business p1

• Consumers act rationally by

  Maximising their utility
• Producers act rationally by


  Selling goods/services in a way that maximises their profits
• Workers act rationally by


  Balancing welfare at work with consideration of both pay and benefits
• Governments act rationally by


  Placing the interests of the people they serve first in order to maximise their welfare
• Groups assumed to act rationally

  • Consumers
  • Producers
  • Workers
  • Governments
• Rationality in classical economic theory is a flawed assumption as people usually don't act rationally
• A firm increases advertising

  Demand curve shifts right
• Demand curve shifting right

  Increases the equilibrium price and quantity
• Marginal utility


  The additional utility (satisfaction) gained from the consumption of an additional product
• If you add up marginal utility for each unit you get total utility
• Businesses will be fined if they fail to comply with the agreements reached during the dispute resolution process
• Businesses that fail to comply with this Act may risk financial costs e.g. legal/CCMA fees and fines
• Ways in which businesses can comply with the LRA

  • Businesses must allow employees to form trade unions/participate in union activities/legal strikes
  • Allow/Support the establishment of workplace forums
  • Employees should not be unfairly/illegally dismissed
  • Employers should not breach/ignore any collective agreement
  • Disclose all relevant information required by trade union representatives to do their jobs effectively
• Rights of employers according to LRA

  • Employers have the right to lockout employees who engage in unprotected/illegal strike/labour action
  • Form employer organisations
  • Form a bargaining council for collective bargaining purposes
  • Dismiss employees who are engaged in an unprotected strike/misconduct such as intimidation/violence during a strike action
  • Right not to pay an employee who has taken part in a protected strike for services/work they did not do during the strike
• Rights of employees according to LRA


  • Employees may join a trade union of their choice
  • Request trade union representatives to assist/represent employees in the grievance/disciplinary hearing
  • Trade union representatives may take reasonable time off work with pay, to attend to trade union duties
  • Embark on legal strikes as a remedy for grievances
  • Refer unresolved workplace disputes to the CCMA
  • Refer unresolved CCMA disputes to the Labour Court on appeal
• Purpose of the EEA

  • This Act states that employees who do the same work (work of equal value) must be paid equally (equal pay)
  • No discrimination on grounds of gender in the workplace
  • Promotes equal opportunity and fair treatment in the workplace
  • Provides for employees to refer unresolved disputes to the CCMA
  • Protects employees from victimisation if they exercise the rights given to them by the EEA
• Positives/Advantages of the EEA for businesses

  • Promotes equal opportunity and fair treatment in the workplace
  • Promotes the implementation of affirmative action measures to redress the imbalances in employment
  • Provides all employees with an equal opportunity to be selected/appointed/ promoted in a position
  • Provides employees with legal recourse if they believe they have been unfairly discriminated against
  • Motivates employees because the workforce is more diverse/representative/inclusive
  • Encourages diversity in business by employing people from various racial backgrounds
  • Encourages consultation between employer and employees
  • Prevents unfair discrimination as it ensures that the workforce represents the demographics of the country
  • Businesses are in a better position to negotiate contracts with the government/Impacts positively of BEE ratings of businesses
  • Certified psychometric tests may be used to assess applicants/employees to ensure that suitable
• Negatives/Disadvantages of the EEA for businesses

  • Increased administration burden, as businesses must compile/submit employment equity reports every two years
  • Expensive to train/employ someone who knows little about the Act
  • Fines/Penalties for non-compliant businesses may be expensive for the business
  • Employers have to appoint one or more senior managers to ensure the implementation of the plan, which increases salary expenditure
  • Businesses must submit a compliance certificate before they can conduct business with state businesses
  • Businesses are sometimes pressurised to appoint an unsuitable EE person to meet EE requirements
  • Often positions go unfilled because there are no suitable EE candidates
• Penalties for non-compliance with the EEA


  • Businesses may be taken to the Labour Court for prosecution
  • Fines may be imposed on businesses that fail to comply with its reporting obligations
  • The Department of Labour may block non-compliant companies from doing business with the government
• Discriminatory actions according to the EEA


