Legal Matters - Changes To The Labour Policies

NEDLAC Proposals Signal Major Overhaul of Labour Laws In South Africa

By Jessie Taylor

South Africa is on the brink of its most comprehensive labour law reform in decades, following the conclusion of extensive negotiations between organised business, organised labour, and government under the auspices of the National Economic Development and Labour Council (Nedlac). If the proposed amendments become law, they could fundamentally alter the country’s employment landscape— especially for high earners, small businesses, and workers facing retrenchment.

The reforms aim to streamline dispute resolution, enhance worker protections, and promote greater flexibility for start-ups while addressing inefficiencies in existing labour systems. They span four key pieces of legislation: the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA), the National Minimum Wage Act (NMWA), and the Employment Equity Act (EEA). In total, the proposed package includes 65 legislative changes—47 to the LRA alone.

A New Framework to Streamline Dispute Resolution

A central feature of the proposed reforms is a limitation on the remedies available to high-income earners (defined as those earning more than R1.8 million annually). Under the proposed changes, these employees would no longer have recourse to reinstatement through the Commission for Conciliation, Mediation and Arbitration (CCMA) in cases of unfair dismissal— unless the dismissal is found to be automatically unfair, such as whistleblowing or discrimination. Instead, remedies for other unfair dismissals would be restricted to capped compensation. The earnings threshold will be adjusted annually based on the consumer price index, and the changes aim to reduce the caseload burden on the CCMA and speed up dispute resolution processes.

Another major focus is retrenchment law. Labour stakeholders successfully pushed for the extension of the facilitation period in large-scale retrenchments from 60 to 120 days. This is designed to ensure that retrenchment is a last resort, and that employers have exhausted all alternative options.

Additionally, statutory severance pay is set to increase from one week to two weeks of remuneration per year of service - although business representatives opposed the change. The amendment will only apply to service accumulated after the commencement of the new legislation.

Other proposed changes to the retrenchment process include:

• Transferring the authority to set facilitation rules from the Minister of Labour to the CCMA.

• Removing the requirement for procedural challenges to be made by urgent application during the retrenchment process, restoring the ability to challenge retrenchments post-dismissal.

• Streamlining access to the Labour Court after facilitated consultations.

These reforms aim to align legal processes with Labour Court rulings and to reduce delays in resolving retrenchment-related disputes.

Start-up Relief and Small Business Flexibility

In a move aimed at encouraging entrepreneurship, the government proposed exempting start-up businesses with fewer than 50 employees from conditions set by extended bargaining council agreements. This proposal was supported by business, but opposed by labour, which raised concerns about potential abuse.

To mitigate this risk, additional safeguards are proposed, such as requiring that the directors of a new company not have previously been registered within the last two years and imposing a financial threshold to prevent wealthy entities from qualifying as start-ups.

These changes form part of a broader recognition of the role that small and medium-sized enterprises (SMMEs) play in job creation and economic growth.

Another significant change involves revising the scope of what constitutes an unfair labour practice. Under the proposed amendments, issues such as disputes over promotions would no longer fall under this definition. Instead, the focus would be limited to unfair suspension or disciplinary action short of dismissal, and occupational detriment arising from protected disclosures.

However, a one-year transitional period has been proposed for certain sectors—such as public service, education, and police—during which time promotion disputes can still be pursued, allowing time for new collective agreements to be established.

Another key area of reform is procedural fairness in dismissals. A proposed amendment clarifies that an employee must be given a fair and reasonable opportunity to respond to allegations before dismissal—reinforcing a move away from overly formal or adversarial processes.

Furthermore, a new three-month probationary period is proposed, during which new employees will have limited protection from unfair dismissal. The rationale behind this is to reduce hiring risks and encourage job creation, especially for young and inexperienced job seekers.

The Nedlac Report, including draft amendment bills and supporting working papers, has been submitted to Employment and Labour Minister Nomakhosazana Meth. The next steps include review by the State Law Adviser, followed by submission to Cabinet and then Parliament. Once tabled, the proposed laws will be subjected to the full legislative process, including public participation and potential revisions.

Notably, not all proposals received unanimous support from Nedlac’s social partners. This means further negotiation and refinement may occur during parliamentary deliberations.

While some future-facing issues— like remote work, climate-related heat stress, and just transition policies—have not yet resulted in specific legislative proposals, working papers on these matters have been developed and may inform future reforms.