LABOUR LAW REVIEW

-Addressing labour brokers-

NABC

OVERVIEW

• Background and progress

• Proposed clauses amending LRA & their consequences

• Related amendments to BCEA & EEA

Background & Progress to date

1. Aim:

To introduce amendments to regulate contract work, subcontracting and outsourcing, address the problem of labour broking and prohibit certain abusive practices.

2. Nedlac process:• Discussion document introduced July 2009• Conclusion of discussion on labour brokers in October• Labour (COSATU & NACTU) called for labour broking to be

outlawed• Fedusa called for a combination of regulation and enforcement• Business called for co-regulation and proper enforcement

Progress cont.

• Draft amendments completed by 13 November 2009 on the following:

i. amendments to s.198 of LRA for inclusion in LRA Amendment Bill;

ii. Proposed amendments to LRA, BCEA and EEA to deal with outsourcing, sub-contracting and protection of vulnerable employees.

• Explanatory memorandum dealing with legal and constitutional issues arising from prohibition

Proposals to deal with labour broking

1. Amend section 198 of LRA to prohibit:

“198. Labour broking prohibited(1) No person may employ any person for the purpose of contracting

that person to work for another person (“the client”).

(2) A person placed to work for another person (the client) is the employee of the client.

(3) For the purposes of this section, “place” means to place, recruit, procure or supply persons to work for another person.”

Proposals to deal with labour broking

Definitions

• Means any person, institution or organisation, including government who employs and provides work to an employee, directly supervises, remunerates or tacitly or expressly undertakes to remunerate such employee for services rendered by such employee.

• Means any person who is employed by or who works for an employer and who receives or is entitled to receive any remuneration and who works under the direction and supervision of an employer

• Means a person who works for or supplies Services to a client or customer as part of the person’s business, undertaking or professional practice.

Consequences of prohibiting labour broking

1. Temporary employment services/private employment agencies can continue to provide services and to place people in work.

2. An employee who is placed will always be the employee of the employer with whom he/she is placed – TES cannot be employer.

3. Additional amendments to LRA, BCEA and EEA will increase protection of workers to achieve overall aim.

4. Likely challenge on basis of limitation of section 22 rights of constitution.

Alternative proposal to deal with labour broking

2. Restriction of Temporary Employment Service(1) No person may employ any person for the purpose of contracting

the employee to work for another person unless:

(a) that person is registered as a temporary employment service

(b) that person has concluded a written contract

© the employee performs only temporary work for the client.

(2) Temporary work defined as;

(a) work as a temporary substitute

(b) work of a temporary nature not exceeding 3 months

© any other category of work determined to be temporary work by the Minister, by a sectoral determination or by a bargaining council agreement.

Consequences of alternative to prohibition

1. TESs will only operate in defined categories of temporary work;

2. In those categories, the TES may be the employer;

3. In any other categories of work that does not fall within the specified categories, the client will be the employer eg. temporary work for longer than 3 months.

4. Where TES is the employer, the client and the TES will be jointly and severally liable for payment of wages and compliance with labour legislation and contractual conditions of employment.

Overview of options

Prohibit labour brokers

• Employee protected against client (‘employer’)

• Dismissal protection iro client

• Equal pay for work of equal value applies

• Constitutionality?

Reworked 198

• Employee protected agains both client and TES, client liable for indefinite placements

• Temporary workers protected for dismissal iro TES; other protected iro client

• Genuine temporary workers to receive equal pay to permanent workers

• Need to define categories of temp work and to regulate TESs

Other amendment relating to labour broking, sub-contracting & outsourcing

1. LRA- Employee presumed to be employed indefinitely unless employer

can justify employment for fixed term (s.200B);- Employer includes persons for whom employee works

irrespective of who pays the worker- If there is more than one employer, both are liable for failure to

comply with any labour legislation- Independent contractor defined to prevent disguising of

employment relationship- Contract of employment defined so that agreements to work may

also constitute contracts (recommended by SA Law Commission)

Other amendments cont.

2. BCEA - Minister may adjust minimum rates or minimum increases in

remuneration- Minister may prohibit or regulate sub-contracting, part-time work,

temporary work and the placement of employees by temporary employment services

- Sectoral determinations can set thresholds for trade unions to gain organisation rights

- Sectoral determinations may apply to workers covered by bargaining council but where there is no collective agreement

- Sectoral determination in agriculture can set cash value of access to land by labour tenants

Other amendments cont.

