Employment and human rights

Approach and structure

The majority of Northam's employees are located at the Zondereinde mine, which is currently the company's primary revenue-generating asset. Each operation has a senior manager with oversight of human capital issues and report to their respective general managers. The general managers and the chief executive officer are ultimately responsible for the people management function.

Board level oversight of this function rests with the social, ethics and human resources committee of the board which is responsible for overseeing that employees are equitably and fairly rewarded, also relative to their peers in the industry.

More specifically the committee has oversight of the employment contracts and remuneration packages of senior management, ratifies their appointments and approves any short-term incentive schemes and bonuses, and the granting of shares in terms of the rules of the Northam Share Incentive Plan.

The committee is also responsible for setting mandates with regard to negotiations with trade unions and oversees implementation of and compliance with the requirements of the Employment Equity Act and the administration of the group's share incentive scheme.

The information presented below relates to the Zondereinde mine. The Zondereinde mine-based human resources department is responsible for driving the implementation and achievement of human resources strategy including all aspects of the Mining Charter.

Other areas of focus are:

• training and development including mentorship and talent management;
• recruitment and retention, including succession planning and implementing career paths;
• implementing employment equity programmes, including affirmative action measures;
• labour relations, including collective bargaining;
• human resource development with specific emphasis on performance; and
• stakeholder and compliance management.

Legislation governing employee relationships

Employment practices and policies are governed by legislation and regulations which have evolved over many years in South Africa's sophisticated labour relations environment. These include:

• the Mine Health and Safety Act;
• the Employment Equity Act;
• the National Skills Development and Skills Development Levies Act;
• the Basic Conditions of Employment Act;
• the Labour Relations Act;
• the Mineral and Petroleum Resources Development Act; and
• collective bargaining and recognition agreements with organised labour.

Collective bargaining

Northam upholds the basic labour rights enshrined in the Fundamental Rights Convention of the International Labour Organization (ILO) relating to collective bargaining and ensures the implementation of fair employment practices. The ompany prohibits forced, compulsory and underage labour, including any form of discrimination based on, inter alia race, religion, age, disability or political affiliation, against the background however, of seeking to ensure that it remains in compliance with South African affirmative action and black empowerment legislation.

During the year no incidents of discrimination were identified.

The rights to freedom of association and collective bargaining are entrenched within South Africa's legislation and the country's constitution. Northam supports employees' rights and acts in accordance with the South African constitution, prescribed legislation, industry compacts and recognition agreements with unions. Minimum notice periods in respect of operational changes and rates of pay for men and women are prescribed by legislation. A sexual harassment policy is in place which prohibits harassment. An issue of particular concern in the recruitment and retention of female employees in order to comply with the requirements of the mining charter.

As a minimum, wages and other conditions of service are negotiated on an annual basis. Recognition agreements with unions also regulate aspects such as participation in safety and health structures and disciplinary and grievance procedures.

Unions, registered with the Department of Labour (DoL), that represent 15% in the category 2-10 bargaining unit receive organisational rights which include:

• access to the workplace allowing unions who qualify to recruit members, host meetings on mine property outside of working hours;
• access to payroll deduction facilities;
• permission to elect 12 representatives per 1 000 employees; and
• representatives are allowed to take paid leave to carry out union-related duties.

Once a registered union reaches a representivity threshold of 33.3% within a bargaining unit, it is allowed/required to bargain for that particular unit. Collective bargaining is carried out between the company and registered unions that meet the required threshold and parties are required to engage with each other in the utmost good faith for the purpose of concluding a satisfying agreement on matters such as wages, substantive conditions of service and other matters of mutual interest.

The company recognises that it is appropriate to engage with any registered employee body which meets these thresholds.

The trade union Solidarity was given notice of termination of its recognition agreement in terms of prescripts contained in the recognition agreement in October 2011. The NUM is currently the representative union at Zondereinde as they represent the majority of employees in the category 2-10 bargaining units. An agreement was reached which allowed Solidarity to form part of the wage negotiation processes for the category 9 and 10 bargaining units in F2012.

