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
2.1. Trends in Ownership
12
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
1
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
4.1.1. Ordinary hours of work
47
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
2
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
3
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
4
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 subsectors 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 higher–skilled 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.
5
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
6
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, bungeejumping 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.
7
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.
8
Organisation
Sub-sector/description
Tourism Business Council
SA
Umbrella body representing business sector in tourism on
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
Associations of South
Africa (FEDHASA)
Hospitality trade association including, hotels, restaurants,
caterers, self-catering, time-sharing, home hosting (B&B,
guesthouses), suppliers, consultants and service providers to
hospitality industry; conference venues, country clubs and
taverns.
National Accommodation
Association
Trade association for smaller establishments- 1-30 bedroom
establishments.
1500 members
Bed & Breakfast
Association of South
Africa (BABASA)
Mostly Small, Micro and Medium Enterprises SMME’s
including lodges, guest houses (1- 15 rooms), B&Bs (1-6
rooms) & caterers.
Mostly informal and “unregistered”, partnerships and “mom
and pop” shops.
National Council for Tour
Guides
Represents tour guides and adventure operators (e.g. bungee
jumping etc.)
National Association of
Catering Employers
(NACE)
South African
Commercial and Catering
Workers’ Union
(SACCAWU)
Employers organization in the catering industry
Hotel, Liquor, Catering &
Allied Workers Union
(HOTELLICA)
Trade union representing hotel and catering employees.
In the process of registering as an employers’ organization
Trade union
Hotels, restaurants, tourism, gambling.
Congress of South African Trade Unions (COSATU) affiliate
National Council of Trade Unions (NACTU) affiliate
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;
9
(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 black–owned businesses, especially in the bed and breakfast (B&B) subsector.
(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
10
questionnaire had basic questions relating to the wages currently earned, hours of work
and also other conditions of employment within the sub-sector. In compiling this report,
inputs received through the questionnaires were incorporate.
The table below indicate names of places visited during the public hearings together with
the attendance profile of stakeholders:
Table 1: Schedule of public hearing dates, venues and attendance
Attendance
Employers
Attendance
Employees
PORT ELIZABETH
18
(2 Employer organization)
4
(2 Unions)
12 /09/06
GRAHAMSTOWN
11
(2 Employer organization)
7
(6 Unions)
13/09/06
EAST LONDON
40
(3 Employer organization)
6
(5 Union)
14/09/06
MTHATA
17
(2 Employer organization)
4
(4 Union)
25/07/06
THOHOYANDOU
11
4
26/07/06
POLOKWANE
38
5
27/07/06
MODIMOLLE
35
11 (3 Union)
11/09/06
PHUTHADITJHABA
3
38
12/09/06
WELKOM
3
0
13/09/06
BETHLEHEM
10
8
(1 Union Rep)
14/09/06
BLOEMFONTEIN
3
1
04/09/06
VANDERBIJLPARK
3
4
05/09/06
JOHANNESBURG
2
10
(2 Union)
Province
Dates
Venues
Eastern Cape
11/09/06
Limpopo
Free State
Gauteng South
11
Gauteng North
05/09/06
SILVERTON
3
0
Western Cape
21 August
2006
BELLVILLE
5
2
22/08/06
SALDANHA
6
1
24/08/06
GEORGE
45
35
(35Membership
SATAWU)
25/08/06
OUDTSHOORN
10
2
(2 Representing
COSATU)
28/08/06
DURBAN
6
(2 Employers Organization)
4
(1 Union)
30/08/06
PORT SHEPSTONE
15
(5 Employers Organization)
10
(3 Union)
01/09/06
RICHARDS BAY
14
(2 Employers organization)
4
(5 Union)
Mpumalanga
17/08/06
SABIE
21
5
(1Union)
Northern Cape
08/08/06
KIMBERLEY
3
5
10/08/06
SPRINGBOK
15
3
11/08/06
UPINGTON
18
17
05/09/06
RUSTENBURG
26
2
06/09/06
KLERKSDORP
8
9
07/09/06
MAFIKENG
21
(1 Employers Rep)
8
(3 Employee
Representatives)
KwaZulu-Natal
North West
12
After the public hearings were finalized, the Department established a working group for
further consultation. The working group consisted of the following stakeholders:

Steve Lonie- Southern Sun Group;

Joe Lukwago-Mugerwa- Sun International;

Marcel Kobilski - City Lodge Group

Ted Stilwell - PRO National Accommodation Association of South Africa Urban & Rural small emerging & established accommodation establishments.

Monica Basilio– Pretoria Restaurant & Catering Trade Bargaining Council

Barry Ross – Legacy Hotels and Resorts

William Matlatle- SACCAWU

Dumisani Dakile – SACCAWU

Manny Nichas- Ocean Basket Restaurants & Restaurant Association

Don Moody- Ceasar

Peter Cumberlege – Fedhasa

Wilson Sangweni - Department of Environmental Affairs and Tourism
The terms of reference for this working group were to provide inputs in relation to the
gaps identified from the public hearings. They were also tasked with assisting in the
development of the definition of the sector, scope of application, and other issues to be
covered by the sectoral determination. The first meeting for the establishment of the
working group took place on the 20 November 2006 and thereafter met every week until
1st December 2006 when they finalized their proposals.
(c)
PHASE THREE – ECC PROCESS
During this phase the Department presented its proposals to the ECC for consideration.
The proposals of the Department are discussed in the chapters dealing with the discussion
on conditions of employment and wages, followed by the ECC’s recommendations.
13
(d)
PHASE FOUR- PUBLICATION OF THE SECTORAL DETERMINATION
This phase will see the publication of a sectoral determination, once approved by the
Minister, in the Government Gazette and subsequent awareness raising.
1.4.
STRUCTURE OF THE REPORT
The report consists of 6 chapters, which are as follows:
Chapter 2 of this report outlines the current status of the hospitality sector in South
Africa. Chapter 3 discusses three issues: the definition of the sector, demarcation and
wages. Chapter 4 deals with conditions of employment including, Chapter 5 deals with
the evaluation of the impact of the minimum wage on the alleviation of poverty, job
creation and affordability. Chapter 6 summarizes the recommendations of the
Employment Conditions Commission.
14
CHAPTER TWO
2.
DESCRIPTION OF THE SECTOR
2.1
STRUCTURE OF THE SECTOR
Trends in Ownership
Ownership in the sector has historically been concentrated among whites. In 2003, white
ownership was estimated at 95% (Rogerson, 2003). A study by the Human Sciences
Research Council (HSRC) in 2004 confirms this (THETA 2004), as illustrated in Figure
2.1 for owners/managers across all sub-sectors. The exception is Gambling and Lotteries,
where just fewer than 50% of owners and managers are black, the highest such
percentage across all the sub-sectors. The latter is probably more to do with the fact that
BEE requirements have featured prominently in the sub-sector in the post-apartheid
period.
Figure 2.1: Population group of owner/manager by sub-sector (THETA) (2004) (%)
Source: HSRC 2004, as cited in THETA SSP 2005-2009.
90%
Percentage of ownership
79%
78%
80%
75%
70%
60%
53%
47%
50%
Conservation & Guiding
Gambling & Lotteries
40%
30%
22%
21%
Hospitality
25%
Tourism and Travel
20%
10%
0%
Black
White
Enterprise distribution across sub-sectors
Figure 2.2 provides an overview of THETA-registered enterprises as distributed by subsectors as of 2004. The THETA classification includes sport, recreation and fitness subsector, much of which (especially sport and fitness) is not part of the proposed definition
for the sectoral determination. It shows that the hospitality sub-sector (catering and
accommodation) constitutes two-thirds of the enterprises in the sector, followed by
15
Tourism and Travel. Conservation & Guiding. Gambling & Lotteries constitute a minute
proportion of the sector as a whole. The figure represents the number of enterprises. The
THETA notes that hospitality also has the largest number of employees (2004:4).
Figure 2. 2: THETA registered enterprises by sub-sector (2004)(%)
Sport, Recreation
& Fitness
13%
Conservation & Gambling &
Guiding
Lotteries
3%
1%
Tourism and Travel
16%
Hospitality
67%
Source: THETA 2004.
Spatial distribution by province and location
Figure 2.3 provides an overview of the provincial distribution of enterprises registered
with the THETA. It confirms the concentration in Gauteng (40%), followed by the
Western Cape (27%) and KwaZulu-Natal (14%). The rest of the sector is fragmented
among the remaining provinces.
Figure 2.3: Distribution of enterprises by province (2004) (%)
5%
4%
EasternCape
27%
Free State
Gauteng
KZN
Mpumalanga
North West
2%
40%
1%
Limpopo
W Cape
3%
4%
N Cape
14%
Source: HSRC 2004, cited in THETA SSP 2005-2009:9.
16
In terms of the locational distribution within provinces, all sub-sectors are predominantly
urban-based, with relatively low levels of development in rural areas (THETA, 2004).
Distribution by Enterprise size category
There is general agreement that the sector is dominated by a small number of large
enterprises, while the overwhelming majority of enterprises are small, medium and
micro-sized1 (Monitor group 2004; THETA, 2000). The Monitor study (2004) also
suggested that larger enterprises command a disproportionate share of revenue relative to
the SMMEs. For instance, in the inbound tour operator sub-sector, 10 operators generate
70 per cent of revenue, while the remaining 800 enterprises generate the remaining 30 per
cent.
The THETA sector skills plan notes that “70% of the enterprises in the sector are so small
that they fall below the levy threshold” (THETA 2000:163). It further notes that official
data regarding formal, registered but non-levying enterprises are not readily available
from the South African Revenue Service or the Department of Labour. Follow up
research in 2004, confirmed this trend of small enterprises as shown in Table 2.2. It
suggested that about 82 per cent of the sector employment was among enterprises in the
category 0-9 employees, followed by those in the category 10-49 employees. However
the evidence in terms of the labour force survey revealed a different picture from
information gathered through the THETA sector skills plan.
Table 2.1: Enterprises by size and sub-sector (THETA registered) (%)(2004)
Percentage of Employees
0-9
10-49
50-149
Sub-sector:
Hospitality:
Accommodation
80%
Hospitality: Food
81%
Tourism
and
Travel
Services
88%
Conservation and Tourism
Guiding
77%
Gambling and Lotteries
80%
Total
82%
150-249
250+
Total
15%
17%
4%
1%
0.9%
0.1%
0.5%
0.3%
100%
100%
9%
2%
0.5%
0.4%
100%
15%
8%
15%
3%
4%
2%
1%
2%
0.4%
3%
5%
0.5%
100%
100%
100%
1
The National Business Act (1996) defines enterprises in the catering, accommodation and other trade
activities as follows: Micro (5 or less employees); Very small (6-10 employees); small (11-50 employees)
and medium (50 or more employees)
17
Source: HSRC 2004, cited in THETA SSP 2005-2009:7.
This dominance of micro, small and very small enterprises is important when considering
possible wage levels and conditions of employment. Non-levy paying enterprises do not
fall easily within the skills development regulatory loop. This implies that departmental
intervention in terms of the enforcement of the sectoral determination may be difficult as
these companies tend not to operate within the legislative frame in other areas.
Another key point to note is that the sub-sectors, conservation & tourism guiding and
gambling & lotteries had a higher concentration of larger companies (150+) than other
sub-sectors. These are relatively new sub-sectors and may be attracting higher levels of
investment.
18
CHAPTER THREE:
This section focuses on defining the sector, the scope of the sectoral determination,
demarcation and the levels of wages. The format of the report in respect of these issues is
as follows: recommendations contained in the research report, followed by the views of
stakeholders, the proposals by the working group; the Departmental proposals and,
finally, recommendations of the Commission.
3.1
Scope and the definition of the hospitality sector
Research findings
The evidence shows that the main sub-sectors that are regarded as “hospitality” by
industry stakeholders and reflected in the survey results include hotels & accommodation
and restaurants. The definition has historical application among key stakeholders and
there is supply-side data available that will facilitate the monitoring and updating of the
sectoral determination. Further, general conditions of employment and wage levels are
similar across the sector thus defined.
The remainder of the sub-sectors under investigation, including Tourism & Travel,
Conservation & Guiding and Gambling & Lotteries relate to the tourism sector more
generally. Further, the study was not able to yield sufficient information regarding the
vulnerability of their employees. However, there is some initial evidence that these subsectors contain larger proportions of skilled employees, with higher levels of education.
This is particularly the case with travel & tourism which has a large proportion of skilled
employees, while in conservation & guiding there may be pockets of semi-skilled
employees who may be more vulnerable. Gambling & lotteries is a very small sub-sector
and is concentrated in a small group of large enterprises, which may be more amenable to
unionization. Further, the skill level in this sub-sector is generally high.
Recommendation:
It is recommended that three of the four sectoral determinations covered by the terms of
reference be combined into the hospitality sector, namely WD 457: Hotel trade, certain
19
areas, WD 461: Catering trade, certain areas, and WD 479: Accommodation
establishment trade, certain areas. Other business activities include:

Provision of short-stay accommodation;

Restaurants, including bars, canteens, and other catering services including food
preparation and beverage services.

Industrial catering and other catering services
The recommendation with regard to industrial catering is based on the fact that its core
business function is the provision of food and refreshments, a function that is key to all
hospitality establishments. Leaving it outside of the ambit of the determination may
contribute to further delays in updating conditions of employment.
With regard to the Wage Determination 477: The Trade of Letting of Flats or Rooms,
Certain Areas the recommendation is that this sub-sector not be included in the definition
of the hospitality sector for the purposes of the determination. Industry stakeholders argue
that it falls within the business services and property management sub-sector. Thus, estate
agencies form a large proportion of the sector, and generally have very little connection
to the hotels and accommodation sub-sectors. Further, the research survey failed to gather
any substantive information on the sector, even though it was included. If necessary, a
separate investigation, including estate agencies, may have to be conducted.
Employers
The hospitality sector is a broad sector which encompasses many activities. The
employers support the definition proposed by the research. They also proposed that due
to the size of the sector and different activities found within the sector, the definition
should be structured in a way that it divides the sector into different sub-sectors.
According to the employers, the ECC should be cautioned not to apply the one-size-fitsall approach since within the hospitality sector you have different kinds and sizes of
establishment and their environment is not the same.
Some employees proposed that the definition should be determined in terms of the number
of rooms the establishment has and that one can also use the number of employees.
20
Employees
Employees proposed that the definition should cover all employers and employees
employed in all sub-sectors within the hospitality sector. They indicated the following as
the sub sectors within the hospitality sector:













Hotels,
Guest houses,
Restaurants,
Catering services,
B&B,
Liquor licensed, hospitality-related businesses,
Lodges,
Motels,
Industrial catering including students hostels/ residence/ hospital etc,
outsourced operations within the sector/ section of the sector;
Parks,
Travel & Tourism,
Fast Foods or providing service to the sector e.g. Labour brokers, outsourcing,
franchises etc.
Proposals by the working group
Scope of application
The working group proposed that the determination applies to the employment of
hospitality employees in the Hospitality Sector in the Republic of South Africa.
Definition of the sector.
The working group proposed that the sector be defined as follows:
For the purposes of this determination, “Hospitality Sector” refers to the sector where
employers and employees are associated primarily for the purpose of providing hotel
and/or other accommodation, and/or restaurant and/or catering and/or liquor (for on-site
consumption purposes) services, commercially for reward (“hospitality activities”).
Without limiting its meaning, “hospitality activities” includes:
(a)
hotels and restaurants, including motels, resorts and game lodges,
timeshare, guesthouses, guest farms and bed and breakfast, etc.;
21
(b)
provision of short stay accommodation including short term rental, selfcatering or camps, caravan parks, etc.;
(c)
restaurants; bars, canteens and other catering services including food
preparation, food and beverage services and banqueting conference and
convention operations. Licensed clubs and fine dining establishments;
pubs and taverns including shebeens, fast-food outlets, snack bars and
kiosks, industrial and contract caterers; functions of outside caterers,
etc;
With respect to the exclusions, they proposed that the following should be stated in the
determination that:
1.
The determination does not apply to employers and their employees:
(a)
involved in the trade of letting of flats, rooms and/or houses;
(b)
involved in travel agencies, tour operators and related activities,
including retail and general travel operations: marketing and
development agencies and companies, tourism authorities, commissions
and boards: tourist information centres; tourism industry associations;
(c)
involved in motor car rental services;
(d)
involved in gaming and gambling including casinos and other tables,
electronic and slot machine gaming outlets; gambling betting and
booking operators; totalisators; lottery operations, horse racing clubs;
(e)
involved in any charitable and/or religious organisation that engages in
the hospitality sector for the purposes of fund raising and are registered
as a non-profit making organization and/or unpaid volunteers working
for an organisation serving a charitable purpose.
22
(f)
employees covered by another sectoral determination in terms of the
Basic Conditions of Employment Act; or
(g)
covered by a collective agreement of a bargaining council in terms of
the Labour Relations Act;
(h)
if the employees are senior managerial employees and/or receive
remuneration in excess of the amount prescribed by the Minister in
terms of Section 6(3) of the Basis Conditions of Employment Act, as
amended from time to time.
Proposal by the Department
Scope and Definition
With respect to the scope and definition, the Department proposes that the sectoral
determination should apply to employers and employees in the Republic of South Africa
who are engaged in the hospitality sector as defined but should exclude the following:
(i)
involved in the trade of letting of flats, rooms and/or houses;
(ii)
involved in travel agencies, tour operators and related activities, including retail and
general travel operations: marketing and development agencies and companies,
tourism authorities, commissions and boards: tourist information centres; tourism
industry associations;
(iii) involved in motor car rental services;
(iv) involved in gaming and gambling including casinos and other tables, electronic and
slot machine gaming outlets; gambling betting and booking operators; totalisators;
lottery operations, horse racing clubs;
(v)
involved in any charitable and/or religious organisation that engages in the
hospitality sector for the purposes of fund raising and are registered as a non-profit
23
making organization and/or unpaid volunteers working for an organisation serving a
charitable purpose;
(vi) employed in activities covered by another sectoral determination in terms of the
Basic Conditions of Employment Act; or
(vii) covered by a collective agreement of a bargaining council in terms of the Labour
Relations Act;
(viii) Senior managerial employees as defined in the BCEA should be excluded from the
regulation of working time clause in the sectoral determination.
The Department supports the definition as proposed by the working group.
Recommendations of the ECC
The ECC supports the proposed definition and the scope of the sectoral determination as
proposed by the Department except that the Commission recommends that non- profit
charitable organizations should be excluded from the determination.
3.2.
Demarcation
Research findings
The sector is primarily urban-based, concentrated particularly in the metropolitan areas,
and on the periphery of the metropolitan areas, towns and cities. Those in the rural areas
are generally engaged in small pockets of highly urbanized activities such as guest farms,
hunting lodges and so forth. As such a clear rural-urban divide does not apply.
The research investigation found that differentiation of wages based on magisterial
districts has not been consistently applied in the current sectoral determinations. The SDs
are applicable across all the municipal areas and other urban areas (or then called
magisterial districts), with some variations within the sectoral determinations. However,
it is not always clear what underpinned the differentiation between rural and urban, or
other divisions, when they were included. Further, stakeholders raised concerns about the
24
plethora of legislative provisions to be dealt with and thus simplicity is a key issue in
enhancing implementation and compliance.
The research report thus recommended that the new sectoral determination should apply
to all of South Africa with no differentiation.
Proposals by the working group
The working group proposed the following with respect to demarcation: that metropolitan
areas be classified under one group which should be the highest paying category. They
proposed that the highest category should include any magisterial districts falling within
the following, municipalities as demarcated in terms of the Demarcation Act, 1998:
Tshwane; Johannesburg; Ekurhuleni; Ethekwini; Cape Town; and Nelson Mandela.
All other municipalities will fall under a separate category.
Proposal of the Department
The Department proposes that for the purpose of this sectoral determination, only two
areas should be applicable. Metropolitan areas should be classified as one category and
all other areas under a second category. This is proposed because the majority of the
hospitality activities are concentrated in the metropolitan areas. Again by allowing nonmetropolitan areas to pay a lower wage than the metropolitan areas, it will promote
growth and employment creation in those areas. Therefore the Department proposes that
metropolitan areas be classified under a single wage structure which will be different to
that of other areas which are classified as non-metropolitan.
Recommendations of the ECC
The ECC recommends that one single minimum wage should apply to the whole of South
Africa. The ECC indicated that it would be unfair to require the Metropolitan areas to pay
higher wages than the rest of the country since there are other areas which are fast
growing in relation to hospitality activities. The ECC therefore proposes that one single
wage structure should be applicable.
25
3.3.
Occupational classification
Research findings
The current range of detailed occupational categories as provided for in the sectoral
determinations is lengthy and unwieldy. It acts as a barrier to speedy updates and
adjustments due to the scope of information required. Given the fragmented nature of the
hospitality sector, as well as the scope of coverage in the current sectoral determinations,
standardization of occupational categories represents a major challenge.
The table below provides an overview of the general Standard Occupational Code (SOC)
categories utilized across the THETA sub-sectors. Those occupations applicable to Sport,
Recreation and Fitness fall outside of the scope of the investigation. Also, only those
occupational categories in the skilled, semi-skilled and unskilled categories are up for
consideration.
The table provides a specific occupational category and the relevant SOC description. For
the purposes of this report, the estimated size of occupations will not be considered.
However, these SOC categories represent the standard approach adopted by THETAregistered employers in their submission of their Workplace Skills Plans and
Employment Equity company reports. As it covers the various sub-sectors (Hospitality,
Tourism and Travel, Conservation and Guiding, and Gambling and Lotteries), this
approach presumably caters for the particular requirements of each sector. In terms of this
skill categorization, the unskilled include labourers and related workers while the semiskilled category includes service workers and clerks.
The current sectoral determinations provide for a range of different occupational
descriptions, ranging from 13 to 20 different occupations depending upon the sectoral
determinations. Similarly, the current bargaining councils prescribe wages and conditions
of employment for up to 28 different occupational categories each. While this approach
ensures that every possible occupation in the sector is considered, it is difficult to update
information across such a large range of occupations. In the absence of formal collective
bargaining processes, it becomes even more complex. Given the universal nature of the
SOC categorization in both the official data as well as among employers, it may present a
useful approach to the standardization of occupational categories under the proposed
sectoral determination.
26
Table 3. 1: Standard Occupational Classification (SOC) in the hospitality sector
(THETA) (2000)
27
Source: THETA SSP 2000.
The research report therefore recommends that the sectoral determination should provide
for two main occupational classifications, namely the broad unskilled and semi-skilled
categories, using the SOC codes as the basis for allocation. Thus, unskilled employees
will include labourers and related workers and semi-skilled occupations will include
service, shop and market workers, and clerks. Managerial staff is excluded. This should
be workable as since the advent of the National Skills Development Strategy there is
increased knowledge and practice regarding the SOC classifications.
Employers
Employers proposed that occupations should be clustered into four different categories.
The lowest category should be composed of all occupations which are at the entry level
and which do not require a qualification to perform. Although employers could not
specify which occupations should be categorized in each level, they proposed that the
Department in consultation with them should develop a proposal for discussion. These
four categories would require clear definitions to guide employers around educational,
experience and level of skills.
28
Employers proposed that the four categories of occupations should be classified as
follows:

