Labour Broking Alternatives – Free Seminar

HRTorQue and MacGregor Erasmus are pleased to invite clients on a first come first served basis to our free seminar on alternatives to using labour broker workers in your business.

The seminars will be held on the dates below in Durban, Cape Town and Johannesburg and will cover the following areas:

  • The aftermath and need for new staffing models arising from the recent Constitutional Court judgment and how it flattens the playing field by limiting quite strictly how and when Labour Broking staff may be used;
  • Exploring efficiencies in employing Broker staff in-house and the options available in HR management and optimisation;
  • Testing whether other outsourced services will be deemed Labour Broking staff and be met with similar challenges;
  • Tax implications and practical questions regarding remaining tax compliant on respect of independent contractors, FTC staff, casuals and the like.

Durban: 30 August
Cape Town: 29 August
Johannesburg: 3 September

To book a place, please contact info@hrtorque.co.za

Cost-effective Alternatives to using Labour Brokers

Many employers in South Africa use labour brokers (TES). Often, they continue this practice because they don’t feel able to manage the volume of workers together with the HR commitment (some employers may only have ~100 permanent staff, but engage 1,000 temporary workers). Following the ConCourt ruling, employers are scared they will not be able to manage the additional workers internally and the additional cost will put them out of business. This is not the case and there are alternatives available to employers that should result in minimal extra work for them and marginal to less cost depending on how they approach the transition.

What does a labour broker do?

A labour broker effectively performs a number of tasks for an employer including:

  • Recruiting and contracting workers
  • Managing these workers (the client would manage them operationally)
  • Run payrolls and pay the workers
  • Manage relationships with third parties including unions/bargaining councils
  • Manage IR issues and terminate the workers’ employment

Potential Options

Employers in the face of the Concourt ruling could choose the following options:

  • Do nothing and face significant financial risk; or
  • Engage the TES workers directly and manage them internally; or
  • Engage the TES workers directly and outsource the processes performed by the labour broker previously

Comparison of Options

The table below illustrates the comparison between trying to manage the TES workers internally and outsourcing. We don’t look at the option of doing nothing because it really doesn’t make much sense financially or form a risk perspective.

Cost Comparison

As cost is a significant factor we have also included a comparison below between labour broking services, managing internally and outsourcing. We have assumed a company with 200 TES workers currently and assumed a current labour broking fee of between 10% and 15% of payroll.

For a more detailed overview the table below illustrates the key assumptions and working for each element.

The above table does not consider any savings through efficiency gains by managing and controlling the workers better. Previously there would have been no incentive to upskill.

Conclusion

Outsourcing is a clear option to better manage your risk and financial exposure if you currently use TES workers. We would recommend you do a review of your business and individual circumstances before you make a decision. If managed well the transition has the potential to improve your business.

Can I still use labour brokers in my business?

Last week, the Constitutional Court clarified a section of the Labour Relations Act regulating labour brokers. There have been a number of rather confusing articles and advice circulating since and the intention of this article is to try simplify things and explain what is actually going on.

Brief History of Labour Broking
In 1996, when the Labour Relations Act (LRA) was created, labour brokers were re-named Temporary Employment Services and, as the name implies, their service was associated with the temporary placement of staff at clients. For a number of reasons, these staff often ended up working for long periods of time and/or indefinitely, resulting in complaints from unions that companies were using labour brokers to underpay staff or to get around the Labour Legislation, with respect to key issues such as terms and conditions, collective issues and dismissal law.

Government Intervention
The Government reacted by amending the LRA with198A. In substance, what the Government introduced was:

  • Companies who wished to use labour brokers in genuine, temporary work could continue to do so with the labour broker remaining the employer at all times;
  • In respect of people who earned over the threshold being R17 119.44 per month (R205,433.30 per annum), these employees would remain the employees of the labour broker (as the LRA would not apply);
  • However, in respect of employees who weren’t employed in temporary capacities, and were employed at the client beyond three months, they would be deemed the employee of the client and, more importantly, the client was obliged to treat the employee on the whole, no less favourably than their own staff, i.e. they needed to give them all the benefits and salaries their own staff received.

