The amendments to the Labour Relations Act will have far reaching effects
On January 1st, 2015 the Labour Relations Amendment Act came into force and it brought significant changes to the current Labour Relations Act, especially in respect of typical employment relationships, and requires employers to comply with the amendments by March 31st, 2015.
One of the changes is that employees of labour brokers who are placed and have been there for longer than three months will be deemed to be employed on an indefinite basis. They will be entitled to be employed on terms and conditions that are the same as employees who are performing the same work. This means employers have less than three months in which to ensure their operations are in order or they could be faced with a dramatically increased wage bill and headcount.
Likewise an employer may only engage an employee on a fixed-term contract of longer than three months if the nature of the work for which the employee is employed is of a limited or definite duration or if the employer can demonstrate any other justifiable reason for fixing the term of the contract. A fixed-term contract concluded in circumstances other than these will be deemed to be of an indefinite duration.
Where an employer legitimately engages an employee on a fixed-term contract of longer than three months the employee must not be treated less favourably than an employee employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for different treatment. Employers must therefore review the terms and conditions upon which they have employed employees on fixed term contracts of longer than three months to ensure that the employees are treated as favourably as the employer’s permanent employees. As with the provisions relating to labour brokers mentioned above, the employer has a grace period until 31 March 2015 to address these issues.
The conundrum for employers is how to go about addressing these issues. Are employers forced to increase headcount and costs by making both fixed term contact employees and those provided by labour broker’s permanent employees? How are employers to address the differences in remuneration and benefits that may exist? There are other alternatives other than to employ everyone on a permanent basis and increase every employee’s benefits to the highest common denominator. Determining these requires a careful analysis of the employer’s business and a proper understanding of why the employer has employed people on fixed term contracts or why it has elected to engage people through a labour broker.
