Promotion of Equality & Prevention of Unfair Discrimination Bill [B57-99]



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The ELDU visited the prospect of a separate Equality Division or Tribunal in the Framework Document referred to in the first paragraph of this submission. There is a precedent for an inexpensive, yet effective separate tribunal to be found in section 30B of the Pensions Fund Act No 24 of 1956. The Pension Funds Adjudicator is a permanent, independent body which adjudicates on all matters pertaining to pension funds.
South African Institute of Race Relations

SOUTH AFRICAN INSTITUTE OF RACE RELATIONS


Introduction

It is axiomatic that decades of statutory race discrimination, especially under the former National Party government, have inflicted immense harm on black South Africans. `Bantu' education, pass laws, job reservation, forced removals, inferior services, restrictions on land ownership and use and businesses opportunities, are only some of the many burdens under which black people laboured for many long years. Compounding the lack of economic freedom for black people was the denial of their civil and political rights - including restrictions on speech and other freedoms, the exclusion of black people from the franchise, and the detention, torture, and/or killing of many black leaders. Even citizenship was ultimately to be denied to all black South Africans under the `homelands' system.


The Institute has documented all this in very great detail over seven decades. Its chief executive, Mr John Kane-Berman, also summarised the pervasive impact of race discrimination when he wrote in the Financial Mail in 1974:
"Discrimination is at the very heart of our society. It governs every facet of our lives from the cradle to the grave - and even beyond, since even our cemeteries are racially segregated. It is enforced where we live, where we work, where we play, where we learn, where we go when sick, and on the transport we use. Not only does government condone it; it systematically pursues it, preaches it, practises it, and enforces it. It is enshrined in our constitution, written into our laws, and enforced by our courts."
The ongoing effects of apartheid are starkly evident today in the poverty that afflicts so many millions of black South Africans. Unemployment rates are higher among black people than among others, and are especially high among young African women. Malnutrition rates are higher among Africans, as is the infant mortality rate. Vast numbers of African households do not have even the piped water and easy transport, let alone the telephones and internal sanitation, that very large proportions of other people take for granted. Millions, denied a decent education, are functionally illiterate.
Now that the statutory race discrimination that characterised apartheid rule has been abolished, one of the central challenges facing the country is to overcome the legacy of those race-based laws and to liberate our people from poverty and all its related social ills.
Within this context, two issues now merit particular attention. The first concerns the optimum means of overcoming widespread poverty. The second is to find an effective way of dealing with all racist conduct, motivated by racial prejudice, that persists in the post-apartheid era and causes pain to people at all levels of society (see Finding a solution, below).
The need for economic growth

The poverty, illiteracy, and disease that beset so many fellow South Africans cannot be ignored by those who are so much better off. The only question is how best to deal with them.


The government has already adopted a sound overall strategy to counter poverty and inequality. This is encapsulated in the GEAR document. Since its adoption in 1996, South Africa has benefited significantly from the consistent application of the fiscal and monetary policy that GEAR prescribes.
However, GEAR envisages far more than maintaining strict fiscal and monetary discipline. Such discipline, as Reserve Bank governor Tito Mboweni has said, is merely a means to promote financial stability. And this, in turn, is merely a means to the overall goal of stimulating investment and growth. GEAR's essence is that faster growth will provide the way out of poverty - and that the private sector must function as the engine of that growth.
The Institute has always supported GEAR, not because the policy suits the private sector or local and foreign investors per se, but because we agree with the department of finance that private-sector-led growth is the way out of unemployment, poverty, and inequality. We have also always taken the view that the single most important means of liberating the poor is to enable them to find jobs. In this connection, self-employment, employment in small businesses in the formal and informal sectors, or employment in large corporations in the formal sector, are all extremely important.
We further believe that all policy must harmonise with the objectives of promoting growth and facilitating the generation of new jobs. Policy must avoid contradicting these goals wherever possible. The Equality Bill, however, risks undermining GEAR.
If we are to attain the growth we need, we must attract more foreign direct investment (FDI). South Africa has a low domestic rate of fixed capital formation. It is currently running at only about 16% of GDP, against a desired level of 25%. Various positive factors, including a more vibrant international economy and our current lower interest rates, are now poised to stimulate investment and lead to increased rates of growth, averaging some 3% in 2000 and beyond. This, however, will still be insufficient to uplift the destitute. For this goal to be achieved, we must have greater FDI. We therefore should be wary of allowing current stimulatory factors to be counteracted by regulations which may discourage investment.
We also need to avoid the phenomenon of `jobless' growth. We must encourage the private sector not only to invest, but also to invest in ways that will generate new jobs. The government has recognised the problematic nature of certain minimum employment conditions in that employers of fewer than ten workers will have some of the requirements of the Basic Conditions of Employment Act of 1997 applied to them less stringently. In mandating this, the government has acknowledged the importance of small business in generating jobs. A gain attained in one sphere should not now be undermined by subjecting small business to further regulation under the Equality Bill.
In speaking of the negative effects the bill is likely to have on business, the Institute is not seeking to promote the interests of the business community. Organised business can do that for itself. For us the key issue is how the bill is likely to impact upon the poor. Business can avoid unwanted regulation by going off-shore, or by declining to offer products where the associated risks have become too high. The poor, however, have no alternatives. It is they who will suffer if the products currently on offer are reduced, or if the price of goods and services is increased to offset the additional risks that have resulted from government policy. This is why the Institute must question the appropriateness and the economic wisdom of this bill.
Key features of the Equality Bill

