BD Business Law & Tax (Oct 2022)

BUSINESS LAW&TAX

A REVIEW OF DEVELOPMENTS IN CORPORATE AND TAX LAW

A risk-based view of crypto

• Avoid one-size-fits all approach to crypto

asset service providers

Angela Itzikowitz & Aslam Moosajee ENSafrica

Recently, the Prudential Authority, actingin termsof the BanksAct, 1990, issueda guidance note(G10/2022) to inform banks and bank controlling companiesof practices related tothe effective implementation of adequate anti-money laundering and counterfinancingofterrorism controls relatingto crypto assets and crypto asset service providers.

The Prudential Authority isawarethat certainbanksin SA havepreviously decided toterminatetheirrelationship with cryptoasset service providers and/orhave discontinued theprovision of banking servicesto crypto asset serviceproviders by closing their accounts.

In animplicit criticismof such actionsby certain banks, theguidance note emphasises thatrisk assessment doesnot necessarily mean that banksshould seek toavoidany riskentirelyby, for example,closing the accounts of cryptoasset service providers or by refusing to open an account for them.

Theguidance notehigh-

lightsthat thedecisionto closeaccountsor nottooffer banking servicesshould be made onlyafter carefuldue diligence and consideration. Ifabank givesnoticeofits intention to closean account of acustomer simplyon the basis that thecustomer is a crypto asset service provider, theenforcementofthebank’s right toterminate maybe challenged on the basis that it is contrary to public policy

Inasmuchas theFinancial Intelligence CentreAct, 2001 adoptsarisk-basedapproach to regulation,banks are required tohave inplace comprehensive policies and risk-management processes as well asprocedures to combat money laundering, terrorist financing and proliferation financing.

Thesepolicies andprocesses mustbe documented and updated on a regular basis and training on money laundering andterrorist financing mustbe provided on an ongoing basis.

Riskassessment interms of such policies would enable banks tounderstand the direct and/orindirect exposure to risksthat a crypto asset serviceprovider may present.Banksneedtoassess what elements are driving or reducing moneylaundering,

terrorist andproliferation financing. Inthis regard, bankshave toconsiderthe type of clients, their transactional activity, crossborder flowof fundsand a client’s associationwith crypto-related activities.

Therisk managementand compliance programmes of banks need to be tailored and cater tovarying levelsof risk

that acrypto assetservice provider poses.Appropriate risk assessmentinvolves a consideration ofvarious factors, including:

● The typeof services,products, transactions involved;

● Customer risk;

● Geographical factors; and

● The type of crypto assets involved or exchanged.

Whena cryptoassetser-

vice provider seeksto establish andmaintain arelationshipwith abank, thebank should,as partofits duediligence, ascertainif thecrypto asset serviceprovider has documented andimplemented appropriate money laundering, terroristand proliferation financingrisk management policies, procedures, systemsand controls that the bank follows in respect of its own activities and productofferings. Where higher riskspresent themselves, an enhanceddue diligence should be undertaken.

A “one-size-fits-all” approach indealing with crypto assetservice providers mayresult in inadequate riskunderstanding and risk measures. The Prudential Authorityhas noted that this approach goes against thespirit andpractice of a risk-based approach.

Risks associatedwith crypto assetservice providers constantly change and this requires banks to conduct regularrisk assessments andamend theirrisk profiles andrisk management programmesto deal with new risksthat might arise. Banksneed relevant and requisite technical expertise toadequately assess therisks stemming from cryptoassets and service providers.

Ifthe transactionalactivity ofa cryptoassetservice providerisnotinlinewiththe

initialprofile thebank hasof its customer,it shouldconsider filing asuspicious or unusual activityreport with the FinancialIntelligence Centre (FIC).Banks must ensure thatthey employ appropriate detection and monitoring mechanismsto mitigateagainst anyrisksof moneylaunderingorterrorist financingthat maybeintroduced throughcrypto assets

BANKS MUST ENSURE THAT THEY EMPLOY APPROPRIATE DETECTION AND MONITORING MECHANISMS

orcrypto assetservice providers.

Banks must ensure they maintainadequate recordsin respect of all customer transactionsforaminimumperiod ofsevenyears orforaperiod ofseven yearsfrom thedate of submission ofa suspicious orunusual transactionreport to the FIC.

In due course, crypto assetservice providerswill become accountable institutionsand willhave tocomply withall theobligations imposed on accountable institutions and that may give

BUSINESS LAW & TAX

Dealing with insurance claims

• What you can do to enhance your chances of your claim being successful

Mthokozisi Maphumulo Adams & Adams

SA’s energy crisis seems tobe getting worse bythe day, and thereis noend in sight.

Eskom,the onlypublic energy supplier whichhas in thepast receivedhugefinancial injections from the government, seems tobe helpless at this point.

Electricitycuts areobviously boundto createserious problemsforallconsumers businesses andindividuals alike. Persistentand long powercutscancauseserious damage toconsumers’ properties and belongings.As a result, various kinds of insurance policies are triggered.

Asmost insuredsknow, not allinsurance claimsare approved andpaid out.In fact,thestatisticsreleasednot solongagoshowedaspikein insurance claims’ rejections, particularly inrelation to short-term insurance claims.

Fortunatelyfor mostbusinesses, theyhave thefinancial muscleto challenge insurers wherethe rejection is unlawfuland/or unwarranted. Unfortunately,most individuals are notable to challenge theseunlawful rejections.

Thequestion thenarises astowhatbenefitdoesithave totakeout policiessuchas home andhouse contents policies if youhave a high chanceof havingyourclaim

rejectedand youarenot ina financial position to challenge such rejections.

This article seeks to assist withthis questionandto explain howone can enhance one’schances of claiming successfullywhen such claims arise.

Homeand housecontents insurance policiesfall under short-term insurance.They provide cover forthe policyholder’s propertyand house contents suchas appliances fridge,stove, television, kettle, geyser, furniture, paintings, musical instru-

LOAD-SHEDDING CAN HAVE MANY UNDESIRABLE RAMIFICATIONS

SUCH AS BREAKINS, THEFT, FIRES AND ROBBERIES

ments and so on. Persistent load-shedding can have many undesirableramificationssuch asbreak-ins,theft, robberies,fires anddamage to appliances.

Given the importance of theinsureditems, itiscrucial thatpolicyholders takesteps to enhance theirchances of claimingsuccessfully inthe event of any loss or damage to the insureditems. These steps include, among others:

● Updating policy.

● Ensuringthat policycon-

ditionsare adheredto atall material times.

● Any material changes to the home/houseconditions arecommunicated toabroker or insurer.

● Any uninsured defects that may impact onthe insured items are repaired soonest.

● Ensurethatalltherequired mitigating equipmentis installedandis inaworking condition. These may include having fire insulators, fire alarms, fire extinguishers, prescribed door locks and so on.

The abovementioned stepsdonot guaranteethata claim will beapproved and paid out. Theyonly enhance one’s chances of claiming successfully.

Whereonehas aclaim,it is important to report and lodge the claim timeously (soon after the incident) and provide all the required documents and information to enable an insurer to process the claim.

Where one’sclaim has been rejected, itis important that due consideration is giventotherejection,thereason(s) thereof and possible ways of challenging same. This is importantbecause a policyholderwouldhavepaid premiums for such cover withthe hopethat s/hewill becoveredincaseaninsured risk eventuates.

Although theinsured can do an internal appeal and further make submissionsto the ombudsman’s officewithout

any legal assistance, it is advisable to source legal assistance duringsuch processes for the following reasons:

● Internal appeals and submissions to the ombudsman’s officeare legalin nature and insurance policies are ordinarily highly technical.Thus, thebestpositioned people toassist withsuch rejections would be an insurance law specialist.

● The legal costsof such appeals and submissions are

considerably lower than the costs which would ordinarily be applicable ifthe matter goes to court or arbitration.

● In some cases, the insur-

IT IS IMPORTANT TO REPORT AND LODGE THE CLAIM TIMEOUSLY AND PROVIDE ALL THE REQUIRED DOCUMENTS

er’s rejection maybe justified and lawful,but theinsured mayhavea claimagainstan intermediary forexample,a broker. An intermediary is unlikely to advise the insured thats/he mayhave aclaim against him/her or his/her firm.Thisis wherealawyer can advise accordingly. Itis importanttohave such policies in place. Policyholders should, however, not simplyconcedethevalidityof rejections without seeking legal advice.

Avoid one-size-fits all approach to crypto asset service providers

CONTINUED FROM PAGE 1

banks someadded comfort, atleast asto theunderlying clients of thecrypto asset service providers.

Until then,given thatthe legislation isrisk-based and not rule-based,the banks should revisittheir risk appetite forcrypto asset clients and effect the necessarychanges totheirpolicies and compliance manual.

The Protectionof Constitutional DemocracyAgainst Terrorist and Related Activities Bill Parliament’s police committee recentlyheard public submissions on thebill. The draft law isdesigned to align SA withinternational instrumentsthat wereadoptedto provide for:

● Offences relatedto terroristtrainingand thejoiningor establishment ofterrorist organisations;

● Offences relatedto foreign travel for thepurposes of committing anoffence outside SA for thebenefit of or at thedirectionof orinassociation with a terrorist group;

● Offences relatedto the possessionanddistributionof material containingunlawful terrorism-related content;

● The authorisationof the director ofpublic prosecutionstobeobtainedinrespect ofthe investigationandprosecution of certain offences;

● The issuing of warrants for thesearch andcordoningoff of vehicles,persons and premises;

● A directionrequiring the disclosure ofa decryption key and the effectof a direction todisclose adecryption key; and

● The removalof ormaking inaccessible materialcontaining unlawfulterrorismrelated content.

