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1 May 2017
Article by: Gia Costella
BKM Attorneys' candidate attorney, Lauren Hastie, discusses the impact of labour brokers on the construction and engineering industries and the new provisional amendments to the labour Relations Act.
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Labour brokers and temporary employment services have an important role to play in South Africa, provided that they are properley regulated, says BKM Attorneys candidate attorney Lauren Hastie.

With many trade unions calling for the banning of labour brokers in the country and the related proposed amendments to the Labour Relations Act (LRA), which were released earlier this year, Hastie says it is important to be aware of the advantages that labour brokers and temporary employment services can bring to a developing country such as South Africa.

“Labour brokers are essentially finding employees who are often poorly educated or skilled and are upskilling, training and providing them with an opportunity to enter the workplace where, ordinarily, they may not have found employment.

“There is a huge market for these services in developing countries, such as South Africa, especially in the construction and engineering fields, where there is a need for a constant stream of blue-collar workers. However, there is currently a disadvantage to this relationship, and case law demonstrates that, at times, temporary employees are being exploited and treated less favourably than permanent employees. Additionally, there are issues involving collective bargaining and trade unions,” she notes.

Hastie believes that, if the proposed amendments to the LRA are in fact implemented, they would provide more favourable circumstances for temporary employees, trade unions and temporary employment services.

“The LRA defines a temporary employment service as ‘any person who, for reward, procures for or provides to a client other persons’,” she says.

Hastie notes that, at any given time, a client has two options – the use of labour brokers or temporary employment services, or the client can avoid these services and conclude a fixed-term contract together with the employee.

“The problem here is, when the client may need to extend that employee’s contract for an extended period of time for any reason, this can create a reasonable expectation by the employee that his or her contract will be extended in this way for an ongoing basis.

“We see many referrals to the labour courts and the Commission for Con-ciliation, Mediation and Arbitration (CCMA) for this exact reason, where an expectation has been created by an employer,” she explains.

For this reason, temporary employment services have a place in our employment system, says Hastie.

“If a client employs through a labour broker, the employees are informed that they will be working on site for a stipulated period of time and, in law, they should not have an expectation that their contract will be renewed after that period, as they are temporary employees,” she states.

Hastie adds that an additional challenge regarding temporary employment services lies in unfair dismissal claims brought against clients, who, in terms of the LRA, are not the employer, even though they are seen in the temporary employee’s eyes as the employer.

“According to Section 185 of the LRA, every person has the right not to be unfairly dismissed, but we see many cases where clients unfairly dismiss temporary employees. These employees then want to take this up with their employer, but the LRA states that the labour broker is their employer.

“The problem is that the brokers are not the responsible party for the unfair dismissal, so this creates a problem for the brokers and the employees,” Hastie explains.

The rights of temporary employees are at times exploited, they are not paid on the same terms as permanent employees and clients often do not follow the correct dismissal procedures in terms of the LRA, she adds.

The proposed amendments to the LRA will tackle these issues and other important challenges.

Proposed Amendments

The proposed amendments feature a sectorial determination of wages, whereby bargaining councils in the various sectors, such as the construction sector, will determine the minimum wages for temporary services as well as what constitutes a temporary service.

In addition, provision has been made for collective agreements involving trade unions to determine minimum wages.

“The principle of joint and several liability has also been expanded on. The current position is that there is only joint and several liability in respect of noncompliance of the minimum standards, where the temporary employment service has contravened an arbitration award, collective agreements or the Basic Conditions of Employment Act (BCEA).

“The proposed amendments expand on this principle to provide for joint and several liability of the temporary employment service and the client where the temporary employee is employed contrary to any employment law,” explains Hastie.

Another important proposed amendment is the provision of the written particulars of employment to temporary employees, which records factors such as the term and scope of work clearly for the employee.

“The provision of written particulars of employment is a current requirement in line with the BCEA and has been included here for clarity,” she says.

The LRA currently states that the employment of temporary employees cannot be in contravention of the provisions contained in the LRA. This is expanded on in the proposed amendments in order to include any employment law, sectorial determination or any collective agreement.

“The proposed amendments also state that temporary employment services will have to be registered,” Hastie adds.

There has been an addition to section 198, a new section 198 A, which pertains to the definition of an employee in terms of temporary employment services as well as the definition of what constitutes a temporary service.

