MM Botha, a senior lecturer in the Faculty of Law at North-West University (Potchefstroom Campus), has published an important article pointing out how the different functions, theories and models of labour and company law accommodate and promote the interests of employees in corporations.   An attempt is also made to reconcile these differences by considering employee participation in the context of both the labour and company law principles and the need for employees to have a say in the workplace and for employers to manage their corporations.

Read the full lengthy article The different worlds of labour and company law: truth or myth? (2014) 17:5 Potchefstroom Electronic Law Journal 56.

Some extracts without the footnotes

In 1995 the South African labour market was transformed with the introduction of the Labour Relations Act 66 of 1995.  The LRA remains the primary piece of labour legislation that governs labour law in South Africa.  The notion of industrial democracy and transformation of the workplace are central issues in South African labour law.  This is due to the constitutional changes that have taken place in South Africa, where the protection of human rights and the democratisation of the workplace are advanced.

Principles

Based on considerable research the author of the article suggests that a new set of principles and policies for corporate law be developed:

  • The ultimate purpose of corporations should be to serve the interests of society as a whole.
  • Corporations are distinctly able to contribute to the societal good by creating financial prosperity.
  • Corporate law should further principles one and two.
  • A corporation’s wealth should be shared fairly among those who contribute to its creation.
  • Participatory, democratic corporate governance is the best way to ensure the sustainable creation and equitable distribution of corporate wealth.

Conclusion

It is also evident from the pluralist approach that employees as stakeholders have an important role to play in advancing the interests of the company as a whole.  This is also unmistakable from a reading of the various reports on corporate governance in South Africa as well as the Companies Act.  Companies can no longer just make decisions without taking note of the protection and rights granted to employees by other legislation, including the rights afforded to employees by the Companies Act itself.

A question still remains about the extent and the level(s) at which employees should participate in corporate decision-making.  This question will be analysed in subsequent contributions – by looking at the types of processes and norms already in place in labour and company law and by looking at other jurisdictions for guidance.  What is clear is the fact that companies can no longer ignore employees and their voice on what goes on in the organisation.