This billhas beenintroduced toaddress shortcomingsidentified bytheglobal antiterrorism andantimoney laundering standards body, theFinancial Action Task Force

Thetask forcehasgiven SA until February2023 to remedy shortcomingsthat were identifiedby itin 2021 and ifnot remedied,could result in thecountry being greylisted. Greylisting could haveanimpactontheeconomy as itcould increase costs and risksassociated with investments.

Concerns havebeen raised aboutthe proposed new section 3A that would be introducedintoour lawifthe billisenacted initscurrent form. This sectionwill prohibit the publication of terrorism-related content.It has been suggested this new section will result in ordinary people beingcriminalised for

publishing criticalcontent abouttheSAgovernmentand its policies.

Thebill proposesthat someone who isfound guilty of the publicationof terrorism-related content could facea fineofupto R100mor imprisonment ofup to30 years. It also allows the national directorof public prosecutions toapply without notice tothe affected party, toa judgein chambers for variousorders, including thefreezing ofanaccused person’s property.

THE TASK FORCE HAS GIVEN SA UNTIL FEBRUARY 2023 TO REMEDY SHORTCOMINGS THAT WERE IDENTIFIED BY IT IN 2021

Thebill alsointendsto prohibita personfromrelying on a dutyof secrecy or confidentiality toescape reporting the presence of a person suspectedof committing or intendingto commit a terrorist-related offence, but thisdoes not apply tolegal professional privilege betweenan attorney and client for communications madefor the purposes of legaladvice or pending litigation.

Academics and journalists whoare arrestedfor beingin possession of terroristrelatedcontentmayraiseasa defence thatthe possession was for carrying out work as ajournalist orforresearch purposes. Thiswas introduced followingan earlier round ofpublic consultations in regard to the bill. Some argue thatthis provision should be extendedto allow for organisationsand individ-

ualsinvolved inwork toprevent radicalthinking or extreme behavioursuch as religious organisationsand religious leadersthat ingood faith engagein researchand education oftheir congregationstocounterradicalthinking or extreme behaviour. Ina recentlypublished statementby the Treasury, it appearsitisworkingtowards the billbeing by November 2022 and, if so, hopefully this willgo somewayto avoida greylisting for SA. In this environment, understanding crypto asset use cases,preparing policies and comprehensiverisk management processes to combat money laundering and terroristfinancing are critical. Documentedpolicies, procedures andinternal controls must betailored to deal with anyadditional risksthat arepresented bynewproducts and/or technologies.

BUSINESS LAW & TAX

Was pay determined by race?

•

Labour court accepts

that

race played no role in the pay distinction between employee and others

Jonathan Goldberg Global Business Solutions

InMkhatshwa vShandukaCoal (Pty)Ltd (JS28/2016) [2022] ZALCJHB 177(July 62022), theemployee was a mine managerwho was retrenched onJuly 312015. Heinstitutedthisaction,challenging the allegedunfair pay discrimination based on race.

The reliefsought bythe employee waspayment of the amount calculated on the differencebetweenthesalary packages ofemployees on the PattersonBand D3level andthose onaD5 level,for theperiodbetweenMay2012 andJuly31 2015.Healso sought compensation that wasequivalent to24months’ remuneration.

Thecrux oftheemployee’s case was that he was discriminated againstas a mine manageras histwo whitecounterpartswerepaid at a higher ratethan he was and were placed on the Patterson Band D5 level.

Soonafter theemployee signed acontract ofemployment withthe employer, accepting theposition of mine manager(decommissioned collieries),he realised other minemanagers were paid at the D5 level. When the employee confrontedthe employer, hissalary was changed to the D4 level.

The employer explained the differencebetween decommissioned and operational mines:

● A decommissioned mine embarksoncareandmaintenance andrehabilitation to ensure it is not flooded if it is re-opened.

● An operational mine involves drillingand blasting, vehicle maintenance,soilstripping, attending to ongoing rehabilitationand pumping.

The minemanager ofan operational minehas the daily pressureof ensuring production isdelivered; regulatory prescripts,including the MineHealth andSafety Act (MHSA)and Explosives Act are complied with; managing employeesand contractorsas wellasrunning

THE EMPLOYER’S WITNESS CONCEDED THERE WAS A HUGE WAGE GAP BETWEEN THE EMPLOYEE AND HIS COMPARATORS

budgets, and communityrelated issues.

The employer’s witness conceded, under cross examination, thatthere wasa huge wagegap betweenthe employee and his comparators.Hencein 2013and2014 the employee received a salary increase of 22% and 7%, respectively, which was higher than the employee’s comparators.

The employer’s witness was adamant the salary gap was informed by the different scope ofwork andthe functionsperformedbymanagers of operational mines and decommissioned mines.

The legallandscape was setoutinsection 6(1)oftheof the Employment Equity Act (act), which provides: “No

person may unfairly discriminate, directly or indirectly, against an employee, in any employment policy or practice, on oneor more grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic orsocialorigin,colour,sexual orientation, age,disability, religion, HIVstatus, conscience, belief,political opinion, culture,language, birthoronanyotherarbitrary ground.”

While section 6(4)of the act provides: “A differencein terms and conditions of employment between employees of the same employer performing the same or substantially the samework orwork ofequal valuethat isdirectly orindirectlybased onany oneor more of the grounds listed in subsection (1), isunfair discrimination.”

In this case the employee questions the alleged racial pay discrimination, in terms of section11(1) ofthe act,the employer bears the onus to prove, ona balanceof probabilities, that such discrimination did nottake place as alleged,was rationalandnot unfair or was otherwise justifiable.

Inregulation 4ofthe Employment EquityRegulations, work ofequalvalue means that thework performed by an employee:

● Is thesame asthe workof another employee of the same employer, iftheir work is identical or interchangeable;

● Issubstantiallythesameas the work of another employee employed by that employer, if thework per-

WORTH THE WAGES

formed bythe employeesis sufficiently similar that they can reasonably be considered to beperforming the samejob,eveniftheirworkis not identical or interchangeable; and

● Is ofthe samevalue asthe work ofanother employeeof the sameemployer ina different job, iftheir respective occupations are accorded the same value in accordance with regulations 5 to 7.

Regulation 6(1) provides that the assessment of whether work is of equal valueis anobjectiveprocess thattakes intoaccount the following criteria:

● Responsibility demanded of the work, including responsibility forpeople, finances and material;

● The skills and qualifications, including prior learning and experience required to perform the work, whether formal or informal;

● Physical, mental and emotional effort required to perform the work; and

● Tothe extentthat itis

relevant, the conditions under which work is performed, including physical environment, psychological conditions, and the time when, and geographic locationwhere, thework isperformed.

The employer’s main defencewas thatthework performedby theminemanager of anoperational mine hasmore demandsinterms of responsibilityand accountability for people, budget and compliance with legislation. The employee, on the other hand, contends that, without conducting a job evaluation, the employer could not objectively distinguish between thework per-

THE EMPLOYEE … FAILED TO DEMONSTRATE HIS RACE WAS AN ESSENTIAL CONDITION FOR BEING PAID LESS

Online dispute resolution can lower costs

Thabile Fuhrmann Cliffe Dekker Hofmeyr

The onset of Covid resulted in businesses adapting responsivemeasures tomitigateits impacton businesscontinuity,whether accessingdocumentsonline toconducting business remotely. Allindustries adaptedto thisaccelerated digitalevolution whilethe legalsector lagged.By chance,dispute resolution is becoming a focal point for the sector. Traditional disputeresolution is lengthyand expensive andwasdoneinpersoninthe eyes of the court. Today, blockchaintechnologyallows onlinemediation andarbi-

tration asalternative dispute resolution is known as online dispute resolution (ODR), lowering dispute costs. ODRisno longeranalternative, butan indispensable norm. Withvirtual hearings during thepandemic becoming a way oflife, virtual hearings arelikely toremain a postpandemic reality.

Catapulting dispute resolution into the digital age ODR isa technology-based extension ofdispute resolution whichseeks toresolve disputes betweenparties. ODR alsoexpands traditional means ofdispute resolution using technologiesinto the procedure.

ODR couldbe theefficient process businessesuse for online consumer disputes concerning theremote purchaseof goods,or ajustice system for smallclaims in business-to-consumer dealings. ODRfacilitates resolutions of disputes, with or without theparticipation of third parties.

While ODR is not an entirelynew concept,ituses sophisticated technology to enhance andreplicate existing alternativedispute resolution processes.Disputes from smartcontracts should be resolvedthrough online dispute resolution systems.

Asynchronous online mediationhas alsoprovento

be the most prevalent form of online mediation, granting the involved parties flexibility and aquicker resolutionofthe matter as opposed to inpersonmediation,whichmay seeamediation movedtoa far-off date because of the parties’ conflicting schedules.

Technical brilliance of ODR Thisdigital evolutionwas derivedfrom thesynergy betweenADRandtechnology designedto mimichuman thought processesand intelligence.The techbehind theprocess istermedthe “fourth party” asit isconsideredan independentcontributionto themanagementof the dispute.

formedby theminemanager of theoperational mineand defunct mine.

The labourcourt found thatin instancessuch asthe presentone, thedistinctionin the value of the work is easily discernable from the scope of thework performedbythe mine manager ofan operationalmineasopposedtothat of a defunct mine. The employer’s evidence in this regard was not disputed.

Itwasaccepted thatabald claimthat adistinctionin remuneration constitutes an unfair discrimination was inadequate forthe onusto shift to the employer to prove that the discrimination was fair.

The employeein thepresent casefailed todemonstrate his racewas an essentialcondition forbeingpaid less thanhis whitecomparators. The employee seemed to suggest that,since he used to be a mine manager of an operational mine prior to 2012,heought tohavebeen paid atD5 levelas his comparators.

The court found there was no merit in the employee’s attack on the employer’s endeavour to address the wage gap betweenhim and his comparators by improving his remuneration as it was aimed at addressing historical challenges that it had inherited.

It wasthe employer’s undisputed evidence that race played no role in the pay distinction between the employee and his comparators asit wasthe actualfunctions and responsibilities of the positions they occupied.

