Our labour laws are constantly evolving as the South African government seeks to balance stronger protections for employees with the need to create a business-friendly investment climate. We can expect to see a number of amendments to the country’s core labour law acts – the Basic Conditions of Employment Act and the Unemployment Insurance Act – over the next couple of years.
Some of them promise to improve the lives of millions for the better, while others will bring about new complexities for businesses to manage.
Let’s run through a few of the most important changes:
Unemployment Insurance Benefits
Parliament has amended the Unemployment Insurance Act to increase benefit values, simplify their administration, and clarify that foreign national employees and learners employed on a learnership agreement are eligible to claim benefits. It also amended the Unemployment Insurance Contributions Act to make it compulsory for foreign national employees and people on a learnership to contribute to the Unemployment Insurance Fund (UIF)—which makes sense since you need to contribute to an insurance fund to benefit from it.
The changes to the Contributions Act took effect from March 2018, but there is not yet a concrete date for the changes to the benefits offered under terms of the Unemployment Insurance Act. Until the legislation is synchronised, the Fund promises to honour benefit claims from the affected employees.
Rob Cooper, discussing the UIF legislation:
This member’s bill is a wonderful example of our parliamentary democracy in action, with MPs from most parties aligning behind a piece of legislation that will make life better for many South Africans. It was proposed by a member of the African Christian Democratic Party in 2016 and approved by the National Assembly towards the end of 2017. This law introduces three new forms of leave for employees: parental leave of 10 days, adoption leave of 10 weeks, and commissioning leave (where a surrogate mother is involved) of 10 weeks.
It’s rewarding to see an Act that gives parents the right to take family time off, even if they are not the person giving birth. It’s also welcome news that adoptive parents and parents working with a surrogate will be entitled to time to bond with the new member of their family.
However, the changes will require further amendments to the Basic Conditions of Employment Act and the Unemployment Insurance Act. For now, we are not sure about the impact on the payroll, but the new types of leave will have to be recorded, and employers will most likely need to provide some information to the UIF to facilitate the approval of the new benefits.
Rob Cooper, discussing the Labour Bill and Paternity leave:
National Minimum Wage Bill
The implementation of the National Minimum Wage has been postponed from 1 May 2018 to an as yet undetermined date—the latest delay in a controversial law that the government has worked on for many years. I’m hopeful that the differences between labour, government and business will be resolved soon because the country needs clarity around this law. Though some critics believe it will harm employment and job creation—and others say it is not a true living wage—it is a step in the right direction. It could change living conditions for millions for the better.
That said, there is still some work to be done. Parliament has introduced amendment bills to align the Basic Conditions of Employment Act and the Labour Relations Act with the National Minimum Wage Act. The implication for the payroll is that we will have a minimum wage administered on an hourly value and that other minimums set by current wage regulating measures will move up to the National Minimum Wage level if they are less.
Employment Tax Incentive (ETI) Act
For an employee to qualify for the Employment Tax Incentive, the employer must pay the employee at least the minimum wage. Where there is no wage-regulating measure (such as a sectoral Bargaining Council), the Act specifies that the employer must pay a minimum wage of R2 000 per month. There is no hourly or weekly minimum wage option in the Act, making it difficult to apply this test fairly in a weekly payroll where some months have 4 weeks and others 5 weeks.
If the life of the Act is extended, it will need to be amended to replace the R2 000 monthly minimum with the proposed R20 per hour national minimum. I strongly believe in this Act, but it has not reached its full potential because employers and SARS alike find it complex to administer. I hope that government extends it beyond February 2019 and uses the next round of amendments to streamline the compliance requirements.
Provident Fund Annuitisation
Subject to recommendations from the Minister of Finance, from March 2019, legislation aligns the rules for pay-out of a provident fund benefit with those governing a pay-out by a pension and a retirement annuity fund, with provisions to phase in the change and to overcome hardship situations. Broadly one third of the total benefit will be paid as a lump sum and two thirds will be reinvested to provide monthly annuity income.
