Tag: risk

Source: Supermarket & Retailer

Despite the widespread practice of shutting down entire retail stores and calling in deep-cleaning experts when an employee tests positive for COVID-19, there is no legal requirement for retailers (or other employers) to do either.

This is according to Talita Laubscher, partner at leading African law firm, Bowmans, who said: ‘We have been told by representatives of the Department of Health that in most circumstances, it’s not necessary to do a complete shutdown. What’s more, cleaning does not need to be completed by special cleaning service providers. It can be as simple as using Jik.’

She was speaking during a recent webinar hosted by Bowmans on employment law challenges faced by the retail sector.

Unlike other sectors, the retail industry has been open since the start of the national lockdown, when there were no directives in place to deal with situations where employees tested positive for COVID-19. In the absence of directives at the time, Department of Employment and Labour inspectors adopted certain practices, such as instructing retailers, especially food retailers, to shut down their stores and call in external cleaning specialists. These practices have in some instances continued from then on – even though they are not legal requirements contained in any of the directives.

Laubscher said in the event that an employee tests positive, the employer must consider three things: the need to temporarily close and decontaminate the affected area; placing the employee who tested positive in isolation; and determining who else has been in contact with the employee who tested positive and assessing the level of risk of that exposure. ‘In this regard, a distinction is made between a high-risk exposure and a low-risk exposure.’

Low vs high-risk exposure

A low-risk exposure is where the contact with the employee who tested positive was for less than 15 minutes and more than 1.5 metres apart, with the individuals wearing protective equipment such as masks or shields. ‘In these circumstances, the employee who was in contact with the one who tested positive can continue to work, but must be carefully monitored for the development of symptoms,’ she said.

In the case of a high-risk exposure, the employee must be placed in quarantine. A high-risk exposure is contact for more than 15 minutes and less than 1.5 metres apart, with the individuals not wearing protective equipment.

‘The employee’s absence following a high-risk exposure absence must be treated as sick leave,” said Laubscher. ‘If sick leave is exhausted, the employer might allow the employee to take annual leave, or special COVID-19 leave, at the discretion of the employer. If such leave options are not available and the employee develops symptoms, the employee may be able to claim illness benefits from the Unemployment Insurance Fund.’

Paid sick leave for employees who test positive

As soon as it comes to light that an employee is positive for COVID-19, the employer must notify the national Department of Health. If the person contracted the virus at the workplace, the Department of Employment and Labour must also be notified.

COVID-19-positive people must immediately be placed on paid sick leave, said Laubscher. ‘If they have exhausted their sick leave, they should apply for the illness benefit under the Unemployment Insurance Act.’

When the employee has recovered and is ready to work, there is no need for her or him to be tested again before returning to the workplace. ‘All the person needs, is a medical certificate confirming that she or he is fit and healthy to work again. There is no legal requirement for another test.’

This has been confirmed in the Directive issued by the Minister of Health on 11 August 2020, in terms of which repeat testing is not required for a person to de-isolate. This Directive also reduces the isolation period to 10 days. The Occupational Health and Safety Directive has, however, not yet been amended and this Directive still refers to the isolation period of 14 days.

In another recent development, the Minister of Employment and Labour has signed new directives on dealing with COVID-19-related Compensation Fund claims. The purpose is to provide clearer guidance on compensation for employees who contracted the virus at the workplace and to take new scientific developments into account.

 

140 000 jobs at risk as Edcon flounders

Source: Business Live

A few weeks ago, the FM reported that Edcon, an iconic SA retail brand that began life in 1929, was facing an imminent cash crunch. This weekend, news emerged that Edcon had written to its landlords, asking for a two-year “rent holiday” of 41% for all its 1 350 stores.

The reality may be less dramatic than the “Edcon crashes” headlines suggested, partly because its stores are still open and trading. But there’s no denying that these are dire times for SA’s largest clothing retailer.

That’s not surprising. Last month, CEO Grant Pattison admitted to the FM that new funding was needed. “The current process we’re under is looking for shareholders, new and old, to inject new capital into the business,” he said.

Now, a letter dated December 11 and sent to Edcon’s landlords spells out details of how this new “restructuring plan” will work.

What is apparently on the table is that the retailer’s existing funders would convert R9bn of their debt into equity, while injecting another R700m. Then, the Public Investment Corp will inject another R1.2bn into Edcon.

For this to happen, the lenders have stipulated that Edcon’s 31 key landlords (like Hyprop and Growthpoint) must agree to the two-year “rent holiday”. This would equate to R1.2bn worth of support, for which Edcon plans to give the landlords a 5% stake.

