11 June 2014
South Africa’s labour law is on par with many developed countries, according to a new report comparing labour legislation governing redundancies and restructuring in 23 countries around the world.
The report, “A Global Employment Guide to Redundancies and Reductions in Force”, was compiled by global law firm DLA Piper, with a chapter on South Africa contributed by local law firm Cliffe Dekker Hofmeyr, and was released last week.
Its findings stand in contrast to those of a number of international reports, including the World Economic Forum’s Global Competitiveness Index, which criticise South Africa’s labour law for being rigid and restrictive.
Aadil Patel, director and national head of the employment practice at Cliffe Dekker Hofmeyr, said their research showed that South Africa’s employment legislation “is actually on par with many first world counties. The company we keep in terms of our labour legislation regime includes Australia, Singapore, France, the Netherlands, Hong Kong and the United Kingdom.”
South Africa received an A-rating for its redundancy and restructuring legislation in the DLA Piper report. According to Patel, an A-rating indicates that legislation is balanced, providing protection and legal recourse for both employers and employees.
“An A-rating in this guide means that the country is considered to have procedures to be followed in the redundancy and restructuring process, but it was possible to make redundancies within a reasonable period of time and without incurring liability if the procedures were followed. However, if the pitfalls were not avoided, the cost implications could be fairly significant,” Patel explained.
Countries sharing an A-rating with South Africa in the report are Australia, Austria, Belgium, France, Hong Kong, the Netherlands, Norway, Poland, Romania, Russian, Singapore, Spain, Thailand, United Arab Emirates and the United Kingdom.
“What this A rating essentially means is that South Africa’s employment legislation compares favourably to other first world countries and offers a similar legal employment framework for multinationals operating in Europe, Asia and the Middle East,” Patel said.
The report assigns a G-rating to countries where the redundancy process is relatively straightforward and easy to get right, being quick to implement and with no restrictions or limited requirements which are easy to satisfy. Countries rated G included Mexico and the United States.
An R-rating is given to countries where there are significant risks and the processes involved in restructuring and redundancies can be highly regulated, can take a long time and can have significant cost or other implications. Countries rated R included China, Germany, Italy and Japan.