HR Pulse

New labour legislation puts brakes on labour brokers

The new labour legislation that came into effect in 1996 severely hamstrung employers in the way they dealt with their employees. In 2002, labour legislation was again drastically amended to constrain employer rights even further. This year's labour legislation amendments have hammered down the lid on business flexibility.

While the protection of employee rights is a good thing, it is no surprise that employers - in the face of such powerful employee protection - look for alternative methods of hiring employees. This they have been doing through labour brokers - referred to as 'temporary employment services' (TES) - in the Labour Relations Act (LRA).

How does business use a TES?

Business has been using TES staff to do the work that company employees would normally do. The TES has, up to now, freed the client from many labour legislation responsibilities in return for a fee. Trade unions have successfully launched a campaign to oppose the TES system, which culminated in the LRA Amendment Act of 2013.

Even before the arrival of this new legislation, employers have often been on the losing side in cases brought by labour broker employees. For example, in the case of Jonas vs Quest Staffing Solutions (2003 7 BALR 811):

• Jonas was employed on a fixed-term contract by Quest to render services as an insurance agent to Quest's client.
• Jonas was charged with misconduct and given a final warning.
• However, although he did not repeat the misconduct, he was fired because the client "no longer required his services".
• Quest pointed out to the arbitrator that Jonas's contract permitted a dismissal if the client no longer required his services.
• The arbitrator found that, despite this contractual clause, the broker had no right to dismiss the employee without first following the legal procedures laid down in the LRA. The broker was therefore forced to pay the employee for the balance of the fixed-term contract.

In the case of Sibiya & others vs HBL Services cc (2003 7 BALR 796):

• The employees were employed by a labour broker to provide work to a client.
• The employees refused to change to a new shift system introduced by the client.
• When the employees arrived for work the next day to render services under the old shift system, the broker's client locked them out and they referred an unfair dismissal dispute.
• The arbitrator found that the employees had been dismissed for refusing to work under the new shift system. As the employees were entitled to refuse the change, and as no proper dismissal procedures had been implemented, the arbitrator ordered the broker to reinstate the employees with full back pay.

In the case of Springbok Trading (Pty) Ltd vs Zondani and Others (2004 9 BLLR 864):

• The company wanted to transfer a number of its own employees into the employment of a labour broker that was already providing most of the company's employees.
• The company claimed that it had discussed this idea with its employees' trade union and that the union had agreed to the transfer. The union denied this.
• Some of the employees accepted the transfer but those that refused it were retrenched and therefore declared a dispute.
• The Labour Court agreed with them so the employer took the decision on appeal to the Labour Appeal Court where the appeal was dismissed with costs because:

 The discussions with the union had been conducted by the very same labour broker to which the employer wanted to transfer the employees. Thus the person who consulted with the union had a lot to gain by the transfer and could not be seen to have consulted in good faith.

 The employer's stated reason for wanting to implement the transfer was not good enough to justify the retrenchment of those employees who refused the transfer. That is, the employer's alleged wish to avoid the burden of payroll administration did not justify the loss of employees' jobs.

 It was unlikely that the trade union would have agreed to the retrenchment of its members.

 Consultations on the retrenchments were neither completed nor properly conducted.

 The retrenchments were unfair.

Ivan Israelstam is the Chief Executive Officer of Labour Law Management Consulting. He is known as a leading practitioner in labour law and pragmatic labour relations management with many years experience in corporate human resources management. He has an honours degree from The University of the Witwatersrand and an IPM diploma in Personnel Management and in Training. Contact Ivan: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. .