Litigation
The labour broker industry challenged the legislation, which went through a number of Courts ending up at the Constitutional Court, who have now confirmed the following:

  • In respect of employees provided by labour brokers who will engage in temporary assignment i.e. to replace someone who is sick and the like, the labour broker will remain the employer and it will be business as usual;
  • However, where a labour broker places an employee at a client, after a period of three months the client becomes the sole employer of the employee.

What role then does the labour broker play?
The Constitutional Court says that the labour broker (whilst there is still a contract between the client and the labour broker) will remain as a party and they will continue to run the payroll and undertake whatever duties they are supposed to in terms of their contract with the client. This is known as the so called “triangular relationship”. They are, however, no longer the employer after the three-month period.

Once the contractual agreement comes to an end, the labour broker falls completely out of the equation and the client will proceed with the employment relationship in the normal course with that employee.

Future CCMA Matters
The labour broker employees, after three months, become the client’s employees and will refer matters to the CCMA against the client. If the client has an agreement with the labour broker, then the employee can also refer the matter against the broker, but this is probably an unlikely scenario as it is anticipated the client would have deeper pockets and, in many cases, be less able to protect themselves if they have abdicated responsibility for managing the employee to the labour broker.

Worrying Issues – Backdated Benefits
The big issue to be concerned about is the fact that should you have had labour broking staff on site for a period of more than 3 months, especially if they have been there at any time since 2015, you may face a claim for the difference between salary and benefits paid and what should have been paid compared to your other staff i.e. a backdated calculation.

Conclusion
As an employer, there is no practical restriction on your continuing to use a labour broker. However, you take on considerable risk if you continue to use the services of a broker for individuals paid under the LRA threshold, as you would be taking on the full risk of employment (and any risks associated with unequal pay) with the relationship being managed by a third party. In these circumstances, we would suggest it would be better to treat the relationship as it actually is i.e. the individuals are your employees and if you need a third party to manage them, manage payroll, or HR, then you should engage the third party on this basis to do these services, with appropriate service level agreements in place.

Can an employer cancel leave which has already been granted?

What happens when an employee has applied for leave, their manager has approved the leave and then operational circumstances change and the employee is required on site? Can an employer cancel the employee’s leave?

In ordinary circumstances, an employer can (within reason) retract any leave based on operational requirements as leave is given at the employer’s discretion. If an employee then does not arrive at work, depending on the individual circumstances (for example if he/she is sick), they could be disciplined.

From an ethical perspective however, the employer should consider the circumstances for the leave before cancelling and also the impact of cancelling on the employee. For example:

  • If the leave is important personally e.g. for an employee to attend his/her child’s wedding then it would have very negative long term consequences for the employee’s morale should the leave be cancelled;
  • If an employee has spent money on arranging travel and accommodation it would be inequitable to cancel the leave unless the employee is at the very least compensated for these expenses.

In these instances, we would consider the smart thing to do would be for employers to carefully consider whether it is really necessary to cancel the leave.

The Impact of Stress and Psychological-related Illnesses in the Workplace

Author: Shahnaaz Bismilla and Kerry Gantley (Cowan-Harper-Madikizela Attorneys)

The work environment has changed drastically over the last few years and as we transition to the fourth industrial revolution, employers need to be aware of the changing risks that business will face. With technology, we spend more time in meetings, at our desks and leading sedentary lifestyles. In South Africa, the state of the economy, with its political, economic and financial factors means that employees are living in much more stressful times.

It, therefore, comes as no surprise that stress-related illnesses have increased substantially over the last few years. Insurance companies have seen a substantial increase in the number of disability claims resulting from psychological, psychiatric and mental disorders.

According to a 2016 study conducted by the South African Depression and Anxiety Group (SADAG), 1 in 4 employees has been diagnosed with depression. How are employers dealing with employees diagnosed with depression? If you, as an employee, were diagnosed with a mental illness, would you feel comfortable disclosing your mental health status to your employer? If so, you would be only 1 in 6 employees who would be willing to do so according to a 2017 survey by SADAG.

