father’s contentions. The court therefore accepted Nandipha s father s contention.
● 5. Nandipha and Lubabalo made no averment that any customarily law formalities were adhered to in order to establish a customary law adoption, save that they lived with the deceased, and she provided them with support during her lifetime.
The court appreciated Nandipha and Lubabalo considered the deceased as their mother and guardian. In these circumstances, the court held a cost order ought not to be awarded against them.
The court further held that their attorney’s failure to consider the provisions of the act properly, while it may be construed as negligent, is not of such a nature to be construed as grossly reckless or grossly negligent, such as to warrant a de bonis propriis cost order against him. The application was dismissed with no order as to costs.
Nandipha s biological father contended that he has never relinquished his parental rights and obligations
Why vague contracts can cost you millions
By JACQUES VAN WYK & MIKE SEARLE Werksmans
Imagine signing a five-year contract with a top-tier employee, only to realise mid-term that their role is redundant. You think: No problem, we ll just terminate early.” But what if your contract doesn’t explicitly allow that? A recent South African court case, Sedumedi v Sefako Makgatho Health Sciences University, shows how that oversight can cost employers dearly think R2.3m dearly.
The million-dollar misstep In 2018, David Sedumedi signed a five-year deal with Sefako Makgatho Health Sciences University to serve as Director of Institutional Advancement & Internationalisation, earning a hefty R129,647.17 monthly by 2021. When the university restructured, Sedumedi’s role was split, and a new Director of Internationalisation position was created. He argued he deserved the new role automatically; the university disagreed and advertised it. Sedumedi didn’t apply, and by February 2022, he was retrenched with a payout of R399,823.81 for notice, severance and leave. Sounds reasonable, right? Wrong. Sedumedi s lawyers came knocking, claiming the university had no right to end his fixed-term contract early. He demanded R2.3m for the 18 months left on his deal. The court agreed, handing him a massive win and leaving the university with a costly lesson.
The legal trap employers must avoid The court’s ruling hinged on a simple but critical point: fixed-term contracts are ironclad unless they explicitly allow early termination. The university tried to argue that its Termination of Employment Policy , referenced vaguely in Sedumedi’s appointment letter as “conditions of service”, gave it the right to end the contract with one month s notice for operational reasons. The court wasn t buying it.
Drawing on cases such as Buthelezi v Municipal Demarcation Board and Natal Joint Municipal Pension Fund v Endumeni Municipality, the judge emphasised that contracts must be crystal clear. Vague references to policies don t cut it. Sedumedi hadn t explicitly agreed to the termination policy being part of his contract, so the university’s attempt to rely on it fell flat. The result? The early termination was ruled a breach, and Sedumedi walked away with damages for the full unexpired term.
What this means for your business
This case is a wake-up call for employers. Fixedterm contracts aren’t just paperwork they’re financial commitments. Here s how to avoid a Sedumedi-sized disaster:
● Spell it out your contract must explicitly state the conditions under which it can be terminated early, whether for performance, restructuring or other reasons. Ambiguity is your enemy.
● Get clear consent if you want to tie company policies to a contract, ensure the employee explicitly agrees to them. A vague “conditions of service” clause won’t hold up in court.
● Don’t assume flexibility fixed-term contracts lock you in as much as they lock in the employee. If your business might need to pivot, build in clear exit ramps from the start.
The bottom line
Sedumedi s victory shows that courts won t bend over backward to rescue employers from poorly drafted contracts. The university s oversight cost it millions, and it’s a stark reminder: clarity in contracts isn’t just good practice it’s a financial firewall. Next time you’re drafting a fixed-term contract, don t skimp on the details. Your bottom line will thank you.
Navigating SA’s new minimum tax rules
By BRADLEY ZEBERT, ANGELIQUE
STRONKHORST & ESTIAN HAUPT AJM
In today’s globalised economy, large corporate groups operate internationally and often take advantage of low tax jurisdictions when structuring their groups. Accordingly, profits may be diverted to these low-taxed jurisdictions, when in substance most of the work undertaken in earning those profits may have taken place in a jurisdiction with a higher tax rate. This is known as profit shifting.