The employeefailed to makeacase tosustaina claim of unfair pay discrimination in terms of section 6(4). Therefore, the employee’s claim was dismissed.

With thenormalising of virtual hearingsbefore and during thepandemic, virtual hearings will likely remain an option post-pandemic. From adispute resolution perspective, courtsare now workingin asimilarfashion, and everythingis becoming paperless.

Whenadisputeisofficially resolved, ahand-signed contract istraditionally expected. This is notnecessary for the digital era.

Contracts are getting smart Smart contractsare digitalised contractsdeveloped through blockchaintechnology that executes all or parts ofan agreementand

is a useful tool in ODR. Computer programmes coded with protocols that can facilitate, verify,execute, and incorporate contractual terms are used to document the agreementbetween the parties. Blockchain technology encourages trust, security, transparency andthe traceability of datashared across networks while delivering cost savingswith new competencies. This hasenabled channels like onlinedispute resolution to becomemore acceptable and mainstream,transformingthe waywework, interact, playand resolve legal disputes.

BUSINESS LAW & TAX

Pitfalls of idyllic workplace

• Working near the waves may sound truly wonderful, but beware of the tax collector in the fynbos

Denny Da Silva Baker McKenzie

If Covid-19 hastaught us anything, it isthat an exclusiveoffice inwhich to performyour workis nolonger anabsolute requirement.

While nota newconcept, the popularity ofan islandhopping, “workingnear the waves”, digitalnomad life appeals to many, even professionals. Butfew individualsoremployersconsiderthe inherent tax risk with this new-age working model.

Whiletechnologyhaskept upwiththechanges,thebasic tax principlesremain the sameand shouldalwaysbe considered, because international tax law has not evolved in this area asmuch as one may think. This isnot to say thereisno spacefordigital nomads; on the contrary, this is increasinglybecoming an important consideration for anyjob-seeker theabilityto work from anywhere.

Here,we aremore concerned withemployees who wishto workremotely and whatan employer should considerwhen intro-

HOME OFFICE WITH A VIEW

ducinga “work from anywhere” policy. The riskfor theemployer, onethatneeds tobecarefully managed, isthe possibilityof creating a permanent establishment in another country.

THE RISK FOR THE EMPLOYER IS THE POSSIBILITY OF CREATING A PERMANENT ESTABLISHMENT IN ANOTHER COUNTRY

Thisis essentiallyfancylingo forcreating atax presencein another country. While theanalysis and ultimate answer to whether a tax presence iscreated is cumbersome and involves a number of considerations, an important considerationis whetherthe presenceofan employee in another country couldcreate ataxablepresence for the employer in that country.

If thisis thecase, the employer would essentially create a “branch” in that country, and besubject to

thatcouldbe attributed to that

beVATconsequences,but thetwotests are not mutually exclusive.

For anindividual, thegeneral rule isthat a taxable presenceis createdafteran individual spends more than 183 days inany 12-month periodin acertaincountry, but it canvary depending on the country. The starting premise isthat beingin a country and rendering services means that an individual’sincomeis sourcedinthat

CONSUMER BILLS

country, which iswhen doubletax treatiesapply interms of howthe taxingrights are allocated.

Where thereis nodouble tax treaty inplace, then an individualpays taxinone

THE

RESPONSIBILITIES OF A ‘DIGITAL NOMAD’ WOULD NEED TO BE CAREFULLY MANAGED

countryonasourcebasisand in another countryon a residency basis, butmay be ableclaim acredit fortaxes paidintheothercountry an administrativenightmarethat canruinyour timeonthe beach.

The responsibilitiesof a “digital nomad” would need tobecarefully managedsoas nottocreate thistaxpresence. For low-level employees withbasic oradministrative functions, the risk is generally low because the employee will not be doing any work of substance in that country and wouldnot generally be in a position to negotiateorbinditsemployer to anycontract. Ifthis isthe case, then the employer would need to reconsider what is termed “administrative functions” Forsenioremployeesor,if you like, administrative-staffwith-contract-negotiatingpowers, the line becomes blurred anda significantrisk starts to develop.The ability tonegotiateorenterintocontracts or have a material influence in any of these aspects vastly increases the risk of apermanent establishmentbeingcreatedforthe employer.

Employees thatfit this profileshould ratherbegiven approvaltogo onleaveand not permission to work remotely from a desk with an enviable real-life ocean view. After all, it would probably be betterfor theirmental health notto beworking while on holidayin an exotic location!

The responsibility of WhatsApp group admins

The elegance of our Roman-Dutch common law system includes being based on principle rather than on precedent.

In about530 BCE, and in a mere three years, Roman law was codified in the Digest under the guidance of the Emperor Justinian. The principles established by classical Roman law and its development after the Digest form the foundation of many branches of law including the law of sale, contract, agency, family law, and for present purposes, the law relating to wrongful, harmful conduct, including defamation.

The other important principle, especially in our constitutional democracy, is the fact that there are very few situations where faultfree strict liability applies.

A media flurry followed the introduction of a new

feature by WhatsApp giving group administrators the ability to delete any message posted by a group member. It has been suggested that SA law determines that the admin of a group is legally responsible for content that they could have removed but did not. It has even been said that, if the admin does not remove a wrongful message, they become legally responsible for every actionable message that appears on that group. That is not the law. In the case of defamatory matter, there is no strict liability. First

of all, you have to be the person who publishes the defamation. The group admin does not publish group members’ messages unless they endorse it or forward it. By the time the message comes onto the group chat, it has already been published to all members of the group. Generally, the group admin cannot be personally responsible for the fact that someone chooses to pass the defamatory matter on and so publish it to third parties, or approves the message. The fact that the group admin could have removed the content does not create the necessary legal intent to defame the person whose reputation is injured.

Besides the publication requirement, the failure by an admin to delete the message does not mean the admin associates themselves with the message or had an

intention to defame the target of the message. It would put an impossible legal burden on a group admin to have to sort out, mostly without knowledge of the intricacies of law or the facts, what is and is not injurious or wrongful.

The so-called chain of publication does not have its links intact if the group admin neither publishes nor specifically permits nor fails within two days to take down the offensive matter.

The same applies to criminal law. You do not commit a crime unless you have a guilty mind. Guilt is not imputed by a failure to act when there is no duty to act. Group admins do not have a strict duty to take down offensive matter because the value judgments involved and the knowledge of law required would create an unacceptable burden of

guilt.

There may be reputational issues for a group admin who fails to take down, for instance, a blatantly racist statement in the knowledge that it has been put on the group message platform. Every group and group admin would be wise to make it clear to members of the group that the admin is not responsible for what is posted by other members on the group nor is the admin legally obliged to take down the messages of members.

Each group member is responsible for their own

THE GROUP ADMIN DOES NOT PUBLISH GROUP MEMBERS’ MESSAGES UNLESS THEY ENDORSE IT OR FORWARD IT

messages. Any member publishing matters to the wider world will have to bear the consequences themselves.

The admin’s position is different if the group is established for the purpose of encouraging, making or distributing inappropriate or offensive matter. The group admin will be part of the chain of publication in that situation. But the same cannot be said for an innocent neighbourhood group or work group that needs someone to administer it.

Therefore group admins should cover their backs by setting the basic limits suggested, but don’t shut down useful groups for want of an admin.

BUSINESS LAW & TAX

Authentication and its pains on blockchain

•

Arbitral deals generated virtually on blockchain

may not have signatures in the traditional sense

Dylan Cron, Kenan Peterson & Jamie Battersby Webber Wentzel

SA enforcesforeign arbitration awards through the InternationalArbitration Act 15 of 2017

Theact which adopts the UncitralModel Lawon International Commercial Arbitration (asmodified) provides forrecognition and enforcement ofawards as required by theNew York Convention onthe Enforcement ofForeign Arbitral Awards1958, subjectto additional requirements.

The act requires the original arbitral award and original arbitrationagreement “authenticatedin amannerin which foreign documents must beauthenticated to enablethem tobeproduced in any court”, alternatively a certified copy ofthe award and agreement, tobe produced forenforcement proceedings. Acertified copy, however, means “ a copy authenticated ina mannerin which foreign documents must beauthenticated to enablethem tobeproduced in any court”

Under SA’s UniformRules governing courtprocesses, rule 63 provides for the authentication offoreign documents (excludingaffidavits), withauthentication

servingthepurposeofverifying signatures on them.

Broadly,this requiresthe signatory to appearbefore a specified officer, identify him- orherself andsign the relevant document before the officer, who then appends a certificateor thelikeconfirmingthe factofsignature by theidentified signatory. (As an aside,it is unclear howa copycould everbe authenticated.)

THE ACT HAS CUMBERSOME REQUIREMENTS WHICH MAY NOT HAVE BEEN STRESS-TESTED PRACTICALLY

Although rule63(4) does provide fora “catch-all” provision where a court “ may accept as sufficiently authenticated any document which isshown tothe satisfactionof such courtor theoffice, to havebeen actuallysignedby the person purporting to have signed such document”, this does requiresome form of signature.

A potentialdifficulty thus arises. Ifthe originalarbitral agreementor awardisgeneratedinavirtualenvironment onthe blockchain,it maynot

havesignaturesat allinthe traditional sense that are capable ofauthentication. Moreover, it would be rare for anarbitrator/arbitral panel tosign anaward before an officer nominated under rule 63, solely for purposes of external confirmation of who signed the award.

So apartfrom blockchain complications, even traditionally signedarbitral awards may face difficulties when it comes to authentication.