Grade 1 (unskilled employees),

Grade 2 (semi-skilled),

Grade 3 (skilled) and

Grade 4 employees in higher positions who are supposed to be covered by the
sectoral determination.
They further proposed that this model might fit well those establishments employing
more employees than the guest houses and bed and breakfast outlets. In addition to these
categories, they proposed that a provision should be made for a multi-skilled level which
will cater for the small establishments like guest houses. Employers recommended that
occupational classifications be included and should be well defined within the
determination.
Employees
Employees proposed that the occupational classification should be based on the three
levels of unskilled, semi-skilled and skilled. They also proposed that the lowest category
of employee should be a cleaner. They further proposed that duty managers should also
be included in the scope of the determination.
Proposals by the working group
The working group proposed that there should be two categories with respect to job
classification.
In determining an employee’s classification in an occupation, the
employee must be deemed to spend at least 51% of their time in completing duties
normally associated with that occupation.The two categories should be entry level
occupations and secondary level occupations.
Entry level occupations refer to NQF level 1 occupations characterized by defined and
limited decision making.
These occupations may include but are not limited to those
listed in the table below.
29
Secondary level occupations refer to those NQF level 2 / 3 occupations characterized by
the requirement for the incumbent to use their discretion when making a decision. These
occupations may include but are not limited to those listed in the table below.
ENTRY LEVEL OCCUPATIONS
Room Attendant, Room Maid, Seamstress
Valet/Linen Room Attendant
Steward,Cleaner,Houseperson
Bar Commis,Bar Hand
Staff Canteen Attendant
Public Area Cleaner, Attendant
Banqueting House person, Porter
Storehand,Store Attendant
Pool Attendant, Gardener
Porter,Page,Messenger
Kitchen Attendant,Cook,Cold
Prep,Commis Chef
Doorperson,Commissionaire
Waiter (Restaurant, Coffee Shop, Room
Service, Banqueting etc.)
Wine Steward (Restaurant, Coffee
Shop,RoomService,Banqueting, etc)
Catering Assistant
General Assistant
Shop Assistant
Watchperson, Guard
SECONDARY LEVEL OCCUPATIONS
Bartender,Butler,Butcher,Blockperson
Florist
Cashiers (Restaurant/Room Service)
Hostess,Host,Head Waiter
Switchboard Operator, Telephonist
Floor Housekeeper/Supervisor
Valet, Linen Keeper/Supervisor
Stewarding Supervisor, Chief Steward
Chef de Partie, Demi-Chef de Partie
Griller, Kitchen Supervisor
Head Barperson,Cellarperson,Storeperson
Handyperson,Plumber,Carpenter
French Polisher,Painter,Electrician
Housekeeping Supervisor
Admin/Accounts Clerk,Debtors,Creditors
Banqueting/Events Co-ordinator
Guest Services/Guest Relations Officer
Receptionist, Front Office Cashier
Security Supervisor,PABX Supervisor
Concierge, Head Porter, Driver
Restaurant Supervisor
Reservationist,Reservations Clerk
Night Auditor, Office Clerk
Cashing-up Officer, Banking Clerk
Head Receptionist, Guest Services Supervisor
Secretary, General Manager's Assistant
Shopkeeper
Payroll Officer
Human Resources Officer
Training Officer
30
Proposals by the Department
The Department realizes that the size and nature of the sector would make it difficult to
classify each and every job category and allocate a minimum wage for each. The
Department therefore proposes that job categories within the sector be clustered into
groups depending on the level of skills and responsibility attached to the particular
category. Three levels or groups of job categories resulted when using this approach for
the purpose of prescribing a minimum wage. The following table illustrates the proposals
of the Department:
31
Level 1
Job Categories
Area A
Manager; Chef de Partie, Demi-Chef
de Partie; Guest Services Supervisor
Bartender,Butler,Butcher,Blockperson;
Chief Steward
Level 2
Florist; Hostess,Host,Head Waiter
Cashiers (Restaurant/Room Service)
Area B
Switchboard Operator, Telephonist
Floor Housekeeper/Supervisor
Valet, Linen Keeper/Supervisor
Stewarding Supervisor, Griller,
Kitchen Supervisor; Head Barperson
,Cellarperson,Storeperson
Handyperson,Plumber,Carpenter
French Polisher,Painter,Electrician
Housekeeping Supervisor
Admin/Accounts
Clerk,Debtors,Creditors
Banqueting/Events Co-ordinator
Guest Services/Guest Relations
Officer; Restaurant Supervisor
Receptionist, Front Office Cashier
Security Supervisor,PABX Supervisor
Concierge, Head Porter, Driver
Reservationist,Reservations Clerk
Night Auditor, Office Clerk
Cashing-up Officer, Banking Clerk
Head Receptionist, Guest Services
Supervisor
Secretary, General Manager's Assistant
Level 3
Job Categories
Room Attendant, Room Maid,
Seamstress
Valet/Linen Room Attendant
Steward,Cleaner,Houseperson
Bar Commis,Bar Hand
Staff Canteen Attendant
Public Area Cleaner, Attendant
Banqueting House person, Porter
Storehand,Store Attendant
Pool Attendant, Gardner
Porter,Page,Messenger
Kitchen Attendant,Cook,Cold
Prep,Commis Chef
Doorperson,Commissionaire
Waiter (Restaurant, Coffee Shop,
Room Service, Banqueting etc.)
Wine Steward (Restaurant, Coffee
Area A
32
Area B
In line with the above table, the Department will develop definitions for all the categories
mentioned. It should also be noted that this proposal is in line with the way in which the
bargaining council has categorized their jobs.
Recommendations of the ECC
The ECC considered the different proposals put forward in relation to job classification.
The ECC feels that its role is to set minimum conditions and wages for vulnerable groups
and therefore it would be inappropriate to set wages for every category of employee
employed in the sector. The ECC therefore proposes that one minimum wage should be
set for employees in the sector and that those in the sector should determine wages for
other job categories. The ECC therefore recommends that one wage structure should
apply to the sector without setting wages for different job categories.
3.5.
Minimum wage levels
Research findings
It is recommended that a national minimum wage be implemented. This would be
applicable at two skill levels, for the unskilled (labourers) and the semi-skilled (service
and clerical workers). The key rationale is that this approach would obviate the need to
engage in complicated processes to update wages for a range of occupational categories
from time to time.
Further, it is proposed that the national minimum wage apply irrespective of geographical
location. This is largely because the sector is predominantly urban-based and therefore
the differences in terms of affordability may not be as stark as that between urban and
rural. Where establishments are based in the rural areas, such as guest farms, it is
proposed that they apply the 10% deduction proposed below for companies employing
fewer than 10 employees. The proposed minimum levels, which were put forward in
October 2005, were based on a comparative analysis of minimum wage levels in the
organized sector, including the bargaining councils, as well as actual and proposed
minima and maxima reported by employer and employee respondents in the survey. The
LFS analysis generally confirmed that unskilled employees earned at and below R1000,
while average semi-skilled wages were at or below R 2000. It is at this level that
employers in the survey indicate that it will have no effect or a positive effect on levels of
33
employment. The effect of the proposed adjustment will be to bring the unskilled
minimum above R1000 but the semi-skilled minimum would not be above R2000.
Proposed minimum wage levels
Unskilled
Semi-skilled
Weekly (Rands)
R292
R400
Monthly (Rands)
1 256
1 720
Employers
In line with the proposed grouping of the occupations, employers proposed that minimum
wages should take into consideration, the level of skills required for the position and also
the responsibilities attached to the position. In KwaZulu Natal areas employers supported
the figures recommended by the research for the unskilled and semi-skilled categories. In
other parts of the country, employers indicated that if the figures proposed by the research
are legislated, it will have a negative impact on the employment levels and some
employers will be forced to move out of business. Employers proposed that the wages for
the lowest category which includes cleaners should be linked to the current domestic
workers wage for the bed and breakfast establishments. They also indicated that the
proposed wages in the hospitality report were too high, and proposed that the ECC should
ensure that minimum wages legislated take into account the situation of the sector.
Employees
Employees proposed that minimum wages should be pegged as follows:

Unskilled – R300 per week

Semi skilled R650 per week

Skilled (chefs, supervisors, duty managers R1200 per week
Employees cited cost of living issues as a reason for this proposal.
Proposals of the working group
As per their proposal on the job classification, employers in the group proposed that the
wages by the research should apply in the Entry level and Secondary level respectively.
This means that Entry level wages should be R1 256 per month whilst Secondary level
wages should be R1 720 per month.
34
They further proposed that these rates should be applicable to the metropolitan areas in
line with the proposed demarcation model and that other areas outside metropolitan areas
should pay 10% less. This therefore means that other areas should have minima for Entry
level at R1130, 40 whilst the Secondary level rates will be R1548, 00. They indicated that
this proposed wages would not negatively affect the employment levels and would also
allow the sector to create and provide more jobs. They further proposed that newly
established and small employers should pay 90% of the applicable minimum wage. This
therefore suggests that in line with the proposed demarcation model, newly established
and small businesses will pay 90% of the wage applicable in the area where they are
located.
Proposals of the Department
The revised departmental proposal of R1256 is derived from the proposal for unskilled
workers made in the HSRC report (p148 top) and is further based on the following:
(i)
That the level of R1241.97 for a third level worker in terms of the first proposal
of the Department is lower than the HSRC proposal.
(ii)
That a single minimum wage should be set in the sector. This minimum should
however be differentiated for a limited period between larger and smaller
employers (again in terms of a directive from the December ECC meeting). The
difference between large and small employers is 10%. Again this has been
narrowly informed by the HSRC report (p148 top) recommendations for
companies employing less than 10 employees.
(iii)
Further the R1256 level was proposed for 2005. Therefore the figure has been
adjusted using the average CPIX figures for 2005 (3.8%) and 2006 (5%)2 to
arrive at R1370. In arriving at scenario 2, the department, in line with ECC
practice, applied a CPIX plus 2 percentage point increase.
The following table illustrates two scenarios as proposed by the Department:
2
At the time the dec CPIX was not available so the average over 11 months was calculated over a twelve
month period.
35
Scenario 1
Adjusted by CPIX only
Small employers
(less than 10 employees)
Hourly
Monthly
6.44
1256
1
Wage level as in Dept
proposal
1304.98+Ave CPIX 2006 7.03
2
R 1,370.23
Other Employers
(10 and more employees)
Hourly
Monthly
7.16
R 1,396.33
Scenario 2
Adjusted by CPIX only
Small employers
(less than 10 employees)
Hourly
Monthly
7.09
R 1,381.60
1
Wage level as in Dept
proposal
1304.98+Ave CPIX 2006 7.73
2
R 1,507.26
Other Employers
(10 and more employees)
Hourly
Monthly
14.32
In addition the proposal further takes cognizance of the size of operation. The HSRC
report provides in table 7.32 (p117 top) entitled Unskilled weekly wages – Minimum and
Maximum by various factors gives an indication of wages being paid in the sector.
(Accepting that the definition for small business (under 10 employees) is uniform
throughout the report, the wages reflected for small employers are important. For ease of
reference the relevant portion of table 7.32 is reflected, but with the rates adjusted from
weekly to monthly, and then adjusted for CPIX + 2 percentage points. Mean and median
wages have been calculated for two different categories of actual wages reported.
Reported wages have been split into those sub sectors at the higher end of the scale
(travel and tourism) and those at the lower end of the scale of wages reported ( hotel,
accommodation and restaurant sub sectors).3
“Micro” means those employers employing less than 10 employees, “very small” refers to those
employers employing less than 4 employees whilst “small” refers to those employing less than 50
employed
3
36
1,535.97
Micro
Very small
Small
Minimum
Monthly
Mean
1166.47
1317.59
1430.93
Median
953.95
1180.63
Maximum
Monthly
Mean
1506.49
1742.62
Monthly
1298.70
1308.14
1138.13
1652.89
1180.63
Phasing in
The Departmental proposal did not deal with the phasing in as proposed in the HSRC
report. The research report proposes that for very small and micro enterprises (i.e. those
with under 10 employees), a deduction of 10% of the prescribed rate should be
applicable. This they proposed should be phased out over a period of 6 months.
The department proposed that:
Since the majority of employers in the sector is small (although not necessarily the
majority of employees), that a single wage rate be set for them.
Recommendations of the ECC
After considering all the different proposals and information provided, the ECC
recommends that it would be inappropriate to set minimum wages on the basis of the skill
level of an employee as proposed by the research study because of the lack of a clear
definition of unskilled and semi skilled employee. The ECC instead recommends that in
setting minimum wage levels, size of the enterprise should be considered. The ECC
recommends that employers employing 10 and less employees should have a separate
wage structure which is different from those employing more than 10 employees. This
therefore means that the sectoral determination should provide for a two-tier wage
structure in terms of the number of employees employed.
Furthermore the ECC recommends that the difference between the two wage structures
should be ten percent. This means that employers employing less than ten employees
should have a minimum that is ten percent less than the wage applicable to other
employers employing more than ten employees.
When determining the level of the minimum wage, the ECC recommends that the
minimum wage for employers employing more than 10 employees should be pegged at
37
R1650 per month. Employers employing 10 and less employees should then pay almost
10 percent less than the wage for larger employers. This proposal is reflected in the table
below:
TABLE 1:
Table 1: Minimum wages for employers with 10 or less employees
Minimum rate for the period
Minimum rate for the Minimum rate for the period
period
1 June 2007 to 31 May 2008
1 June 2008 to 31 May
1 June 2009 to 31 May 2010
2009
Monthly
Weekly
Hourly Monthly Weekly Hourly Monthly Weekly
Hourly
R1650-00
R380-80
R8-46
TABLE 2:
Table 2: Minimum wages for employers with more than 10 employees
Minimum rate for the period
1 June 2007 to 31 May 2008
Monthly
Weekly
Hourly
R1480-00
R341-60
R7-59
3.6.
Minimum rate for the
period
1 June 2008 to 31 May
2009
Minimum rate for the
period
1 June 2009 to 31 May 2010
Minimum wage increases and the duration of the sectoral determination.
Research findings
The report shows that wage levels and conditions of employment in the SDs have not
kept up with the cost of living. Further, other legislative provisions have superseded its
provisions in the interim, such as the BCEA. It is also noted that it is costly to conduct
these investigations on an annual basis.
One of the key problems encountered in this investigation was the lack of sub-industry
level data from StatsSA. This relates to the availability of data that allows for the tracking
38
of output, employment and wage trends in these sub-sectors. Thus, the lack of availability
of data at the 5 digit SIC level is a major constraint, and there are no credible alternatives
available, in terms of primary survey data. The establishment of an accommodation
survey may address some of these concerns.
Recommendation:
It is recommended that an across the board percentage increase be set for up to three
years based on the annual inflation rate and an additional 1 %. This will apply to all
employees in the sector who earn above the national minimum at unskilled and semiskilled level. In the interim, bi-annual reviews of conditions of employment and wages
based on secondary data should be conducted for a review in the third year. The above
the inflation rate increase is based on the fact that in the last 2-3 years, regional
bargaining council agreements and other organized employees have been able to secure
such increases, given improvements in general business conditions. This will also ensure
that employees’ wages keep up with the cost of living. Business stakeholders indicate that
in general wage increases have been in line with the inflation rate.
Views of the employees
Employees proposed that depending on the level of wages published by the Department
of Labour, CPIX could be used to determine wage increases for a period of at least two
years after the date of promulgation. They proposed that the proposed sectoral
determination should prescribe wages for two years.
Views of employers
Employers proposed that CPIX should be the indicator used when determining wage
increases. They further pointed out that the sectoral determination should be reviewed
over a three year period.
Proposals of the working group
The working group proposed that wages should be increased by CPIX plus two percent.
They further proposed that the sectoral determination should be reviewed after three
years.
39
Views of the Department
The Department is of the opinion that CPIX plus two percent should be used to determine
future wage increases. This means that the sectoral determination should not have the
lapsing date of the wages but should indicate “THEREAFTER” on the wage table. This
is clearly illustrated on the wage table above as proposed by the Department.
Recommendations by the ECC
The ECC recommends that wages in the sectoral determination should be promulgated
for a three year period.
3.7.
Companies employing less than 10 employees (Small employers)
Research findings
The study showed that micro and very small companies dominate the industry. Therefore
it is difficult to create blanket exemptions for this category, as that may amount to
exempting most of the sector. Further it would preclude up to 60% of the sector
workforce from improved labour standards. It is therefore proposed that the new sectoral
determination does not supersede the variations contained in the Ministerial
Determination for small business. Very small and micro enterprises may reduce the
prescribed wage by 10% in the first 6 months of operation of the sectoral determination,
after which they would revert to the prescribed rate. The research has shown that on
average, micro enterprises pay up to 91% of the highest wage.
Employers
With regard to small establishments, employers had differing views on whether they
should be covered by the determination or not. The bigger employers proposed that since
the small employers are part of the sector, they should be covered by all the conditions
prescribed in the determination. These employers argued that although they might be
small in size, their prices are sometimes more than those charged by big establishments.
Small employers proposed that they should be allowed to pay reduced wages especially
where they were located in the rural areas or out of town. They indicated that if they are
required to pay the same wages as big establishment, this might push them out of
business and they would have to retrench the workers. Small employers proposed that in
40
terms of minimum wages, they should be allowed to pay the same wages as prescribed
for domestic workers.
Employees
As stated previously, employees proposed that all the establishments falling within the
scope and definition of the hospitality sector should be covered by the determination
irrespective of the size of the employer.
Proposals of the working group
The working group proposed that with respect to small employers the following should
apply:
For a period of 48 months after the commencement of the determination, an employer
who is a micro business and employs less than ten employees must pay such employees a
minimum wage of at least 90% of the applicable minimum wage.
The working group proposed that for the purposes of this determination a “micro
business” or small employer mean an employer who is employing less than 10
employees.
Views of the Department
The Department supports the proposal by the working group in relation to exempting
small and newly established employers from paying the reduced wage. However the
Department proposes that they should be exempted for 24 months after the
commencement of the sectoral determination in that on the third year their wages should
be aligned to the rest of the country.
Recommendations of the ECC
The ECC recommends that the provisions of the Small Business Determination should
apply to employers employing 10 and less employees in relation to overtime, averaging
of hours of work, and family responsibility leave. With respect to minimum wages, small
employers should pay 10% less of the applicable minimum wage.
41
3.8
Newly established employers
The working group proposed that newly established employers should be given some
form of flexibility with respect to payment of minimum wages in order to allow them to
grow. They proposed that for a period of 48 months after the commencement of the
determination, a newly established employer who employs less than ten employees must
pay such employees a minimum wage of at least 90% of the applicable minimum wage.
The 90% will be worked out in terms of the applicable minimum wage, in line with the
proposed demarcation model.
Furthermore the working group proposed that for the purposes of this determination
newly established employer should be seen as the employer:
(i)
employ less than 10 employees
(ii)
who has not been in operation for longer than 2 years;
(iii)
that did not come into being as a result of the division, sale or transfer of the
whole or part of an existing employer;
(iv)
that did not come into being from the outsourcing or subcontracting of the whole
or part of an existing business or service.
Proposals by the Department
The Department proposes that the sectoral determination should stipulate that a “newly
established employer” means any employer that –
(i)
commenced business after 1 May 2005,
(ii)
has not been in operation for longer than two years;
In addition the sectoral determination should stipulate that “newly established employer”
does not include any employer established as a result of(i)
the division, sale or transfer of the whole or part of an existing employer
42
(ii)
that did not come into being from the outsourcing or subcontracting of the whole
or part of an existing business or service.
Furthermore the Department proposes that newly established and small employers should
be allowed to pay a 10% reduction of the applicable minimum wage for the first two
years after the commencement of this determination. In addition, the Department
proposes that other variations should also be extended to small employers in terms of the
conditions of employment. This will be clearly reflected under the discussion on the
conditions of employment.
Recommendations of the ECC
With respect to the newly established employers, the ECC recommends that there should
be no special dispensation for this category of employers since a provision for small
employers has been taken into consideration when pegging the minimum wage.
The ECC therefore recommends that the provisions as recommended should apply
irrespective of when the establishment started operating.
3.9.
Minimum wages for casual and part-time employees
Research findings
The Wage Determination 457: Hotel trade, certain areas, 461: Catering trade stipulates
that casual employees should receive the prescribed rate plus a percentage while parttime employees receive 75% of the full-time wage. The secondary research showed that
cost reduction is a key incentive in the employment of non-full-time employees. One may
then interpret the differentiated wages for casuals and part-timers as an incentive for
companies to employ fewer staff on a full-time basis. The recommendation is aimed at
retaining the cost advantage to employers, but also at providing a better dispensation for
employees working on insecure terms and under poor conditions of employment.
Recommendation:
It is proposed that part-time employees receive 80% of the prescribed wage and casual
workers receive one and one half times the prescribed wages.
43
Employers
Employers supported the proposal by the research in terms of paying part-time workers
reduced wages as compared to full-time employees. Employers argued that the nature of
the business require them to have part-timers to assist during the peak periods. They also
indicated that it is difficult for them to employ all the staff on permanent basis since it is
the business which dictates to them how many employees they require at any given point
in time. They therefore proposed that part-time employees should be paid 80% of the full
time employee’s wage.
Employees
With respect to part-timers, employees indicated that this is the group of employees who
are exploited in the sector. Employees indicated that this category of employees does not
have any benefits because they are called when they are required. They further indicated
that these employees are not protected by law since employers do not regard them as
employees because they call them whenever they require them to work. In addition they
indicated that part-time employees are excluded from other benefits which full time
employees have. They therefore proposed that the sectoral determination should not make
provision for part timers. In the event the sectoral determination provides for part-timers,
the hourly wage for part-timers should be higher than the hourly wage for full time
employees to discourage employers from employing part timers.
Proposals by the working group
The working group felt that minimum hours for part-time employees could not be
guaranteed. It was felt that, instead, a premium payment could be considered for these
workers. Employers proposed that a premium plus proportional rights should be afforded
to these workers. In addition they objected to the proposal by the Department of having
guaranteed hours of work pegged at 8 hours. They said that this could negatively impact
on the restaurant sub-sector and even force some businesses to close down. After a
lengthy discussion, they proposed that if this provision should is included in the sectoral
determination; guaranteed hours of work should be a maximum of 4 hours which should
include a transport subsidy paid for “part-time” employees.
44
Proposal by the Departmental
The Department recognizes the need for the sector to employ additional employees on a
part-time basis during peak periods due to the operational requirements. During the
public hearings and the site visits conducted, it was established that part-time employees
do not enjoy any benefits in terms of the BCEA and they are the most exploited and
vulnerable group within the sector. In extending protection to this group, the Department
proposes the following for this category of employees:
Recommendations by the ECC
The ECC feels that the sectoral determination should not distinguish between part time
and full time employees. The ECC recommends that the provisions of the BCEA should
be applicable. The BCEA stipulates that employees employed for more than 24 hours per
month are entitled to proportional benefits.