  • Not employing a young woman because she would want to have children in future
  • Refusing to employ a person because he/she has strong religious beliefs/has a disability
  • Doing HIV testing unless justified by the Labour Court
  • Denying people access to the workforce based on gender/race/culture/etc. and treating them unfairly
• Ways in which businesses can comply with the EEA

  • Businesses must guard against discriminatory appointments
  • Promote equal opportunities and fair treatment
  • Reasonable accommodation of people from designated groups
  • Ensure that there is equal representation of all racial groups in every level of employment
  • Submit the employment equity plan to the Department of Labour
  • Retain designated groups, including skills development of such groups
  • Assess the racial composition of all employees, including senior management
  • Clearly define the appointment process, so that all parties are well informed
  • Use certified psychometric tests to assess applicants/employees to ensure that suitable candidates are appointed
  • Ensure that diversity/inclusivity in the workplace is achieved
  • Implement affirmative action measures to redress disadvantages experienced by designated groups
  • Prepare an employment equity plan in consultation with employees
  • Implement an employment equity plan
  • Assign one or more senior managers to ensure implementation and monitoring of the employment equity plan
  • Eliminate barriers that have an adverse impact on designated groups
  • Retain/Develop/Train designated groups, including skills development
  • Regularly report to the Department of Labour on progress in implementing the plan
• Purpose of the BCEA


  • Provides clear terms and conditions of employment for employers and employees
  • Set minimum requirements/standards for the employment contract
  • Regulates the right to fair labour practices as set out in the Constitution
  • Adheres to the rules and regulations set out by the International Labour Organisation
  • Regulates the variations of basic conditions of employment
  • Advance economic development and social justice
• Positives/Advantages of the BCEA for businesses

  • Creates a framework of acceptable employment practices e.g., work hours, leave, etc.
  • Promotes fair treatment of employees in business
  • Encourages consultation between employers and employees
  • Outlines minimum requirements that form the basis of employment contracts
  • Work hours are specified so that the employer cannot exploit employees
  • The rules and regulations are very specific, which clearly guides the employer on how to deal with employment issues
  • Employees are permitted to consult labour unions in cases where the BCEA conditions are violated. (Relationship with LRA)
  • Employees may submit complaints to labour inspectors who can address it
• Negatives/Disadvantages of the BCEA for businesses


  • Developing/Drafting a formal/legal employment contract may be time-consuming/costly
  • Businesses may regard employment contracts negative and may not implement it, which result in non-compliance/penalties
  • No employer may force an employee to work more than 45 hours in a week. This may result in reduced productivity
  • Hiring cheap labour is no longer possible, so businesses cannot exploit workers
  • BCEA forces businesses to comply with many legal requirements, which may increase labour costs
  • Businesses not complying to the Act, may be charged with high penalties, which may affect their cash flow negatively
  • Businesses may consider the provisions of the BCEA as unimportant and an unnecessary administrative burden that increase operating costs
• Discriminatory actions according to the BCEA


  • Forbidding workers to discuss wages/salaries with co-workers
  • Preventing workers from having access to employment contracts
  • Refusing to accept a valid medical certificate of a sick worker
  • Refusing to grant a worker family responsibility leave to support a sick family member
• Penalties businesses may face for not complying with the BCEA


  • Labour inspectors may serve a compliance order by writing to the Department of Labour
  • The Director General may agree/change/cancel the compliance order
  • Labour inspectors may investigate/inspect/ask questions about complaints and remove records as evidence
  • Businesses may be taken to the labour court for a ruling
  • Businesses that are found guilty of non-compliance may face heavy fines/ penalties
  • They can be ordered to pay compensation and damages to the employee
• Ways in which businesses can comply with the BCEA


  • Workers should only work 9 hours per day in a 5 day work week./8 hours per day in a 6 day work week./Overtime should not exceed 10 hours per week
  • They must have a break of 60 minutes after five hours of work
  • Workers can take up to six weeks paid sick leave during a 36-month cycle
  • Businesses should not employ children under the age of 16
  • Workers must receive double if they work during public holidays/Sunday
• Provisions of the BCEA