Several potentialsolutions could bedevised withinthe existing framework to cater for this difficulty regarding signature and authentication:

● The ElectronicCommunications and Transactions Act, 25of2002 provides for the use of electronic and advanced electronicsignatures,which maysufficeto meet rule 63(4), supplemented by additionalevidence, if necessary (althoughwhere an arbitration agreement is silent on the signature requirements, statutorily only the more securely digitally signed method of signature would be accepted.In other words,it islikely thecourt would only accept an advanced electronicsignature which meets the requirements of the Electronic Communications and Transactions Act);

● If authentication is impos-

SIGN ON THE (VIRTUAL) DOTTED LINE

sible, given the nature of the award oragreement, thenit couldbe arguedthat rule63 (andthe IAauthentication/ certification requirement) could never be met, permittingthecourt toadoptapurposiveapproach toensure thatthe safeguardsperformedby theserequirementsare satisfied.It maybe a stretch, however, to argue that the maxim lex non cogit ad impossibilia truly applies, giventhat thepartieswere free to sign the agreement in the traditional manner; ● Ifthe partieshaveagreed to the awardand the agreement being located in a virtualenvironment, thendoctrines of waiver and estoppel may prevent the losing party objectingto recognitionand enforcementonthebasisdiscussed above.This doesnot,

however,solve thedifficulty thatthecourt wouldstillitself have to apply the act, even without any opposition.

Parties seeking to have foreign arbitralawards recognisedin SAmayfirst want to have the underlying agreements signed traditionally, before an officer with authentication powers, before uploading itto the blockchain.That wouldrenderthe storagelocation irrelevant.

Ultimately, the act has cumbersome requirements which may nothave been stress-tested practically.It remainstobeseenhowthese will beapplied bythe courts whenfacedwiththeprospect ofrecognising andenforcing aforeign arbitralaward locatedon theblockchain. Clear legislative development

to dealwith thispotential issue would be welcomed. Itis hopedthat ourcourts will adapt to ensure foreign arbitralawardsmakinguseof newtechnologies arenot defeatedby formalisticpoints raised byopportunistic defendants. Although it was stated years ago, inthe context of jurisdictional challenges,the followingstill ringstrue today: “Welive in atime of rapidly growing commercial and financialsophistication anditbehoves thecourtsto adapt their practices to meet the currentwiles ofthose defendants who are prepared todevote asmuch energyto making themselves immune to the courts’ orders as to resistingthe makingof suchorders onthe meritsof their case.”

Terms to be met for Sars default judgment

Riette Lombard AJM

In the judgmentof Taxpayer M v Commissioner for the SouthAfrican RevenueService(VAT1826)[2022]ZATC4 (May 102022), theGauteng Tax Court hadto consider whetherit shouldgrant default judgment infavour of thetaxpayer(to setasideits penalty assessment).

This application followed Sars’ failure totimeously deliverits statementof groundsof assessmentand opposing the appeal in terms of TaxCourt rule 31(rule 31 statement).

Thefactsof thecasewere as follows: Following the taxpayer’snotice ofappeal against Sars’ disallowance of its objection, Sars had 45 businessdaystofileitsrule31 statement.Shortly beforethe 45-dayperiod expired,the parties agreed to suspend the 45days pendingdiscussions betweenthe parties’ legal representatives. Onceit becameapparent to the taxpayer the matter would not beresolved outsidetheformalcourtprocess, it notifiedSars to fileits rule 31 statement within 45 days from the date of the letter. Thecourt confirmedthat,

beforeanapplicantmaybring an applicationfor default judgment,thefollowingjurisdictional requirementsmust be met: ● 1. The respondentmust be indefault withanobligation or failed tocomply with a period prescribedunder the Tax Court rules;

THE COURT FOUND THAT THE TAXPAYER’S APPLICATION FOR DEFAULT JUDGMENT WAS PREMATURE

● 2. The applicantmust have delivered anotice interms of rule56(1)(a) ofthe TaxCourt rules notifyingthe respondent toremedy thedefault within 15 days; and ● 3. Therespondent must have failed toremedy its default within 15 days.

The courtfound thatthe taxpayer’s application for default judgmentwas premature. Thetaxpayer was first required toserve a formal rule 56(1)(a) notice on Sars,granting Sarsafurther 15 daysto remedyits default (ie, fileits rule31 statement), before it was ableto bring an application fordefault judg-

ment interms ofTax Court rule 56(1)(b).

The practicalimplication of the judgment Wherea partyfailsto fileits rule 31,32, or33 statement timeously, TaxCourt rule 52(6) requires thatthe party first bring anapplication to condone the late filing.

It follows that if Sars is late in filingits rule31 statement (voluntarily without being prompted bythe Taxpayerin terms of a rule 56(1)(a) notice), Sarsisrequiredtofirstbringa condonation applicationin terms of rule 52(6). However, supposeSars

delaysthe processof filingits rule 31 statement, forcing the taxpayerto firstserve arule 56(1)(a) notice on it. In that case, Sars obtains a further 15-day extension tofile its rule 31statement without having to bring a condonation application.

This interpretation does not seem fair.One would expectthatwhile Sarsisprovided withan additional15 daysto fileitsrule 31statement beforethe taxpayer mayapply fordefaultjudgment,Sarsis stillrequiredto apply for condonation of the latefiling ofitsrule 31statement in terms of rule 52(6).

Dust off that plan for the dawn raiders

•

Companies must have internal and external teams responsible for dealing with searches by regulators

Heather Irvine Bowmans

The recentCompetition Commission raid on insurance companies, its first inyears,isawarning to companies operating in SAto implementacomprehensive dawn-raid plan.

Thisplan shouldidentify the coreteam responsiblefor dealing with a search, including seniormanagement, inhouse legal counsel and the IT andsecurity managers responsible for each site.

Anexternal supportteam, including thecompany’s lawyers andinvestor relations expert, shouldalso be identified.

Staff need to be clear on procedures tobe followed and who is responsible for dealing withthe regulatorin the event of a raid.

Theplan shouldoutline key principles to be adopted to dealwith thesearch operation,and shouldtakeinto account travellingdistances, aswell asthesize andnumberofcompanypremisesthat may beinvolved. Ideally, competition authority staff

should be askedto wait for the company’slegal advisers to arrivebefore commencing the search, and the warrant shouldbephotocopiedandemailed to the core team as swiftly as possible. However, the commission staff may begin the search before external counsel arrive,andso staffshouldbe appointed to “shadow” each commission official, and monitor theconduct ofthe search.

Shadow staffrecord which offices are visited, all

ADEQUATE MEASURES NEED TO BE PUT IN PLACE TO PROTECT THE COMPANY’S LEGALLY PRIVILEGED DOCUMENTS

questions asked byeach official, and noteeach document reviewed or removedby the authorities.

It isimportant that employees co-operatefully and assistthe commissionto

locaterelevant partsofthe building being searched, or the relevant records being sought, to minimise disruption of the business (or even a complete shutdown of the company’s operations).

Ideally,this coreteamof employeesshouldreceiveindepth training toensure they understand the crucial role theywillplayduringandafter the dawn raid.

Adequate measuresneed to be put in place to protect the company’s legally privileged documents.

The commissiontakes the view that it is entitled to remove documents that are claimed as legally privileged, although these are generally not read on site.

Staff should insistthat any legal opinions, or communications to or from legal counsel are placed in a sealed bag priortobeingremovedbythe commission.

If thecommission does not observe this procedure meticulously there may well begrounds forthecompany toapproach thehigh courtto set aside the seizure.

Although itis notpossible torefuseto allowthecom-

mission to remove highly confidential information, suchas strategicplans,budgets,pricingorcustomerlists, companies are entitledto file aconfidentialityclaiminrelation toany hardcopies and electronic files that are removed or copied, and shoulddo soimmediately,to ensure that this information does not find its way into the handsofthird partiessuchas customers or competitors or the media.

In recentraids, thecommission has engaged an external service provider to extract a mirror image of company’s servers,which can later besearched repeatedly using keywords.

IT staff needto be available to assistthe commission to obtain access, without crashing the systems.

It is a goodidea to formulate an external communication plan to deal with questionsfromthe media,aswell as an internal communicationplan topreserveconfidentiality and dealwith the

impact on staffmorale as far as possible.

Once the searchis over, the companywill needto conducta thoroughinternal investigation to determine whether any contravention of theCompetition Acthas occurred.

It may stillbe possible to qualifyfor immunityfrom prosecution in terms of the commission’s corporate leniency policy in relation to the complaint identified in the searchwarrant, orother potential contraventionsof the act of which the commission isnot yetaware (for example,involvingothertime periods,service orproduct lines,or differentprohibited practices).

Accordingly, consideration needs to be given to applying for a marker to join theleniencyqueueassoonas possible. Companies that offer substantialco-operation at anearly stage aftera dawn raid may indue course be ableto negotiatereduced administrative penalties.

Whilethecommissionhas not been as active in conductingsearches sincethe Covid-19 lockdown began (and weare still along way from2015/2016, whenthe commission conducted five raids in18 months),this recentseizure operationmay signal a returnto more normalenforcement bythe commission, including more active cartel prosecutions. Although thecommission has said itwill prioritise investigationsin sectorsof the SA economy which affect poorconsumers, thecommissioncan anddoesconduct dawnraids inindustries that arenot now inthe commission’spriority sectorsfor investigation.

This means thatall companies with operationsin SA not only those in sectors suchas foodandagro-processing, infrastructureand construction, insurance, banking andintermediate industrial products need to planfor thepossibilityof dawn raids.

Accepted offer of employment is binding

Jacques van Wyk & Michiel Heyns

Werksmans

Inthe caseofNtsunguzi vM2 Bio Foodand Beverage(Pty) Ltd[2022] 6BALR629 (CCMA), following aseries of interviews, the interviewee receivedan emailfromthe prospective employer which read “wewould liketo offer you a positionat our company, for a probation period of threemonths starting October12021 Forthisinterimperiodwe canofferyou R20,000 permonth ascompensation. Welook forward to hearing from you”

The intervieweereplied to this correspondenceseeking further detailsconcerning the remuneration offered and expressed excitement by stating “lookingforward to hearing fromyou and

definitely lookingforward to October 1”. Thefollowingday the interviewee sent a further email whichstated: “Just following up on the conversationbelow, I’m expected at the Woodstockoffice on October1and notHoutbay,is that correct?”