For some people, the result of receiving a monthly annuity income could be that they earn above the means-test level for a social security grant. Hopefully, policymakers are looking at this issue. The same applies to the new minimum wage — an employee’s wage could be increased above the means test threshold for a social security grant.
Rob Cooper, discussing the Provident Fund:
Uber-like Insurance Platform Is Revolutionising The World Of Insurance Claims
the 4-Sure platform, which was launched two short years ago by actuary Shalen Moodley and a collective of seasoned tech gurus, is to provide value-added services that benefit the financial services industry. All partners had substantial success across Africa introducing loan origination platforms for leading banks before deciding to tackle the problems existing in the insurance claims fulfilment process.
A multi-sided, digitally-driven business platform that has been wholly-developed and launched in South Africa is ‘uberising’ the local short-term insurance industry by transforming the traditional claim fulfilment landscape.
Developed locally by Insuretech sensation 4-Sure and headed up by actuary-turned-entrepreneur Shalen Moodley, the 4-Sure platform seamlessly connects the claims ecosystem consisting of the customer, broker, insurer, service providers and suppliers and manages all complex interactions and sequencing required to deliver superb customer experience, optimal claim cost and fast turnaround times.
“The new system, which eliminates virtually all the manual processes and “waste work” involved in dealing with a claim, also provides enhanced opportunities for small businesses to compete for insurance claim work traditionally only available to a select few. Simultaneously, it reduces the fraud risks associated with the manual allocation of claims, and reduces costs across the board”, says Moodley.
“There are several weaknesses inherent in the appointment of the traditional insurance panels, “says Moodley. Relationships between the insurer’s agent and supplier base can result in some contractors being favoured above others. The payment of “incentives” by service providers as a reward for getting work can also skew the allocation process and drive massive cost inflations. Furthermore, costs can vary for similar jobs and the use of assessors for approval of routine jobs results in time delays and increased administration costs.”
“Most seriously for most insurers, is that contact with the customer is lost during the claim fulfilment process – they are disintermediated. Often, the result is dissatisfaction on the part of the customer, disrupted processes, unnecessary delays and often the possibility of an unhappy customer withdrawing their insurance and other investments with the associated brands of the insurer.
After extensive discussions with the industry regarding problems faced with settling claims, 4-Sure concluded that reformation of the system should be based on shorter, effective communication structures, the ‘democratisation’ of the panel system and the strategic use of technology to improve customer delivery and satisfaction levels.
The answer was the building of an entire ecosystem based on the use of sophisticated regressive algorithms that made the ‘Circle of Service’ between insurer and claimant transparent and frictionless. Creating an extensive database, making software available to service providers and connecting suppliers of raw materials as well as early payment mechanisms completed the service circle. As well as speeding up claim response times, the process was also efficient and fundamentally more effective.
Taking inspiration from the concept launched by the Uber transport system, the insurance platform includes a vastly increased list of qualified and rated service providers. As in the ride-sharing service, becoming listed requires that several stringent criteria are met by service providers. When a claim is registered – including the time when the customer requires assistance – it drops into the platform. Appropriate service providers listed can then respond and confirm their availability. They are then required to be on site at the time stipulated by the customer, undertake the work and then complete a Mobile App-driven reporting process for the insurer’s records (including before and after photographs, assessments and costings).
To participate in the platform a service provider must have a smartphone and the software, provided free by 4-Sure. Part of the package includes a service provider ‘scheduler’s’ desktop package that enables job scheduling, field technician allocation and all the information relating to the job to be collated and electronically submitted for payment to the insurer.
“For a sole trader or SME, one of the greatest challenges to building a sustainable business is controlling cash flow. Service providers on 4-Sure do not have to carry an extensive array of raw materials to fulfil allocated insurance claims work. Once they are on site, have assessed the repair work and had it approved within minutes, the service provider is able to visit a 4-Sure approved partner supplier (Builder’s Warehouse, Penny Pinchers, Buco, Plumblink and others) and pick up the required stock.