Union representation at the end of F2012

Union	Cat 2-8		Cat 9		Cat 10		Total
Complement	5 968		398		387		6 753
NUM	4 981	83.46%	129	31.16%	119	30.75%	5 224	77.36%
Solidarity	32	0.54%	152	38.19%	154	39.79%	338	5.01%
UASA	5	0.08%	22	5.53%	26	6.72%	53	0.78%
Total	5 018	84.08%	298	74.87%	299	77.26%	5 615	83.15%

1. ^*This table only represents employees in collective bargaining units

Northam upholds the right to exercise freedom of association and collective bargaining by employees, contractors and suppliers through compliance by the company, its contractors and suppliers with South African legislation and the company's own policies.

Booysendal is currently still in the construction phase and does not yet have a permanent full-time workforce – for this reason it does not have any agreements in place with organised labour.

The management of Northam is deeply concerned about the recent violent conflict in the platinum sector and keeps a watching brief on developments at its operations. Naturally the company recognises that this conflict could spread and that it is not immune to any such activities and remains vigilant to any new developments.

While Northam will engage with any registered union which meets its thresholds, NUM is currently the representative union at Zondereinde.

Establishing and maintaining constructive relations with unions

While 37 days, R380 million in revenue and R65.1 million in wages overall were lost during F2011 as a result of industrial action following a dispute related to wages, no days were lost as a result of industrial action in F2012.

However, the industrial relations climate in South Africa continues to be dominated and flavoured by political developments. While F2011 was dominated by protracted and acrimonious industrial action, wage negotiations for F2012 resulted in the conclusion of a two-year agreement in November 2011. The agreement is valid until 30 June 2013.

In the absence of the annual negotiations around wages and basic conditions of employment, Zondereinde focussed on cementing the structures of our employment equity and training forums, the housing and living conditions forum and the CSI/LED forum. During the year, these structures evolved into more effective platforms for dialogue between management and the employee community. On the recommendation of an external, independent, third-party mediator, Zondereinde management and the NUM entered into an engagement charter to strengthen the relationship between management and recognised labour unions.

Employment practices

Northam is committed to fair and progressive employment practices, providing long-term employment opportunities with the scope for employees to develop their potential. Competitive remuneration practices take into account the nature of the operation, the innovative mining practices as well as the remote location of its operations.

Benefits provided to full-time employees include:

• membership of pension and provident funds;
• death benefits;
• access to medical care;
• housing and living-out allowances;
• study assistance; and
• maternity and paternity leave.

The Toro Employee Empowerment Trust, which was established in August 2008, represents the interests of some 98.7% of the company's Zondereinde employees. During F2012 the company contributed R10.8 million (F2011: R13.6 million). In F2012, the net income of the trust was R3.7 million (F2011: R3.4 million). The net interest of the beneficiaries at 30 June 2012 was R95.4 million (F2011: R81.4 million), with the first payouts to employees planned for F2013.

Performance F2012

Employment

At the end of June F2012, Northam employed 11 631 people. At Zondereinde the company employed 6 861 full-time, permanent employees and 1 940 long-term, permanent contractors and 362 short-term contractors at Zondereinde. At Booysendal, the company employed 55 full-time, and 2 413 contractors. It is expected that the permanent employment at Booysendal will increase to 1 200 once the mine reaches steady-state production in F2015.

At the end of June 2012, 19% of permanent employees at Zondereinde were drawn from the Limpopo province (F2011: 19%), while a further 49% (F2011: 47%) were from other provinces in South Africa, and 32% (F2011: 34%) from neighbouring countries. While the company does not discriminate against foreign labour, Northam remains committed to increase the local labour representation at both Zondereinde and Booysendal to facilitate the allocation of wealth and skills to those most affected by its operations.

Labour turnover at Zondereinde was 7% (F2011: 7%) with a total of 461 (F2011: 487) people leaving the employ of the company during period. These 461 departures may be ascribed to resignation (198), misconduct (147), incapacity (59) and death in service (57).

