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REPORT OF THE EMPLOYMENT CONDITIONS COMMISSION ON THE

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REPORT OF THE EMPLOYMENT CONDITIONS COMMISSION ON THE

     REPORT ON THE INVESTIGATION INTO A SECTORAL

    DETERMINATION FOR THE HOSPITALITY SECTOR-2007

Background 3

    Terms of reference 3

    Methodology 5

    Phase One Administrative aspects 5

    Phase Two Consultation with stakeholders 7

    Phase Three ECC process 9

    Phase Four Publication of the amended sectoral determination 11

    Structure of the report 11

    CHAPTER TWO Description of the sector 12

    2.1. Trends in Ownership 12

    2.2. Enterprise distribution across sub-sectors 12

    2.3. Spatial distribution by province and location 13

    2.4. Distribution by Enterprise size category 14

    CHAPTER THREE

    DISCUSSION AND PROPOSALS 16 3.1 Scope and the definition of the hospitality sector 16

3.2. Demarcation 21

3.3. Occupational classification 23

3.4. Minimum wage levels 30

3.5 Minimum wage increases and the duration of the sectoral determination. 35

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3.6. Companies employing less than 10 employees (Small employers) 37

    3.7 Newly established employers 38

    3.8. Minimum wages for casual and part-time employees 40

    3.9 Guaranteed hours of work 41

    3.10 Commission based payment 42

3.11 Payment in kind 43

3.12 Provision of meals or vouchers 43

    3.13. Accommodation 45

    CHAPTER FOUR

4. CONDITIONS OF EMPLOYMENT 47

4.1. Working time 47

    4.1.1. Ordinary hours of work 47

4.2. Daily and weekly rest periods 48

    4.3. Overtime hours 49

    4.3.1. Overtime payment 50

    4.4. Averaging of the hours of work 51

    4.5. Payment for Sunday work 53

    4.6. Payment for work on public holidays 55

    4.7. Night work 56

    4.8. Leave 57

    4.8.1 Annual Leave 57

    4.8.2. Sick Leave 58

    4.8.3. Family Responsibility Leave 59

    4.8.4. Maternity Leave 60

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4.9. Particulars of employment and remuneration 60

    4.9.1. Written particulars of employment 60

    4.9.2. Information about remuneration 61

    4.9.3 Informing employees of their rights 62

    4.10. Termination of employment 62

    4.11. Severance pay 63

    4.12. Certificate of service 64

    4.13. Long service recognition 64

    CHAPTER 5

EVALUATION IN TERMS OF ECC CRITERIA

    The ability of employers to carry on their business successfully 66

    The operation of small, medium and micro-enterprises 67

    The cost of living 67

    The alleviation of poverty 67

    The likely impact of any proposed condition of employment 68

    on current employment or the creation of employment

The possible impact of any proposed conditions of employment on 68

    the health, safety and welfare of employees

     CHAPTER SIX ECC RECOMMENDATIONS 69

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    CHAPTER ONE: As directed by you, the Employment Conditions Commission (ECC) has pleasure in

    presenting you with a report on its investigation into the Hospitality Sector.

1.1 Background to this investigation

    In post-apartheid South Africa the fortunes of the hospitality sector are closely bound up

    with the development path taken by the tourism industry. The Department of

    Environmental Affairs and Tourism(DEAT) states that the tourism industry is regarded as

    a leading sector within the national economic strategy in that a “globally competitive

    tourism industry will be a major force in the reconstruction and development efforts of

    the government” (DEAT 1996:18).

The vision of the 1996 White Paper on Development and Promotion of Tourism in South

    Africa was “…to develop the tourism sector as a national priority in a sustainable manner,

    so that it will contribute significantly to the improvement of the quality of life of every

    South African.” Industry commentators have long been extremely optimistic about the

    future potential of tourism in general, and hospitality specifically. The hospitality sector,

    often associated with the hotels and accommodation sub-sector, has been described as

    experiencing a “boom‟, and the Federated Hospitality Association of South Africa

    (FEDHASA) (2003) says that “the boom just keeps going” with hotel occupancy rates at high levels.

The tourism sector is the fourth largest generator of gross domestic product (GDP),

    following manufacturing, mining and quarrying. In the post-September 11 period, South

    Africa has become known as one of the safer and more cost-effective destinations for

    entertainment and leisure activities. It has also developed a reputation as a convention

    destination of high standards.