On December 24 2024, in a significant move aimed at aligning domestic tax policy with emerging global standards, SA implemented the Global Minimum Tax Act No 46 of 2024 and the Global Minimum Tax Administration Act No 47 of 2024, which apply retrospectively to fiscal years beginning on or after January 1 2024. This legislative development
seeks to bring into effect the OECD’s Global Anti-Base Erosion (GloBE) project towards a minimum global tax rate of 15%. In essence, the legislation applies to certain entities (such as a company, partnership or trust) or a permanent establishment (such as a branch) that are members of a multinational enterprise group (MNE) which has an annual revenue of €750m or more in the consolidated financial statements of the ultimate parent entity in at least two of the four fiscal years immediately preceding the tested fiscal year. This carves out a significant group of MNEs, applying only to a handful of South African groups. The legislation imposes a minimum effective global tax rate of 15% through the income inclusion rule (IIR) and the domestic minimum top-up tax (DMTT). The IIR will apply to an MNE s ultimate parent entity in SA and will require tax to be topped up to an effective rate of 15% to Sars in respect of the
jurisdictions in which the MNE operates, should the effective tax rates in those jurisdictions be less than 15%.
The DMTT will apply to an MNE s subsidiary or branch in SA with an effective tax rate lower than 15%, again requiring the shortfall to be paid to Sars.
In terms of compliance obligations, where an ultimate parent entity and its branches or subsidiaries are in scope, a GloBE information return may need to be submitted within 18 months from the fiscal year ending between January 1 2024 and January 1 2025. The return will contain information about the MNE and the calculations required to determine whether the effective tax rate was below 15% and any top-up tax payable, requiring complex analyses to be undertaken. It is noted, though, that specific safe harbour provisions also exist to simplify completing this return. Should a GloBE information return not be submitted, a fixed administrative penalty of up to R50,000 for each
month of noncompliance may be imposed by Sars. This penalty may be doubled if the amount of top-up tax not paid as a result of the failure to comply exceeds R5m and is tripled if the amount exceeds R10m.
Given the above, MNEs operating within SA must now urgently assess whether they fall within the scope of the newly implemented Global Minimum Tax legislation. Internal finance and tax teams, together with external advisers, should collaborate to conduct impact assessments and establish reporting mechanisms to manage the new administrative burdens effectively. This includes conducting a detailed analysis of group revenue thresholds, entity classifications and the geographic distribution of effective tax rates.
If within scope, immediate action should be taken to ensure readiness, particularly with regard to gathering the requisite financial data,
maintaining proper documentation and aligning internal resources to meet the demanding reporting obligations under the GloBE framework.
The introduction of these rules marks a significant shift in the global tax landscape, and SA’s early adoption reflects a strong commitment to tax transparency and international cooperation. For MNEs, this creates both a compliance challenge and an opportunity to review their global tax strategies.
In short, the Global Minimum Tax regime is no longer a distant prospect it is a current and enforceable reality. As such, affected MNEs must act swiftly to evaluate their exposure, fortify compliance systems and adapt their strategies in light of this evolving international tax framework.
-Bradley Zebert is a Senior Associate,
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Sweeping changes to foreign worker employment
By JONATHAN GOLDBERG & JOHN BOTHA
Global Business Solutions
South African employers across key economic sectors are facing unprecedented changes to foreign worker employment following the cabinet s approval of the National Labour Migration Policy (NLMP) 2025 White Paper and Employment Services Amendment Bill (ESAB) on May 28 2025.
The new legislative framework, which will proceed to parliament for consideration, introduces sectoral quotas for foreign national employment. It significantly increases penalties for noncompliance, thus marking the most substantial overhaul of SA’s foreign labour regulations in decades.