The recent Labour Court case of Jansen v Legal Aid South Africa [2018] ZALCCT 17 (16 May 2018) concerned the automatically unfair dismissal of a long-standing employee of the Legal Aid Board because of depression.

The employee had been in the employ of the employer since 2007 and by all accounts was a good performer. During 2010, the employee was diagnosed with major depression. The employee disclosed his condition to the employer and accessed the employer’s wellness program. During 2012, the employees’ condition deteriorated due to his personal circumstances which were exacerbated by his supervisor unexpectedly testifying on behalf of his spouse during his divorce proceedings.

The employee had difficulty dealing with the actions of his supervisor and was feeling betrayed and mistrustful. This was brought to the attention of the employer who was advised by a clinical psychologist that the issue needed urgent resolution as it was negatively affecting the employee’s mental state. The employer ignored this advice and the employee’s condition deteriorated, affected further by the employer’s inaction. As a result of his condition, the employee was absent from work for a period of 17 days during August 2013 and, upon his return to work, he informed the employer of his mental state and the difficulties he was experiencing. Again, the employer ignored the issue and instead notified the employee that his leave of absence would be regarded as unpaid leave.

On 7 November 2013, and whilst the employee was on sick leave, the employer attended the employee’s residence and issued him with a disciplinary charge sheet for misconduct, ranging from unauthorised absence, a failure to notify the employer of his absence to insolence and a failure to obey a reasonable instruction.

The employee did not deny his conduct and upon receipt of the charge sheet once again alerted the employer to his mental condition and the severe impact it was having on him. The employer ignored this evidence and persisted with the disciplinary action, convened a disciplinary enquiry and summarily dismissed the employee.

The termination of his employment together with the additional strain of financial loss of income further exacerbated the employee’s mental health and his personal circumstances deteriorated even further.

In dealing with this matter in the judgment, Acting Judge Mthomebeni confirmed that at all relevant times the employee was suffering from a mental condition and that the employer was aware of his condition. The Judge confirmed that the employer was aware that the employee had a mental illness and was therefore under a duty to reasonably accommodate the employee. The Court found that the employer failed to take into account the mental state of the employee at the time that he perpetrated the misconduct.

The Judge reasoned that the employee was treated unfairly because of his mental condition and therefore on the facts of this particular matter an automatically unfair dismissal had been established. Interestingly, the employer chose not to lead any evidence. The Court awarded the employee reinstatement with retrospective effect. In addition, and having due regard to the suffering incurred by the employee both during his employment and subsequent to the termination thereof, occasioned primarily in the Court’s view by the employer’s continuous disregarding of the employee’s condition, the Court further awarded the employee a further 6 (six) months compensation as a “solatium” to assuage the hurt and indignity caused by the employer’s actions.

In assessing the merits of this matter, the Court ruled that the employee’s depression did not amount to a disability. In coming to this conclusion, the Judge had regard to the definition of disability as set out in Section 1 of the Employment Equity Act 55 of 1998, as amended.

The EEA defines a disability as a:-
“…long term or recurring physical or mental impairment which substantially limits their entry into, or advancement in Employment”.

Whilst in this case the Judge found that the employees’ depression did not amount to a disability, in certain circumstances depression (and other psychological, psychiatric and mental disorders) may amount to a disability especially if the condition falls within the definition of what constitutes a disability as defined in the EEA and as stipulated in the Code of Good Practice on the employment of persons with disabilities. The Code provides excellent guidance to both employers and employees in this respect.

Employers should recognise that there are different types of depression on a wide spectrum. The South African College of Applied Psychology recognises 6 different types of depression ranging from clinical depression to psychotic depression. Where the form of depression falls within the definition of a disability, it should be recognised as such.

According to the World Health Organisation (“WHO”), depression is the leading cause of ill-health and disability in the workplace. SADAG’s research indicates that employees are taking more than 18 days off work due to depression but are reluctant to disclose depression as a reason for sick leave due to the stigma associated with the condition. Such absenteeism has a direct financial impact on an employer. However, for those employees who are reluctant to disclose their condition, this can also result in a loss of productivity for employers, incurred because of employees who report for duty but are unable to perform (presentism).

