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By Jan Du Toit
As most employers are aware by now, the Department of Labour published proposed amendments to labour legislation and the introduction of the Public Employment Service Bill in December 2010. This undoubtedly resulted in some sleepless nights over the festive season for both Temporary Employment Services providers (also referred to as Labour Brokers) and their clients. The proposed amendments, if enacted, would effectively "ban" Labour Brokers and will have far reaching implications for employers whether they make use of temporary employees provided by a Labour Broker or not.
We recently published a press release by the Department of Labour highlighting some of the key areas of the proposed amendment bills. This document is however not comprehensive and we will therefore during the next couple of weeks discuss some interesting proposed amendments that must be carefully considered and commented on before the 17th of February.
The first proposed amendment to consider is the definition of an employer in the Labour Relations Act. An employer will be defined in section 213 of the Act as "any person, institution, organisation, or organ of state who employs or provides work to an employee or any other person and directly supervises, remunerates or tacitly or expressly undertakes to remunerate or reward such employee for services rendered". An employee will be defined as "any person employed by or working for an employer, who receives or is entitled to receive any remuneration, reward or benefit and works under the direction or supervision of an employer;"
From these definitions it is clear that any person or institution that provides work to another person and directly supervises such a person is considered to be the employer. The client of a Labour Broker would therefore be considered to be the employer and not the Labour Broker or a third party. Section 198 of the Labour Relations Act will be repealed meaning that Temporary Employment Service providers are not longer recognized in the Act. Clients of a Labour Broker would therefore not be able to rely on section 198 (2) of the Act stating that "a person whose services have been procured for or provided to a client by a temporary employment service is the employee of that temporary employment service, and the temporary employment service is that person's employer".
In addition to the above it is proposed that a new section be inserted in the Act stating that "an employee must be employed permanently, unless the employer can establish a justification for employment on a fixed term." Employing staff temporarily instead of using a Labour Broker will therefore also not be an option.
Those employers that will be able to justify the use of temporary staff as per section 200B of the proposed amendments will have to be extremely careful since section 186 (1) (b) will also be amended. It would be considered to be a dismissal if the employer failed to permanently appoint an employee engaged under a fixed term contract and such employee can prove that reasonable expectation of a permanent appointment was created.
Section 186 of the principal Act is amended by—
(a) the substitution in subsection (1) for paragraph (b) of the following paragraph:
(b) an employee engaged under a fixed term contract of employment reasonably expected the employer—
(i) to renew a fixed term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or
(ii) to offer the employee an indefinite contract of employment on the same or similar terms but the employer offered it on less favourable terms, or did not offer it, where there was reasonable expectation;"
Another costly mistake would be to offer an employee engaged under a fixed term contract permanent employment on less favourable terms as what the employee was entitled to as a fixed term employee. Employers are advised to study the proposed amendments and to consider the impact it would have on their businesses if enacted.
For more information contact Jan du Toit
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