BREACHED

The intervieweewas then advised thatthe employer was stillreviewing candidatesandabout aweeklater he was informed that another candidate was chosen.

The commissionerstated that,in orderto concludea binding contract, acceptance mustbe clearandunequivocal orunambiguous. A counteroffer is not sufficient. In this instance the interviewee unequivocallyaccepted the offer. Thefact that he didso viaemailcorrespon-

dence did not matter and neitherdid thefact thathe requested someclarity about his salary. Whenhe accepted theoffer, hebecamean employee. Bynot appointing him, theemployer breached the contractof employment that wasestablished. His dismissal wastherefore procedurally andsubstantively unfair.

Conversely, inthe matter of Tshikiv NelsonMandela University [2022]8 BALR 860 (CCMA),following a recruitment process the interviewee claimedthat he was informed telephonically byan HRconsultant ofthe employer (who thereafter passedaway) thathehad been successful in his application fora positionhe applied for.

While beinginformed of this, he wasadvised to send

hispayslip toher tofinalise the offer. On his own version the HRconsultant later informedhim thattheshortlisting processfor theposition had beenchallenged and the offer had been delayed.

NO CONTRACT

The intervieweeconfirmed, in a “follow-up” correspondence, that he was still awaiting the offer. Thereafter, the interviewee hadbeen told that anothercandidate had been placed in the position.

In this case the commissionerfound thatnocontract of employmentwas concluded as there was on his own version no offer and no acceptance.

In both the Ntsunguzi and the Tshiki matters,the CCMA referred to the Labour Appeal Court’s (LAC)decision of Wyeth SouthAfrica (Pty)Ltd

v Manqele and others [2005]

6 BLLR 523 (LAC).

In the Wyeth matter, the LAC held that a person who hasconcluded acontractof employment but has not yet commenced workingfor the employer is anemployee, for purposes of the Labour Relations Act 66 of 1995 (LRA).

Ultimately, afactual enquiry hadbeen conducted in both theNtsunguzi and Tshiki mattersto determine whether theprinciple confirmed in the Wyeth matter

PULLQUOTE IN CAPS FOR DEPTH OF BOX BUT NOT LESS THAN FOUR LINES OF COPY/ OR MORE

THAN 8, LINE SPACE ON TOP

had been established,that is whether acontract ofemployment had been concluded. The factualenquiry involves a “backward-looking” process.As summarised in Youngv BarnesGroup (2019)40 ILJ479 (CCMA),for anemploymentagreementto be valid, there must be:

● An intention to create a legal relationship;

● Offer and acceptance;

● Agreement as tothe essentials of the contract; and

● Consensus asto therights and duties of the parties.

Employers arereminded to avoidproviding offersof employment ifthe relevant recruitment processes or details ofa vacantpost have notbeen finalisedas avalid employment agreement maystill becreatedand enforced throughoffer and acceptance.

BUSINESS LAW & TAX

Common purpose in the workplace

• Constitutional Court clarifies grounds on which employees can be dismissed when violence occurs

Francis Mayebe & Tracy van der Colff Baker McKenzie

The doctrineof common purpose is a well-known principle incriminallaw.Inessence, iftwo ormore people,having a common purpose to commit a crime, act together in ordertoachievethatpurpose, then the conductof each of them in theexecution of that purposeis imputedtothe others.

Fromalabourlawcontext, thedoctrine isrelevantin instancesof violentstrike action. The vexedquestion is whether an employer may apply the doctrineof common purposeto dismiss employees formisconduct wherethe employeeswere spectators to a violent assault during an unprotected strike.

The ConstitutionalCourt (CC) provided someguidance

in this respectin August 2022,in NumsaoboAubrey Dhludhlu and147 Othersv MarleyPipe Systems(SA) (Pty) Ltd [2022] ZACC 30.

One hundredand fortyeight employees participated in an unprotected strike, during whicha roguegroup of12

TWELVE OF THE 148 EMPLOYEES WERE ACTIVELY ENGAGED IN THE ASSAULT, AND 41 OF THE EMPLOYEES WERE UNIDENTIFIED

violently assaulted the employer’s head ofHR. The employer instituted disciplinary proceedingsand dismissed all148 employees whohad participatedinthe strike and hadbeen present during the assault.

The chairfound allthe employeesguilty oftwo counts ofmisconduct both theassault andparticipating in an unprotected strike.

Forty-oneof theemployees challenged this decision andboth theLabourCourt (LC) and Labour Appeal Court (LAC)found infavour ofthe employer. The LACheld that toavoid liabilityunderthe doctrine of common purpose, the employeesin thevicinity ofthe assaulthad anobligationto takepositive stepsto disassociate themselvesfrom the conduct of the perpetrators and interveneto stop the violence from taking place.

Initsfinding,theCCunanimously overturnedthe decisionoftheLAC.TheCCfound that 12of the148 employees were actively engagedin the assault,and 41of theemployees wereunidentified. Despite the probability of the unidentified employeesbeing at thepremises duringthe

MASS

violentaction, theCCfound that the LAC misconstrued the doctrine ofcommon purpose by requiring bystanders totakepositivestepsindisassociating themselvesfrom the actual perpetrators, and intervening instopping the violent action.

Common purpose requires activeassociation with the violencebefore its commencement. Themere presenceat thescene ofthe violentactiondoesnotinvoke the doctrine of common

THERE WAS NO CLEAR EVIDENCE THE EMPLOYEES INTENDED TO ASSOCIATE THEMSELVES

WITH VIOLENT ACTIONS

LEGAL SCOOP

purposeandimputethatconduct to all bystanders.

In thisinstance, therewas no clear evidencethat the employees intendedto associate themselveswith violent actions. The mere fact the employees were singing during the violentaction was not enough to establishan active associationwith theviolent actionand thusestablisha common purpose.

RETALIATION

Active disassociationby intervention in the context of aviolentstrike mayputan employee inharm’s way. Therefore,an employeeis entitledto choosesilencefor fear of retaliation

TheCCset asideboththe LCand LACfindingsand referred thematter backto the LC toconsider an appropriatesanction onthecharge

of participationin anunprotected strike only. The CCclarified the application of the doctrine of common purpose,and its application in the context of employmentlaw. Itisundeniable that singing and jeering while your colleagueis being violentlyassaulted isabhorrent,butinthiscaseitwasnot enough to invoke the doctrine.

Common purpose requires positivesteps in associatingoneself withviolent action.Our lawdoes not require that an employee actively disassociatesthemselves from the violent action or intervenes. Therefore, a carefulanalysisisrequiredon the basisof thefacts andevidence todetermine whether the employee is guilty of misconduct by wayof common purpose.

Watch what you do with your industrial waste

The mass production of goods worldwide is at a record high with fast fashion, fast food and fast learning leading the way.

What’s the catch, you may ask? Easy: waste. As a result of the increasing demand for the supply of goods, and the aftermath that comes with disposing of those goods, commercial law transactions and legislative changes are requiring large entities to reassess how they can reduce their environmental footprint.

EXTENDED PRODUCER RESPONSIBILITY

The National Environmental Management Waste Act 59 of 2008 (act) regulates how waste is managed in SA, providing for various practices to be implemented by individuals and companies alike, to prevent pollution and promote social and ecological sustainability.

Section 18 of the act deals with what has been coined as “extended producer

responsibility”

Essentially, this term means that a producer is now responsible for what happens to the packaging of its products after the consumer has bought and used those products, otherwise known as the “post-consumer stage”

On the back of section 18, as well as section 69 of the act, the department of forestry, fisheries & the environment (the department) introduced a new set of regulations, which were subsequently amended in 2021, detailing the extended responsibilities that have been imposed on producers regarding the packaging of their products.

The regulations apply to a variety of product packaging. These classes of products include paper and packaging material, single use compostable plastic packaging, single use plastic products, single use biodegradable products, glass packaging, and metal packaging.

In a nutshell, pretty much every kind of packaging material is included, except for shipping containers, timber or textiles, and plastic pallets or bulk containers exceeding 1,000l

AIM OF THE GAME

The purpose of introducing additional producer responsibilities is to encourage a circular economy. A circular economy aims to create a system that will significantly reduce waste by focusing on maintaining, repairing, recycling, re-using, or refurbishing product packaging. Therefore, the materials that package the

products we buy will not always be discarded, but rather repurposed or regenerated.

So, who needs to pay attention?

The regulations define a “producer” as any person or category of persons, including a brand owner who is engaged in the commercial manufacture, conversion, refurbishment (where applicable) or import of new or used identified products as identified by the minster by notice in the Government Gazette in terms of section 18(1) of the act.

What do you need to do?

By definition in the act, a producer is financially or physically responsible for implementing schemes and strategies that will effectively implement the obligations placed upon them by the act and the regulations. These schemes and strategies must be implemented in conjunction with waste collection organisations or

waste pickers. The following main steps must be taken by a producer in order to comply with the regulations:

● 1. Register as an identified producer with the department;

● 2. Curate and submit an extended producer responsibility scheme to the department within six months from the date on which the producer commenced business.

Alternatively, a producer can join an organisation running an existing scheme within three months from the date on which they commenced business.

Producers who join an organisation will have to

A PRODUCER WHO ESTABLISHES ITS OWN SCHEME MUST SUBMIT INTERIM AND ANNUAL PERFORMANCE REPORTS

make payment of a fee, prescribed by the organisation. The organisation itself will have to submit both interim and annual performance reports to the department, which will be measured against the waste reduction targets set out in the regulations.

A producer who establishes its own scheme must similarly submit both interim and annual performance reports to the department. These submitted reports must show the quantity of waste that has been either exported, collected, diverted from landfill, or replaced on the market.

In the era of climate consciousness, companies are ethically responsible for reducing their carbon footprint, the aforementioned legislation is certainly a step in the right direction.

