If you woke up feeling 2011 was going to be the year you took on the world and capitalized on the fact that you have come through the recession intact, think again if running a small business is what you do. If the Amendments to the Labour Relations, Basic Conditions of Employment, Employment Equity and Employment Services Acts come into being, you might have to seriously reconsider if it is viable to remain in business or not.
If your business model is based upon the employment of employees on a temporary or casual basis, than your business will come under attack. Ensuring that all employees, outside of much defined circumstances, will under the new Act, be forced to be made permanent. This will have drastic impacts on certain industries, especially service related industries where income and job security is linked directly to performance of employees.
Bet you didn’t factor this “unknown known” into your strategy planning.
South Africa historically has been pro-employer. Since 1994 workers have seen their rights entrenched and empowered under the South African constitution, various pieces of legislation and institutions such as the CCMA. South Africa is no longer viewed as pro-employer, however because of the rights won by workers and the high level of “labour action” these rights allow workers, South Africa is described as a country where” Cost competitiveness has been jeopardized by insider dominated wage bargaining..”
Now South Africa has a set of draft Amendments to most of the significant labour relations legislation. We want to touch on what are the implications of the Act and how will this affect your business?
The Amendments were tabled to address the undermining of general conditions of employment of workers that occurs through companies outsourcing their employment of employees via labour brokering firms. The unions argue that labour brokering is equivalent to “a form of modern slavery” and further that in order to ensure “decent work” for South Africans, the term “decent work” needs to be synonymous with “permanent” employment and that labour brokering should be banned outright.
While, nobody wants to perpetuate “modern slavery” and surely everyone is entitled to “decent work” the Amendments being debated heatedly have high implications for the way you do business. It must be pointed out that many countries use a combination of approaches that allow fixed-term contracts to play their legitimate economic role while preventing abuse. The concern with the Amendments
Some of the key issues you should be concerned about as a business owner are:
- The amendments preclude the employment of foreigners over national citizens. If your business runs on the employment of foreign nationals, this practice will now be illegal and heavy penalties will be enforced.
- Ensuring that all fixed/temporary contracts become permanent and all employees are directly employed by a company as opposed to intermediaries, such as labour brokers, places increased risk on companies. Companies will need to seriously prioritise posts needed which will affect the number of people they will be able to hire within the confines of the required minimum wage and conditions of services.
- There is the possibility that as many jobs could be at risk if employers chose to convert current temporary contracts to permanent ones. Coming out of an economic recession, where industry is risk averse and not confident of growth, job losses will seriously impact on the country. These job losses don’t just mean increased unemployed, it means less consumers to consume the services and good being sold by particularly small South African businesses.
- The amendments would violate the Constitution of South Africa; in that it would infringe on the right to choose a trade, occupation or profession freely. An employee could also not choose temporary employment as an option. This will have huge impacts on for instance, women, who need to work on a temporary basis to cater for the care of children and young people working informally to support themselves through university, etc
- The amendments across the Labour Relations Act (and other linked labour specific legislation) could destabilize institutions such as the CCMA and UIF by significantly increasing the workloads on these intuitions. These institutions will have to increase their capacity, which in the meantime will result in huge backlogs in unresolved cases. In addition to the cost of capacitating these organizations which will be borne by the State, businesses will have to cover the cost of maintaining employees of suspension for longer periods of time.
- If the amendments go through unchanged, your business could be faced with the situation where you need to let go of your current workforce and be fighting several claims at the CCMA.
These amendments could very well be a game changer. How does one plan to expand your business not knowing how drastically your rules will be changed? The unions need to start getting to grip with the concept of the bottom line, if there’s no bottom line there’s only the welfare line.
There are other ways of regulating this practice – that could even do away with the labour brokering all together, not that this is really a good idea to start with. Why use a stick when a carrot could work. Were no alternatives considered, such as tax breaks or quick access to business support financing, should they not be considered?
So what can you do about all of this? Should you shut up shop now fearing the worse? Don’t despair, should this amendment go through parliament it won’t come into effect immediately and there are still legal avenues for challenge, avenues that lead all the way to Constitution Hill and this probably where this fracture between business, government and the Unions will be splint.
If you are a business that makes use of temporary workers, you must start planning for the changes to the labour brokering environment that will be coming in the near future.