Labour broking could face an 'indirect ban'

Labour broking could face an 'indirect ban'

SERVICES NEWS

Business LIVE - May 15th 2012, 08:30

While an outright ban on labour broking is not on the cards in SA, and while some in the industry are embracing the proposed amendments to two labour laws, the amendments could signal an "indirect ban" for many in the industry, according to Anastasia Vatalidis, head of employment law at Werksmans Attorneys.  

"The proposed amendments to the Labour Relations Act could over time have the effect of indirectly banning the practice of labour broking for many in the industry," Vatalidis said.

"That effect would almost certainly be reinforced by the proposed changes to the Basic Conditions of Employment Act (BCEA), which will further criminalise certain forms of contraventions," she added.

Cabinet approved amendments to both acts in March following public debates on the issue of labour broking.

"Although labour broking is not the only matter dealt with in the amendments, it has become the focal point of the debate on labour law change," Vatalidis said.

While the amendments did not ban labour broking, they appeared to have resolved the long-running controversy over them, she said.

"The stringent regulations, although welcomed by some players, give brokers and their clients little leeway and this could make the practice less attractive.

"If a labour broker assigns an employee earning below the threshold prescribed in the BCEA to a client for more than six months, that employee could be deemed to be the employee of the client."

Vatalidis said that in such a case, the person had to be employed on terms no less favourable than the terms applying to the client's other employees doing the same or similar work, unless there was a justifiable reason for the differentiation.

The only exception to the six-month rule would be when employees were employed to do work that fell under the category of "temporary services", she said.

"The draft bill contemplates that the minister will categorise certain types of work as temporary services. Once specific work has been categorised as a temporary service, the employees engaged by a labour broker to perform that work will not be deemed to be the employees of the client merely by virtue of them having been assigned to that client for more than six months."

However, it was not yet clear what work would be regarded as temporary versus "indefinite" work, Vatalidis said.

"Although the minister of labour intends to invite representations from the public on the categorisation of temporary services, the lack of clarity on this critical issue could make many a labour broker anxious."

More cause of anxiety among brokers and their clients included other proposed changes affecting employees on fixed-term contracts, such as severance pay, she said.

"When terminating the fixed-term contract of a person employed for 24 months or longer, an employer will be obliged to pay at least one week's remuneration for each completed year of service.

"Importantly, the payment of a severance package will not protect the employer, whether it be the labour broker or the client, from a claim of unfair dismissal should the fixed-term employee hold the view that he or she had a legitimate expectation of continued employment."

Vatalidis said that together, the proposed changes to the acts would make labour broking a highly regulated industry.

"If passed into law, the amendments may over time negate the use of labour brokers who provide employment for over one million people within the work force," she concluded.