Employers should also be mindful of the stigma associated with mental illness, including depression and in many instances, employees are reluctant to disclose their condition. Considering the prevalence of depression and the direct negative impact it has on the workplace, employers are encouraged to create a culture of openness and understanding that fosters a safe space for disclosure where employees are reassured that they will not suffer negative consequences but instead will be supported and assisted.

Employers must play an active role to create this environment. According to the South African Depression and Anxiety Group (“SADAG”), employers can assist by:

  • Educating employees on depression and especially how cognitive symptoms can affect work performance;
  • Raising awareness of any existing employee wellness assistance programmes AND emphasise that they can help with mental health problems, like depression, by providing access to medical facilities;
  • Promoting a culture of acceptance around depression and other psychiatric disorders – they are no different to diabetes or asthma;
  • If an employee shares their struggle with depression, referring them to a mental health care professional and reassuring them the illness can be treated; and
  • Exploring creative ways to support an employee’s recovery, like flexible/adjusted working hours.

Understanding that wellness is not only about physical conditions, but also mental conditions, is fundamental in any workplace and employers should consider having innovative policies and processes in place in how they will address such conditions and as to how they should adopt a holistic approach. Employers should introduce wellness initiatives and take proactive steps to identify employees at risk and to encourage employees to personally take charge of their wellness.

The South African Human Rights Commission has developed an excellent resource on disability which is useful in understanding what constitutes a disability and how to manage disabilities in the workplace.

Dishonesty and the Employer’s Onus in Dismissal Disputes

Author: Neil Coetzer (Cowan-Harper-Madikizela Attorneys)

An apple a day?

In the case of Compass Group Southern Africa (Pty) Ltd v van der Merwe N.O & Others (JR633-16, 9 February 2018) the employer had approached the Labour Court with a review application, seeking to review and set aside the findings of the Commissioner who had found the dismissal of the employee to be both procedurally and substantively unfair.

The employee, whose duties included storing and serving apples at a hospital, was caught in possession of several apples which she was carrying in a bag obtained from the hospital ward. Upon being confronted by her employer, the employee apologised and begged for forgiveness. The employee was found guilty of misconduct and dismissed by the employer.

The employee’s version at the enquiry, and subsequently the arbitration, was that she had bought the apples from a vendor and that she had taken them with her to work. While the vendor was not called as a witness at the disciplinary enquiry, at the arbitration he indicated that the employee had left the apples with him and that the employee had gone to collect a plastic bag to place them in. These were two mutually destructive versions which placed serious question marks over the employee’s defence.

It was common cause that the employee had access to apples on the day of the incident. The employee also conceded that the apples found in her possession were ‘strikingly similar’ to those that were served in the hospital ward.

The Court commented on the onus of an employer to prove that a dismissal was fair. It explained, with reference to Woolworths (Pty) Ltd v CCMA & Others (2011) 32 ILJ 2455 (LAC), that:-

“In an unfair dismissal case relating to misconduct, the ‘evidentiary burden’ starts with the employer but once the employer provides prima facie proof of the misconduct as alleged, the ‘evidentiary burden’ shifts to the employee to prove his own defence. If the employee then fails to put up a defence or fails to prove his defence, the employers [sic] prima facie proof of misconduct becomes conclusive proof and the employer has then discharged the ‘overall onus’ that always rested with it.”

The Court found that the employer had established a prima facie case of misappropriation of company property or dishonest conduct on the part of the employee and that therefore the employee was required to ‘prove to be honest what admittedly on its face looked dishonest’. The Court found that the employee clearly failed to do so and then had to consider whether her dismissal was fair.

The Court found that the employee had engaged in conduct which essentially amounted to theft, concocted an obviously dishonest defence, showed no real remorse and, finally, occupied a position of trust within the Company. The Court accepted that the Labour Appeal Court has in the past followed a strict approach in respect of dishonest conduct by employees, particularly for reasons related to the employer’s operational requirements. Importantly, the Court found that persistent theft of stock ‘places in jeopardy the security of employment of all employees’. The Court also found that there was no basis to find that the dismissal of the employee was procedurally unfair.