Overview


The Equality Bill has been made so broad in its scope that its implications are virtually impossible to grasp in full. It lists 17 grounds on which unfair discrimination is prohibited. These are ‘race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language, and birth'.The bill further prohibits unfair discrimination on `any other recognised ground', and such grounds may expand in the future, as has happened in the US.
As further outlined below, the bill also reverses the normal onus of proof, gives locus standi to sue to a wide range of individuals and organisations, empowers new ‘equality courts' to award damages and make other orders, and allows `questions of fact' regarding alleged unfair discrimination to be decided by lay assessors rather than judicial officers.
The bill expressly covers education, health care, accommodation, land, property, insurance, pensions, goods, services, banking, entertainment, refreshment, transport, and travel. Sectors that are not listed may be covered too, for the bill provides that the inclusion of any one sector is not to be interpreted as signifying the exclusion of any other.
The Equality Bill also overrides all law other than the constitution. Various unforeseen consequences may arise from this. To cite but one example, the department of health has spent many months negotiating with medical aid schemes the content of the regulations promulgated in October 1999 under the Medical Schemes Act of 1998. Now, the provision in the October regulations that allows medical aid schemes to levy `late-joiner' penalties on those who join schemes only after turning 30 is to be overridden, it seems, by the Equality Bill.
There is a risk that the combined effect of the bill's provisions will be to increase, significantly, the `hassle' factor involved in doing business in South Africa. The legal issues raised by key terms of the bill are thus not mere technicalities. They could have important economic consequences (including many that are unintended). Some, in addition, raise issues of principle regarding the rule of law and the requirements of due process.
Unfair discrimination

The goal of the bill is not only to put an end to incidents of deliberate discriminatory treatment. As part of its endeavour to eliminate `systemic' discrimination too, the bill will also prohibit any business policy or practice that is race neutral but which has a `disparate impact' on black people compared to whites, on women compared to men, on older people compared to younger people, and so forth. In all the sectors covered by the bill, businesses will thus run the risk that standard practices, applied equally to everyone, will be construed as prima facie evidence of unfair discrimination. The only way to avoid such liability, as the equality legislation drafting unit has foreshadowed, may be to grant preferential terms to certain groups, and to black people in particular.


This may appear a desirable redress for decades of past discrimination. In reality, it could prove counter-productive in certain respects, if normal business operation is impeded in such a way that expansion or investment are damaged. The impact of any resulting economic malaise is likely, as noted, to fall most heavily on the poor.
There is a point of principle at stake as well. The rule of law has traditionally required equality before the law. It has demanded that all people, irrespective of race, gender, or other immutable and irrelevant physical characteristics, should be treated in the same way by their governments. (Apartheid legislation infringed this principle absolutely, of course.) Where the non-discrimination principle is extended to the private domain, the rule of law would likewise seem to require that private persons should likewise treat others equally, and without regard to race, gender, or other similar attributes. The Equality Bill will undermine this principle, however, by allowing business to be held liable, under the `disparate impact' doctrine, for treating its customers on an equal basis and without regard to their race, sex, age, or other characteristics.
The bill also erodes the principle of equality before the law in another way. It indicates that only those who can prove their membership of a disadvantaged group or a `violation of the right to dignity', will be able to sue for unfair discrimination. In practice, this could exclude various individuals from invoking the protection of the statute.
These aspects of the Equality Bill thus infringe not only the equality principle, but also the constitutional provision (in section 9(1) of the 1996 constitution) that `everyone is equal before the law and has the right to equal protection and benefit of the law'. Though preferential terms of business for black people might be legitimate under the `affirmative action' provisions of the constitution (contained in section 9(2)), unequal treatment will still infringe the underlying core principle of equality before the law. In addition, it is difficult to see how excluding some South Africans from suing for unfair discrimination could be justified either by section 9(2), or reconciled with the access to court guaranteed by section 34 of the constitution.
The normal onus of proof

The normal rule in civil litigation is that plaintiffs must prove every element of the wrongdoing (for example, the breach of contract, or the delict) that entitles them to compensation for the loss they have thereby suffered. The Equality Bill, however, reflects a growing trend in our law to reverse the normal onus of proof, and to place the burden on defendants to disprove their liability.