“The proposed amendments state that a temporary employee is one who is employed for a period of six months, where a permanent employee is substituted by a temporary replacement or in the case of an employee conducting a specific category of work for any period of time,” Hastie says.

The specific category of work for any period can be determined by a collective agreement as temporary.

Further, the amendments clarify that the labour broker or temporary employment service is, in fact, deemed the employer of its employees during disputes.

“Also of significance is the proposed amendment which states that, if the services of an employee are terminated as a result of the client avoiding the correct operation of the LRA, this is seen as an unfair dismissal,” says Hastie.

Likewise, the proposed amendments state that a temporary employee cannot be treated less favourably than a permanent employee.

“This is an important amendment for employees, as they want, and have the right to, fair and equal treatment. It does pose a challenge to employers, however, as com-panies often do not want to pay a temporary employee the same as they would pay a permanent employee in light of having to still pay a temporary employment service.

“This could have the effect of indirectly ousting labour brokers because, if a com- pany is required to pay the same amount for a temporary and a permanent employee, they may look for a permanent employee rather than deal with a labour broker,” she says.

Hastie feels that while the temporary employee has the right to be treated fairly, the practicality of this proposed amendment needs clarification.

In Section 198 B, the proposed amendments regulate fixed-term contracts for temporary employees.

“As stated before, there are issues with regard to employers creating a justified expectation together with an employee after extending the fixed-term contract.

“This section says a temporary employee can work for a period of more than six months, or extend the contract, but it has to be for a limited or fixed duration and must be for a justifiable reason – for example, an absent employee or the company having increased work load,” says Hastie.

Should a temporary employee be employed in a fixed-term contract of more than 24 months, he or she will also then be entitled to a severance package of one week for each completed year of service.

“This is not codified in legislation at the moment, so this amendment is quite significant,” she notes.

Section 198 D of the proposed amendments refers to the general application of the LRA and, in particular, the dispute resolution, where a temporary employee refers a dispute to the CCMA or bargaining council, and should the issue remain unresolved, it then goes to arbitration.

“This is the current procedure in most instances,” says Hastie.

The section further provides the definition of what would constitute a justifiable reason for deferring from the provisions throughout section 198, such as seniority, experience and length of service, merit and quantity and quality of work, she explains.

International Trends

The new proposed amendments to the LRA were proposed in view of international trends, notes Hastie.

“The International Labour Organisation has held that banning labour brokers is unconstitutional as this would prevent the establishment of a forum from which many people gain employment,” she says.

Hastie adds that many temporary employees often find permanent work after a few years of experience in temporary employment, as they gain skills, knowledge and experience over time.

“There was also a recent and significant decision in the Namibian Supreme Court, on which our amendments are essentially based. It held that the constitutional objective of regulating labour brokers is more favourable than their total banning.

“This regulation involves the registration of the brokers, the establishment of a board to regulate and enforce the set standards, a code of conduct enforced by the industry and prescribed minimum standards that will ensure that temporary workers are protected,” explains Hastie.

Solutions for the Future

Hastie notes that the proposed amendments in totality are controversial, especially from the trade unions’ point of view, given that the amendments discussed are only a portion of all the proposed amendments.

“The amendments were discussed for months before being released, so there is really no way to know if and when they will be effected. Also, there are some interpretation problems, which will need to be revised before the amendments can be implemented,” she says.

Hastie notes that, because temporary employees are often employed for only a short period, they do not assert their collective bargaining rights by joining trade unions.

Hastie states that it is possible for labour brokers and trade unions to come to an agreement through collective agreements and thereby find an amicable way to work together.

“The purpose of the amendments is not to get rid of trade unions in respect of temporary employment services, as they also have an important role to play in our country for these employees.

“The amendments give the conclusion of collective agreements significant weight and, in my opinion, if businesses, trade unions and temporary employment services work together, then temporary employment services will be regulated efficiently,” she says.

Should the proposed amendments be effected, Hastie says, employers would need to be mindful of these proposed amendments and the manner in which they are required to treat their temporary employees.

“As long as this happens, I believe these amendments are good and fair. One cannot say that a forum which opens the doors to employment for people who may not have been otherwise employable is a bad thing – it just needs to be correctly regulated,” she states.


Edited by: Shannon de Ryhove
Creamer Media Senior Deputy Editor Polity & Multimedia
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