In the circumstances, the Court set aside the arbitration award and found that the dismissal of the employee had been both substantively and procedurally fair.

This judgment confirms that dishonesty in the workplace will usually result in dismissal. The Courts will not expect an employer to continue to employ an employee who has broken the trust relationship or engaged in conduct which has negatively impacted on that relationship.

Health and Safety Roles in the Workplace

Author: Delene Sheasby (www.worksafetysa.co.za)

As the company HR Specialist, are you responsible for Health and Safety? Are you fully informed of your organisation’s Occupational Health and Safety legal compliance requirements? You do realise that for noncompliance of the Act, an employer (and maybe you) could incur both civil or criminal liability?

Have you heard about an Occupational Safety Practitioner or a Safety Officer or a Safety Representative? Surely these are more or less the same? The answer is no.

There is a difference and depending on the type of organisation you have (i.e processes, risks, and employees, environment), you may need one of or all of these):

The Occupational Safety Practitioner is a person who applies their expertise gained from a study of safety science, principles, practices and other subjects and from professional safety experience to create or develop procedures, processes, standards, specifications and systems to achieve optimal control or reduction of the hazards and exposures which may harm people, property and/or the workplace environment. The Safety Practitioner will have the necessary qualifications and experience to perform their roles in a competent manner and should be registered as a Professional Practitioner with a professional body.

The Health and Safety Officer is usually a full-time job, commonly (but not necessarily) appointed on a construction site, in which case the Health and Safety Officer must be in possession of a relevant formal qualification. The Health and Safety Officer, in the construction industry, must also be registered with the South African Council for Project and Construction Management Professions (SACPCMP) in order to work as a Health and Safety Officer.

The Health and Safety Officer-s tasks include:

  • Developing, implementing, and improving the health and safety plans, programs and procedures in the workplace
  • Ensuring compliance with relevant health and safety legislation
  • Identifying OHS-related training needs in the workplace
  • Conducting safety inspections and risk assessments
  • Investigating workplace accidents
  • Reporting on OHS-related activities
  • Supervising junior health and safety employees

The Health and Safety Representative is required to be designated in writing in terms of the Occupational Health and Safety Act in workplaces where the employer employs more than 20 employees.

Health and Safety Representatives act as the liaison between senior management and employees, and may be responsible for:

  • Assisting the Health and Safety Officer. (if available)
  • Attending Health and Safety Committee meetings.
  • Identifying hazards and risks in the workplace.
  • Listening to and investigating OHS-related complaints from employees.
  • Assisting with the investigation of accidents that occur in the workplace.
  • Making OHS-related suggestions to senior management and/or the Health and Safety Officer.
  • See Occupational Health and Safety Act Section 18

The role of Safety Representative is not always a full-time job and sometimes takes on the above-mentioned responsibilities in addition to their regular full-time jobs. While Safety Representatives are also required to undergo relevant training to assist them in carrying out their responsibilities, they do not necessarily need to study toward formal OHS qualifications.

Some workplaces do not require a Safety Practitioner or a Safety Officer, However, usually Safety representatives will be in place. If this is the case, senior management must take responsibility for employees’ health and safety and not expect or rely only on the Health and safety representative for compliance.

Racism in the Workplace and Hate Speech

There has been a lot to talk about on this topic following on from the Constitutional Court Ruling on 17th May 2018 in the matter between Rustenburg Platinum Mine vs South African Workers Association obo Meyer Bester.

In summary, the facts and history of the case leading up to the Constitutional Court are as follows.

The case relates to an incident in 2013 wherein Mr Bester pointed his finger at a fellow worker and told him “verwyder daar die swart man se voertuig”. Mr Bester was charged with insubordination and making racial remarks and was dismissed following a disciplinary enquiry. During the enquiry he denied ever saying the words “swart man” and was unrepentant and confrontational with the employer’s witness.

