20 February 2013

South Africa: Labour Legislation Could Lead to Losses for Employees, Employers and the Economy

According to recent surveys and reports, South Africa has some 13 million employed people, with at least 1.2 million employed on a limited duration contract. An industry index released at the beginning of the year revealed that from 2000 to 2012, the number of permanent jobs declined by 1.9 million, whereas the number of temporary jobs increased by 2.6 million. In addition, temporary jobs presently account for 30.5% of all jobs in South Africa.

It is, therefore, clear that a large portion of the population are currently employed in the temporary sector and that most new job opportunities are found within this category. However, should the current changes and proposed amendments to labour legislation come to pass, there will in all likelihood be a drastic reduction in overall employment within South Africa.

Premature fear

The new amendments have created premature fear amongst the clients of Temporary Employment Services providers as well as immense confusion, with some clients being misinformed or misinterpreting the issues. This will have an effect on employees, our businesses and those of our clients.

As the proposed amendments currently stand, employers will need to ensure that they comply with the requirement that employees who earn amounts below the stipulated wage threshold are not employed on a limited duration contract for longer than six months. This means that an employee will be deemed as a permanent employee of the company after six months of employment.

Already many in the Temporary Employment Services industry have seen clients terminating contracts after six months and re-employing someone new in that role, meaning that employees are being rolled over or rotated around. There are also reports that clients are abusing this system to get rid of an employee after six months if problems arise, thus enabling them to avoid following the necessary processes as prescribed by the law. For example, instead of having to follow the route of a disciplinary hearing to dismiss an employee for misconduct (and possibly end up at the CCMA), an employer will keep an employee on a fixed-term temporary contract and simply wait for the expiry of the contract to terminate him.

For many employees it can take six months to be properly trained and attain a sense of what is required of them, so it is unfair both for them and the employer for a decision to have to be made at that point as to whether they will be kept on board.

Employers reducing the total number of staff

Furthermore, some of the new amendments, such as the Equal Treatment Clause, will likely give rise to employers reducing the total number of staff that they employ in an attempt to maintain current wage costs, resulting in an increase in the job functions and responsibilities of the staff that remain. My concern is that clients will reduce their staff and overload their residual employees without increasing their salaries.

As a result of these misinterpretations and potential misuses of the new legislation, businesses are going to suffer and possibly close down, which will have a negative effect on the economy. These amendments will also impact negatively on the Small, Medium and Micro Enterprises (SMMEs) that are currently growing and contributing greatly to the creation of employment in South Africa. This is because the laws will mean that not all of them will be able to afford to employ permanent staff, especially when they are just starting up their businesses and still growing. Additionally, most start-ups are unsure of the specific job functions that will be required to achieve operational efficiency later on and usually only discover these as their business grows. Moreover, the proposed amendments and new labour laws will make it very difficult for companies to invest in South Africa and will discourage them from helping to finance our economy.

Slave traders

Many of the proposed amendments to the labour law have come about due to union federations' criticisms of the Temporary Employment Services - we have been accused of preventing people from getting "decent" employment and are seen as "slave traders". I do believe that some of the issues that the industry has been accused of are true and that some agencies in the industry have treated their temps unfairly by putting their clients and profits first. The entire industry has been tarred with the same brush, however - not all of us are guilty. Sinakho, for instance, not only provides temporary, contract and permanent employment opportunities across a multitude of industries, but also awards bursaries to those on fixed-term contracts and offers both its temporary and contract staff compulsory subsidised benefits that include medical insurance, provident fund and dependent care assistance.

It is my hope that by regulating the sector, staffing agencies will place greater emphasis on ensuring that their staff are adequately protected in the tri-party employment relationship. We are in business because of our temps and, therefore, we need to place great value on them as human beings and put people before profit.

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