Labour flexibility is a key business advantage. Flexibility has two core components:
- flexible contract terms, e.g. the ability for management to alter working hours according to business needs, and
- flexibility in terms of termination of employment..
It is the latter aspect that has attracted the most attention from trade unions and others who are concerned about job security issues. Given the perception - one which is largely misplaced - that it is difficult to dismiss a worker in South Africa, employers devise contractual arrangements that would, on the face of it, facilitate the termination of a worker’s services. Fixed-term contracts and temporary employment services ('labour brokers') are the preferred mechanisms for achieving this.
This contribution focuses on labour brokers in the light of a recent decision of the High Court of Namibia in which the court expressed views that were highly critical of, and antagonistic towards, the labour broking industry. The court’s decision is important for us, as the views expressed there will undoubtedly add fuel to the fires of those agitating against the industry.
The issue before the court concerned an amendment to the Namibian Labour Act in terms of which labour broking is prohibited and punishable as a criminal offence. The applicant in the matter, Africa Personnel Services, sought an order against the Namibian Government and others to the effect that the amendment was unconstitutional because it allegedly infringed the applicant’s constitutional right to conduct its business. The court dismissed the application, holding that the constitutional right to conduct a profession, trade, occupation or business only applies in respect of activities that are lawful. Labour broking, the court held in a unanimous judgment, is an unlawful practice as it involves ‘the letting and hiring of persons as if they were chattels' (goods). This practice, the court said, is not part of the law of the contract of employment and also ‘smacks of the hiring of a slave by his slave-master’. It therefore does not deserve constitutional protection but has to be rooted out. Note that the common law relating to the contract of employment is similar in Namibia and the RSA.
What are the implications? Both the LRA and the BCEA make provision for temporary employment services / labour brokers and therefore legalize the hiring of the services of employees through labour brokers. However, given that labour flexibility in general, and the use of labour brokers in particular, remain a politically controversial issue, one should expect that the Namibian judgment will offer strong support for those arguing for the more effective regulation of the industry or its prohibition.
In the meantime, companies using labour brokers would be well advised to use only reputable organisations that can, first and foremost, offer guarantees of compliance with labour legislation and applicable collective agreements. This includes compliance with LRA provisions dealing with fair labour practices and unfair dismissal. Unfortunately, some employers cooperate with unscrupulous brokers to deprive employees of any form of job security by including ‘automatic termination’ provisions in employment contracts depriving the relevant employees of any semblance of job security.
Companies must also realise that disputes between the broker and its employees, if not managed well by the broker, are likely to influence the client’s workplace. With little control over the issue in dispute, the client might be hold to ransom by unmanageable demands. For this reason, companies should choose brokers who are not merely compliant, but actually implement good HR / ER practices.
Barney Jordaan of Maserumule Employment Consultancy for www.labourwise.co.za,
an on-line labour relations service aimed at assisting employers
with the implementation of effective labour relations. They can be contacted
via www.labourwise.co.za or email@example.com