It’s a tough call for the landlords, especially since Edcon plans to shut a number of stores until 2022. But if they reject this deal, Edcon could end up defaulting on leases anyway.

The bigger issue is whether bailing out Edcon will create a stronger retailer able to compete, or whether it will be akin to an SAA bailout — where the money vanishes up a chimney, with no value created. It’s a tough call, since Edcon has been shrinking every year. Since 2012, it has lost 22% of its clothing and footwear market share; it once held more than 50% of the sector.

Disturbingly, there aren’t too many specifics on the turnaround plan. There are promises to close some stores and improve trading densities (sales per metre), get more stock through its tills, expand its financial services side (credit and insurance, primarily) and reduce IT costs.

There’s nothing ingenious in that, though. And it’s one thing to put those goals on a PowerPoint presentation, another to make it happen.

Still, the letter to landlords contains some interesting revelations.

First, it says that since March, advisory firm Rothschild & Co has been trying to sell Edcon, but has found no takers. It adds that unless there is a further “intervention”, liquidation is “highly likely”. Fortunately, Pattison seems to have a plan, likely to be announced in the next few days, to prevent that. Which is just as well, considering the 40,000 employees who would be affected.

Of course, Pattison hasn’t helped himself by repeatedly bungling the communications around Edcon.

He denounces the reports as “misleading”, without saying exactly what was wrong. At the same time, he admits that when asked to comment by the Sunday Times, he declined.

There has been a consistent pattern of refusing to comment, then blaming the media for publishing what happened, when greater introspection might have been the wiser approach.

Unfortunately, it goes hand in hand with Edcon’s years of displaying a profound lack of respect for customers and, it seems, staff.

Hopefully, a much stronger Edcon will emerge from the ashes, one that can restore the principles and market position it once held, selling things that people actually want to buy.

By Georgina Crouth for IOL 

Stellenbosch Law Clinic filed an application in the Western Cape High Court, seeking judicial intervention on the manner in which debt is collected. It believes debt collection needs to be regulated and that costs must be capped.

The clinic is joined by Summit Financial Partners in representing 10 of their clients. All the major role players in the credit industry are involved, with 49 respondents, including all the major banks, the lending institutions, the ministers of Justice and Trade and Industry, and the National Credit Regulator.

Stephan van der Merwe, senior attorney at the university’s Law Clinic, says there’s widespread abuse in the industry.

“We have a lot of situations where people have been garnished with emolument attachment orders against their salaries. When you sit down and look at it you find amounts in excess of five, six, seven times the principal debt and they’re expected to continue making payments on it,” he says.

In one case, a client was granted an initial loan of R600, but had paid back more than R5 000 – about eight times the initial loan amount. In another, a farm labourer, earning R2000 a month, has R970 garnished from his monthly salary. Back in 2011, he was given a loan of R16 000 and has repaid in excess of R31 500 – yet the creditor alleges he owes R37 000.

Van der Merwe says the reason they get away with it is because there are no rules that the costs levied against the debtor are taxed.

“What you have is the creditors going to their attorneys or their collection agents and telling them to collect on the debt but the charges are borne by the debtor.

“This is why the debtors end up paying these astronomical amounts for small loans, because the attorney and collection agency fees are dumped on them.”

The common law in duplum rule says that interest cannot accrue to more than the capital amount. Since 2007, when the National Credit Act (NCA) came into effect, the statutory in duplum rule has been interpreted by institutions in a myriad ways.

“This is why we are going to court: to request a declaratory order that the statutory in duplum is applicable to all the interest, the costs, including the legal fees that are levied against the debtor – irrespective of whether a judgment has been granted.”

Van der Merwe says on a proper interpretation of the relevant sections of the NCA, it would mean that if the debtor is in default under the credit agreement these amounts may not exceed the unpaid balance of the principal debt at the time of default.

“When a consumer is in default all the combined interest, the collection costs and so on cease to run when they reach the unpaid balance of the principal debt.”

“The problem is creditors say legal costs don’t form part of it, or that this isn’t applicable after judgment.”

In addition to the two declaratory orders, asking for clarity on how sections 101 and 103 of the NCA are interpreted, the clinic is also asking that the court declare that legal fees may not be recovered from the debtor unless they have been taxed.

“Nowhere in the National Credit Act is a distinction drawn between legal fees and collection costs.

“What we’re saying is that creditors want to use expensive attorneys to collect on miniscule debts; debtors can’t be expected to pay those fees.