A fundamental shift in labour migration policy
The heart of these changes lies in the government’s response to SA’s crippling unemployment crisis and growing public frustration about foreign workers taking jobs that could go to local citizens. Under the new policy framework, the employment & labour minister will wield unprecedented power to set maximum quotas for foreign national employment across major economic sectors including agriculture, hospitality, tourism and construction.
These quotas represent more than just numbers on paper. They signal a fundamental philosophical shift from SA’s relatively open approach to labour migration towards a system that prioritises domestic employment. The quotas can be applied with surgical precision, targeting specific sectors, occupations or even geographical areas where unemployment is particularly acute.
The price of noncompliance has skyrocketed
Perhaps nothing illustrates the government s seriousness about enforcement more clearly than the dramatic increase in penalties for noncompliance. The Amendment Bill introduces a graduated penalty structure that transforms what were once manageable fines into potentially business-threatening sanctions.
Where employers previously faced maximum fines of R50,000 for violations, they now confront a three-tier system that escalates rapidly. Firsttime offenders will face fines up to R100,000, while businesses that repeat violations within three years could be hit with penalties reaching R200,000. Most dramatically, companies that become serial offenders face the prospect of fines amounting to either R1m or 10% of their annual turnover, whichever is greater.
For a medium-sized company with annual revenue of R50m, this could mean a devastating R5m penalty. The message is unmistakable: the government views compliance with foreign worker regulations as nonnegotiable, and the financial consequences of violations could now threaten business survival.
These quotas signal a philosophical shift from SA s relatively open approach to labour migration towards a system that prioritises domestic employment
A web of new compliance requirements
The regulatory burden extends far beyond simple quota compliance. Employers seeking to hire foreign nationals will find themselves navigating a complex web of new obligations that transform the hiring process from a straightforward business decision into a carefully documented legal procedure.
Before employing any foreign national, employers must now verify not only that the individual has legal work status but also that they are specifically authorised to perform the intended work. This seemingly simple requirement masks a complex verification process that demands expertise in immigration law and meticulous attention to documentation details.
More challenging still is the requirement to demonstrate that no suitable South African candidates are available for the position. This goes beyond posting a job advertisement and hoping for responses. Employers must use prescribed employment services for local recruitment efforts and maintain comprehensive records proving their search was thorough and genuine. The burden of proof rests entirely on the employer to show that hiring a foreign national was the only viable option.
The skills transfer requirement adds another layer of complexity. For every foreign national employed, companies must prepare and implement comprehensive skills transfer plans designed to ensure local employees acquire the expertise currently provided by foreign workers. These plans cannot be token gestures they must demonstrate genuine commitment to developing domestic capacity and reducing future reliance on foreign expertise.
SA’s AI regulation: progress, challenges and the road ahead
By RYSZARD LISINSKI Fluxmans Attorneys
SA stands at a pivotal moment in the regulation of artificial intelligence (AI), balancing the promise of technological innovation with the need to address ethical, legal and socioeconomic challenges.
As AI adoption accelerates globally, SA is laying the groundwork for a comprehensive regulatory framework that aims to foster responsible innovation while protecting citizens and advancing national interests.
The country does not have laws or regulations that specifically govern AI. The current legislation most notably the Protection of Personal Information Act (Popia), the Consumer Protection Act (CPA) and the Electronic Communications and Transactions Act seek to regulate certain aspects of AI use, particularly surrounding data protection, privacy and consumer rights.
For example, section 71(1) of Popia addresses automated decision-making, protecting individuals from decisions made solely by algorithms that have significant legal consequences.
However, this legal patchwork leaves many AI-specific issues such as algorithmic bias, accountability, transparency and the societal impact of automation unaddressed by statute.
Legal uncertainties persist around deepfakes, AI-generated art and the ownership of AI-created content.
The National AI Policy Framework
The communications and digital technologies department has spearheaded the development of SA s National AI Policy Framework, released in late 2024.
