Tag: labour brokers

Labour brokers: when is it legal?

South African labour legislation severely constrains the few employer rights that exist. It is therefore no surprise that employers  look for alternative means of hiring labour instead of employing workers directly.

One option is to use labour brokers in an attempt to free employers from many labour law responsibilities in return for a fee.Trade unions, who find this loophole to be a thorn in their sides, call this type of arrangement “Atypical Employment” and have instigated new legislation, effective from April 2015 that severely curtails the purposes for which labour brokers.

Even before the 2015 amendments using labour brokers to evade labour law responsibilities was difficult and labour brokers were already taking struggling to cope with the legal responsibilities that they took over.

For example, 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 labour. The company claimed that the union had agreed to the transfer.

The union denied this. Those employees who refused the transfer were retrenched and some of them declared and were successful with a dispute in the Labour Court. On appeal the Labour Appeal Court found that:

• 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.The employer’s appeal was therefore dismissed with costs.The 2015 amendments shift most of the responsibility from the labour broker back to the original employers who have therefore lost a key means of relief from the heavy constraints of labour legislation.

All employers and the smaller ones in particular, need to learn, with the help of reputable labour law experts, how to continue to run profitable businesses despite the ever increasingly restrictive labour legislation.

To book for our 10 November Johannesburg seminar on achieving a productive and legally compliant workplace, please contact Ronni via ronni@labourlawadvice.co.za or 084 521 7492.

By Ivan Israelstam, chief executive of Labour Law Management Consulting

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