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Amendments to Labour Legislation - Temporary Employees

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 Section 198 of the Labour Relations Act will be repealed meaning that Temporary Employment Service providers are not longer recognized in the Act.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 [email protected]

 

Retrenchments: Transformation, a selection criterion?

 

Key information

 

When an employer contemplates dismissals based on operational requirements, section 189(1) of the Labour Relations Act 66 of 1995 (LRA) requires the employer to consult any person impacted by the decision, including trade unions whose members may be affected by the proposed retrenchments. The employer and other consulting parties must engage in a meaningful joint consensus-seeking process and attempt to reach consensus on, amongst other things, the method for selecting employees to be dismissed. Where an employer does not comply with a fair procedure, section 189A(13) provides a consulting party with recourse to approach the Labour Court.

 

2022/05

By Phetheni Nkuna, Director and Mbulelo Mango, Associate Designate, Employment Law, Cliffe Dekker Hofmeyr

 

Where the consulting parties have agreed on the selection criteria to be used, the employer is obliged to implement the criteria. However, where no agreement can be reached between the consulting parties, the employer is obliged to use criteria that is fair and objective. This legal position has been crystallised by the Constitutional Court (CC) in its recent judgment of Solidarity obo Members v Barloworld Equipment Southern Africa and Others [2022] ZACC 15I.

 

Evaluating substance vs procedure

On 27 April 2020, Barloworld notified its employees, including Solidarity’s members, of its intention to restructure its operations resulting from the impact of COVID-19. Shortly thereafter, Barloworld lodged a request with the Commission for Conciliation, Mediation and Arbitration (CCMA) for it to facilitate a joint consensus-seeking process between the affected parties and Barloworld. During the consultative process that ensued. Solidarity took issue with the proposed selection criteria – specifically, the inclusion of transformation as part of the selection criteria.

 

Solidarity and the National Union of Metalworkers of South Africa (NUMSA) approached the Labour Court in separate applications contending procedural irregularities in the consultation process. One of the issues challenged by Solidarity was Barloworld’s failure to consult on various issues, including transformation as a selection criterion. This was unlawful and amounted to unfair discrimination. NUMSA contended that the process was flawed in that Barloworld had failed to disclose information that was essential to enable its effective participation; there had been no meaningful consultation on alternatives to retrenchment; there had been no joint consensus-seeking consultation on the selection criterion; and Barloworld had called workers to interviews without furnishing them with important information that they needed prior to attending the interviews.

 

The Labour Court distinguished between procedural fairness and compliance with fair procedure which is what is envisaged in section 189A(13) of the LRA. Disputes of procedural fairness go beyond the employer’s statutory obligations alone and are excluded from the ambit of section 189A(13). The primary remedy envisaged by section 189A(13) is compliance, which is no longer possible once the consultation process is concluded. Solidarity and NUMSA’s complaints did not raise compliance issues, but rather general issues related to procedural and substantive fairness.

 

The court also held that in its view transformation is not a selection criterion, per se, and that Solidarity’s complaint, properly construed, related to substantive fairness. The court reasoned that the issue of which selection criteria to apply is one of substance and not procedure. It then stated that Solidarity had a right, in terms of section 189A(7)(b)(ii), to refer the dispute as to whether there was a fair reason for the dismissal to the court in terms of section 191(11) of the LRA. The court also held that the issues raised by NUMSA were issues of substance.

 

Before the Constitutional Court

Solidarity’s petition was refused by the Labour Appeal Court. It then approached the CC on the basis that it had jurisdiction as it concerned the proper interpretation of sections 189 and 189A(13) of the LRA which were underpinned by the right to fair labour practices. Barloworld disagreed.

 

The CC held that there was meaningful joint consensus-seeking consultation in that, on the evidence before it, Barloworld genuinely and meaningfully considered the representations made by Solidarity. Parties only need to seek consensus and do not necessarily need to agree. Solidarity rejected the inclusion of transformation in the selection criteria, with the effect that the parties deadlocked on the issue. The failure to reach consensus or agreement did not necessarily mean that the consultation process was not meaningful.

 

The CC also considered whether failure to present the selection criteria matrix led to a conclusion that the consultation process was procedurally unfair. Once the parties had deadlocked, the next step was for Solidarity to approach the Labour Court in order for it to adjudicate on the substantive fairness of relying on transformation as part of the selection criteria.

 

In relation to the distinction between procedural fairness and compliance with fair procedure, the CC reiterated that the Labour Court may not adjudicate a dispute about the procedural fairness of a dismissal based on the employer’s operational requirements in any dispute referred to it in terms of section 191(5)(b)(ii). Disputes about procedural fairness, as a distinctive claim or cause of action, that a dismissal on the basis of operational requirements was procedurally unfair, are removed from the adjudicative reach of the Labour Court. In order for the Labour Court to adjudicate a claim of the unfairness of a procedure in dismissals for operational requirements, the court must be approached in terms of section 189A(13) on the basis of non-compliance with the procedures prescribed by sections 189 or 189A of the LRA.

 

Finally, the CC differed with the Labour Court on the timing of the referral – that is, after the consultation process had been concluded. Section 189A(17)(a) of the LRA provides that “an application in terms of subsection (13) must be brought not later than 30 days after the employer has given notice to terminate the employees’ services or, if notice is not given, the date on which the employees are dismissed”. The referral was made timeously.

 

For more information contact Phetheni Nkuna at [email protected] or Mbulelo Mango at [email protected]

 

Article published with the kind courtesy of Cliffe Dekker Hofmeyr www.cliffedekkerhofmeyr.com

 

This article does not constitute legal advice and is based on the author’s interpretation of legislation and relevant case law. For an informed opinion and/or assistance with a labour-related matter, you are encouraged to arrange a formal consultation with the author.

 

 

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