This framework serves as the foundational blueprint for future AI regulations and potentially an AI Act, marking a decisive step toward a more
structured approach to AI governance.
Key objectives of the framework include:
● Promoting responsible innovation the framework seeks to harness AI for economic growth and social equity while mitigating risks such as bias, discrimination and privacy violations.
● Human-centred AI it emphasises that AI should augment and not replace human decisionmaking, ensuring that ethical and societal values remain central.
● Transparency and accountability the policy calls for robust data governance, transparency in AI systems and mechanisms to ensure explainability and trust.
● Sectoral strategies by encouraging tailored approaches for sectors such as healthcare, education and finance, the framework aims to maximise AI s benefits across the economy.
● Capacity building the framework prioritises talent development, research and public-private partnerships to build a dynamic AI ecosystem.
Consultative and inclusive policymaking
A hallmark of SA’s approach is its emphasis on broad stakeholder engagement. The policy framework was developed through extensive consultations with the industry, academia, civil society and the public.
This participatory process is designed to ensure
that regulations are context-specific, enforceable and reflective of national priorities.
To further guide regulatory development, SA is establishing an AI expert advisory council, led by leading academics and practitioners, to advise on ethical, legal and technical challenges. This council will play a key role in shaping future regulations and aligning them with both continental and global standards.
SA’s regulatory ambitions are unfolding against a backdrop of rapid international developments, such as the EU s Artificial Intelligence Act, which sets a high bar for AI governance. The National AI Policy Framework draws inspiration from these global standards, aiming to position SA as a leader in responsible AI in Africa and a significant player on the world stage.
What comes next?
The National AI Policy Framework is currently under official evaluation, with public consultations ongoing and plans for further legislative development under way. The framework is expected to serve as the foundation for a future AI Act, setting out enforceable rules and standards for AI development, deployment and oversight.
Key priorities for the next phase include:
● Drafting and enacting comprehensive AI-specific legislation;
● Establishing clear mechanisms for enforcement, accountability and redress;
● Ensuring ongoing stakeholder engagement and public trust; and
● Addressing sector-specific risks and opportunities through targeted strategies.
SA’s journey toward AI regulation is still in its early stages but is marked by a strong commitment to responsible innovation, ethical governance and inclusive growth.
-Ryszard Lisinski is a Director at Fluxmans Attorneys
EE targets what businesses need to know
By JONATHAN GOLDBERG & JOHN BOTHA Global Business Solutions
In a significant shift for South African business, the recently adjusted Employment Equity Amendment Act has introduced numerical targets across 18 economic sectors, all converging on a common deadline: 2030.
These targets, which are characterised by many industry observers as stretch goals , present both challenges and opportunities for organisations committed to transformation.
The new framework introduces stringent compliance requirements, with nonadherence potentially resulting in severe penalties that range from 2% to 10% of annual turnover. However, the legislation recognises legitimate circumstances where deviations may be justified, provided these are meticulously documented.
Understanding justifiable deviations
Companies unable to meet prescribed targets must provide comprehensive documentation explaining their deviation, citing one or more of the seven justifiable factors recognised by the act:
● 1. Insufficient recruitment opportunities
● 2. Insufficient promotion opportunities
● 3. Insufficient qualified candidates from designated groups with relevant qualifications, experience or capacity to acquire necessary skills within a reasonable timeframe
● 4. Impact of CCMA awards or court orders
● 5. Transfer of business scenarios
● 6. Mergers or acquisitions
● 7. Impact of economic conditions on business operations.
These provisions acknowledge real-world constraints while maintaining accountability. The focus is on demonstrating genuine efforts toward transformation rather than penalising businesses facing legitimate obstacles.
Policy revisions
To navigate the new requirements effectively, organisations will need to implement substantial policy revisions, particularly in:
● Recruitment and appointment protocols
● Career development and succession-planning frameworks
● Formal deviation documentation processes.