  • Hours of work/Work hours
  • Overtime
  • Leave (Annual leave, Sick leave, Maternity leave, Family responsibility leave)
  • Meal breaks and rest periods
  • Public holidays
  • Termination of employment
  • Child and forced labour
• Purpose of COIDA


  • Provides a comprehensive protection to employees who injured in the course of performing their duties
  • COIDA applies to all casual and full-time workers who become ill/injured/ disabled/killed due to a workplace accident/disease
  • It excludes workers who are guilty of wilful misconduct/workers working outside South Africa for at least twelve months/members of the SA Defence Force/Police services
  • It provides for the establishment of a Compensation Board whose function is to advise the Minister of Labour on the application/provisions of COIDA
• Positives/Advantages of COIDA for businesses

  • Promotes safety in the workplace
  • Creates a framework for acceptable employment practices and safety regulations
  • Supply administrative guidelines/mechanisms for dealing with/processing claims
  • Eliminates time and costs spent on lengthy civil court proceedings
  • Employers are protected from financial burden should an accident occur in the workplace provided that the employer was not negligent
  • Claiming processes are relatively simple
  • Makes businesses more socially responsible as they cannot just employ workers at random in dangerous working conditions
  • Workers are treated with dignity and respect as businesses view them as valuable assets and not just as workers
  • Covers all employees at the workplace if both parties meet all the necessary safety provisions in the Act
  • Employees do not contribute towards this fund
  • Employees are compensated financially for any injury/disability resulting from performing their duties at their workplace
  • In the event of the death of an employee as a result of a work-related accident/ disease, his/her dependent(s) will receive financial support
  • Employees receive medical assistance provided there is no other medical assistance option./Cannot claim medical assistance from the fund and medical aid
  • Any compensation to an employee/the family is exempt from income tax
  • Medical expenses/Other types of compensation are paid to employees and/or their families depending on the type/severity of the injuries
  • Employers have to pay a monthly amount to the Compensation Fund depending on the number of employees/the level of risk they are exposed to
• Compensation for Occupational Injuries and Diseases Act (COIDA)

  • Covers all employees at the workplace if both parties meet all the necessary safety provisions in the Act
  • Employees do not contribute towards this fund
  • Employees are compensated financially for any injury/disability resulting from performing their duties at their workplace
  • In the event of the death of an employee as a result of a work-related accident/disease, his/her dependent(s) will receive financial support
  • Employees receive medical assistance provided there is no other medical assistance option/Cannot claim medical assistance from the fund and medical aid
  • Any compensation to an employee/the family is exempt from income tax
  • Medical expenses/Other types of compensation are paid to employees and/or their families depending on the type/severity of the injuries
  • Employers have to pay a monthly amount to the Compensation Fund depending on the number of employees/the level of risk they are exposed to
• BBBEE Pillars (Old)


  • Management
  • Employment Equity
  • Skills development
  • Ownership
  • Preferential procurement/Supplier development
  • Enterprise development
  • Social responsibility
• BBBEE Pillars (Revised)


  • Management control
  • Skills development
  • Ownership
  • Enterprise and supplier development (ESD)
  • Socio-economic development/social responsibility
• Implications of BBBEE pillars on businesses (Old)

  • Management
  • Employment Equity
  • Skills development
  • Ownership
  • Supplier development/Preferential procurement
  • Enterprise development
  • Social responsibility/Socio-economic development
• Implications of BBBEE pillars on businesses (New)

  • Management control
  • Skills development
  • Ownership
  • Enterprise and supplier development (ESD)
  • Social responsibility/Socio-economic development
• Supplier development plan/supply chain

  Develop and implement
• Small/Large businesses may not be able to afford enterprise development investment/support
• Black owned SMMEs may become too reliant on support from other businesses/unable to take their own initiatives
• BBBEE suppliers may be without good workmanship
• Smaller businesses that are not BBBEE compliant lose business