The matter was referred to the CCMA and the Commissioner found that “swart man” was a descriptor and not racist. The dismissal was found to be both substantially and procedurally unfair.

The matter was then taken to Labour Court on review. The Labour Court found that referencing a person as “swart man” was in fact racist and derogatory and that Mr Bester was fairly dismissed.

Mr Bester then lodged an appeal in the Labour Appeal Court. The Court found that taking into account the context in which the phrase was used, the inference was that the phrase was not necessarily racist and derogatory and the dismissal was therefore found to be unfair both substantively and procedurally.

Finally the matter went to Constitutional Court which found the following:

  • The Labour Appeal Court’s point that the phrase was neutral did not take into account or recognise the legacy of apartheid and racial segregation which has resulted in us living in a country that is racially charged.
  • CCMA and The Labour Appeal Court also failed to take into account the circumstances around the use of the phrase “swart man”.
  • Mr Bester also did not show any remorse for his actions and had made no attempt to apologise.

The Constitutional Court found that the dismissal was the appropriate sanction.

This decision is an important one because it deals with the more subtle and less obvious forms of racism and assists in creating a test for determining whether a neutral statement is in fact neutral or racist.

As employers, it is imperative that we understand our obligations in this regard and have adequate policies, rules and procedures in place to ensure that employees understand what is and is not acceptable as well as what the consequences are if they transgress. This is especially true taking into account the Bill for “The Prevention and Combating of Hate Crimes and Hate Speech Bill”.

The Bill aims to provide protection for person or persons against any form of communication which is threatening, abusive or insulting.

Once adopted, this Bill will criminalise hate speech and hate crimes which often take place in the workplace. This Bill will now make employees susceptible to disciplinary and civil action as well as criminal prosecution.

We are entering a time where people will be held accountable for their actions and as employers we need to be moving forward too.

If you require assistance with policies and procedures relating to racism in the workplace, please feel free to contact info@hrtorque.co.za for assistance.

Encouraging Employee Performance

In addition to Job Profiles and Key Performance areas, employees need to know when they’re performing well and when they’re not.

Effective managers assist in clarifying expectations and provide clear, timeous communication relating to the employee’s work structure and priority of tasks.

They hold employees responsible and accountable for their input and output, and make themselves available to assist the employee with their questions. They also ensure ongoing support and regular feedback.

After setting expectations, effective managers do not walk away hoping that the task will ‘just be done’. Regular measurement and feedback is essential. This ’employee engagement’ plays a crucial role in supporting company growth.

What is responsibility and accountability?

The responsible person is the individual who actually completes the task and is the person responsible for action / implementation. Responsibility can be shared. The degree of responsibility is determined by the individual with the “accountability”.

The accountable person is the individual who is ultimately answerable for the activity or decision.

The main difference between responsibility and accountability is that responsibility can be shared while accountability cannot. Being accountable not only means being responsible for something but also ultimately being answerable for your actions. Also, accountability is something you hold a person to only after a task is done or not done. Responsibility can be before and/or after a task.

Conflict Potential

When clients subscribe to our HR Admin product, our administrators come to a client’s premises for a set number of days per week/month. This gives us unique insights into the practical day-to-day employee issues clients face.

Conflict in the workplace is common place and can arise for a number of reasons. One of the key reasons we see conflict arising stems from uncertainty faced by employees:

  • There are no Job Profiles in place with clear expectations and measurements.
  • Managers do not have the skills to assist employees set and achieve goals.

Tip: Involve employees to assist you in formalising their Key Performance areas.

If you have been considering why you are experiencing conflict and non-performance on a daily basis, turn your thoughts to the possibility that employees may not know exactly what’s expected of them.

Managers assess and implement individual work standards and timing according to what they believe is possible and reasonable. Naturally, these would differ between the Managers and conversations with employees inevitably end up in conflict, refusals to obey instructions, and decreased employee morale.

If a company makes an objective assessment of reasonable inputs and outputs based on work-study results or previous experience, and obtains the input and sign off from employees, they are more likely to enjoy stress free management, increased employee initiative, and reliance on employees meeting their KPAs responsibly and independently.