Industry experts recommend developing comprehensive deviation policies requiring signoff from multiple stakeholders, including recruiting line managers, HR leadership and potentially CEO approval for significant deviations. Organisations should view this as an opportunity to entrench equity considerations into their core business practices. The most successful companies will integrate these requirements into their operational DNA rather than treating them as mere compliance exercises.
Strategic implementation approach
Forward-thinking businesses are already developing systematic approaches to meet these requirements, including:
● Establishing regular equity target-tracking mechanisms
● Creating standardised deviation documentation templates
● Implementing multilevel approval workflows for appointment exceptions
● Enhancing talent pipeline development for designated groups.
The amended act represents a significant evolution in SA s employment equity landscape, balancing ambitious transformation goals with practical business realities through its deviation framework. How effectively organisations adapt their internal processes to these requirements will likely determine both their compliance status and transformation success in the years ahead.
Disciplinaries is your sick note the real deal?
Distinguishing
between genuine illness and attempts to frustrate disciplinary proceedings
By SIBUSISO DUBE Bowmans
The submission of medical certificates by employees facing disciplinary action is a recurring issue for employers.
Employees often produce medical certificates booking them off for lengthy periods a few days before a disciplinary hearing is scheduled to proceed. This creates a conundrum for employers who are then required to grapple with the challenge of distinguishing between genuine cases of illness and attempts to delay or frustrate the disciplinary proceedings.
Employers are under no obligation to accept medical certificates as valid justification for an employee not to attend a disciplinary hearing. Employers are entitled to scrutinise the validity of medical certificates, especially where there is a pattern of last-minute submissions or where the content of the certificate is vague or incomplete. In such cases, employers may request additional information, such as an affidavit from the medical practitioner, or require the practitioner to attend the hearing to provide oral evidence.
Employers may also reserve the right to refer
Repeated or poorly substantiated requests for postponement may be viewed with suspicion
the employee to a medical practitioner of their own choosing for an independent assessment at the company’s cost.
Rule 16 of the Ethical Rules of Conduct for Practitioners Registered under the Health Professions Act, 1974 provides that a valid medical certificate must contain, among other things, a description of the illness or condition in layman’s terms (with the patient s consent) and must specify whether the employee is totally indisposed for duty or able to perform less strenuous tasks. If the patient does not consent to disclosure of the nature of the condition, the practitioner must at least state, based on examination, that the patient is unfit for work.
The labour appeal court in the case of Mgobhozi v Naidoo NO & Others, confirmed that medical certificates amount to hearsay evidence. The court held that medical certificates should provide an explanation regarding the capacity of the employee to participate in disciplinary proceedings and that the doctor issuing the medical certificate must depose to an affidavit explaining why the employee will not be able to participate in the proceedings.
The Supreme Court of Appeal in the case of Old Mutual v Gumbi, held that little evidential value could be attached to the medical certificate submitted by the employee ahead of his disciplinary hearing. The medical certificate did not reflect an independent medical diagnosis of the illness or an opinion as to the fitness of the
employee to perform his normal work, let alone his fitness to attend a disciplinary hearing. The mere production of the medical certificate was found to be insufficient, in the circumstances of this case, to justify the employee s absence from the hearing.
Employees facing disciplinary action must be mindful that the mere submission of a medical certificate does not automatically entitle them to a postponement of proceedings. They bear the responsibility to ensure that the certificate is comprehensive, fully setting out the extent of the employee’s incapacity, including their inability to participate in disciplinary proceedings where relevant, and, if challenged, to provide further evidence of their incapacity.
Employees should also be aware that repeated or poorly substantiated requests for postponement may be viewed with suspicion and could undermine their credibility.
Employers, on the other hand, need to strike a balance between ensuring there are no undue delays and that the process followed is fair. In certain circumstances, employers may opt to conduct the disciplinary process by way of written submissions to circumvent what they may view as undue delays on the part of the employee.
Both employers and employees have defined roles to play in ensuring medical certificates are used appropriately and that the integrity of the disciplinary process is maintained.