The 1994 political transformation and the integration of South Africa‟s economy to the

    world economy have also made a significant contribution to the country‟s tourism

    potential. The research commissioned for the purposes of this investigation reveals that

    besides the traditional and well-established holiday and business infrastructure, new

    sectors have opened up with adventure, conference, cultural and eco-tourism leading the

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way. Further, the country‟s successful conducting of a range of very large, world-class

    events including the World Summit on Sustainable Development has illustrated the efficiency of the hospitality supply chain.

    However, while this illustrates the positive face of the industry, it is also faced with a range of constraints and challenges. The industry is very diverse in terms of its sub-sectors and number and size distribution of enterprises. It is estimated that it mostly consists of very small, micro and medium-sized enterprises (Tourism, Hospitality and Related, Education and Training Authority (THETA) 2005).It is a highly labour-intensive industry and as a result of a historical under-investment in training of black people under apartheid, this translates into the concentration of blacks in predominantly low-skilled and low-paid jobs, while whites are concentrated in higherskilled and better-paid jobs

    (THETA, 2004). In 2004, a Black Economic Empowerment Scorecard was released to begin to address, among others, historical inequities such as the concentration of ownership in predominantly white hands (TBCSA, 2004).

    Labour standards across the sub-sectors are generally assumed to be poor, with pockets of reasonable standards in certain larger enterprises. The industry is said to run on very flexible principles, given the operational requirements in the personal service industry, where a significant section runs on a 24/7 basis (THETA, 2005). There is a common perception that working conditions in the hospitality sector are notoriously hard, in terms of the pressure of work, very long and irregular hours, low wage rates and a lack of job security (Bothma and Thomas, 2001).

    It is within this context that an investigation of minimum wages and conditions of employment is appropriate. Employees are the first point of contact for all visitors (local and foreign), and if South Africa is to become known as a global destination for leisure and entertainment activities, it cannot do so under so-called “sweat shop‟ conditions. The

    purpose of sectoral determinations is to facilitate the achievement of the delicate balance between efficiency and, most importantly, the protection of vulnerable workers. This is done primarily through the protection of labour standards, while not jeopardizing business growth and employment levels.

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Currently the sector is regulated by several old wage determinations which are outdated

    in terms of wages and conditions of employment and do not cover the full sector as

    proposed in the terms of reference.

1.2. Terms of reference

    The Department published a notice in the Government Gazette No 22822 of 16

    November 2001 under Government Notice No R1124. The notice called upon interested

    parties to send written representations to the Department within 90 days of publication of

    such notice. The terms of reference for the investigation into the hospitality sector were

    set out as follows:

1. To review the following wage determinations and to establish the feasibility of

    grouping them together in a single determination for the Hospitality Sector:

    (i) Wage determination 457: Hotel Trade, Certain Areas;

    (ii) Wage determination 461: Catering Trade, Certain Areas;

    (iii) Wage determination 477: The Trade of Letting of Flats or

    Rooms, Certain Areas,

    (iv) Wage determination 479: Accommodation Establishment Trade,

    Certain Areas;

In the application of these terms of reference, the Hospitality Sector was defined to

    include any business that is associated with the following activities:

    (a) Hotel and restaurants, including hotels, motels, resorts, and game lodges, hotels,

    guest houses, guest farms and bed and breakfast;

    (b) provision of short-stay accommodation including short-term rental, self catering

    or time shared, camps, caravan parks;

    (c) restaurants: bars canteens and other catering services including food preparation,

    food and beverage services; licensed clubs and fine dining establishments; pubs

    and taverns, fast food outlets, snack bars and kiosks, industrial and contract

    caterers; functions and outside careers;

    (d) travel agencies, tour operators and related activities, including retail and general

    travel operations: marketing and development agencies and companies, tourism

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    authorities, commissions and boards: tourist information centres; tourism

    industry associations;

    (e) destination management including tour operators and guides; venue management;

    museums; special attractions, management of special events, conventions,

    exhibitions and festivals: event, conferences, festival and attraction venue

    management; fun fairs and parks rafting; abseiling; hang-gliding, bungee-

    jumping and other adventure tourism operation;

    (f) motor car rental services;

    (g) conservation: games parks and zoological establishments including wildlife

    conversation, wildlife parks and game reserves; camp and conservation park

    management; trekking and safari operators; botanical gardens; (h) gaming and gambling including casinos and other tables, electronic and slot

    machine gaming outlets; clubs, gambling betting and booking operators;

    totalisators; lottery operations horse racing clubs; and (i) inbound international airline operators.

