The Department of Rural Development and Land Reform (the Department) recently published a new policy document entitled “Strengthening the Relative Rights of People Working the Land” that proposes drastic changes to ownership structures on commercial farms. Its most salient feature is that of proposing a system of equity sharing on farms, of which the constitutionality is questionable.

In justifying the need for the policy, the Department describes the Constitution, the Freedom Charter, the National Development Plan and “Agenda 21” of the United Nations as the “broad context for all rural development and land reform policies”. In addition, the Department contends that the “tension to which these provisions [contained in the aforementioned broad context documents] are particularly pertinent… is the necessity to address historical land hunger, which could be absolute in most instances; and, extreme concentration of land ownership and control in a few hands, on the other hand.” Hence in a bid to correct the above and to “de-racialise South Africa’s rural economy, democratise the allocation and use of land and ensure food security as well as food sovereignty for the country”, the policy proposes a share equity scheme on commercial farms. This means that each farm owner will retain 50% of the ownership of the farm and will cede 50% ownership to workers. The workers will, according to the policy document, acquire equity shares in the farm depending on their length of service. Workers who have been employed for 10 years get 10% of the workers’ half of the business – that is, 5% shared amongst however many employees there are. Those employed for 25 years get 25% of the workers’ half i.e. 12.5%, workers employed for 50 years get 50% of the workers’ half i.e. 25% and those who have worked for less than 10 years do not receive anything.

It is unclear how this policy will be incorporated into legislation. As the policy stands, it lacks the force of law and is thus unenforceable; particularly in light of section 25(1) of the Constitution which provides that “No-one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property“. Will new legislation be enacted in order to give the demands of the policy some legal authority? The policy makes reference to the Extension of Security of Tenure Act 62 0f 1997, its current Amendment Bill of 2013, and the Labour Tenancy Act 3 of 1996, but is unclear whether the policy stipulations will be incorporated into either. In any event, it is difficult to envisage the policy, should it ever be incorporated into law, passing the constitutional test due to its aim of acquiring 50% share equity without reference to any compensation. Section 25(2) of the Constitution allows expropriation in terms of a law of general application for a public purpose or if in the public interest – and subject to compensation.

The policy seems to be unclear about the real motive and purpose behind the proposals. Despite references to living and working conditions in commercial farming areas being irreconcilably marginalised, the protection of farm workers and their families (seemingly in context of labour rights, tenure security and apparent land rights) is touted as the primary objective. Does the policy then seek to improve labour rights of farm workers? Must the reference to the Extension of Security of Tenure Act and the Labour Tenancy Act (both of which are concerned with tenure security on farms) be taken to mean that the share equity scheme is seeking to address working conditions of farm workers? Moreover, does the policy imply that the right to fair labour practices must be interpreted to mean that employees have a right to their employer’s business? Is that the only way in which the right to fair labour practices for farm workers can be interpreted?

The policy also mentions that the share equity scheme should be built into the “current draft bill” – presumably the Extension of Security of Tenure Act Amendment Bill. This is to assist government in managing unintended consequences to the reopening of land claims and the introduction of the exceptions to the 1913 cut-off date for the Khoi and San descendants’ historical landmarks and heritage sites. Once again, the policy is unclear as to whether its focus is on land restitution or tenure security. There is a difference between the beneficiaries of land restitution and those of tenure security. Land restitution would cater for individuals who once held property but were dispossessed of the property after 19 June 1913. Tenure security is geared towards people living on land that belongs to land owners in rural and peri-urban areas. The Extension of Security of Tenure Act protects the basic human rights of such people, subject to reasonable limitations.

The policy proposal further provides that families can only stay on farms if they adhere to certain ‘duties and responsibilities’. This takes away the tenure rights provided by the Constitution in section 25(6) which states that:

A person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to tenure which is legally secure or to comparable redress.

The policy makes the tenure conditional upon these unknown sets of duties and responsibilities, despite the Constitution providing a basis for entitlement to tenure security. This appears to be unconstitutional, apart from the fact that it creates an incentive for farmers to terminate lease agreements and employment contracts after nine years so that employees do not qualify for the share equity scheme.

This is not to suggest that share equity schemes as a concept cannot succeed. Similar schemes that are successful have, however, been underpinned by “preparatory work, including opening communication lines, managing expectations, financial education and promoting productivity and competitiveness“, according to experts. Where share equity schemes have worked, they have involved substantial private investments. For example, the Solms-Delta Wine estate boasts an equity-sharing scheme that tackles poverty and dependency cycles amongst its farm workers. Exclusively funded from private finance without government involvement, the equity share scheme is in the form of a trust, which provides education and healthcare for the farm workers. The trust also provides job skills training, as well as life skills training for the farm workers. In the case of Solms-Delta, the farm workers as shareholders are also entitled to a share of whatever profit the business makes. There are other examples of successful share equity schemes, mostly from the Western Cape. Some received government subsidies while others are privately funded, but they work far differently from the model proposed in this policy. Land reform is a constitutional imperative, but poorly implemented policies will arguably result in job losses and threaten food security.

The policy as it stands, fails to delineate objective rights for farm workers and is unclear as to what issues affecting farm workers the policy should address. Political parties from across the spectrum have expressed their opposition to the policy, alongside business and farmers’ agricultural unions. Even the governing ANC has reportedly questioned the constitutionality of the policy’s proposals. Hence, it is unlikely that the proposals should come into fruition. Ultimately, it should be borne in mind that South Africa, as a constitutional democracy founded on fundamental freedoms, provides for the security of rights against unlawful and arguably unnecessary state intervention. All laws passed in Parliament must stand up to constitutional scrutiny. It is doubtful whether the “Strengthening the Relative Rights of People Working the Land” policy, should it be incorporated into law, would meet the requirements of section 25 of the Constitution.

Summary of paper delivered at the “Colloquium on Land Reform and Food Security” hosted by the Konrad Adenauer Stiftung and the Faculty of Law of the North-West University (Potchefstroom Campus), 19 – 20 June 2014, Muldersdrift.

By Phephelaphi Dube, Legal Officer: Centre for Constitutional Rights