One alternative way to deal with an increasingly challenging labour environment
South Africa is known for having one of the strictest labour legislations in the world. The government is faced with the challenge of creating an enabling environment for investors that will lead to job creation while at the same time ensuring that rights of workers are protected.
South Africa is known for having one of the strictest labour legislations in the world. The government is faced with the challenge of creating an enabling environment for investors that will lead to job creation while at the same time ensuring that rights of workers are protected. Labour unrest in mining and manufacturing especially has become a common occurrence which has put employers in a difficult position. To make matters worse the local and global economic outlook is negative in the short to medium term, meaning that human capital – constituting a significant expense for most companies – is increasingly subject to cost cutting reviews and exercises.
So how can employers still have a flexible labour force without falling foul of the labour legislation?
Fixed Term Contracts – Still the way to go?
For employers, fixed term contracts are a favourable alternative to permanent employment as they provide the flexibility to scale up or down with minimum labour risk. These contracts, which typically range from 6 months to 5 years, are common practice - even in the public sector. The challenge however is that labour laws are continuously reviewed and amended to ensure this form of employment is not abused. In the past some employers have circumvented the system by continuously renewing contracts in order to escape liability for full benefits. It needs no explanation that this practice is not sustainable going forward.
Contractor Management – An alternative solution to have a flexible
While it is absolutely essential to follow labour laws employers could benefit from being a little more open-minded about finding innovative solutions to this challenge. One of the ways of overcoming it is through the use of reputable contractor management companies. Certain skilled white colour workers such as engineers and IT specialists are attracted to the prospect of selling their labour on an atypical basis because of higher earnings and more flexibility. For employers this is an ideal arrangement as workers are only paid for the time they work and contractors can be terminated when they have run their course. The contractor, on the other hand, benefits from access to group medical aid, retirement and free income protection – just as he/she would as a permanent employee. This creative solution therefore can provide both employers and contractors with a win-win situation – eliminating the need to circumvent those tricky labour law challenges.
Would you like to find out how EOH Human Capital can assist your organization to deal with fluctuating labour demand? Drop us a note at
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To find out more about EOH Human Capital, visit our website at www.eohhumancapital.co.za
EOH Human Capital has a perfect model to ensure labour law compliance, maximum take home pay for contractors and a flexible staffing model. Through its internal tax and labour law and financial experts the company is able to optimally structure salaries, offer group benefits, provide financial advice and act as an employer to the contractors for the duration of the contract. Not only do all parties benefit but EOH typically assumes the labour risk as it is perceived to be an employer in this type of arrangement.