Mauritius party to Harare Protocol from August
By ROWAN FORSTER & PRAVIN BARTHIA ENS
Mauritius’ accession to the Harare Protocol, which will take effect from August 27 2025, represents a considerable development in intellectual property (IP) protection in Africa.
By depositing its instrument of accession on May 27 2025, Mauritius has become the 21st member state of the African Regional Intellectual Property Organisation (Aripo), thereby enabling applicants, as of the effective date, to designate a total of 21 countries in a single Aripo filing.
This milestone not only underscores Mauritius’ commitment to fostering robust IP standards in alignment with international norms but also marks an important expansion of Aripo s regional reach. The Harare Protocol governs the procedure
for the protection of patents, utility models and industrial designs among participating Aripo member states.
Businesses and inventors will benefit from the streamlined process of securing rights in multiple jurisdictions under a single consolidated application. In a practical sense, this removes the need to file separate national applications in Mauritius, thereby reducing both administrative burdens and legal complexities.
By virtue of these efficiencies and the establishment of a more harmonised framework, applicants will be positioned to benefit from time and cost-effective strategies that comprehensively address patent and design protection across Africa. This is a pivotal step in Mauritius ongoing development as a knowledge-based economy and
CONSUMER BILLS
a gateway to the African continent for investors and innovators.
It will reinforce the wider goals of strengthening IP rights, fostering international collaboration and propelling sustainable economic growth within Mauritius and across the African continent.
It is noteworthy that Mauritius is yet to accede to the Banjul Protocol for trademarks, meaning Mauritius cannot yet be designated under Aripo trademark applications.
This milestone marks an important expansion of Aripo’s regional reach
An invalid code, even for the scone seller
Trade, industry & competition minister Parks Tau has invited the public to comment on the draft Consumer Goods and Services Industry Code of Conduct which purports to be a future regulation under the Consumer Protection Act. It will be hard to find a more egregious example of regulatory overreach, especially seeing the issues are already better dealt with in the CPA itself. The draft code is proposed for the consumer goods and services industry to govern all participant entities involved in a supply chain that provides, markets or offers to supply goods and services to consumers, with some exceptions for the motor industry, financial institutions and the government.
It is not clear who is an “entity” bound by the code because the CPA does not distinguish between individuals and juristic persons. It is said to be mandatory for all
participating entities to comply with the code. Who knows whether persons doing business in partnership and selling scones at the side of the road are supposed to be bound by the code. It would mean that every single entity that provides, markets or offers to supply goods or services in SA will be bound by the code and must register with the Consumer Goods and Services Ombud which itself is an impermissibly self-created ombud.
Once these hundreds of thousands of entities are registered, they are expected to contribute to the funding of the operation of the CGSO by means of payment of a joining fee, an annual fee and possibly a special levy. Extraordinarily, the CGSO board will even be allowed to charge fees to people who fall outside the CGSO s jurisdiction.
There is no authority in the CPA for the CGSO or anyone else setting, charging and enforcing fees under an industry code applicable to people who have never been consulted. An industry
code is supposed to be recommended to the minister after consultation with persons conducting business within the relevant industry. There is no mention of how the multitude of suppliers of goods and services in SA were consulted.
What is an industry?
The core problem is to decide what is an industry. Having one code for hundreds of thousands of entities who, without being consulted, now become members of a body they have never heard of, and be subject to levies and ombud jurisdiction, is not what the
CPA allows. The drafters appear to have misunderstood valid models such as the National Financial Ombud Scheme After reading more than 30 pages of the Gazette you will find, among the unenforceable provisions, that the CGSO has given itself authority to make recommendations to consumers and participants who are in a dispute. If the industry member does not accept the recommendation, they can be penalised by having their name as a non-acceptor in the ombud s annual report, and the matter can be referred to the National Consumer Commission. Every participant large or very small must establish an effective internal complaints handling process and appoint a designated officer to deal with complaints subject to a long list of obligations, none of which can ever apply to most small businesses.