“We shouldn’t allow debtors to be abused in this way – we need to the court to make a ruling.”

Once the court has clarified allowable collection costs, the clinic wants it to order that an independent expert recalculate the applicants’ indebtedness and then order that if there is an overpayment, the money must be repaid to the debtors.

But before consumers get excited about having collection fees and interest repaid, Van der Merwe says prescription might be at play. “You might have trouble in court claiming that money back because prescription would have to be taken into consideration.

“There will be clarity: everyone will know what is expected and people won’t be abused financially as a result of uncertain legal interpretation.”

Van der Merwe says they are not attempting to vilify small cash loan providers, the credit industry or attorneys in general: “We applaud those creditors who are honest, give loans responsibly and collect responsibly: they play an important part in our economy.

“We are not tackling the industry in general – we have an issue with unscrupulous guys who don’t play by the rules. We are not going to assist so called ‘professional debtors’ either, who abuse the system by getting loan after loan at creditors’ expense if there are no merits in their cases.

“We have a problem with creditors who abuse low-income earners by coaxing them into enticing loans which they would never be able to service based on their limited wages.”

In 2016, the law clinic won a landmark case in the Constitutional Court, which found that several practices relating to the abuse of emolument attachment orders were unconstitutional.

“The court also considered the validity of the initial loan agreements which regularly included interest of 60% annually and they were concluded absent of any, or alterna- tively after severely defective, affordability assessments. Those transactions were conducted in breach of section 81 of the NCA which talks about reckless credit.

“Those specific creditors want to extend reckless credit to consumers, who they know won’t be able to repay the loans, and then they abuse the situation by putting debtors into a debt trap that they’ll never be able to get out of.

“People like that shouldn’t be able to shirk responsibility in their collection when they use illegal practices. They cause economic catastrophe in the lives of those clients.”

Van der Merwe says that after the Marikana massacre of August 16, 2012, clear linkages were drawn between the demands for higher wages and the abuses in the credit industry.

“Those workers demanded more money to allow them and their families to make a living because their salaries were severely garnished by credit providers that were instituting emolument attachment orders that were illegal and unconstitutional.

“We are trying to avoid those situations arising in the future, by asking the court to assist us in fostering a healthy and responsible credit environment.”

Aside from political uncertainty, a tough local and global economy and increasing cyber threats, South African businesses are now also stressing about the weather in 2017.

This is according to the latest Allianz Risk Barometer for 2017, which gauges the biggest worries and risks faced by businesses across the globe.

Globally, businesses are becoming increasingly worried about the unpredictability of the global business environment, following a few surprises that cropped up in 2016 with Britain’s decision to exit the EU, and the US electing Donald Trump as president.

“Companies worldwide are bracing for a year of uncertainty,” said CEO of Allianz Global Corporate & Specialty, Chris Fischer Hirs, (AGCS).

“Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite.”

South African businesses are no exception to this; however, the local risk landscape has other things to consider, with natural catastrophes making its debut among the ten biggest risks companies face in the country.

While South Africa isn’t known for extreme weather, the past year has seen a lot of damage done by hail storms and flash flooding – but taking the prime spotlight is the severe drought which battered the country’s agricultural sector in 2016.

Natural disasters are a big worry, but only ranks as the 7th biggest stress among SA businesses. Cyber incidents – such as cyber crime, data leaks and IT failure – still ranks supreme, with 30% of companies ranking it as the top worry for the year.

“Cyber incidents costs the South African economy around R35 billion annually, with the most common threats being from hackers, disgruntled employees, negligence and competitors – so (it’s no) surprise to see this risk ranked first in the country for the second year in a row,” said Nobuhle Nkosi, Head of Financial Lines AGCS Africa.

South Africa also continues to face macroeconomic challenges – including low commodity prices, the Chinese slowdown, and the tightening of US monetary policy – while also suffering from its own internal pressures such as inflation, weak domestic demand and socio-political tensions, Nkosi said.

These are the 10 biggest risks companies face in 2017:
Source: www.businesstech.co.za

Rising political risk carries the threat of disrupting policies aimed at growing the economy, bringing SA closer to a sovereign credit rating downgrade in three months.

Credit rating agencies identified the local government elections and the uncertainty surrounding whether Finance Minister Pravin Gordhan will be charged by the Hawks as the main political risks facing SA.

The country cleared the first hurdle, but the hangman’s noose is tightening on the second one, which has seen the rand take a dive and big money pull out of lending to state-owned entities.

BNP Paribas Cadiz economist Jeff Schultz said the political risk affected meaningful foreign direct investment to SA.