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1.3. Methodology

    A four-phased project framework was developed for this investigation, as follows:

(a) PHASE ONE INFORMATION GATHERING

    In terms of information gathering, the Department commissioned research into the

    hospitality sector. In line with the terms of reference, the research had to provide the

    following information in relation to the hospitality sector:

(a) Labour market information which includes:

    (i) Labour force composition

    (ii) Conditions of employment

    (iii) Remuneration

     (b) Economic information

    (c) Socio-economic information

As the first phase of the research process, the researchers developed a literature review

    (secondary research) which included:

     Desktop analysis economic profile and structure

     Analysis of data from the Labour Force Surveys of 2001 to 2003

     Analysis of sectoral determinations and collective bargaining agreements

     Review of other sources with relevant information

The second phase of the research process was the primary research which included:

     Stakeholder interviews

     Sample survey - 900 employers and 1087 employees

This process involved interviews with employees and employers.

    The table below provides an overview of the range of organizations consulted in the

    research process.

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Organisation Sub-sector/description

    Tourism Business Council Umbrella body representing business sector in tourism on

    SA macro-issues;

    Members include trade associations and individual businesses. THETA Training body for all sub-sectors related to tourism and

    hospitality, conservation, sport and recreation. The Federated Hospitality Hospitality trade association including, hotels, restaurants, Associations of South caterers, self-catering, time-sharing, home hosting (B&B,

    Africa (FEDHASA) guesthouses), suppliers, consultants and service providers to

    hospitality industry; conference venues, country clubs and

    taverns.

    National Accommodation Trade association for smaller establishments- 1-30 bedroom Association establishments.

    1500 members

    Bed & Breakfast Mostly Small, Micro and Medium Enterprises SMME‟s Association of South including lodges, guest houses (1- 15 rooms), B&Bs (1-6 Africa (BABASA) rooms) & caterers.

    Mostly informal and “unregistered”, partnerships and “mom

    and pop” shops.

    National Council for Tour Represents tour guides and adventure operators (e.g. bungee

    Guides jumping etc.)

    National Association of Employers organization in the catering industry Catering Employers In the process of registering as an employers‟ organization (NACE)

    South African Trade union

    Commercial and Catering Hotels, restaurants, tourism, gambling. Workers‟ Union

    Congress of South African Trade Unions (COSATU) affiliate (SACCAWU)

    Hotel, Liquor, Catering & Trade union representing hotel and catering employees. Allied Workers Union National Council of Trade Unions (NACTU) affiliate (HOTELLICA)

    Commercial Catering, Independent trade union- breakaway from South African Accommodation Workers‟ Catering, Commercial and Allied Workers‟ Union

    Union (CCRAWU) (SACCAWU) mainly hospitality sector

As illustrated in the table, these organizations represent a reasonable profile of the main

    sub-sectors in the targeted business activities and the scope of coverage contained in the

    relevant Sectoral Determinations under investigation which are:

    (i) Wage determination 457: Hotel Trade, Certain Areas;

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    (ii) Wage determination 461: Catering Trade, Certain Areas;

    (iii) Wage determination 477: The Trade of Letting of Flats or Rooms, Certain Areas,

    (iv) Wage determination 479: Accommodation Establishment Trade, Certain Areas

    Those not covered include gambling, lotteries and the travel sector does show that there is

    a fair amount of overlap between the industry or trade associations, especially those in the

    accommodation sub-sector. This is partly ascribed by the increased entry of new, small

    businesses and blackowned businesses, especially in the bed and breakfast (B&B) sub-

    sector.

(b) PHASE TWO CONSULTATION WITH STAKEHOLDERS

    In February 2006, after the publication of the research report, the Department conducted

    information-sharing sessions throughout the country to raise awareness of the findings of

    the research and also to start a debate around the issues raised in the report. The research

    report was disseminated through government printing works to provincial offices for

    them to distribute to stakeholders. In addition copies were made available during the

    briefing sessions for stakeholders. Furthermore the report was placed on the website of

    the department. Stakeholders were given the opportunity to verify the accuracy of the

    information contained in the report in relation to the sector. In preparation for the briefing

    sessions, the Department met with the SETA to sensitize them about the process and also

    to request the agency to encourage their members to participation.

Briefing sessions were held in the nine provinces (ten sessions, as two were held in

    Gauteng) from 17 February 2006 until end of May 2006 since activities relating to the

    sector are distributed throughout South Africa. Individual employers and employees were

    invited including their organizations. The invitations were forwarded through provincial

    offices and also publicized in the national newspapers.

Subsequent to the data analysis being carried out from the written inputs, public hearings

    were conducted in all provinces. The criteria that were applied in selecting venues for

    public hearings in all provinces were informed by the activities relating to the hospitality

    sector. In all areas, an effort was specially made to interact with employees through site

    visits in their workplaces and issuing them with questionnaires to complete. The

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