● This month’s column was written by Jessica Strydom, Fluxmans attorneys

BUSINESS LAW & TAX

Best defence is good ESG

• As scrutiny of claims about ESG targets reached grows, make sure you actually achieve them

Sarah McKenzie, Maria Philippides & Anél De Meyer Webber Wentzel

Increasing public and regulatory scrutiny of claims bycompanies abouttheir ESG(environment,social andg overnance) achievements makes it essential these are accurate, well-founded and backed up with data.

Inmany jurisdictions,soft law recommendations about companies’ ESG-related activities arematuring intohard law obligations.As thepressureon companiesandinstitutional investorsto tackle ESG issuesintensifies, regulators aredeveloping disclosure standardsto meet investors’ information needs.

For financial institutions in SA, crackdownsby global regulators should beseen as awarning tomake sureany ESG-related statements are substantiated and true.

InMay 2022,theUS Securities andExchange Commission (SEC)proposed two amendmentsseeking to enhance and standardise disclosuresof ESGfactorsconsidered by funds and advisers, and toexpand regulation on the namingof funds with an ESG focus.

InNovember 2021,the UK’s FinancialSector Conduct Authority(FCA) published its ESGStrategy, stating thatmarket participants and consumersmust beable totrustgreen andotherESG labelled financial instruments and products.

InEurope andChina,regulators arealso imposing new obligationson companies to conductdue diligence to identifyadverse environmental effects, and to make

greater disclosureof environmental information.

SA’s current disclosure and reporting requirements do notexplicitly requiredisclosureson ESGmatters,but thismay change.Thereare, however, guiding principles on disclosuresrequired by companies:

● The KingCode, which deals withcorporate governance, emphasisessustainabledevelopment asa “primary ethicaland economic imperative”. Thisreflects an approach that incorporates

JSE-LISTED COMPANIES HAVE GENERAL CONTINUING DISCLOSURE OBLIGATIONS UNDER JSE LISTINGS REQUIREMENTS

ESGfactors intoinvestment decision-making. TheJSE requireslisted companiesto report annually,on an “apply and explain” basis, the extent to which they have complied with the King Code; ● JSE-listed companies have general continuingdisclosure obligations under the JSE listings requirements, which applyto financiallymaterial ESG issues;

● On June 14 2022, the JSE releasedits Sustainabilityand Climate Disclosure Guidance note,which aimstopromote transparencyand goodgovernance,and guidelisted companiesonbestpracticein environmental, social and governance disclosure; ● PrudentialStandard GOI3, promulgatedby thePruden-

tial Authority underthe FinancialSector RegulationAct, 9 of2017, requireslife insurers,nonlifeinsurersandreinsurers tomeet thefollowing requirementsin theirinvestmentpolicies: (i)settingout theirstrategy forinvesting, including assetallocation strategies andhow thesewill bemanaged; and(ii)taking into accountany factorthat maymateriallyaffectthesustainable long-termperformanceof assets,including ESG factors;

● A reviseddraft Codefor ResponsibleInvesting inSA (Crisa) 2.0sets outprinciples and practicerecommendations with a clear emphasis onESG and sustainable development issues; and

● TheFinancial MarketsAct 2012makesit anoffenceto publish, in respectof past or future company performance, any false or misleadingstatement, promiseor forecast. The risk of breachingthisact willriseascompaniesmore regularlyreport toshareholders andstakeholders ontheir ESGconduct andasESGconcernsbecome moreimportant ininvestor choices.

One of the principal ESGrelatedlitigation risksfaced by the financial sector is the potentialfor inaccurateor misleading ESG disclosures, includingon climatechange, or “greenwashing” Greenwashing is generallydefined asunsubstantiatedor misleadingclaims aboutan entity’s environmentalperformance, orselectivedisclosure ornondisclosureof theenvironmental or social impacts of a company’s business practices.

In other jurisdictions there hasbeen asurge oflitigation

DO THE RIGHT THING

inthese categories,and sometimes theregulators themselves have taken action.Recent casesinclude Abrahams vCommonwealth Bankof Australia,where shareholdersof theCommonwealthBank ofAustralia filed acomplaint in2017 against the bank for investing incoalmines; SECvValeSA, inwhichtheSEChascharged Vale, a publicly traded Brazilianmining company,for committing securitiesfraud by intentionally concealing thatits Brumadinhodam might collapse, andthat the flowfrom thedamwould

OFFICERS, DIRECTORS AND FUND MANAGERS SHOULD FOCUS ON ENSURING ESG-RELATED DISCLOSURES ARE ACCURATE

cause significantenvironmentaldamage; andSECv BNY Mellon, where the SEC hascharged BNYMellon,an investmentadviser, foromittingor makingmisleading statementsabout theESG investment considerationsof its managed mutual funds.

There hasbeen nodirect orexplicit greenwashinglitigation in SAor ESG-related enforcementaction bySA regulators, butSA legaland regulatorylaws createthe platform andcater forthe possibility of greenwashing claims and litigation.

ROBUST Officers,directors andfund managersshould focuson ensuring that ESG-related disclosuresare accurateand developing robust policies andprocedures toevaluate ESG-related issues.

Thefollowingrecommendations couldhelp tomitigate these risks:

● Ensuring thatgovernance

SA stalling on blockchain arbitration

Dylan Cron, Kenan Peterson & Jamie Battersby Webber Wentzel

Withtheadventofblockchain technology,thequestionarises whether SA’s legal environmentallows forthe recognition andenforceabilityof foreignarbitration agreementsthat usethis technology. And, inthe best traditionof lawyers,the answer is perhaps.

At the outset, the intersectionof blockchaintechnology with arbitrations covers expansive terrain.Blockchain technology,also referredto asdistributed ledgertechnol-

ogy, is(broadly) an immutable, digital database which uses coding to generate whatis essentiallya ledger. Thedigital ledger records andtracks transactions, generally inreal time, andcan beaccessedaccording to relevant permissions. Each transactionis recorded as a “block” of data in the ledger, linked to the preceding andsuccessive blocks, creatinga digital chain ofinterconnected, contemporaneously successive data blocks.

This digitalledger can intersect with arbitration agreements inseveral ways.

At one endof the spectrum areself-executingsmartcontracts, whichwould theoretically never(practically) require recognitionor indeed even human intervention. These smartcontracts would automatically trigger enforcement eventswhen an arbitral award is uploaded. By way ofexample, if monies (formingthe subject matterofthedispute)areheld bya facilityora bankwhich isparty totherelevant blockchain, these funds could automatically be released onceadigitalinstructiontodo sois generatedbya favourable arbitral award.

Thisalso appliestothe transfer ofownership where ownership is evidenced electronically. If proof of ownership existed in a digital space, this proof could automatically be updatedonce afinal arbitralaward tothis endis uploaded (share certificates, deeds, registration ofIP etc, if thesewere recorded electronically).

Of course,this would require the relevant registries or facilitators to be party to theblockchainandacceptthe automated “smart” rules whichwouldapply.Intheory, the act of external enforcement couldfall awayas this

and oversight committees focusedon ESG-relatedtopicswork closelywithdirectors andofficers sothat management andoperational personnel remain wellinformedabout howthese topicsimpact corporatedecision-making; and ● Financial institutions should: (i)makeevery attemptnotto overclaimclimate actionsthe companyis takingtowards net-zero(or other)commitments; and (ii) review ESG disclosureswith marketing,scientific and legalteams to avoid publishing potentiallymisleading information. Like allclaims basedon misrepresentation, the truth isthebest defence.Ifacompanycan supportconcrete statements with concrete sustainabilityefforts andfirm data, itis more likelyto be able toneutralise anddefend potential greenwashing claims.

agreements

becomes anautomatic incidence of an arbitral award. This enforcementcould span jurisdictions andlegal regimes, providedthat the relevant actors areparty to the blockchain (and the electronic recordingof ownership is recognised in the relevant jurisdiction).

We may besome way from ahomogenous digital and legal environment which would cater for this, however. At the otherend of the spectrum arearbitration agreements whichstill require human recognition and enforcementbut have

(with therelevant arbitral award) been recorded as data blocks in a digital ledger. Given thebenefits of blockchain technology, including real-time uploads, transparency ofthe chainof transactions, thepermanent recordingofeachtransaction, the chronological sequencing of datablocks whichmakes tampering difficultand readilyidentifiable andso on,the immediate reactionmay be that there isno discernable reason whyawards recorded only onblockchain technology should not be recognised. Alas,thelaw isnotwithout complications.

BUSINESS LAW & TAX

World dispute cases to grow

• Only 2% of mediating personnel appointed in 2022 so far have come from sub-Saharan Africa

Kylie Slambert & Ethan Chetty Baker McKenzie

The International Centre forthe Settlement forInvestment Disputes (ICSID) has,since 1966,beenrecognisedwidely as theleading institutionfor alternative dispute resolution in disputesbetween states and individual investors.

Thetheoretical utilityof such conventionsis relatively straightforward: inthe same manner that international commercial arbitration,in combination withthe New York Conventionon the Recognition and Enforcement ofForeign Arbitral Awards, fuelledthe rapid expansion ofglobal commerce by offering parties to international commercial contracts amechanism to expeditiously resolvedisputes, theICSID Convention was designedto encourage foreign investmentinto states withthe promisethat,should anything gowrong, there would berecourse inthe form of enforceable awards.

The latest issue of the

“ICSID Caseload Statistics” reveals that 2021 was a record-setting yearfor cases registeredbytheICSIDunder the ICSIDConvention, with promising signsof growthin 2022sofar.Thevastmajority of claims pertainto international oil, gas,mining and energy investments. This was,no doubt,aresult ofthe after-effects ofthe Covid-19

TANZANIA,

NIGERIA, GHANA, ZAMBIA AND KENYA HAVE PROVIDED A VARIETY OF GROWTH OPPORTUNITIES

pandemic, whichexacerbated underlyinginvestment disputes,as wellasinterruptions to theglobal supply chain causedby geopolitical conflict.