Moody’s has cited domestic politics as the biggest factor that will affect SA’s credit rating.

Co-operative Governance Minister Desmond van Rooyen and Deputy Defence Minister Kebby Maphatsoe, speaking in their capacities as Umkhonto weSizwe Military Veterans Association executives, poisoned the well further by criticising Gordhan.

Capital Economics Africa economist John Ashbourne said tensions within the Cabinet, which posed a risk to a fragile economy, were of great concern to investors.

The rand, like other emerging market currencies, is under pressure from speculation that the US Federal Reserve may raise interest rates before year-end. Unstable domestic politics will add to the pressure.

The Reserve Bank may also resume hiking interest rates if the rand continues to weaken, stoking inflationary fires.

“If a credit rating downgrade does, in fact, lead to continued rand weakness, higher import prices could increase the local consumer inflation rate, leading to more monetary policy tightening by the Reserve Bank,” said Sanlam Investments’ Melville du Plessis.

The ANC losing control of some of the major metros poses another risk, Fitch Ratings warned in August. This increased the chances of the party adopting more populist government policies to tackle rising voter dissatisfaction.

The more populist policies could include costly spending measures that may require that the government breach its spending ceilings, or redistributive regulatory policies that might undermine economic growth.

By Ntsakisi Maswanganyi for BDLive

Banking fraud is here to stay

Internet users are contributing to banking and financial fraud by falling victims to cyber-scams designed to steal cash, says a cyber security expert.

While credit card fraud has declined in SA by 28,6%, according to the South African Banking Risk Information Centre (Sabric), debit card fraud increased 8,3% to the year ended 2015.

The organisation also reported that Card Not Present (CNP) fraud increased by 12,6% to account for 75% of losses relating to South African issued credit cards.

“The problem is not that the cyber-criminals are stealing our information, but rather that we are giving it to them,” says Tjaart van der Walt, chief executive of Truteq Group.

“We click on the links in the phishing emails and we install the ‘free’ apps on our mobile phones. This mechanism to get your banking information is more about social engineering than hacking in the old sense,” he adds.

Trojan attacks
Security firm Kaspersky Lab recently reported that cyber-criminals have turned to Trojans designed to steal financial information and install malicious software on both PCs and smartphones.

“Almost every detected threat in South Africa is an advertising Trojan that can use root rights on the phone,” Roman Unuchek, senior malware analyst at Kaspersky Lab USA recently told Fin24.
Van der Walt says the divergent interests of communication and financial security between mobile phone operators and banks has left a security gap.

“Using mobile technology to secure financial transactions was not part of the specifications or the intended purpose. Three decades later, mobile telephony has turned out to be indispensable to our way of life and there is now a mobile phone in almost every pocket,” he says.
Banks typically use a one-time PIN (OTP) sent to a customer’s cell phone to secure online transactions. However, mobile operators do not want to expose themselves to additional risk.

“In the delivery of a one-time pin, a mobile network operator has very little (in all likelihood no) legal or financial risk. The terms and conditions of use limit their liability and case law exists to reinforce this position. In fact, a mobile network operator will not want to be associated with the authentication of financial transactions at all,” Van der Walt says.

The fact that many banks send the verification to the same mobile number to conduct the transaction may leave customers vulnerable if a cybercriminal has compromised the device.

SIM-swap fraud
“Using the same mobile phone to make a transaction and to verify it [financial transactions], wipes out the benefit of the two-factor authentication. Fraudsters only have to compromise you once in order to break into your bank account and clean it out,” says Van der Walt.

The problem is magnified when customers enact a SIM-swap – or if criminals conduct a fraudulent SIM-swap.

“The identification process followed by a mobile network operator’s call centre agent to verify your identity for the purposes of a SIM swap or network port is as simple as possible. Their interest is to keep us talking and if we cannot make a call, then we cannot talk and consume credit,” says Van der Walt.

“The banks, on the other hand, need the verification process to be as rigorous as possible in order to comply with anti-money laundering and counter-terrorism laws,” he adds.
Van der Walt argued that about 1% of mobile subscribers conduct a SIM swap per month, implying a change in about 870 000 numbers in SA.
While not all mobile subscribers are banking customers, Van der Walt says number porting could place a strain in banks’ ability to keep track of customers.
“Even if a bank had the access to see if a user has ported or not, blocking a transaction purely on the basis of the user changing networks will drive hundreds of thousands of irate customers to their call centres,” he says.
By Duncan Alfreds for Fin24

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