Guaranteed hours of work
The Department proposes that since their wages are dependant on the hours worked, a
minimum of eight hours per day be set as guaranteed hours. This means that an employer
cannot pay an employee for less than eight hours in any day. If an employer requires an
employee to work less than eight hours, the employee should be remunerated for the eight
hours. This is in line with section 54 of the BCEA, in terms of the impact of the minimum
wage towards poverty alleviation. In addition, eight hours’ pay would help in covering
the costs of transport to come to work.
Recommendations by the ECC
With respect to guaranteed hours of work, the ECC recommends that in line with other
sectoral determinations, a minimum of four hours should be included as the guaranteed
hours of work.
3.10 Commission based payment
Commission based payment is found to be applicable to the part-time or casual worker
category of employees. This form of payment did not come out of the research but during
the public hearing stakeholders raised this issue.
45
Views of employees
During the public hearings it was established that the majority of part-time employees are
paid only through commission or tips. It was also discovered in the case of the waiters,
after receiving their tips, they have to tip other employees in the kitchen so as to get their
orders speedily. This leaves them with nothing or very little to take home at the end of the
day. They further indicated that their income is based more on the nature of the clients
coming into their workplace for services. They pointed out that tourist are the best in
giving them reasonable tips as compared to domestic clients. In responding to the
question posed around the introduction of a minimum wage, they indicated that it would
be a good idea if they have a basic salary although indicated that they should still be
allowed to earn their tips.
Views of employers
In the written submissions and during the public hearings, employers argued that
employees who are commission based should be excluded from the sectoral
determination. They proposed that this category should be regarded as independent
contractors because they come to work when they want to. They also cited examples
where employees if there is a vacant position will refuse to take the job because they will
loose on their tips. Lastly employers indicated that commission based workers earn more
that hotel managers in tips, hence they refuse full time employment.
Proposals by the Department
The commission work and minimum wage systems are potentially mutually exclusive
and herein lies the challenge for minimum wage setting. Disallowing commission work in
the hospitality sector could be disruptive. Recognizing the fact that it might not be
feasible to rule out commission work completely in the hospitality sector, but also taking
cognizance of the fact that employees are potentially being exploited, the Department
recommends a compromise between commission work and a minimum wage system. The
commission work should only be allowed over and above the minimum wage.
46
Recommendations by the ECC
With respect to commission work, the ECC supports the proposal of the Department that
commission work should only be allowed over and above the minimum wage. This
means that employees should be guaranteed a minimum wage.
3.11
Payment in kind
Research findings
Provision of meals or vouchers
The practice of deducting amounts from employees’ wages for meals taken at the
employee’s place of work is provided for in the current sectoral determinations, with
limits placed on the proportion of wages that may be deducted for meals. The survey
showed that the most frequently reported in-kind payment is free meals or vouchers. The
bargaining council for the tearoom, restaurant and catering trade also provides for free
meals or the equivalent in cash. The BCEA does not provide for the deduction of monies
related to meals and/or accommodation.
The research report recommended that the sectoral determination should stipulate that
every employee should receive free of charge those meals that fall within their working
hours in addition to the wages prescribed for such employee. Where meals are not
provided, the equivalent value shall be given as a cash allowance.
Employers
With respect to the payment in kind, employers indicated that the common payment in
kind in the sector is the meals and accommodation provided to employees. Meals are
provided to the employees who work in the kitchen since they are exposed to food.
Employers indicated that the issue of meals should be left out of the sectoral
determination because of the difficulty in quantifying the food. Employers indicated that
employees might demand the same food provided to their guest which they might not
afford to provide. They proposed that food provision should be left to parties to negotiate.
47
Employees
Employees indicated that meals should be legislated in the sectoral determination. They
proposed that if an employer does not provide free meals, then the employers should pay
a cash allowance of R25 for breakfast, R40 for lunch, and R50 for dinner.
Proposals by the working group
In relation to the regulation of payment in kind, the working group proposed that this
matter should not be regulated in the sectoral determination but parties should be allowed
to enter into an agreement outside the employment contract
Proposals of the Departmental
With respect to the provision of meals, the department proposes that this matter should
not be regulated in the Sectoral Determination but should be left to parties to enter into a
separate agreement. This is due to the problems which might be experienced in
implementation and also enforcing the food provision. In addition there might be health
hazards associated with the nature of the food which employers can offer to their
employees. It should also be mentioned that some establishments employ a large number
of employees so that if food is regulated, the company will spend huge amounts in
providing food due to the number of employees.
Recommendations by the ECC
With respect to the provision of meals or meal vouchers, the ECC recommends that meals
should not be regulated in the sectoral determination. The ECC further recommended that in
the event the employer requires the employee to sleep in, he or she must provide for food.
3.12.
Accommodation
The current sectoral determination Wage Determination 477 provide for deductions from
the employee’s wages for accommodation at the place of work of up to 8% of wages or it
is left open to agreement. In practice this has meant that employees are expected to work
split shifts wherein employees are required to work shifts over a longer period of time on
an unpaid basis, yet also pay for the accommodation provided to enable them to work a
48
split shift. The current BCEA does not speak to the issues of deductions for
accommodation.
The research report recommends that where accommodation is provided it should be
subject to a written agreement, stipulating the agreed rates for accommodation. No
employee should be forced to accept an offer of accommodation. Deductions for
accommodation should not constitute more than 8% of the employees’ wage.
Employers
Employers indicated that the limitation of 8% deduction for accommodation as proposed
by the study does not recognize the true value of providing accommodation. They further
argued that it is unlikely that an employee provided with accommodation would be able
to secure any outside accommodation of the same quality at 8%. They therefore proposed
that more flexibility should be allowed in terms of deductions.
Employees
Employees proposed that accommodation should not be regulated. They indicated that in
instances where employees are required to stay at the accommodation provided for by the
employer, there should be a separate voluntary agreement entered into between the
parties. In the event that such an agreement exists, employers should deduct not more
than 8% of the employees wage for accommodation.
Proposals by the working group
Stakeholders proposed that the issue around accommodation should be left to parties to
negotiate.
Proposals by the Department
The Department proposes that, accommodation should not be regulated in the sectoral
determination. However the sectoral determination should stipulate that in the event an
employer requires an employee to sleep in accommodation provided by the employer, the
employer may not require the employee to pay for accommodation.
49
Recommendations by the ECC
The ECC recommends that accommodation should not be regulated in the sectoral
determination. The ECC nevertheless recommends that in the event the employer requires
the employee to sleep in, he or she must provide for accommodation.
CHAPTER 4:
CONDITIONS OF EMPLOYMENT
This chapter follows the same format as the previous one, in that for each issue it records
the research findings, followed by the views of employers and employees; proposals of
the working group; proposals of the Department, and the Commission’s view.
4.1.
Working time
4.1.1. Ordinary hours of work
Research findings
The research showed that among the full-time semi-skilled employees, 56% worked 2645 hours in line with the maximum ordinary hours prescribed in BCEA regulations.
Among the full-time unskilled, 68% worked 26-45 hours. However, the second largest
group of full-time employees worked ordinary hours of more than 45 hours per week,
ranging between 28% and 43% of unskilled and semi-skilled employees, respectively.
The study revealed that it is only among the unskilled that the maximum ordinary hours
per week are up to 25 hours, for between 1-5 days per week. There were very few parttime employees recorded in the survey, but it is probably among the unskilled that these
categories of work may be found.
Among those working between 26 and 45 hours, 56% and 39 % (semi-skilled and
unskilled respectively) worked more than 5 days per week. Thus, the ordinary hours per
week are in line with the BCEA. However, among those working 46 hours and more per
week, the overwhelming majority (both semi-skilled and unskilled) worked 6 days and
