Johannesburg - A tendency to knee-jerk reactions and misinterpretations of labour law amendments relating to temporary employment have led to jobs being lost by 47 percent of workers employed through fixed-term contractors and labour brokers.
This is the initial assessment of the Federation of African Professional Staffing Organisations (Apso), which represents 800 businesses involved in labour recruitment.
Apso has painted a grim picture of company closures and the mass dismissal of workers since the new law came into effect.
In January, several amendments to the Labour Relations Act came into effect. These included changes to the conditions of temporary employment, introduced by the government in an attempt to protect temporary workers.
But the situation on the ground suggests that workers are in limbo as the temporary employment services companies and their clients try to get to grips with what the law really means.
According to the Department of Labour it is now illegal to employ workers as temporary staff for more than three months without justifiable reasons.
In the absence of such reasons, the law requires that labour brokers and their clients “offer the employee an indefinite contract or employment”.
And this is where the problem arises.
“Forty-seven percent of workers employed in this fashion have had their services terminated, 30 percent have been given some form of long-term contract and only 23 percent have been made permanent employees,” said Apso vice-president KC Makhubele.
Some businesses had had to reduce staff on contract as they interpreted the law as indicating they needed to make them permanent or transfer them from the books of the recruitment company.
“This has negatively affected small temporary employment services companies, the majority of which are owned by black entrepreneurs. Many have had to close shop.”
According to the website of the umbrella body, the Confederation of Associations in the Private Employment Sector, labour brokers have been estimated to generate R40 billion a year.
Apso, and other companies represented by umbrella body, has commissioned a study of the effects of the law.
Three months have elapsed since the law came into effect, and the companies want to know if their worst fears about mass job losses will be confirmed by research data.
The companies have also explored the possibility of using some of the first court cases arising from the amendments to request that the law be interpreted for all stakeholders.
“The Commission for Conciliation, Mediation and Arbitration and the government appear to interpret the clause to mean that assignees or temps be transferred permanently to the client after the three months. We do not believe this is the correct interpretation,” said Makhubele.
“The industry obtained a number of legal opinions, including senior counsel opinion, which support our stance.”
Labour lawyer Jonathan Goldberg said the hasty reactions of companies were problematic. “The dismissals were a result of knee-jerk reactions. A lot of people are losing jobs. Again, the interpretation of the law has to be correct. We need to get certainty for employers.”
The CCMA said employers who terminated contracts under the guise of an inability to afford permanent labour could be deemed unco-operative. “This... may be perceived as an attempt to circumvent the new law and may constitute a new category of dismissal.”
The CCMA advises affected workers to seek recourse for unfair dismissal from itself or a bargaining council with jurisdiction.
But if the labour brokers and employing companies prove to the court that they had no permanent need for the service provided by the dismissed workers, it may be hard for affected individuals to prove a case of unfair dismissal. This means they will join the pool of more than 25 percent unemployed South Africans whose prospects of being employed are bleak.
The Federation of Unions of South Africa (Fedusa) has a different take, saying labour brokers are simply resisting change and orchestrating mass dismissals to prove they are right.
This particular amendment was one of the most debated legislation proposals before its signing off.
Labour unions supported pushing for the protection of temporary workers who were believed to be the most vulnerable and expected to perform the same work as permanently employed individuals without the basic benefits.
Cosatu pushed for a ban on labour brokers, advocating an environment where employers would deal directly with workers.
“The act was written in such a way that it allows for temporary employment of up to five years, provided employers can prove there is a genuine temporary project. It was expected that the initial reaction by the temporary employment services would be negative,” said Fedusa’s chief negotiator at Nedlac, Leon Grobler.
“There is a genuine need for permanent employment; some workers cannot buy cars and houses. We believe the law will self-correct, as we have seen in the past, when there’s great opposition to sectoral determinations.”
The law was being deliberately misunderstood. “All that it says is that after three months you are now deemed employed by both and you can litigate against both. What happens is that the people were simply sent back to the brokers by employers. Now, after three months if that happens they have recourse.”
Makhubele said Apso had been calling for regulatory changes and supported the effort by the government to clamp down on rogue recruitment agencies who exploited the vulnerable, as well as to improve the livelihood of these workers.
“We contributed to the making of these laws through our industry bodies and are fully informed of the intention of the law, not the interpretation as it is being applied.”
Cosatu acting spokesman Norman Mampane said unless the economic structure “moved away from profiteering, the situation will remain in a yo-yo mood for a while”.
Labour Bureau