New electrical contracting industry sick benefit fund

November 18th, 2016, Published in Articles: Vector


Mark Mfikoe

Mark Mfikoe

The parties to the Bargaining Council for the Electrical Industries (SA) recently concluded an agreement to establish the new Sick Benefit Fund for the electrical contracting industry.

We previously had three different sick benefit funds, one covering the Western Cape, the other KwaZulu-Natal, and one for the rest of the country. Each of these had different contributions and benefit structures. This situation was unjustifiable and we could all benefit from having one fund, with the same benefits and identical contributions from all participants.

This agreement signals a real partnership on the industrial relations front in the sense that both employers and employees contribute towards this fund to ensure that there are unique benefits for employees in the electrical industry.

The National Sick Benefit Fund has been on the cards for a number of years and we achieved a breakthrough this year thanks to the commitment of the negotiators from both the employers’ and the employees’ side. I led the employers’ delegation as national director of the ECA(SA), and my own personal motivation was what happened when the late Roderick Semono, a contract manager at Standard Electrical, took ill.

Semono was registered with the Bargaining Council as a master installation electrician but he earned far more than this category as he was employed in a managerial position. The Sick Benefit Fund in Gauteng pays 65% of minimum prescribed wage for a particular category.

When Theresa Megalane of Standard Electrical submitted a claim for Semono’s benefit and was paid 65% of the minimum prescribed wage of a master installation electrician, she protested that this money would not help Semono manage his life as it was about 20% of his earnings at that company.

Theresa was right. This shows that the fund fell way short in meeting the needs of employees who fell sick for long periods of time. Change had to happen and the story of Roderick Semono helped shape the thinking and motivation of the negotiators. Irrespective of where Roderick would have been in the country, each one of the current funds would have failed him just as these schemes continue to fall short for all employees who qualify to claim.

The new sick benefit fund will have a number of benefits. For the first ten days that the employee is sick, the employee would be paid 100% of their actual wage. This means the employee would not have any shortfall. Critically, the employee’s wages would be at his actual rate of pay and not at the minimum wage. This means that, if Roderick earned R50 000 a month, he would have been paid 100% of his wage per day for the first ten days of his illness.

From day eleven to day 30, the new fund would pay at 60% of actual wage. The employee still would not have a shortfall as 40% of the salary is recoverable in full from the Unemployment Insurance Fund (UIF). Again, this calculation is based on the employee’s actual wage.

From day 31 to day 130, the new fund will pay out at 33% of the actual wage. This will also be supplemented by a UIF claim and, considering that the employee will not have transport expenses while ill, this should be an adequate income replacement.

At the end of this period, which equates to more or less six months, the employee would qualify for a PHI benefit (disability benefit) for the next ten years if he is a member of the retirement funds, or for three years if he is on a fixed term contract. I am part of a team that is negotiating for the PHI benefit to pay a qualifying person up to the earlier of retirement or recovery. I will report on progress in this regard in my next article.

The contributions reduce to 0,3% of wage in KwaZulu-Natal and the Western Cape for each employee and employer, for every employee registered with the Bargaining Council. For the rest of the country, there is actually an increase in contributions to meet this new benefit structure. The trustees of the Region A and B Sick Benefit Fund have recently done a calculation and are satisfied that we will be able to subsidise this increase by 0,1% of wage for every employee and employer in the first year and then 0,05% of wage in the second year.

We are proud of this achievement and, should the minister extend this agreement to non-parties, it should see the light of day by 1 February 2017. The only suspensive condition is that the minister of labour must extend this agreement to every employer and employee in the electrical industry.

When this happens, we will all celebrate and my former colleague and friend, Roderick Semono, would rest in peace. Thanks to Theresa Megalane for her passion in pursuing justice for all employees in similar positions. Things have changed for the better for the whole industry.

Mark Mfikoe, ECA national director

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