“They are then using their 4-Sure Mobile App to get the necessary materials and the outlet then bills the insurance company concerned directly through the 4-Sure software for the expenditure. Because of the volumes involved, we have been able to negotiate favourable prices for these services which are now on offer at more than 400 service points across the country. The service provider bills only for the time and labour spent on the job at the agreed rates. Their bills are then submitted using the 4-Sure software, go directly to the insurer and are generally settled within 24-48 hours.”
“As smaller operators are no longer waiting between 30 and 60 days for their money, they are happy to complete routine jobs for a set fee. Depending on the service they deliver and the ratings they receive, they are in control of just how much work comes their way. As a job is loaded on the system and service providers then bid for the work, competition is assured and opportunities for work are equal across the spectrum of service providers – a new paradigm which rewards performance with more work and manages the non-performers off the platform.”
Further value is added to service providers by free access to geo-positioning systems, which not only plots their way to their closest parts supplier but also to the customer’s property. Jobs that appear on their systems also cover the areas in which they choose to operate. As is the case with their Uber driver colleagues, those closest to the customer can make their presence known and compete for the work. Those who feel the costs of reaching the site do not make a job worthwhile simply do not respond to the job alert,” says Moodley.
For insurers, who can track the response times of service providers in real-time and contact them electronically if they are late on site, the major benefit is that the loss of customer contact at the point of handing over a claim to an incident manager no longer exists.
The typical flow of a job is made easier by:
- Insurers were able to use a sophisticated eco-system that is a centralised platform connecting all players in the supply chain, facilitating a seamless claims fulfilment process.
- Customer contacts their insurer via their contact centre, their website, or a digital self-service channel and this claim, is electronically dropped into the 4-Sure to facilitate the claim process automatically.
- A claim’s details being logged directly on the 4-Sure platform instead of being referred to an incident manager. The message enables specific skills, customer location, a time required for service and other factors to be selected so that it can be responded to by competing service providers.
Explains Moodley, co-founder of 4-Sure and one of the innovators behind the home-grown platform that caters specifically for local needs and is believed to be the leading services of its type anywhere in the world:
“4-Sure has succeeded in becoming the first, fully-digital insurance claims platform to provide a truly customer-centric experience. The system is flexible and although the present focus is on non-motor claims, other avenues, including motor insurance and non-insurance opportunities are being investigated and developed,” says Moodley.
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Off The Beaten Track
What Tourism Month means in South Africa and how Mango Airlines is focusing on local opportunities.
This September, being Tourism Month, we have so much to talk about in South Africa, and so many people to engage with, both domestically and abroad. We are privileged to be able to leverage a broad range of destinations – arguably world-class in nature, and they expand way beyond a beautiful mountain, and an ecosystem of game.
The vast majority of leisure tourists, however, remain attracted to the Mother City and various Safari destination, while business tourists tend to stick to hub cities for short durations of time before departing again.
“There is a golden opportunity to expand on the same offerings – while not detracting from them in any way. Our responsibility is to drive tourism into new areas, really emphasising the differentiators that are incredibly attractive to local and international tourists,” said Benediction Zubane, Head of Marketing at Mango Airlines.
“Often tourists visit one of the more well-known sites in an area, and are completely unaware of the other features and destinations close by. We’re seeing a lot of success in township tourism which goes to show how diversifying can really drive new tourism opportunities,” explained Zubane.
According to Statistics South Africa survey on Tourism and Migration, nearly 3.5 million international travellers visited South Africa in August 2017. Top numbers were tourists from USA, UK, Germany, France and The Netherlands, with African visitors primarily coming from SADC countries. Zubane added, “This means there is vast opportunity to begin engaging with travellers in new countries across the globe. We need to become our own best ambassador, talking-up our famous and lesser known destinations, proudly showcases our uniqueness. We should also be tourists in our own country and start exploring the wonders of the Rainbow Nation.”
Mango is passionate about helping its SMEs and entrepreneurial community to successfully overcome the unique challenges facing the tourism industry: “There has never been a more opportune time for small businesses and entrepreneurs to benefit positively from tourism in South Africa, and we hope to celebrate alongside our SME community as they fly high – both literally and figuratively,” he concludes.
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