This raises another point of principle. The rule of law also requires that every individual be regarded as innocent until his or her guilt has been properly proved. Under apartheid rule, this principle was continually abrogated. It is one of the great achievements of our new constitution that it guarantees the presumption of innocence. We should not, now, fall into the trap of allowing difficulties of proof to erode, bit by bit, the presumption of innocence that is so crucial to due process and the rule of law.
The Equality Bill is also contradictory as to the circumstances in which the onus shifts. Mostly, the bill seems to envisage that the onus will shift after `prima facie' evidence of unfair discrimination has been provided. However, subsection 43(3) reads: `If unfair discrimination is alleged, there may be no finding that it is reasonable and justifiable in the circumstances unless it is established that the person or group affected by the discrimination cannot be accommodated without unjustifiable hardship.' This indicates that the mere allegation of unfair discrimination will place on a respondent the burden of proving `unjustifiable hardship'.
The role of lay assessors

Every magistrate's court and high court will be empowered to function as an equality court.

Though judicial officers are to preside over the equality courts, they will not necessarily be able to decide all aspects of the cases before them. If either party so requests, or if the judge or magistrate considers it in the interests of justice, two lay assessors may be chosen from the community to assist in hearing the matter. Matters of law must be decided by the judge or magistrate (as must disputes as to whether a particular issue is a matter of law or a matter of fact). However, on all matters of fact the two assessors may override the judicial officer, and their decision is then the decision of the court. Matters of fact include the quantum of damages to be awarded. This is surely the function of the judicial officer.
If a judge or magistrate thinks the assessors in a case have `clearly made an incorrect finding', he or she can refer the decision to the High Court for review. However, no such review is possible if the party against whom the decision has been made was assisted by a legal representative. Though the bill provides for appeals to the High Court and, ultimately, the Supreme Court of Appeal, the legal costs involved in bringing an appeal are likely to be considerable.
Lay assessors, by definition, are unlikely to have the same training or experience in weighing contradictory evidence as judicial officers. Their role should thus rather be confined to advising judicial officers, who should be entitled to decide all questions of law and fact. Judicial officers who disagree on questions of fact with their two assessors should, however, have to explain in full the reasons for their decisions.
Encouraging an upsurge in litigation

The Equality Bill is likely to encourage an upsurge in discrimination suits, which will put further pressures on our heavily burdened courts and add to the `hassle factor' involved in doing business in this country. In particular, the bill will allow the Human Rights Commission (HRC) to bring claims on behalf of aggrieved individuals, using state revenue for this purpose. It will also allow the HRC to have damages awarded to it directly, thus giving the commission a financial stake in initiating litigation. The bill fails to specify, moreover, the basis on which any damages awarded to the HRC are to be computed. This might make possible the award of punitive damages to the commission, even though such damages are unknown in our law, and even if the HRC is not the aggrieved party.


Further, the bill will seemingly preclude legal costs being awarded against a losing claimant. In doing so, it will remove one of the most important practical constraints on the bringing of weak or even vexatious claims.
The bill also allows proceedings to be brought on a class basis. Though class actions may assist the indigent and help streamline the judicial system, they may also generate various problems. In particular, they may allow weaker claims to be subsumed within their overall ambit, while adding to the costs and difficulties of mounting a defence. Moreover, the indigent have already been assisted in bringing suit by the Contingency Fee Act of 1997, and the need for class actions to be included in this bill is thus unclear.
Finding a solution

The 1996 constitution, in section 9(4), provides that: `No person may unfairly discriminate directly or indirectly against anyone on one or more grounds in terms of subsection (3)'. (Subsection (3) lists the same 17 grounds as are contained in the Equality Bill.) Section 9(4) then continues: `National legislation must be enacted to prevent or prohibit unfair discrimination.'