Local employment at Booysendal

Located in a region of little economic activity, a particular issue of concern at Booysendal is the allocation of jobs. As a new business in the area, the company endeavours to engage with local community structures, including the Greater Tubatse and Greater Sekhukhune district municipalities on an ongoing basis.

As part of Northam's commitment to the Mining Charter and the Booysendal social and labour plan, the company is fully committed to developing skills and promoting economic activity amongst the communities in which their operations are located. Although there are limited vacancies currently at Booysendal mine, going forward, the mine will require employees with the necessary skills and experience particularly in the fields of engineering, trackless mining and plant operation.

In order to establish the level of required skills in the nearby communities and to identify individuals who possess these skills, Booysendal has developed a dynamic skills database. This skills database was compiled by way of hosting several open days to give community members from the surrounding Greater Tubatse and Taba Chweu local municipal areas the opportunity to fill in an individual profile summary and submit their details for inclusion in the database. The skills database is, and will continue to be used by contractors and the mine as a reference to source employees from the local communities.

Certain community members who attended these open days were interviewed to establish if they possessed the necessary skills and qualifications for employment at Booysendal. Those who qualified were asked to undergo psychometric tests and medical examinations and received training in preparation for job opportunities during the construction phase. All these individuals have been, and will continue to be employed by the main contractor upon completion of their training.

Northam started employing people at Booysendal in July 2010. It is envisaged that a total number of 1 200 people will be employed once the mine reaches steady-state production in F2015.

Employment equity and transformation

Employment equity legislation in South Africa promotes equal opportunity and fair treatment through the elimination of unfair discrimination and the implementation of affirmative action measures to redress the imbalances of the past. Greater participation of black South Africans and women in the economy is needed and the Mining Charter requires that HDSA employees make up 40% of management by 2014.

In line with legislative requirements, specifically the Mining Charter and the Employment Equity Act, the company has an employment equity programme in place. Equity plans and progress at the company's operations are submitted to the Department of Labour (DoL) every year.

The attraction and retention of HDSAs and women in management continues to be a significant challenge for the mining sector. Incentive schemes such as retention bonuses amongst others are implemented across the sector resulting in smaller companies often not being able to compete with the packages offered by larger companies.

In addition, the remote location of the operations are a significant deterrent for younger generations of women and HDSAs, and it remains a challenge to fill core positions with the necessary skill sets from these groupings. This is exacerbated also by the fact that HDSA and women university graduates appear to be absorbed by companies in locations closer to urban centres.

At Northam, transformation has taken the form of legal compliance and maintenance as well as constant improvement of relationships between organised labour and management. Structures have been defined and managed closely to ensure efficiency and focus in the implementation of key initiatives.

The employment equity and training committee, established in F2011, consistently monitors the company's employment equity plan and workplace skills plan. Key successes have been achieved in areas relating to communication, transparency in reporting and monitoring legal compliance targets.

At the end of F2012, the representation of HDSAs in management for the group was 35% (F2011: 45%).

Women in mining

In line with the requirements of the Mining Charter, priority is given to the attraction, retention and development of HDSAs and women. Engagement and consultation with female employees at Zondereinde are driven by the employment equity and training committee as well as by way of consultation with local branch structures of the NUM. The major barriers and challenges identified through these structures are:

• the suitability of personal protective equipment (PPE) that suits the needs of women;
• suitable arrangements for the unique needs of women underground; and
• perceptions surrounding women in mining.

To address these challenges, Northam continues to implement the following interventions:

• sourcing suppliers that are able to provide suitable PPE for female employees;
• identification and discussion of the unique needs of women in the workplace by the employment equity and training committee to identify and implement suitable arrangements; and
• inclusion of issues around perceptions and attitudes of both male and female employees in a diverse workforce.

As at 30 June 2012, 473 women were employed of which 257 were working in the core disciplines of the mining, metallurgy and engineering. During the year, women made up 7% of the workforce at Zondereinde.

It is Northam's policy to ensure that remuneration is based on skills, expertise and experience, and not on race or gender. There were no material differences in the range of minimum wages of men to women during the year. The standard entry level and minimum wage entry rates include a service increment of 0.5% for each year of relevant, proved experience.

