Since becoming a democratic state in the mid-1990s, the South African legal environment has been based on a national constitution, which is the supreme law of the land. According to the constitution, basic human rights are applicable, and it is with this in mind that one needs to assess the legislation that affects the running of businesses in the country.
To begin with, labour legislation in South Africa has sometimes been criticised in that it supposedly restricts the operation of a business. Then there is also the BEE (Black Economic Empowerment) legislation, which one needs to be aware of when conducting business in South Africa. Since these are probably the two biggest legal issues facing new businesses in South Africa, they are discussed in more detail below.
Concerning labour law, one criticism is that it is too difficult to remove non-performing or unsuitable employees from the equation. However, this is not necessarily the case. If, as a business operator, you follow the correct procedure laid down in the labour legislation, there is no reason why a redundant or problematic employee cannot be disposed of. Just keep in mind that, in South Africa, before you can “fire” anyone, you have to give them a couple of written warnings. So, make very sure about who you hire. Conduct a thorough background check and an intensive interview process. Never hire someone who cannot or will not provide contactable references, besides their present employer. It is simply common sense.
BEE legislation was enacted with the supposed intent of economically benefiting previously disadvantaged persons. Because the apartheid system discriminated against “black” person, the legislation essentially is aimed at benefiting “black” individuals through enhanced employment opportunities and company shareholdings. Recently, doubts have been raised publicly about the efficacy of the legislation, since it appears to have benefited only a small minority of individuals with government connections. However, as it stands it is something that you should research, as it may impact to a greater or lesser degree on the recruitment strategy and shareholding of your business.
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