3. Employment Equity Act

- Addition of a clause on equal pay to entitle workers to receive equal pay to that received by co-workers who do the same or substantially the same work or work of equal value

- Amendment to facilitate the bringing of unfair discrimination claims by clarifying that once an employee has established a prima facie case, the employer is required to prove that it was not guilty of unfair discrimination

Proposed amendments to Labour Relations Act.

• Amendment of section 197 of Act 66 of 1995• Section 197 of the principal Act is amended by the substitution for

subsection (1)(b) of the following subsection:• “197…• (1)(b) ‘transfer’ means the transfer of a business [by] from one

employer (‘the old employer’) to another employer (‘the new employer’) as a going concern.”

• This seeks to extend the automatic transfer provisions to ”second generation” outsourcing or sub-contracting in which the service provider is changed. This amendment is consistent with the “purposive” interpretation given to section 197 of the LRA by the Labour Appeal Court in the case of Aviation Union of South Africa (obo Barnes & others) v South African Airways (Pty) Ltd & others (Case No. JA 51/07) (Judgment delivered on 9 October 2009).

Proposed amendments to Labour Relations Act continue

• Insertion of section 200B of Act 66 of 1995• 17. The principal Act is hereby amended by the insertion of the

following sections-• “Section 200B • Presumption of indefinite employment• (1) An employee is presumed to be employed indefinitely,

unless the employer can justify employment on a fixed term.• (2) Subsection (1) does not apply to a person who earns in

excess of the amount determined by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act.

• (4) A Code of Good Practice that sets out guidelines for determining whether persons, including those who earn in excess of the amount determined in subsection (2) are employed indefinitely or on a fixed-term, must be issued within one year of the Amendment Act coming into effect.”

Proposed amendments to Labour Relations Act continue

• This clause introduces presumption of indefinite employment for employees earning below an earnings threshold which the Minister sets. For employees earning below the threshold, this will place an onus on employers employer to establish that there is a justification for hiring employee on fixed term basis.

Proposed amendments to Labour Relations Act continue

• Section 200C Liability for employer’s obligations • (1) For the purposes of this Act and any other employment law an

“employer” includes one or more persons –• for whom an employee works, irrespective of who remunerates the

employee;• who are assisted by an employee in carrying on or conducting their

business;• who carry on associated or related activities or businesses by or

through those persons if the intent or affect of their doing so is or has been to directly or indirectly to defeat the purpose of this Act or any other employment law.

• (2) If more than one person is held to be the employer of an employee, those persons are jointly and severally liable for any failure to comply with this Act or any other employment law in respect of that employee.”

.

Proposed amendments to Labour Relations Act continue

• This clause seeks to deal with the problem of outsourcing and sub-contracting arrangements that are used to disguise the identity of the “true” employer and create “shell” employers. If it can be shown that an employer is in fact operating its business through an employer that has a separate legal identity it will be liable for the employment law obligations of that entity.

Proposed amendments to Labour Relations Act continue

• Amendment of section 213 of Act 66 of 1995• 19. Section 213 of the principal Act is hereby amended by the

insertion of the following provisions:• “‘independent contractor’ means a person who works for or supplies

services to a client or customer as part of the person’s business, undertaking or professional practice;

• This seeks to clarify who an independent contractor is in order to prevent employers disguising employment relationships as independent contracting.

• ‘contract of employment’ means –

Proposed amendments to Labour Relations Act continue

• a common law contract of employment; or • any other agreement or arrangement under which an

individual works for another, but excludes a contract for work as an independent contractor

• This clarifies that the term contract of employment includes agreements to work that may not constitute contracts of employment at common law. This amendment was recommended by the SA Law

Commission.

Proposed amendments to Basic Conditions of Employment Act

• 1. Section 55 of the principal Act is hereby amended by:• the substitution for subsection (1) of the following subsection - • “ (1) After considering the report and recommendations of the

Commission contemplated in section 54 (4), the Minister may make a sectoral determination for one or more sector and area or as contemplated by subsection (8).”

