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Labour broking alive and well while the CCMA bumbles

19/01/2024
Publication: Business Day Live
Author: David Dickinson & Thabang Mohlala

Labour-hiring firms still use exploitive labour broking - and the bargaining councils, CCMA and labour court are complicit in this

The 2015 amendments to the Labour Relations Act (LRA) regulating temporary employment services, better known as labour broking, have proved to be a hollow victory for vulnerable workers.

The department of labour first commissioned research to amend the LRA in 2003. What eventually emerged was a compromise between labour and employers; workers placed by a labour broker with a client company would be deemed to be permanent employees of the client after three months (with exceptions such as maternity cover).

Once deemed permanent, section 198A(5) of the LRA requires that the employee be treated no less favourably than other employees of the client company doing similar work. The legislation aimed to prevent the exploitation of vulnerable workers within the triangular employment relationship created by labour broking.

Vulnerability was defined using workers’ remuneration (set by the Basic Conditions of Employment Act). The intention was to end unlimited duration precarious employment — “slave labour”, as it was emotionally but not entirely inaccurately termed in the debates of the time.

Yet no sooner had the legislation been promulgated than lawfare erupted over the meaning of the word “deemed”. That the amendments were subject to three years of legal contestation over this one word reflects flawed legal drafting, but also the centrality of labour broking in maintaining precarious, cheap labour in SA.

In July 2018 the Constitutional Court ruled on what “deemed” meant in the Numsa v Assign Services case. Paragraph 69 of the ruling clearly states that after three months “the employee automatically becomes employed on the same terms and conditions of similar employees [of the client company] with the same employment benefits...” At this point the client company becomes the sole employer and any remaining contractual relationship with the labour broker is purely administrative, such as managing the payroll.

That’s clear enough, but labour broking companies, which typically do the legal heavy lifting in the Commission for Conciliation, Mediation & Arbitration (CCMA) on behalf of client companies, have kept exploitive labour broking practices in place, a situation in which the CCMA, bargaining councils and labour court are de facto complicit.

This is not confined to the margins of the economy; the Germiston-based Casual Workers Advice Office is representing workers in long-running disputes over terms and conditions of deemed employees with Heineken SA, Simba and Takealot, all large enterprises owned by multinational companies.

After the Assign case lawfare shifted to in limine arguments that can endlessly frustrate applications to the CCMA or bargaining councils. These are legal points that must be settled before the actual application can be heard. For workers making an application for equal terms and conditions as permanent workers of the client company this frequently starts with the need for condoning late applications.

Section 198D(3) of the LRA requires that applications to be deemed as an employee of the client company must be referred within six months of completing three months of employment with the client company. If longer than six months, the applicant must convince the commissioner to condone lateness. One aspect the commissioner must consider is the length of delay.

Without condonation the application cannot go forward. The unfairness of this is palpable: the longer a worker has been without the rights afforded them, the less chance they have of realising them. But if you think this is the logic of the Mad Hatter, wait for what comes next.

Citing labour court cases, commissioners are now ruling that they can declare workers to be deemed employees of the client company but are unable to award them equal pay and conditions. But what about section 198A(5), which provides for equal terms and conditions of employment? Until you are deemed to be a permanent employee it does not apply, but with commissioners limiting awards to declarations, nor does it apply once a worker is deemed permanent. The Mad Hatter must be splitting his sides over this one, except that it’s a cruel joke on vulnerable workers.

The advice from commissioners denying relief to deemed permanent workers in terms of section 198A(5) is that applicants must now pursue equal pay and conditions through other avenues. The first option is to pursue their claim through the Employment Equity Act, a complex process that can only deal with unequal pay and not benefits, which are often a key difference between a labour broker and permanent employees.

The second is to declare an unfair labour dispute, though this will open another field of in limine defences, not least over subpoenaing information. The third is to declare a mutual interest dispute, which if unresolved at conciliation gives workers the right to strike. The irony is heavy: the CCMA was established to minimise strikes, yet now denies rights under section 198A(5) and points workers towards strike action.

Why should vulnerable workers jump through yet more hoops for what was granted by the Constitutional Court? And are commissioners sidestepping the fundamental legal principle of stare decisis (that rulings of higher courts take precedent) and taking their lead from the labour court two steps lower in the judicial hierarchy than the Constitutional Court?

This legal play perpetuates labour broking. We should heed the damage this super-exploitation creates. In 2011 a third of the SA Post Office’s workforce were labour broker employees. What followed was the violent implosion of the company’s industrial relations system, which contributed significantly to its current demise.

The CCMA regards itself as integral to an industrial relations system based on co-operation, industrial peace and social justice. It was established to simplify dispute resolution. Yet its practise speaks otherwise. It has lost its way.

Dickinson is professor of sociology at Wits University and author of “In Precarious Battle: Labour Broking in the South African Post Office”. Mohlala is legal officer at the Casual Workers Advice Office.

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Category: MEDIA COVERAGE | LABOUR BROKERS