Experience teaches us that comments along the above lines to the DTIC will not result in the code disappearing. There is a well-known
principle of interpreting laws that they must not be interpreted to give absurd results. The CPA provisions regarding industry codes of conduct are for persons (not entities) conducting business within a defined industry. The CPA does not provide for enrolling, levying and regulating every entity involved in providing, marketing or offering goods and services including their supply chain (such as the person who bakes the scones).
The CGSO is already incorporated as a not-for-profit company allegedly as an ombud scheme accredited in terms of section 82(6) of the CPA. There is no provision in the CPA allowing for the CGSO’s self-appointed existence. One wonders whose money paid for all this.
So we now have a proposed ombud that nobody appointed, intending to regulate persons that nobody consulted, to administer an illegal code that nobody needs.
-Patrick Bracher (@PBracher1) is a director at Norton Rose Fulbright.
PATRICK BRACHER
A walk around the block: an overview of recent block exemptions
Mechanism seeks to assist industries facing diverse challenges, including health, transport and sugar sectors
By PRELISHA SINGH, MARTIN VERSFELD, ALEXANDRA REES & THOMAS GREIG Webber Wentzel
In recent months, the trade, industry & competition minister has published several block exemption regulations in terms of section 10(10) of the Competition Act, 1998.
An exemption is a regulatory tool that allows firms to conclude agreements or engage in practices that would otherwise be prohibited under the act, to advance competition objectives.
Sections 10(1) to 10(9) of the act provide for the exemption of agreements, practices or categories of agreements or practices on application to the Competition Commission.
A successful application for exemption must show that the agreement(s) or practice(s): (i) are essential to the achievement of the socioeconomic or political objectives listed in section 10(3)(b) of the act; (ii) are necessary for the exercise of intellectual property rights; or (iii) relate to the activities of a professional association.
Block exemptions in terms of the Competition Act
A successful exemption application may lead to a category-wide or industry-wide exemption. For example, in 2010, the commission granted a short-term exemption for certain categories of agreements and practices to the South African
It important the discretion section 10(10) affords is exercised in a measured, principled manner. This avoids enabling inappropriate political intervention
Petroleum Industry Association (Sapia) and its members to allow the petroleum industry to collaborate to meet the anticipated demand for liquid fuel during the 2010 Soccer World Cup. In a loose sense, this is a “block” or category exemption.
However, a true block exemption mechanism was only introduced in 2019 by the insertion of section 10(10) into the act. This provision empowers the minister, after consulting the commission, to exempt a category of agreements
or practices to give effect to the purposes of the act. No application process is required: section 10(10) allows the minister to act proactively and unilaterally (subject to the consultation requirement, the requirement to further the objectives of the act and applicable public law requirements).
The agility afforded by section 10(10) has proved useful where urgent or systemic interventions are required and protracted casespecific assessments are impractical. For instance, the section’s first use, in March 2020, enabled concerted conduct in the healthcare sector (followed swiftly by the banking, retail property and hotel sectors) to alleviate the effects of the Covid-19 pandemic.
More recently, the May 2023 Energy Suppliers Block Exemption enables collaboration among energy suppliers to ease constraints on the national electricity grid. In both cases, section 10(10) was used to fast-track industry collaboration in response to crises.
The June 2024 Block Exemption Regulations for Small, Micro and Medium-Sized Businesses aim to promote the participation of SMMEs in the economy by exempting agreements relating to research and development, production, joint purchasing, joint selling, commercialisation, standardisation and collective negotiations with large buyers or suppliers. SMMEs must apply to benefit from the exemption, with applications being determined within 30 days again highlighting the flexibility of section 10(10).
Recent block exemptions
In February 2025, draft regulations governing the Interim Block Exemption for Tariffs Determination in the Healthcare Sector were published for comment. Ostensibly designed to contribute to the affordability of healthcare, these regulations propose to exempt the collective determination not only of tariffs for healthcare services, but also of standardised diagnosis, procedure, medical device and treatment codes, quality metrics, medicines formularies and treatment protocols and guidelines.