Training and development

Northam has distinguished between training and development to ensure that individuals are supported to improve their competence and knowledge in the workplace and also to grow as individuals. Training includes:

• legislative training (skills, health and safety);
• learnerships;
• portable skills; and
• external specialised training.

Development includes:

• bursaries and study assistance;
• Adult Basic Education and Training (ABET)
• mentorship
• succession planning
• management development programmes

In F2012, the company spent a total of R15.4 million on training and development at Zondereinde.

Breakdown of training expenditure (F2012)

Training	Expenditure
ABET	R362 290
Library	R109 625
Learnerships	R571 818
Bursaries	R265 469
Study assistance	R29 731
Skills development	R1 279 053
Safety training	R59 707
Legal training	R1 045 160
Seminars	R75 628
Cat 9-13 trainer labour	R5 981 481
Category 2-8 trainer labour	R5 162 594
Stores (training centre and systems)	R493 342
Total:	R15 435 898

Zondereinde skills audit and performance management

As reported in F2011, Zondereinde conducted a skills audit in July 2010. The audit included the review and verification of all qualifications of Zondereinde employees. It further required employees to declare any disabilities, if these are applicable, and provide necessary supporting documents to confirm such.

The results of this audit assisted the company to develop an accurate workplace skills plan where critical, core and scarce skills within the business need to be represented. This skills plan includes the development plans and training priorities within each department and section, where applicable, in the business.

Workplace skills development plans and training reports, which identify Northam's future skills needs and training requirements, are submitted to the Mine Qualifications Authority (MQA) each year as required by legislation.

The workplace skills plan is used to target specific training and development interventions for particularly HDSA and women employees to assist with the achievement of the targets in the Mining Charter scorecard as well as internal company targets set in the SLP.

Zondereinde's performance management system includes all aspects of performance, including legal compliance. As of July 2012, the system is aligned to annual salary increases of employees. Employees participate in crafting the job-related aspects of their contract to ensure that realistic targets are set. Performance coaching and feedback is done quarterly to measure which objectives have been met successfully and to highlight challenges which hinder performance as well as to identify development requirements.

During the year 238 employees underwent behaviour-based performance management training as part of their performance and development. At the time of writing, 226 of these reviews were finalised.

Skills development plans for individuals are based on the skills requirements of the company and the development objectives for targeted individuals. Emphasis is place on historically disadvantaged South African (HDSA) employees to assist the company with maintaining a pool of relevant and effective skills amongst HDSA employees.

Literacy

The literacy level at Zondereinde is estimated to be 75.5% with 5 180 employees having completed seven or more years of formal and structured schooling. A total of 226 (3.29%) of employees have never had any form of schooling, 3 238 (47.19%) have been educated to ABET levels 1-4 (Grade 4 – 9), 3 089 (45.02%) have been educated to Grade 10 – 12, 263 (3.83%) of employees have obtained certificates or diplomas with 45 (0.66%) having obtained post graduate degrees.

ABET is available to all employees on a part-time voluntary basis. The ABET facilitation group consists of six full-time facilitators. In total, 800 employees per semester can be accommodated at the ABET facility on a parttime basis. The current ABET facility comprises three computer rooms with 100 computers, two facilitation rooms and a new library, built during the previous financial year and is equipped with four computers with internet access so participants have access to research resources. The library is fully equipped with reading material which includes books, subscribed mining and engineering magazines and newspapers.

The ABET programme is marketed on a regular basis to encourage employees to participate in ABET at Zondereinde. ABET facilitators are required to develop campaigns that make use of various communication systems including the Zondereinde radio station - Radio Vuka - and printed materials such as posters and brochures.

The Zondereinde ABET facility received full Mining Qualifications Authority (MQA) accreditation following an audit by the MQA in September 2010. The entire ABET syllabus, all learning materials as well as the competency of the ABET facilitators were evaluated as part of the audit. Recommendations made by the MQA regarding minor modifications to the syllabus to include mining industry-related subjects to create a platform for further careerspecific development and the further integration of career paths following the completion of ABET were taken on board by the company.