more. Thus, the maximum number of ordinary hours a week exceeded the stipulated 45
hours in the BCEA. This highlights the problems in the sector related to the need for a
24/7 operating schedule. The problem relates especially to semi-and unskilled employees
as illustrated here.
50
The research concluded by indicating that generally the sector is already in line with the
provisions of the BCEA in terms of a 45-hour working week, even where the working
week is longer than 5 days. The research report recommended that the sectoral
determination be aligned with the BCEA provision on ordinary hours of work.
Employers
Employers in the hotels and accommodation sub sectors proposed that since their
businesses generally operate seven days a week, and 24 hours per day, this has to be
taken into account when determining the hours of work. They proposed that hours of
work should be 48 hrs per week made up of 6 shifts of 8 hours each. In addition,
employers proposed that flexi-time or part time employees should work not less than 30
hours per week made up of 6 shifts at 5 hours per shift.
Employees
Employees also proposed that hours of work be 48 hours per week. They argued that this
is necessary because they are working twelve hours shifts. They also proposed that parttime employees be guaranteed a minimum of 32 hours per week.
Proposals of the working group
The working group supported the idea of aligning working hours with BCEA for the
hospitality sector.
Proposals of the Department
The Department takes cognizance of the operational requirements of the sector in that the
sector requires more than 45 hours per week. The overall policy objective of the
Department and government is to work towards a 40-hour week. Extending the hours of
work for this sector beyond 45 will be in contradiction with realizing a 40 hour work
week. The Department therefore proposes that hours of work be aligned to the BCEA
which provides for 45 hours per week.
Recommendations of the ECC
The ECC recommends that hours of work be aligned to the BCEA which provides for a
maximum of 45 ordinary hours of work per week.
51
4.2.
Daily and weekly rest periods
This issue was not covered by the research. It nevertheless emerged during the
deliberations with the working group. The BCEA requires that employees should be
granted a daily rest period of at least twelve consecutive hours between the ending and
recommencing of work; and 36 consecutive hours as weekly rest periods. The BCEA
further stipulates that a written agreement may provide for a rest period of at least 60
consecutive hours every two weeks; or an employee’s weekly rest periods may be
reduced by up to 8 hours in any week if the rest period in the following week is extended
equivalently.
Proposals of the working group
Employers in the working group proposed that daily and weekly rest periods for the
hospitality sector should be varied in the sectoral determination. They proposed that the
sectoral determination should stipulate the following:
That an employer must allow an employee (i)
a daily rest period of at least 8 consecutive hours between ending and
recommencing work unless the employee specifically requests in writing that
such daily rest period to be reduced to 6 hours for such period as the employee
requires.
(ii) The employer may not include a provision reducing the daily rest period to 6
hours as a term and/or condition of any employment.
(iii) a weekly rest period of at least 36 consecutive hours, or in accordance with an
agreement in writing a fortnightly rest period of at least 72 consecutive hours.
They indicated that it should be noted that this provision regulates the time off required
between shifts. They indicated that the actual hours of work which may be undertaken in
any day will be limited by the provision dealing with hours of work. They further
indicated that the reduction in the duration of the daily rest period is necessary to
accommodate shift changes. They cited an example that employers are often requested
52
by employees to vary their shift allocation, so as to accommodate various personal
circumstances. They pointed out that the 24-hour nature of the industry often makes it
difficult for employees to attend to personal issues, which are very often regulated by the
8am to 5pm norm, e.g. attending a school/parents event. In such circumstances,
employees often request that they are permitted to change their shift to accommodate
such realities.
In addition they cited a situation where an employee works the late (14h00 to 23h00) shift
and may ask to work the following day on the early shift (06h30 to 15h00) in order to
have the afternoon/evening free to attend such an event. This would obviously mean that
the employee would stop work at 23h00 and recommence work at 06h30 the following
day (a break of only 7 hours). Employers argued that this practice is well established, is
only applied in exceptional circumstances and does not cause any significant risk or
disruption. Lastly they indicated that such flexibility is largely in the interests of the
employee, without which the address of personal matters can become highly problematic.
Views of employees
This matter was not raised during the public but however it came up during the working
group meetings. SACCAWU who were part of the working group did not support this
idea but proposed that BCEA be applicable.
Proposals of the Department
With respect to the daily and weekly rest periods, the Department is of the view that the
flexibility provided for by the BCEA is sufficient in dealing with the employers concerns.
The Department is therefore of the view that this matter should be aligned to the BCEA.
Recommendations of the ECC
The ECC recommends that daily rest periods should be aligned to the BCEA. The BCEA
stipulates that a daily rest period of at least 12 consecutive hours between ending and the
commencement of the shift should be provides, as well as a weekly rest period of 36
consecutive hours which, unless otherwise agreed, must include a Sunday.
53
4.3.
Overtime hours
Research findings
The study generated contradictory results, in that the secondary data point towards high
levels of overtime reflected in working hours in excess of the 55 hours (45 ordinary hours
and 10 overtime hours) permitted by the BCEA. However, the survey results suggested
low levels of overtime hours from both employers and employees.
The research proposed that the BCEA provisions regarding overtime should apply to the
proposed sectoral determination.
Employers
Employers proposed that overtime provisions be aligned to the BCEA
Employees
Employees proposed that overtime provisions be aligned to the BCEA.
Proposals by the working group
The working group proposed that the overtime provision be aligned to the BCEA
Proposals by the Department
The Department proposes that overtime provision be aligned to the BCEA except for
small employers employing less than 10 employees where the Department proposes that
that a 15 hours overtime limitation should apply. This proposal take into account the size
of the establishment in that it will be difficult for small employers like Bed and Breakfast
operations operating with one or two employees to comply with 10 hours. In addition this
is in line with the variation in terms of the Small Business Determination.
Recommendations of the ECC
The ECC recommends that the overtime provision be aligned to the BCEA which
provides for 10 hours overtime per week. For employers employing less than 10
employees, the ECC recommends that a maximum of 15 hours per week overtime be
applicable.
54
4.3.1. Overtime payment
The research compared the overtime payment in the sectoral determinations and the
Pretoria Bargaining Council. Casual employees under the bargaining council do not earn
a premium for overtime, unlike those falling under the sectoral determination.
The Ministerial Determination for Small Business (less than 10 employees) is in line with
the current sectoral determinations WD 477 and 479 provisions, as it has varied the
BCEA for very small and micro enterprises. This covers many such companies in the
hospitality sector. However, for those that employ more than 10 employees, the
provisions of the BCEA are applicable, that is, one and one half times the wage for
overtime hours.
The research report proposed that the BCEA provisions regarding overtime and payment
of overtime should apply to the proposed sectoral determination.
Employers
Employers proposed that overtime payment should be aligned to the BCEA
Employees
Employees proposed that overtime payment be aligned to the BCEA
Proposals by the working group
They proposed that the BCEA provisions regarding overtime and payment of overtime
should apply to the proposed sectoral determination.
Proposals by the Department
The Department proposes that overtime payment be aligned to the BCEA
Recommendations of the ECC
The ECC recommends that overtime payment be aligned to the BCEA which stipulates
that overtime be remunerated at one and half times the hourly rate.
55
4.4.
Averaging of the hours of work
Research recommendation:
The research report proposed that the BCEA provisions regarding the averaging of hours
should apply to the proposed sectoral determination.
Employers
Employers proposed that the BCEA provisions should apply with respect to averaging of
working hours.
Employees
Employees proposed that the BCEA provisions should apply.
Proposals by the working group
The working group proposed that the BCEA provisions should apply with respect to
averaging of working hours.
Proposals by the Department
It is proposed that the BCEA provisions regarding the averaging of hours should apply to
the proposed sectoral determination.
Recommendations of the ECC
The ECC recommends that averaging of hours of work be aligned to the BCEA. The
ECC recommends that the sectoral determination should stipulate that ordinary hours of
work and overtime of an employee may be averaged over a period of up to four months in
terms of a collective agreement. It stipulated further that an employer may not require or
permit an employee who is bound by a collective agreement to work more than
an average of 45 ordinary hours of work in a week over the agreed period;