The constitutional requirement could be met by concentrating, in a reformulated anti-discrimination bill, on proscribing the form of discrimination that has generated by far the most misery for the greatest number of people over the longest period of time. This, clearly, is race discrimination. Such discrimination, more than discrimination on any other ground, is what has bedevilled this country and its people, leaving a legacy of poverty, anger, bitterness, and personal humiliation.
All forms of unfair discrimination are, of course, already prohibited by the constitution. By enacting a bill that prohibited race discrimination alone, we could meet three important objectives. We could satisfy the constitutional requirement for national legislation. We could recognise the poverty as well as the pain that race discrimination has done so much to engender. And we could also safeguard and facilitate our future economic growth by adopting a statute that would not have the unintended consequence of discouraging the foreign investment we need.
The immediate imperative of such a statute would be to put an end to racial incidents in which racially discriminatory treatment was motivated by racial prejudice. Conduct of this kind could be made actionable under civil law, while the perpetrator could be compelled to pay damages for any loss caused as well as for pain and suffering occasioned.
The normal principles of civil law would continue to apply. A plaintiff suing for damages on this basis would need to prove the wrongdoing in question, including the intention to discriminate on racial grounds. Since the proceedings would be civil rather than criminal, the standard of proof would be proof on a balance of probabilities, rather than the higher standard, required in criminal law, of proof beyond a reasonable doubt.
Race discrimination suits could continue to be brought in the ordinary civil courts, with a right of appeal lying ultimately to the High Courts and the Supreme Court of Appeal. Within the magistrates' and high courts, all facets of each case could be adjudicated by judicial officers with experience and/or training in interpreting law as well as in weighing all relevant evidence. If necessary, an advisory role could also be given to lay assessors.
A plaintiff who demonstrates that race discrimination of the kind in issue has indeed occurred would be entitled to appropriate relief, including an apology from the defendant. An interdict against any repetition of such conduct could also be included in the remedies available. Punitive damages have no place in our law, however, and should not be introduced. The common law rules of locus standi could apply (the indigent being assisted in bringing suit by the Contingency Fees Act), as could the normal rules regarding the award of legal costs.
Such a law would not, of course, purport to address the poverty and inequality which afflict so many millions of South Africans. This, realistically, can only be tackled in other ways, and especially by rigorously and determinedly implementing GEAR. In addition, the process of privatisation could be accelerated. We are fortunate that the government has assets worth R300 billion that it could sell to reduce infrastructural backlogs, while also using part of the proceeds to donate shares to the poor.
17th November 1999
South African Insurance Association

The South African Insurance Association (SAIA)


17 November 1999
The Chairperson

Ad Hoc Joint Committee on the Promotion of Equality and Prevention of Unfair Discrimination Bill


PROMOTION OF EQUALITY AND PREVENTION OF UNFAIR DISCRIMINATION BILL

The South African Insurance Association (SAIA) thanks the Committee for the opportunity to present its submission on the Promotion of Equality and Prevention of Unfair Discrimination Bill. The short-term insurance industry recognises and supports the need to enact legislation preventing unfair discrimination. However, the Bill as published exceeds international standards applied in this type of legislation, and will cause permanent damage to the industry if enacted in its current form.


The SAIA represents the vast majority of short-term insurance companies.
The SAIA is a member of Business South Africa (BSA) which will also be making a submission on this Bill. The BSA submission will contain comment on issues of principle contained in the Bill. SAIA would like it placed on record that it fully supports the BSA submission. Since the BSA submission will be of a general nature the SAIA has in this submission focussed only on issues specific to the insurance industry.
Throughout history the fundamental basis of insurance has been that of transfer of risk. A person passes the risk of losing all his worldly goods or becoming disabled and unable to earn, onto another body – the insurance company. The insurer adopts that risk through analysis of its chances of suffering a loss and by spreading the risk amongst groups of insureds to insure sufficient levels of profitability. These levels of profitability have traditionally been low and more recently, the industry has incurred underwriting losses. To prevent insurance company collapses, which would have a severe impact on the economy, an insurer needs to practice proper underwriting criteria. This entails a company correctly and as accurately as possible giving consideration to risk factors which will determine its chances of paying claims.
Risk factors that need to be taken into consideration on, for example motor policies, are factors such as age of the driver. This is because older drivers are more experienced and less likely to have an accident than a twenty-one year old. The area of residence may be a factor relating to property insurance since according to national statistics some areas are more prone to flooding than others. These factors are justifiable in ensuring proper treatment of insureds, by ensuring that the person who properly manages his risk is not discriminated against by paying for the person who does not. Proper management of risk is important to ensure insurance companies can carry on the normal course of business without the real threat of financial collapse.
Since many of the risk factors taken into consideration by insurers are listed under the Prohibited Grounds in the Bill, it is clear that some of the practices currently used will have to be defended as ‘justifiable’, as indeed they are.

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