AFRICAN CASES

Despite theglobal trend towards ICSID arbitration, African countriesform the minority ofcited statesin

recent proceedings. According tothe “ICSIDCaseload Statistics”, thegeographic distributionofnewcasesregistered infinancial year2022 under theICSID Convention, shows that,for sub-Saharan Africa, two caseswere registered in the Republic of Congo,twoin Mali,onein Senegal and onein the Republic of Sudan.

Further, only 2% of arbitrators, conciliatorsand ad hoc committee members appointedin 2022,incases registered underthe ICSID Convention and additional facility rules, werefrom subSaharan Africa.

SAis ajurisdiction opposed toICSID proceedings, since the matter of Piero Foresti, Laura de Carli versus Republic of SA ICSID, which challenged transformative constitutional and statutory provisions in SAlaw, and resultedin theterminationof its Europeanbilateral investment treaties andthe promulgation of the Protection of Investment Act 22 of 2015.

Section 13 ofthis act requiresthat theSAgovernment may only consent to international arbitralpro-

YOUR CASE

ceedings onceall domestic remedies havebeen exhausted. Accordingly, international investmentdisputes with SA needto be mediated andlitigatedinSAbywayofa court, independent tribunal orstatutorybody, asafirst port of call.

OtherAfricanjurisdictions are not similarly opposed to these proceedings. Mauritius has becomea gatewayjurisdiction forinvestment into Africa. Tanzania,Nigeria, Ghana, Zambiaand Kenya have provided avariety of growth opportunities for infrastructure investments, structured tradeand com-

VIEWPOINT AFRICA

modityfinancing,amongother investment opportunities. Parties seeking to initiate proceedings and enforce awardsin Africancountries, however,often faceamultitude of mainly practical challenges. These include that:

● ICSID proceedings generally require the application of novel,intricate andcomplex lawsfrom multiplejurisdictions; ● ICSID proceedings generally require multijurisdictionalco-ordination effortsto investigate, collect evidence and sustain proceedings; and ● Enforcement proceedings generally requirea greatdeal

of legal,as wellas political and social sensitivity to the award debtor state.

CHALLENGES

Disputes arebecoming increasingly frequentand complexfor businesseswith operations across Africa. As businesses continue to enternew marketsagainsta backdropof tighterregulatoryscrutiny, increaseddigitalisationand higheraccountability, legal advice that offers an interconnected,multijurisdictional, cross-border approachto arbitrationand dispute resolution, has become essential.

Competition watchdogs improve co-operation

Brought to you by ENS

Now more than ever before transacting parties should remain cognisant of the competition law regimes applicable across Africa.

In addition to the everincreasing regulation of competition law in general, there has been notable growth in the monitoring and enforcement capabilities of African regulators.

A critical tool in this regard is information sharing (co-operation) among regulators, which can take various forms, including informal commitments and formalised memoranda of understanding In May this year, the fair competition commissions of Tanzania and Zanzibar undertook to co-operate in a strong working partnership going forward.

In July, the Egyptian Competition Authority agreed with the Tunisian Competition Council to enhance co-operation in the competition law domain. In August, the Egyptian authority further concluded a

memorandum of understanding with the Competition Commission of SA, in terms of which the agencies have committed to co-operate in various areas of competition law.

A further example of the collaboration trend is the recent memorandum of understanding entered into between the Comesa Competition Commission and the eSwatini Competition Commission in August, the objective of which is to foster cooperation and harmonisation across the agencies.

TANZANIA

In July 2022, the Fair Competition Commission of Tanzania published its whistle-blower policy, the objective of which is to enable and encourage stakeholders to report corruption, malpractice and other forms of unethical behaviour by employees of the commission. The policy makes provision for, inter alia, reporting procedures, confidentiality measures and compensatory rewards for

whistle-blowers, with the aim of enhancing and protecting the integrity and reputation of the commission.

BOTSWANA

On August 4, the Botswana Competition and Consumer Authority approved, subject to conditions, a transaction involving the indirect acquisition by Heineken of the flavoured alcoholic beverages, wine and spirits businesses of Distell Group Holdings.

In addition to the horizontal overlap, the transaction encompassed the acquisition of a dominant market share held by the target business before the merger. Thus, Heineken undertook to dispose of its own flavoured alcoholic beverage brand (Strongbow), which the authority acknowledged as a divestiture undertaking and imposed additional measures as conditions. These include a complete disassociation between Heineken and the Strongbow brand in Botswana, and monitoring mechanisms to enable the

authority to assess the notifiability requirements of any subsequent transaction with the new brand owner. Furthermore, to address the public interest concern arising from the absence of Botswana-owned local distributors, the authority imposed conditions aimed at empowering a citizenowned distribution company. The conditions oblige the parties to identify and equip (through a supplier/ distributor development programme) a locally owned distributorship business for eventual inclusion in the supply chain.

MOROCCO

The Competition Council of Morocco imposed a fine of 3-million Moroccan dirhams (about R4.8m at the time of writing) on the Accounting Association for agreeing to fix the minimum hourly audit rate in violation of article 6 of the Law No. 104-12, which prohibits conduct that impedes, limits or distorts competition in a market.

It was found that the conduct deprived small and medium companies of audits

conducted at competitive prices and was not in accordance with the functions of the association.

MOZAMBIQUE

Less than two years since becoming operational, the Competition Regulatory Authority of Mozambique issued its first penalty for a contravention of the competition law (Law no 10/2013 of April 11 2013). The authority imposed a fine of 41-million meticais (about R11m at the time of writing) against merging parties for failing to notify a transaction subject to mandatory filing prior to implementation. In Mozambique, gun-jumping constitutes an offence punishable by a fine up to 5% of each or all of the infringing parties’ turnover in the preceding year.

IT WAS FOUND THAT THE CONDUCT DEPRIVED SMALL AND MEDIUM COMPANIES OF AUDITS CONDUCTED AT COMPETITIVE PRICES

NAMIBIA

In 2018, the Namibian Competition Commission issued preliminary findings after its investigation into alleged collusion between short-term insurance companies. After inviting oral representations on its findings, the commission instituted proceedings in the high court. It was alleged that the defendant insurance companies engaged in a concerted practice to set maximum mark-ups and labour rates charged by panel beaters for the repair of insured vehicles.

In June 2022, the commission and Phoenix Assurance Namibia Limited (one of the defendants), concluded a settlement agreement based on an admission by Phoenix that the conduct constituted an unintended contravention of the legislation, for which penalties were imposed and commitments required to be made regarding future compliance with competition law in Namibia.

BUSINESS LAW & TAX

What normal retirement age is today

• The idea of a defined time to hang up your gloves seems as outdated these days as a carriage clock

Paul Williams & Kirsty Gibson Baker McKenzie

Benjamin Franklin famously noted thatthere aretwo certainties inlife: death andtaxes. Until not that longago, a third could havebeen added: retirement.

Youworked untilyou reacheda definedagewhen youduly receivedyourcarriage clock before heading off intothesunset toenjoythe fruitsof yourlabour.These days,the notionof adefined retirementage seemsasoutdatedasa carriageclock.The pandemic(ofcourse)hasonly served to accelerate this.

Some employees have had to rethinktheir retirement plans inthe light of financial hardship,and the dramatic shift towards remote workinghas made flexi-retirement thatmuch easier.

Itis hardlysurprising, therefore, thatemployers are struggling with the notion of whenthey canand can’t dismiss anemployee onthe groundsof age.A coupleof

recent casesbefore the Labour Court inSA highlight someof thepitfallsfor employers in this area, but equally helpus understand how those pitfalls can be avoided.

Dismissalon thegrounds of ageis automaticallyunfair unless theemployee “has reachedthenormaloragreed retirement agefor persons employed inthat capacity” (section 187(2)(b)of the LabourRelations Act,1995) a deceptively simple test.

Employersoften runinto issues whenthey seekto amend theretirement age unilaterally. Bydefinition, a unilateral changecannot be “agreed” and so an employer wouldneedto arguethatthe revised retirementage was the “normal” retirement age all along. Thisis essentially

AN EMPLOYER CAN ENFORCE AN AGREED RETIREMENT AGE EVEN WHEN THE

EMPLOYEE

WORKS PAST THIS AGE

what the respondent municipalityarguedin ImatuoboSP Hlabisa and7 othersv Umkhanyakude District municipality when it sought to dismiss employees aged between 60 and 63.

The municipalityargued thatas the “normal retirement date”,as definedinthe pension funds of which the employees weremembers, was60, thiswas their “ normal retirement age” and so it was lawful for it to dismiss employees aged 60 and above.

Despite this,the court found that the “normal” retirement age was65 for two main reasons. First, the employer’s policy (in practice; thiswas notdocumented),which wastoallow employees to retire from age 60 butto requirethem to retireatage65,supportedthe positionthat65wasthe“normal” retirement age.

Second, thecourt was persuaded by the applicants’ argument that the “normal retirement date” as referred to in the context of the pension funds was the date after which, ifan employeewas to take a pension from the fund,

the pensionwould notbe reduced for early payment.

More helpfullyfrom an employer’s perspective,in anotherrecentcase,thecourt confirmed in Solidarity obo Gerhardus Viljoen Strydom v SITA that anemployer can enforce an agreed retirement age even when the employee works past this age.

This decisionfollows a consistent line of authorities whichstem fromthe factthat section 187(2)(b)says thata dismissalis fairifemployees “have reached” retirement age, not “when they reach”— inother words,thesection refers to acontinuing right ratherthan arightwhich arises at asingle point in time.

In this matter, SITA served notices of retirement on a number of employees aged over 60.

It was common cause that age60wastheagreedretirement age, but the applicants claimed that their dismissals were automatically unfair on grounds of age,because the

parties hadtacitly agreedto extend the retirementage to 67.

