Although many labour brokers are now stating that the Constitutional Court’s 2018 ruling amounts to a ban on labour broking and will have serious implications for the whole of the South African labour market, it is now our law.
It must be said that there is an unfortunate situation in South Africa where labour brokers continuously move placed workers, creating uncertainty. The workers themselves have very little power to negotiate their wages and job descriptions. The court also said that the previous situation did not manifest employment security.
In addition, placed workers could not demand equal pay from client employers and were invariably financially discriminated against. A situation existed where, if an employee was dismissed by a client, they were then usually retrenched by the labour broker because there was no longer work for them. Invariably, placed workers in the previous dispensation were unable to meaningfully participate in collective bargaining.
It was said that “the terms of the employment are agreed to between the temporary employment service and the client before they are placed, and they are usually too vulnerable to raise grievances through strikes”. Our labour law arises from our Constitution, which states that there should be a right to fair labour practices in South Africa.
Section 23 of our Constitution outlines this succinctly. Therefore, the Constitutional Court had jurisdiction to hear the dispute over who was the employer.
It should be noted that even to this day, a large portion of South Africa’s workforce is still employed through temporary employment services. It was stated in that court case in 2018, more than 700 000 workers were placed on a daily basis.
It should be understood that the placement of these workers is now rather contentious.
I still strongly believe that most of the placed workers are not aware of their rights and invariably they are not unionised because of the lack of knowledge within the industry. Other rather onerous implications might emerge. For instance, I recently had a dispute where individual so-called labour broker employees did not have the same terms and conditions as permanent employees at the client.
We were about to embark on a Labour Court case, as some of those labour-broker employees would have been on the client’s pension fund for over a decade.
Furthermore, the labour broker did not pay double on public holidays and was short-paying their staff for sick leave.
These calculations grew into enormous sums of money for the over 100 staff who were placed at the client. Eventually, a settlement was reached where some back pay was put into the pension fund and a cash amount was paid to make up for the shortfall on public holidays.
If a dispute of this nature landed in court, it could take about two to three years and the legal costs would become exorbitant. It is incumbent on all temporary employment services clients carry out a reassessment of the sitution so they are completely aware of the eventual consequences.
For instance, should the client wish to sell their business after having employed the staff for 10 years, the potential severance package to each staff member stretches back to the very first time when they had completed three months of employment at the client. The new purchaser of the client business will take that expense into account in calculating the true value of the business.
South African labour legislation is becoming more and more onerous and, to a large degree, has created a situation where employers are not keen to embark on the employment relationship. I’m hearing from my employer clients that they would rather consider mechanising and computerising their systems as opposed to employing more staff.
Laws such as this “deeming” provision have created a need to rather import finished goods as opposed to manufacturing. The latest figures in South Africa showed that manufacturing has been on a downturn over the last few years. It could be said that our Labour Relations Act and indeed our Basic Conditions of Employment Act has created the push to get our manufacturing done in other jurisdictions.
* Michael Bagraim.
** The views expressed here are not necessarily those of Independent Media.