An area of keen interest for auditors today, is laws and regulations affecting their clients.  The auditing standards have made it imperative that auditors assess whether there are any laws and regulations that could have a negative financial impact on the business and ultimately affect the going concern of the entity.  Some of the key areas that the auditor will look at are Company legislation and legislation relating to labour, as these have been two controversial topics over the past number of years and potentially the most costly.  It is therefore important for owners and directors of businesses to be aware as to what labour legislation affects them and what impact it could have on their business.

It is recommended that companies engage human resource experts to manage the relationships between themselves and their employees, as legislation is changing at such an alarming rate that it is difficult to keep up, while still trying to run the business.  It is not only the legislation that is changing but due to the improved access to legal representation to employees, through the CCMA, there have also been a number of ground breaking judgements through the courts,  also affecting the way we deal with labour.

These are some of the legislations governing labour relations:

Labour Relations Act

One of the most important and more controversial pieces of legislation affecting employment relations is the 1995 Labour Relations Act, which applies to all employers, employees, workers, trade unions and employer organisations.

The Labour Relations Act seeks to delineate the employment relations environment and along with the Basic Conditions of Employment Act governs relationships between employers and employees. Built into this act is the provision for collective bargaining, which allows unions and employer groups to represent certain sectors of the markets.

The Act also provides the right to freedom of association of employees allowing them to join a union or other association if they wish. It also provides employees, protection against unfair dismissal.

Basic Conditions of Employment

The Basic Conditions of Employment Act of 1997 regulates the standards to which an employer must adhere when setting working conditions for employees. The Act therefore regulates aspects such as leave, remuneration, terminations, working hours and other employment conditions.  Collective agreements can be made for certain sectors of employment, but otherwise all aspects of this Act are to be followed by employers. Please note that the section of the Act dealing with working hours does not apply to those employees that work less than 24 hours a month, or receive a yearly wage in excess of R115 472.

The Employment Equity Act

The idea of the Employment Equity Act of 1998 is to address inequity in the workplace and to ensure that it reflects the demographics of the population. It is also designed to encourage employers to address racial, gender, disability and other disparities in the workplace.

The CCMA

The Commissioner for Conciliation, Mediation and Arbitration is an independent body that was established by the terms of the Labour Relations Act. It is largely designed to conciliate workplace disputes and to arbitrate certain kinds of disagreements that remain unresolved after conciliation. All Employees may refer a dispute, such as ill treatment or unfair dismissal to the CCMA.

It has been mentioned that the South African Labour Law makes it to difficult to dismiss wayward employees, and often creates greater problems than it wishes to solve. One of the major issues facing the CCMA now is the massive backlog of cases that still need to be heard, which makes the CCMA as a body rather ineffectual.

To avoid costly hearings and arbitration it is suggested that firms develop formal policies to regulate the employer-employee relationship in the workplace. If done effectively, this allows everyone to know where they stand and can help build productive relationships between employers and employees.

Staff should understand their rights and it is incumbent on management to ensure that the policy is properly communicated to staff members.

According to David Cartright, a labour attorney, the employment relations policy should cover the following areas:
The relevant legislation;

• Employee rights;
• The parties in the employment relationship;
• Grievance procedures;
• Disciplinary procedures;
• The relevant trade unions and employee organisations;
• Retrenchment procedures;
• Strikes and lock outs; and
• Dispute resolution processes.
  
  Therefore, a workplace policy can go a long way to save money and time when it comes to labour disputes.