The employees’ position derived from a contractual term that an employee who has reached normal retirement ageof 60may, subject to SITA’s consent,remainin service until age 67.

Theemployeescontended that SITA hadgiven its consentas ithad previouslyprovided them with salary adjustment letters.

The courtfound thatthe scope ofapplication ofthese letters was limitedto an amendment of the employees ’ salaries andso didnot constitute consent on SITA’s part to the employees remaining inservice. Itfound that on theevidence, the agreed retirement age of 60 remained “uninterrupted and binding”

Although theemployer was successful, this case demonstrates that even though the principle is clear that employers have an ongoingright todismissan

employee once they have reached anagreed ornormal retirement age, the evidence, and inparticular thewording of employmentcontracts, policies and retirement fund rules,iscrucialinestablishing whether an employer has compromised this right. What these cases have in commonis thatthey demonstratehowimportant itisthat either normal retirement age is specified in the employment contract orthat the contractrefersto apolicyor the retirement fund rules, where normal retirement age is clearly stated. Similarly, anyretirement policy must be unambiguous. And if an employer is seeking to make a change to the normal retirementage, itcannot do so unilaterally. In thepresent working environment, many employers willwant togive their employees the option to continue workingbeyond normal retirement date, but insodoing, theyshouldnot open themselves up to risk.

Unprotected strikes put employers to test

Sibusiso Dube Bowmans

SAhasa richhistoryof protestaction.Whenitcomes tothe workplace,eachyear thereis aperiodthat canbe dubbed as “strike season” Ordinarily, this happens when mostindustries engage in wage negotiations.

The right of each employeetostrike isenshrined.Section 64 of the Labour Relations Act sets outthe rules of engagement foremployers and employeeswhen it comes toindustrial action. However, rulesthat areset are not always followed. This often happenswhere strikes are concerned.In instances where theprescripts section 23 of the constitution of section 64 of theact have not been followed,such strikeis deemed to be unprotected.

Unprotected strikes are frequently riddledwith violence, intimidationand damage to property. For employersthis isa difficult periodwhere they experience, among other things, financialloss, reputational harm, loss of business and/or damage to property. On theother hand, employees losetheir wages for the days theyare not at work andrisk facingdisciplinary action,which may include dismissal,for their conductof participatinginan unprotected strikeand their conduct duringthe unprotected strike.Those employeeswhochoosenottoparticipateintheunprotectedstrike may, unfortunately,find themselves fallingvictim to threats, intimidationand, in some cases,damage totheir homes.

Foran employerthelaw has developed ina manner which,inmyview,createsan onerous burdenin dealing with employeesengaged in an unprotectedstrike. Ordinarily,whenfacinganunprotected strike,employers will approach theLabour Court on anurgent basisfor an order declaring,among others, thestrike unprotected and interdictingall employees from participatingin the unlawful conduct.

Employers arerequired tosatisfythe courtthatthe matter isurgent andthat the unions and/or striking employees havebeen made awareof thecourtprocess. Thiscanbechallengingasnot all employeeshave email addresses andunions may notalways takeacall toconfirm that theyhave received urgent application papers

as required by the court.

Further, foremployers to impute blame on particular individuals forviolent conduct orotherwise during an unprotectedstrike, employers now havea duty to identify the specific individuals who areengaging in the unlawfulconduct. This may bedifficult toachieve where groupsof employees are protesting and where the protest action is violent, or employees are behaving aggressively.

Once acourt orderis obtained interdicting the unprotected strike, employers are then required to communicatethe contentofthe court order tothe striking employees. Again, thiscan be tough toaccomplish when facing an angry crowd of striking employees, especiallywhere thepoliceare

reluctant to assist,which is often the case.

Inarecentjudgmentofthe Constitutional Courtin the case of Numsa obo Aubrey Dhludhlu and147 Othersv Marley PipeSystems (SA) (Pty) Ltd, a group of 148 employees hadbeen dismissed for participating in an unprotected strikeand for assaulting a manager.

The courtfound, among other things, that there must

UNPROTECTED STRIKES

ARE FREQUENTLY RIDDLED WITH VIOLENCE, INTIMIDATION AND DAMAGE TO PROPERTY

be proof ofthe employees’ complicityinthe actsofviolencefordismissal tobesubstantively fair.The employer had failed toshow that 41 employees, thoughthey may havebeenin thevicinityof the strike,were complicitin theassault ofthemanager and so the court found that their dismissal on the charge of assaultwas substantively unfair. Employees shouldbe encouraged toexercise their right to strikein a lawful manner. Employers should usewhatevertechnologyisat theirdisposal tocollateas much evidenceas possibleto assist inidentifying culpable employees for thepurpose of taking disciplinaryaction, and lodgingpotential claims for damagesarising fromthe losses sufferedas aresult of the unprotected strike.

BUSINESS LAW & TAX

New law aims to speed up transformation

Lauren Salt & Amy Pawson ENSafrica

In a mediarelease on August31, thedepartmentof employment& labour confirmed that thesigningintolawofthe Employment EquityAmendment Bill, 2020 is imminent.

President CyrilRamaphosa is expected to assent to thebill beforetheend ofthe year. Theamendments are dueto comeinto effecton September 1 2023.

Thebillwillintroducevariousamendmentstotheaffirmative actionprovisions of the EmploymentEquity Act, 1998; thesenew provisions aim toachieve morerapid transformation inthe workplaces ofdesignated employers.The isagainst thebackground of the slow progress of transformationsince the introduction of the act in 1998.

The mostsignificant ofthe amendmentsin thebillrelate to the employment & labour minister’s powerto setsector-specific employment equitytargetstowhichdesignated employers willheld to account.

SECTORAL TARGETS

tionof theactand todetermine numericaltargets for such sectors.

These sectoral targets may differentiatebetween occupational levels, subsectors, regions orany other relevant factor.

Before determining the targets,the ministerwillbe required toconsult relevant stakeholders andthe Employment EquityCommissionontheproposedsectorsand sectoraltargetsand publish anyproposals for public comment.

A NEW ONLINE ASSESSMENT SYSTEM WILL BE CREATED TO MONITOR THE IMPLEMENTATION OF SECTOR TARGETS

In its mediarelease, the department statedthat engagementsonthesettingof sector-specific equitytargets startedin June2019 andwill be completed bythe end of September 2022.

Some of the sectors consulted include:

● Accommodation andfood services;

● Human health and social work;

● Agriculture, forestry and fishing;

● Wholesale and retail trade;

● Repair of motor vehicles and motorcycles;

● Administrative andsupport;

● Professional, scientificand technical;

● Electricity, gas steam and air conditioning supply; and

● Financial andinsurance activities.

The remainingsectors that are tobe consulted between nowand endof September 2022 include:

● Mining and quarrying;

● Public administrationand defence;

● Manufacturing, information and communication;

● Construction: and

● Real estate.

Thismeans itis likelythat, fairly quicklyafter thebill becomes law, the sectorspecific targets will be circulatedforpubliccommentand, thereafter, amended if deemed necessary, and implemented.

ISSUANCE OF COMPLIANCE CERTIFICATES

To “incentivise” employers to meet targets,the billstates that certificates willbe issued by the minister if:

● The employer has compliedwithanyapplicablesectoral targets or has raised a reasonable ground for noncompliance;

● The employer has submitted its most recent employment equity report; and

● Within the previous 12 months,theemployerhasnot been found tohave breached theprohibition onunfairdiscrimination, or paid wages below the level of the minimum wage.

sector targets. The first year inwhich thesector-specific targets will applyis 2024. At the endof thatreporting year, thesystemwill beabletotell whether employers have achievedtheir target,and whereemployers arenot meeting theirtarget, theywill need tohave justifiablereasons fornot achievingtheir set targets.

The systemwill accept,in good faith, allthe information suppliedbut thedepartmentalinspectorate mayvisit workplaces to verifyif informationsubmitted isgenuine.

In its statement, the department seems to suggest the system will automatically generatea compliancecertificate for thosewho comply with the above.

However,itgoesfurtherto expressly state that if the informationsupplied isnot genuine,then thecertificate will be withdrawn.

DEFINITION OF DESIGNED EMPLOYER

hold,as “designated employers. ” Consequently, employers who employfewer than 50employees, regardlessof their turnover, will no longer fall within the definition of a “designated employer” and willtherefore notberequired to comply with Chapter III of theact (whichdealswith affirmative action).

The bill empowersthe labour minister toidentify national economic sectorsfor the purposes ofthe administra-

● Education;

These employers will no longer be requiredto take certainmeasures, suchas preparing and implementing anemployment equityplan, consulting with employees and/or representativetrade unions on matters and submitting an employment equityreport onanannual basis. According tothe memorandumontheobjectsofthe bill, this isintended to reduce theregulatory burdenon small employers. With the possibility that the president couldassent to this bill as early as September 2022, employersshould analysetheir existingtransformation measures and implement the necessary preparations. Compliance withthe amendments,as soon asthey areenforced, will be vitalfor businesses, sincefines ofbetweenR1.5m andR2.7m maybeimposed for a contravention of the act. •

● Water supply, sewerage management andremediation;

discover more

Employers concerned aboutthe targetsshouldkeep an eyeout forthe circulation of theproposed targetsand make any submissions they deem necessaryprior tothe finalisation thereof.

The importanceof obtainingthiscertificate isthatstate contractsmayonlybeoffered and issued to employers who have beencertified asbeing compliant with their obligations underthe act.A failure to comply with these requirements is a sufficient groundforcancellationofany state contract (shouldno reasonablegroundexisttojustify such noncompliance).

In the recent media statement,thedepartmentstateda new online assessment system willbe createdto monitor the implementation of

In additionto theabove, the bills seeks to amend the definitionof a “designated employer” by deletingthe paragraph which classifies employerswith fewerthan 50employees,andwhomeet therequired turnoverthres-