For many employers, their most important rationale each day is to ensure that their business and/or operational requirements are met. They achieve this objective, inter alia, by ensuring that their employees perform their functions so that their business is profitable. Employees have a fundamental duty to render a service and their employers have a commensurate right to expect them to do so.

 

However, what should an employer do when an employee is unable to come to work for a month because of visions, premonitions and a strong cultural belief about ancestors calling him/her to become a sangoma?

 

This very same incident occurred in Kievits Kroon Country Estate (Pty) Ltd v CCMA and Others [2011] 3 BLLR 241 (LC). This matter was first referred as an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) by the employee and after an unsuccessful conciliation, the matter was arbitrated by a Commissioner.

Mitch Marescia co-founder and CEO of Camargue Underwriting Managers discusses why Employment Practices Liability is cover advantageous for companies and what type of companies use this cover. Mitch highlights that South Africa has become very litigious and outlines what some of the remedies awarded to aggrieved employees are in unfair dismissal cases, as well as the effect on working relationships. Providing advice for what you should look for when deciding on various EPL cover options.

Employment Practices Liability defined:  “Employment Practices Liability (EPL) provides insurance for employers against allegations of unfair dismissal and unfair labour practices (including sexual harassment and discrimination) brought by a past, present or even future employee.”

 

 

Employment Practices Liability Insurance (EPLI) was introduced to the South African insurance landscape in 1998, just two years after the formation of the Commission for Conciliation, Mediation and Arbitration. At the time, most underwriters were reluctant to sign for the cover. This reticence was partially due to the historically poor industrial relations environment and then of course the perception that the post-apartheid closet of South Africa still contained many skeletons - even in the workplace.

 

But by the year 2000, underwriters became more comfortable with what really amounted to “labour dispute insurance” and over time, a few specialised markets gradually introduced the new form of cover. As the CCMA case load grew; the knock on effect was more corporate and large employers sought out this then niche insurance. These employers typically had a workforce exceeding 500 and immediately recognised the benefits of being able to transfer the risk of CCMA and Labour Court awards into the insurance market.

 

A proof point of this must surely be that the maximum amount that can be awarded by the Labour Court for an Automatically Unfair Dismissal is 24 months’ salary. At a middle management salary of R30 000 per month, the award could reach R720 000 – a bitter pill for even a large employer to swallow. Of course the larger employers were also faced with another problem: the frequency of losses due to labour disputes could be likened to the frequency of accidents in the motor fleet. While it may sound ridiculous, the ratio of accidents to motor vehicles on South African roads is actually far lower than the ratio of CCMA cases to employers.