The new ABET syllabus at Zondereinde comprises:

• language, literacy and communication;
• mathematical literacy, mathematics and mathematical sciences;
• natural science;
• occupational health and safety;
• overview of mining; and
• mining/metallurgy skills.

A total of 752 learners were registered to attend ABET during the year (F2011: 952) with 301 completing the curriculum and participating in examinations (F2011: 462) – 179 in the first half of the financial year and 122 in the second half. The overall pass rate was 48% with 90 (50%) employees successfully obtaining ABET qualifications in the first half of the financial year and 53 (43%) in the second half. A total of 41 employees received their General Education and Training Certificates (GETC) in F2012.

Learnerships

At Zondereinde, Northam offers learnership programmes to provide employees with the opportunity to improve their skills through a combination of studying and practical, on-the-job training. Learnerships play an important part in progressing employees' careers as they lead to qualifications recognised by the Sector Education Training Authority (SETA) and are registered with the Mining Qualifications Authority (MQA). In F2012, the company spent R572 000 on learnerships. In total, 58 employees participated in learnerships in various fields during the year.

Bursary and study assistance programmes

A bursary and study assistance programme (assistance to employees who are employed by the company, including in-service bursars) is based on the skills required by each department and is therefore department-driven. In F2012, Zondereinde provided bursaries to seven people, at a cost of R229 000, in the fields of mining engineering, electrical engineering, chemical engineering, analytical chemistry and financial management.

At Zondereinde, Northam has in place the ‘Dinaledi’ Stars scholarship programme which provides assistance to local school girls in Grade 10 to 12. The top three students in Maths and Science in each grade are selected and bursaries to tertiary institutions of their choice are awarded to scholars once they matriculate. Each year, three new Grade 10 pupils are selected to feed the programme.

In addition, four bursaries are awarded to promising second year students from universities across South Africa until they complete their qualification. Northam is currently supporting four students in the fields of mining engineering, chemical engineering, electrical engineering and mechanical engineering.

Housing and living conditions

The requirements set out in the MPRDA underpin the overall intent and direction taken by Northam in respect of provision of housing and accommodation for employees and contractors.

A housing forum, comprising representatives of organised labour and management, has been established at Zondereinde to actively direct the housing and living conditions objective of the company.

The majority of Northam's workforce come from labour-sending areas and have indicated a clear preference not to be permanently housed in the area and will return home. In F2012, 3 501 full-time employees (59% of employees who form part of category 2 - 8) were accommodated in hostels provided by the company, while some 2 221 employees in this category opted to receive living-out allowances. Many employees have their primary homes and families in other countries, other provinces or other regions of Limpopo province. To deal with the continued need for hostels, the company is in the process of converting portions of the hostels into lower density accommodation. Renovations are nearing completion which will provide 992 employees with single accommodation.

Meals served at company-provided accommodation are prepared according to a meal plan drawn up by a clinical dietician with the energy, macro and micro nutrient content rigorously monitored. On average 9 000 meals are served to employees per day.

Northam's accommodation and housing strategy is largely aimed at promoting affordable housing and home ownership. As part of its approach, the company has in place the Mojuteng housing project to help employees to own their own homes. In total, 308 housing units have been completed to date with 200 units currently in use.

Supervisory and management employees are largely accommodated in company-provided housing, which is a significant draw-card for employment in a country and region where there are housing shortages.

At Booysendal, full-time employees receive living-out allowances. Accommodation and meals are provided to contractor employees by the relevant contractors.

Mojuteng home ownership scheme

The Mojoteng home ownership scheme focuses on making home ownership affordable for employees. It does this by offering employees a home loan, a debt consolidation facility and a structured housing subsidy. This helps free up disposable income and results in higher home loan approval rates of around 70%.

During the year, around 140 housing units in Mojuteng were sold to employees, bringing the total to 240 since inception of the housing scheme. In F2012, Northam spent R44 million on this project (F2011: R56 million).