an average of five hours’ overtime in a week over the agreed period
4.5.
Payment for Sunday work
Research findings
The research revealed that Sunday work is a sensitive issue in the sector. The sensitivity
relates to what is argued by employers to be operational requirement for greater
flexibility. The study shows that up to two thirds of employees in the hotels and
56
accommodation as well restaurant sub-sectors were required to work on Sundays. This
echoes other findings in terms of the 24/7 operational requirements in these sub-sectors.
However, it seems that in the T&T sub-sector Sunday work is not a requirement.
The rate of pay for Sunday work is a sensitive issue in the sector since the hotel trade sub
sector was exempted from paying double time as per the BCEA requirements in terms of
the Ministerial Determination granted in February 2003. Furthermore the research
revealed that in the hospitality sector, 43% of respondents reported being paid the
ordinary rate for Sunday work. Thus Sunday work is regarded as a normal day. However,
at least 20% were being paid double time, in line with the BCEA.
In the hospitality sector, a slight majority (51%) of respondents indicated that they did not
get time off in lieu of pay for Sunday work. Presumably this would include those who
answered that they did not receive extra pay for Sunday work.
In light of the exemption from the BCEA, the research report recommended that no
changes be made. However, it is clear from the survey findings that a variety of rates are
being paid. The report therefore recommended that the Department should commit itself
to monitoring that the exemption from double time does not result in Sunday being
treated as an ordinary day.
Employers
Employers indicated that the nature of the sector requires them to operate 7 days per
week and 24 hours per day. They argued that if it was possible they also would like to
rest on a Sunday but because of operational requirements they cannot. They further
indicated that if Sunday is not treated like an ordinary day, this would have a huge impact
on their operations. They also raised another dimension, namely the different religions in
their workplaces. They argued that if Sunday is paid at a double rate, then it will also
imply that those employees for whom according to their religion Sunday is an ordinary
day will have to be paid double on the day which is regarded as Sunday in terms of their
religion. Employers therefore proposed that Sunday should be treated like any other day
and that in the event the employer requires an employee to work on the day on which the
employee was not supposed to work, that day should be remunerated at a double rate.
57
Employees
Employees indicated that Sunday should be paid at double rate. They indicated that this
should be phased in over a three-year period in that in the first year, Sunday should be
remunerated at 1.5, in the second year at 1.8, and at double in the third year. They further
proposed that employees should not be co-erced to take time off in lieu of Sunday
payment.
Proposal of the working group
It was proposed that Sunday should be treated like any other day and that where
employees required to work during their off days, those days should be remunerated like
Sunday in terms of the current provisions of the BCEA.
Proposal of the Department
The Department recognizes the operational requirement in relation to that Sunday is a
normal working day for many businesses in the sector. The Department proposes that
Sunday be regarded as a normal working day for the Hospitality sector. Furthermore the
Department proposes that if an employer requires an employee to work on the day which
falls under the normal ‘off’ days for that employee, that day should be remunerated at the
double the daily wage. It should also be noted that this proposal is in line with the
Ministerial determination granted to the Hotel trade which is currently operational.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply in respect of Sunday
work. This means that employees must be paid time and one-half when Sunday is part of
ordinary hours, and double time if Sunday falls outside the ordinary hours of work.
4.6.
Payment for work on public holidays
Research findings
The survey showed that it had virtually become a requirement for many employees to
work on public holidays. A variety of rates were being paid, as well as ordinary rates.
The research report recommended that the sectoral determination be aligned to BCEA
provision regarding payment on public holidays.
58
Employers
Employers proposed that the BCEA provisions should apply in respect of payment for
work on public holidays.
Employees
Employees proposed that the BCEA provisions should apply.
Proposal of the working group
The working group proposed that BCEA provisions should apply in relation to public
holidays.
Proposal of the Department
The Department recommends that the sectoral determination be aligned to BCEA
provision regarding payment on public holidays.
Recommendations by the ECC
The ECC recommends that BCEA provisions should apply.
4.7.
Night work
The survey indicated that night work (after 18h00 and 06h00) was prevalent, especially
among restaurant employees. However, a small proportion received a night shift
allowance and /or transport or allowance as the sector treats night work as ordinary hours.
However, the sector employs predominantly female employees, and therefore night work
presents a particular threat in terms of safe and secure transport.
The research report proposed that the BCEA provisions should apply regarding the
payment of a night shift allowance, or a reduction in working hours, and the provision of
transport or a transport allowance.
Employers
Employers in restaurants indicated that their industry operates in the evenings. They
further indicated that if employers are required to pay an allowance and to absorb the cost
of transport for employees, it will serve as a punishment to employers although it is an
59
inherent requirement of their business. They proposed that the definition of night work
for the hospitality sector should be any work which happens between 23h00 and 05h00.
Employees
Employees proposed that night work definition should be amended for the sector to
include work which occurs between 19h00 and 07h00. They indicated that this is
necessary due to the threats in terms of safety of employees and secure transport either
from home to work. They further proposed that employers should pay a night work
allowance of not less than 10% of the hourly rate or R100 per shift, whichever is greater,
and that employer should provide or pay for transport to and from work.
Proposal by the working group
Employers in the working group proposed that night work should be defined as the work
which occurs between 18h00 and 06h00 the following day. SACCAWU representative
supports the definition of the night work if aligned to the BCEA.
Proposal by the Department
The Department recognizes that the BCEA defines night work as the work which occurs
between 18h00 and 06h00 the following day. Since the sector is dependant on clients and
employers cannot completely control their coming and going especially in restaurants, the
Department proposes that night work for the hospitality sector be defined as work which
occurs between 18H00 and 06H00 the following day. With respect to payment of the
night shift allowance, the Department proposes that payment should be based on the work
which occurs between 22H00 and 06H00 the following day. The Department further
wants to indicate that the sectoral determination should indicate that the employer may
require or permit an employee to perform night work if transportation is available
between the employee’s place of residence and the workplace at the commencement and
conclusion of the employee’s shift.
Recommendations by the ECC
The ECC recommends that BCEA provisions be applicable in relation to night work. The
ECC further recommends that with respect to the availability of transport, if the transport
price at night is more than the daily price, employers should provide subsidies to
employees who are required to work the night shift.
60
4.8.
Leave
4.8.1 Annual Leave
The survey showed that on average employees were receiving paid annual leave of 21
days per year. Thus, the recommendation is that the BCEA provision should apply in
terms of 21 paid leave days.
Employers
Employers proposed that annual leave provision be aligned to the BCEA
Employees
Employees proposed that for employees who have completed 12 months service, 21
consecutive days should be granted. For employees who have service of above 18
months, 30 days annual leave should be granted. They further proposed that annual leave
should be granted within three months after the employee has accumulated the leave
days.
Proposals by the working group
The working group proposed that BCEA provisions should apply.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that BCEA provisions should apply in relation to annual leave.
4.8.2. Sick Leave
The survey shows that on average employees were receiving paid sick leave of 12 days
per annum. Thus, the recommendation was that the hospitality determination should
align itself with the BCEA provisions.
Employers
Employers proposed that sick leave provision be aligned to the BCEA
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Employees
Employees proposed that medical certificates issued by traditional healers and faith
healers should be recognized by employers. They indicated that other conditions with
respect to sick leave should be aligned to the BCEA.
Proposals by the working group
The working group recommended that the BCEA provisions should apply
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that BCEA provisions should apply in relation to sick leave.
4.8.3. Family Responsibility Leave
The survey showed that on average employees were receiving paid family responsibility
leave of 3 days per annum, irrespective of company size. Thus, the recommendation was
that the hospitality determination should align itself with the BCEA provision.
Employers
Employers proposed that family responsibility leave provisions be aligned to the BCEA
Employees
Employees proposed that a minimum of 3 days to a maximum of 10 days in a year be
granted as family responsibility leave irrespective of the company size.
Proposals by the working group
The working group proposed that the BCEA provisions should apply
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
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Recommendations by the ECC
The ECC recommends that BCEA provisions should apply in relation to family
responsibility leave.
4.8.4. Maternity Leave
The survey showed that maternity leave is on average 3 months (11-12 weeks) long, but
it is not clear how it is paid. This is shorter than the 4 months envisaged by the BCEA,
but the current sectoral determination do not make provision for this leave at all despite
the fact that it is a sector dominated by women who are in their prime reproductive years.
The research report recommended that the maternity leave be aligned with the provisions
of the BCEA.
Employers
Employers proposed that maternity leave provision be aligned to the BCEA
Employees
Employees proposed maternity leave of six months. With respect to payment, they
proposed that the first three months should be on full pay and the other three months on
50% pay. Employees said that most of the employees represented by unions are currently
enjoying this benefit.
Proposals by the working group
The working group recommended that the sectoral determination be aligned to the
BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that BCEA provisions should apply in relation to maternity leave.
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4.9.
Particulars of employment and remuneration
4.9.1. Written particulars of employment
The survey showed that up to one third of employees had a verbal contract or could not
account for contractual arrangements between themselves and their employer.
The recommendation was that the BCEA provision be applicable. The BCEA exemption
regarding companies employing less than 5 employees and employees working less than
24 hours per month would still apply.
Employers
Employers proposed that BCEA provisions should be applicable.
Employees
Employees supported the recommendation of aligning with the provisions of BCEA.
Proposals by the working group
The working group recommended that the sectoral determination be aligned to the
BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply.
4.9.2. Information about remuneration
The survey showed that in the hotel and accommodation sub-sector at least one-third of
employees did not receive a pay slip or the equivalent stating the details of remuneration.
The report therefore recommended that the sectoral determination be aligned with the
BCEA provision.
Employers
Employers proposed that the BCEA provisions should apply
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Employees
Employees proposed that this should be aligned with the BCEA.
Proposals by the Department
The working group proposed that the determination should be aligned with the BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply.
4.9.3
Informing employees of their rights
The BCEA currently requires that an employer must display in their workplace a
statement that describes the employee’s rights under the Act. The research
recommendation is that the employer must display at its workplace a statement in the
prescribed form of the employee’s rights under the sectoral determination in the official
languages that are spoken in the workplace.
Employers
Employers proposed that this provision be aligned to the BCEA
Employees
Employees proposed that this provision be aligned to the BCEA
Proposals by the working group
The working group proposed that the determination should be aligned with the BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply.
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4.10. Termination of employment
It is recommended that the sectoral determination be aligned to the BCEA.
Employers
Employers supported the proposal of aligning to the BCEA.
Employees
Employees also supported alignment to the BCEA.
Proposals by the working group
The working group proposed that the sectoral determination be aligned to the BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply.
4.11. Severance pay
It is recommended in the research report that the sectoral determination be aligned to the
BCEA.
Employers
Employers proposed that severance pay provision be aligned to the BCEA
Employees
Employees supported the proposal that severance pay provisions be aligned to the BCEA.
Proposals by the working group
Parties recommended that the sectoral determination be aligned to the BCEA.
Proposals by the Department
It is recommended that the sectoral determination be aligned to the BCEA.
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Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply.
4.12.
Certificate of service
It is recommended in the research report that the sectoral determination be aligned to the
BCEA.
Employers
Employers proposed alignment to the BCEA.
Employees
Employees proposed alignment to the BCEA.
Proposals by the working group
Parties recommended that the sectoral determination be aligned to the BCEA.
Recommendations by the ECC
The ECC recommends that the BCEA provisions should apply in relation to the
certificate of service.
4.13.
Long service recognition
Employees proposed that employers should show recognition of long service by paying
recognition allowances/bonuses on their birthdays. They proposed that the payment
should be as follows:

5 years continuously or with less than 6 months break in the service with the same
employer, one month wage should be paid.

10 years, 150% of the wage

15 years, 200% of the wage

20 years, 250% of the wage

25 years, 300% of the wage
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
30 years, 350% of the wage

35 years, 400% of the wage

40 years, 450% of the wage

45 years, 500%of the wage
Views of employers
Employers urged the Department that issues such as long service recognition should be
left to the parties to negotiate. They argued that long service recognition is based on
performance and therefore employers and employees are best placed to deal with this
matter.
Proposals by the working group
Working group proposed that this matter should not be included in the sectoral
determination but should be left for collective bargaining.
Proposals of the Department
The Department proposes that the issue around long service recognition can be dealt with
through the bargaining process. The Department also wants to indicate that the sectoral
determination provides for minimum conditions and therefore there should be a room for
parties to engage each other in bettering the conditions within their sector.
Recommendations by the ECC
The ECC recommends that this matter should not be regulated by the sectoral
determination.
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CHAPTER 5
EVALUATION IN TERMS OF ECC CRITERIA
The implementation of the proposed national minima by using the size of the enterprise
will have a positive impact in allowing those employers with less than 10 employees to
grow. However, it is very difficult to anticipate what the overall effect will be on
employment, as the effect will only be visible in the longer term.
The ability of employers to carry on their business successfully
The proposals on the national minima have been largely based on the reported wages for
unskilled workers in the sector. The proposal also took into consideration what generally
outsourced ancillary services in the sector such as contract cleaning services are being
paid. Further employer respondents in the survey indicated that a minimum wage would
have neutral effect at this level. It should further be noted that the lowest minima as
proposed does not differ significantly from those that have been agreed upon through
collective bargaining in the Johannesburg and Pretoria bargaining councils.
There is further evidence that suggest that the sector is robust and healthy. , including the
following.
According to the food and beverage report released by Statistics South Africa in October
2006, the total income generated by the food and beverages industry in the second quarter
of 2006 amounted to R5 625,2 million. This was an increase of 3,1% (R169,9 million)
compared to the first quarter of 2006. The increase was mainly due to a 3,6% (R167,4
million) increase in income from food sales and a 1,6% (R11,4 million) increase in
income from bar sales for the second quarter of 2006 compared to the first quarter of
2006.
Furthermore, in June 2006, total income was R1 899,3 million. This was an increase of
3,3% (R59,8 million) compared with May 2006.The increase in total income between the
first and second quarter of 2006 could partly be due to the greater number of school and
public holidays in the second quarter of 2006. The food and beverages survey is a
monthly survey covering a sample of public and private enterprises involved in the
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preparation of meals and drinks for immediate consumption in South Africa. In August
2005, the total income was R1 758, 4 which represent and increase of 8, 01% in a period
of eleven months.
The research revealed that the tourism sector, which includes hospitality, is the fourth
largest generator of GDP, following manufacturing, mining and quarrying. Furthermore
in the post-September 11 period, South Africa has become known as one of the safer and
cost-effective destinations for entertainment and leisure activities. It has also developed a
reputation as a convention destination of high standards and this means more tourists are
having interest in the touring to country.
The research argued that 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. Besides the traditional and well-established holiday and
business infrastructure, new sectors have opened up with adventure, conference, cultural
and eco-tourism leading the way”. Further, successfully conducting a range of very large,
world-class events including the World Summit on Sustainable Development illustrates
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 operation of small, medium and micro-enterprises
The survey showed that very small and micro enterprises paid up to 10% less than small
companies. Given the concentration of these companies in the sector, it is impossible to
exempt them all, as it will imply that most workers in the sector will not be covered. It is
for this reason that the 10% reduction on the payment of minimum wage is proposed for
employers employing ten and less number of employers.
The cost of living
The annual increase of all wages above the national minimum by the applicable annual
inflation rate plus an additional two percent will begin to address the concern that those
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earnings at the lower receive below the cost of living increases, thus further reducing
their standards of living.
The alleviation of poverty
The national minimum proposed will still not bring the wages of the most vulnerable in
the sector above the household subsistence level (HSL) of R2130 as at August 2005 for
low-income households, despite the fact that this is a very minimal poverty datum line,
and for some months back. This is a long- term process and cannot be addressed
overnight by a wage adjustment only. However, the survey showed that hospitality
employees on average have 3 financial dependents. This means that an adjustment in the
minima will impact on the lives of people other than the employees themselves.
The likely impact of any proposed condition of employment on current employment
or the creation of employment
It has been indicated that employers have been moving closer to the provisions of the
BCEA for some time now. Therefore, many of the conditions are already in place in most
companies; in others it will constitute a new set of conditions of employment. However,
hospitality employers currently enjoy a series of exemptions, such as non-payment of
double time for work on a Sunday, while very small and micro enterprises are exempted
from a number of provisions in the BCEA.
The possible impact of any proposed conditions of employment on the health, safety
and welfare of employees
The proposed conditions of employment will improve the general health and welfare of
the most vulnerable in the sector since there would be a regulatory framework which will
regulate the employment relationship by prescribing minimum wages and other
conditions of employment..
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CHAPTER 6
6. SUMMARY OF THE RECOMMENDATIONS BY THE ECC
The following are the recommendations of the ECC.
3.1
Scope and the definition of the hospitality sector
Definition of the sector.
For the purposes of this determination, “Hospitality Sector” refers to the sector where
employers and employees are associated primarily for the purpose of providing hotel
and/or other accommodation, and/or restaurant and/or catering and/or liquor (for on-site
consumption purposes) services, commercially for reward (“hospitality activities”).
Without limiting its meaning, “hospitality activities” includes:
(j)
hotels and restaurants, including motels, resorts and game lodges,
timeshare, guesthouses, guest farms and bed and breakfast, etc.;
(k)
provision of short stay accommodation including short term rental, selfcatering or camps, caravan parks, etc.;
(l)
restaurants; bars, canteens and other catering services including food
preparation, food and beverage services and banqueting conference and
convention operations. Licensed clubs and fine dining establishments;
pubs and taverns including shebeens, fast-food outlets, snack bars and
kiosks, industrial and contract caterers; functions of outside caterers,
etc;
With respect to the exclusions, they proposed that the following should be stated in the
determination that:
1.
The determination does not apply to employers and their employees:
(m) involved in the trade of letting of flats, rooms and/or houses;
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(n)
involved in travel agencies, tour operators and related activities,
including retail and general travel operations: marketing and
development agencies and companies, tourism authorities, commissions
and boards: tourist information centres; tourism industry associations;
(o)
involved in motor car rental services;
(p)
involved in gaming and gambling including casinos and other tables,
electronic and slot machine gaming outlets; gambling betting and
booking operators; totalisators; lottery operations, horse racing clubs;
(q)
involved in any charitable and/or religious organisation that engages in
the hospitality sector for the purposes of fund raising and are registered
as a non-profit making organization and/or unpaid volunteers working
for an non profitable charity.
(r)
employees covered by another sectoral determination in terms of the
Basic Conditions of Employment Act; or
(s)
covered by a collective agreement of a bargaining council in terms of
the Labour Relations Act;
(t)
if the employees are senior managerial employees and/or receive
remuneration in excess of the amount prescribed by the Minister in
terms of Section 6(3) of the Basis Conditions of Employment Act, as
amended from time to time.
3.2. Demarcation
The ECC recommended that one single minimum wage should apply to employers
employing more than ten employees and a separate wage for those employing ten and
less number of employees.
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3.5.
Minimum wage levels
The following table reflects the recommendation of the ECC:
Table 1: Minimum wages for employers with 10 or less employees
Minimum rate for the period
Minimum rate for the Minimum rate for the period
period
1 June 2007 to 31 May 2008
1 June 2008 to 31 May
1 June 2009 to 31 May 2010
2009
Monthly
Weekly
Hourly Monthly Weekly Hourly Monthly Weekly
Hourly
R1650-00
R380-80
R8-46
Table 2: Minimum wages for employers with more than 10 employees
Minimum rate for the period
Minimum rate for the
Minimum rate for the
period
period
1 June 2007 to 31 May 2008
1 June 2008 to 31 May
1 June 2009 to 31 May 2010
2009
Monthly
Weekly
Hourly
R1480-00
3.6.
R341-60
R7-59
Minimum wage increases and the duration of the sectoral determination.
The ECC recommends that wages in the sectoral determination should be promulgated
for a three year period. The ECC further recommended that with respect to wage
increases CPIX plus two percent should be applied.
3.7.
Companies employing less than 10 employees (Small employers)
The ECC recommends that the provisions of the Small Business Determination should
apply to employers employing 10 and less employees in relation to overtime, averaging
of hours of work, and family responsibility leave. With respect to minimum wages, small
employers should pay 10% less of the applicable minimum wage.
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3.9.
Minimum wages for casual and part-time employees
The ECC indicated that the sectoral determination should not distinguish between part
time and full time employees. The ECC recommends that the provisions applied to the
BCEA should be applicable. The ECC recommends that protection provided by the
BCEA should be extended to the hospitality sector. The BCEA stipulates that employees
employed for more than 24 hours per month are entitled to proportional benefits.
3.10
Guaranteed hours of work
With respect to guaranteed hours of work, the ECC recommends that in line with other
sectoral determinations, a minimum of four hours should be legislated as the guaranteed
hours of work.
3.11
Commission based payment
With respect to commission work, the ECC supports the proposal of the Department that
commission work should only be allowed over and above the minimum wage. This
means that workers should be guaranteed a minimum wage.
3.12 Payment in kind
With respect to the provision of meals or meal vouchers, the ECC recommends that
accommodation should not be regulated in the sectoral determination. The ECC further
recommends that in the event the employer requires the employee to sleep in, he or she must
provide for accommodation.
4.
CONDITIONS OF EMPLOYMENT
4.1.
Ordinary hours of work
The ECC recommends that hours of work be aligned to the BCEA which provides for a
maximum of 45 ordinary hours of work per week.
4.2.
Daily and weekly rest periods
The ECC recommends that daily rest periods should be aligned to the BCEA. The BCEA
stipulates a daily rest period of at least 12 consecutive hours between ending and the
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commencement of the shift and a weekly rest period of 36 consecutive hours which,
unless otherwise agreed, must include a Sunday.
4.3.
Overtime hours
The ECC recommends that the overtime provision be aligned to the BCEA which
provides for a maximum of 10 hours overtime per week. For the employers employing
less than 10 employees, the ECC recommends that 15 hours per week overtime be
applicable.
4.3.1. Overtime payment
The ECC recommends that overtime payment be aligned to the BCEA which stipulates
that overtime be remunerated at one and half times the hourly rate.
4.4.
Averaging of the hours of work
The ECC recommends that averaging of hours of work be aligned to the BCEA. The
ECC recommends that the sectoral determination should stipulate that, ordinary hours of
work and overtime of an employee may be averaged over a period of up to four months in
terms of a collective agreement. In addition, an employer may not require or permit an
employee who is bound by a collective agreement to work more than
an average of 45 ordinary hours of work in a week over the agreed period;

an average of five hours’ overtime in a week over the agreed period
4.5.
Sunday work
The ECC recommends that the BCEA provisions should apply in respect of Sunday
work. This means that employees must be paid time and one-half when Sunday is part of
ordinary hours, and double time if Sunday falls outside the ordinary hours of work.
4.6.
Payment for work on public holidays
The ECC recommends that BCEA provisions should apply.
4.7.
Night work
The ECC recommends that BCEA provisions be applicable in relation to night work. The
ECC further recommends that if the transport cost at night is more than the daily cost,
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employers should provide subsidies to employees who are required to work the night
shift.
Leave
4.8.1. Annual Leave
The ECC recommends that BCEA provisions should apply in relation to annual leave.
4.8.2. Sick Leave
The ECC recommends that BCEA provisions should apply in relation to sick leave.
4.8.3. Family Responsibility Leave
The ECC recommends that BCEA provisions should apply in relation to family
responsibility.
4.8.4. Maternity Leave
The ECC recommends that BCEA provisions should apply in relation to maternity leave.
Particulars of employment and remuneration
4.9.1. Written particulars of employment
The ECC recommends that BCEA provisions should apply.
4.9.2. Information about remuneration
The ECC recommends that BCEA provisions should apply.
4.9.3 Informing employees of their rights
The ECC recommends that BCEA provisions should apply.
4.10. Termination of employment
The ECC recommends that BCEA provisions should apply.
4.11. Severance pay
The ECC recommends that BCEA provisions should apply.
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4.12. Certificate of service
The ECC recommends that BCEA provisions should apply in relation to annual leave.
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