Unusually, the regulations propose the establishment of a multilateral negotiating forum and a tariffs governing body, both controlled by the health department
On May 8 2025, the Block Exemption for Ports, Rail and Key Feeder Road Corridors was published in response to SA s transport and logistics infrastructure challenges. Collaboration is
permitted in defined instances, depending on whether the aim is to address difficulties relating to ports, railways or road corridors.
On the same day, draft regulations for the Block Exemption for the Implementation of Phase 2 of the Sugar Master Plan were published for comment. These are aimed at facilitating collaboration in the sugar value chain, including through coordination on pricing methodologies, to stabilise and grow the domestic sugar industry and mitigate adverse effects of the sugar tax and declining local demand. The regulations also propose the appointment of an independent facilitator by the trade, industry & competition department to oversee certain collective determinations.
Parameters of the section 10(10) exemption powers
The varied content of these examples demonstrates that the block exemption powers in section 10(10) of the Competition Act offer a flexible and expedient mechanism for advancing economic policy and assisting industries facing diverse challenges.
However, while the benefits of section 10(10), which is broadly aligned with similar provisions in other jurisdictions, are clear, it is important the discretion it affords is exercised in a measured and principled manner. This avoids enabling inappropriate political intervention under the guise of competition regulation.
This caution is potentially relevant to the draft healthcare sector regulations. The establishment of new regulatory bodies overseen by the health department and proposed to be empowered by way of competition regulation to negotiate, not only on tariffs, but on a wide range of healthcarerelated matters, is far-reaching. Submissions from various stakeholders have pointed out that these provisions may exceed what is lawfully permissible under the act.
The establishment and exercise of the powers afforded by section 10(10) to craft effective responses to economic challenges is to be welcomed. However, it is essential to guard against the blurring of lines between industrial policy and broader political objectives, on the one hand, and what is permitted under competition regulation, on the other. Ultimately, block exemptions must further the objectives of the Competition Act. To withstand legal scrutiny, they must remain within the legislative bounds of section 10(10).
The establishment and exercise of the powers afforded by section 10(10) to craft effective responses to economic challenges is welcomed
Travel rule aims to enhance crypto transfer transparency
By ANGELA ITZIKOWITZ
& ERA GUNNING ENS SA has taken a significant step toward strengthening transparency in crypto asset transfers with the introduction of the “Travel Rule , now mandated under Directive 9 issued by the Financial Intelligence Centre (FIC). Effective from April 30 2025, it aligns with the Financial Action Task Force (FATF) Recommendation 16 that requires accountable institutions involved in crypto asset transfers to enhance transparency and combat financial crimes such as money laundering, terrorist financing and proliferation financing. Directive 9 obliges crypto asset service providers (Casps) to collect and transmit detailed information about both the originator and the beneficiary with every crypto asset transfer. This information must be shared, either before or simultaneously, with the transfer and retained securely for regulatory review. For natural persons,
it is incorporated, and the registered address must be obtained and verified. Intermediary Casps must ensure the information travels with the transaction chain and
implement risk-based policies for handling transfers with missing or suspicious information. Importantly, the measures referred to in Directive 9 and the policies and procedures to give effect to them must be included in the Risk Management and Compliance Programme (RMCP), which the Casp is obliged to have developed and implemented under section 42 of Fica.
Noncompliance with Directive 9 can lead to administrative sanctions in terms of section 45C of Fica, which include warnings, reprimands or financial penalties up to R50m for juristic persons and R10m for natural persons. In summary, Directive 9 enforces the FATF’s Travel Rule within SA’s crypto sector, ensuring that all Casps and non-Casps accountable institutions dealing with crypto assets maintain transparency and accountability in crypto asset transfers to mitigate financial crime risks effectively.
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