• the substitution for subsection (4)(b) of the following subsection - • “(4)(b) provide for the adjustment of remuneration by way of -• (i) minimum rates; or• (ii) minimum increases of remuneration;”• the substitution for subsection (4)(g) of the following subsection - • “(g) prohibit or regulate task-based work, piecework, home work,

sub-contracting, part-time work, temporary work , contract work and the placement of employees by temporary employment services;”

Proposed amendments to Basic Conditions of Employment Act Continue

• the addition of the subsections below - • (o) subject to the provisions of the Labour Relations Act, set a

threshold of representativeness for a registered trade union to have the organizational rights contemplated in sections 12 and 13 of the Labour Relations Act in respect of all workplaces covered by the sectoral determination;

• any matter necessary to determining the conditions of a labour tenant as contemplated in section 4 of the Land Reform (Labour Tenants) Act 3 of 1996, including but not limited to, specifying one or more methods for determining the value of a right to occupy or use part of a farm as contemplated in section 3 of that Act;

Proposed amendments to Basic Conditions of Employment Act Continue

• the substitution for subsection (7)(a) of the following subsection - • “(a)covering employees and employers who are bound by a

collective agreement concluded at a bargaining council in respect of any matter dealt with in that collective agreement;”

• the addition after subsection (7) of the following subsection - • “(8) Subject to the provisions of subsection (7), the Minister may

publish a sectoral determination that applies to employers and employees who are not covered by any other sectoral determination.”

Proposed amendments to Basic Conditions of Employment Act Continue

• The proposed amendments to section 55 of the BCEA would introduce several changes to the powers of the Minister of Labour when issuing sectoral determinations. These changes would enhance the capacity of sectoral determinations to protect vulnerable workers and to enhance collective bargaining within the sector. These changes include - –

• a sectoral determination covering all employees not covered by other secotral determinations or bargaining council agreements can be issued;

• a sectoral determination can set minimum wage increases;

Proposed amendments to Basic Conditions of Employment Act Continue

• a sectoral determination can prohibit or restrict the operation of temporary employment services or the sub-contracting of work;

• a sectoral determination can set sectoral thresholds for trade unions to gain organisational rights within that sector;

• a sectoral determination may apply to employees covered by a bargaining council in respect of matters on which that bargaining council has not negotiated a collective agreement;

• a sectoral determination for the agricultural sector can set the cash value of the value of access to land enjoyed by labour tenants .

Proposed amendment to Employment Equity Act

• The following section is inserted after section 6 of the principal Act:• 6A Equal pay• An employee has the right to receive equal remuneration to that

received by co-employees performing the same or substantially the same work or work of equal value.

• An employer may justify differentiation in remuneration on reasonable grounds.

• In assessing whether the work performed by co-employees is substantially the same or is of equal value, the criterion to be applied is the composite of –

• (a) the skill, effort and responsibility required in performing the work; and

• (b) the conditions under which the work is performed. •

Proposed amendment to Employment Equity Act Continue

• An employer breaches subsection (1) if it fails to remunerate part-time employees proportionately to full-time employees performing the same or substantially the same work or work of equal value.

• An employer may not reduce the remuneration of an employee in order to eliminate a breach of sub-section (1).

• This clause provides an express statutory basis for equal pay claims. The absence of such a provision has been criticised by the

ILO.

Proposed amendment to Employment Equity Act Continue

• Amendment of section 11 of Act 55 of 1998• 4. Section 11 of the principal Act is amend mend by - • the deletion of section 11: • “11 [Whenever unfair discrimination is alleged in terms of this

Act, the employer against whom the allegation is made must establish that it is fair]

• (b) inserting the following section after section 10 of the principal Act:

Proposed amendment to Employment Equity Act Continue

• 11 (1) If the employee makes out a prima facie case of discrimination, the employer against whom the allegation is made must prove, on the facts before the court, that -

• (a) the discrimination did not take place as alleged; or• (b) the conduct is not based on one or more of the prohibited

grounds.• (2) If the discrimination did take place-• (a) on a ground listed in section 6(1) of this Act it is unfair,

unless the respondent proves that the discrimination is fair;• (b) on a ground not listed in section 6(1) of this Act; it is

unfair-• (i) if it cause or perpetuates systematic disadvantage (in the

workplace);• (ii) if it undermines human dignity; or• it adversely affects the equal enjoyment of a person’s rights and

freedoms in a serious manner that is comparable to discrimination on a ground listed in section 6(1).

Proposed amendment to Employment Equity Act Continue

• This clause seeks to facilitate the bringing of unfair discrimination claims by clarifying that once an employee has established a prima facie case, the employer is required to prove that it was not guilty of unfair discrimination. This clause is based on the equivalent provision in PEPUDA and will therefore allow for work-related discrimination claims to be dealt with on the same basis as discrimination claims in other arenas.