The proposed amendments to the Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA) are causing new controversy, due to potential implications both for employers and employees
This is according to Brian Patterson, Employment Law director at ENS, speaking at the ENS Employment Law Seminar held in Johannesburg today, who says that amongst the most pressing of concerns held by employers regarding the proposed amendments to the labour legislation, are the proposed limitations to ways of changing workplace conditions and the constricted parameters for using fixed-term workers.
“In light of these proposals, businesses face the loss of an important mechanism for changing workplace terms and conditions. Furthermore, should the proposed amendments be implemented, new conditions on the employment terms of atypical workers will pose significant challenges for employers,” he says.
Facing challenges
Brian explains that included in the proposed changes to the LRA is a proposed ban on employers being able to retrench workers where they refuse to agree to changes in terms and conditions that are objectively necessary to meet the employer’s operational requirements. “This will make changing workplace terms and conditions a major challenge for employers,” he says.
Secondly, should the proposed amendments to the existing legislation be implemented, Brian says atypical forms of employment – such as using labour brokers, fixed term and part-time workers – will be much more heavily regulated and will therefore be less attractive options for employers.
“Firstly, labour broker workers working for clients who operate in industries falling under bargaining councils, will be entitled to the same terms and conditions of employment that are applicable to the employees employed by the clients in the industry. It will not be possible, therefore, for an employer to avoid paying bargaining council minimum wages and benefits through the use of labour brokers,” he says.
Secondly, employers who use labour brokers on an on-going basis to avoid the responsibility of being the employer, will be deemed to be the employer of the workers supplied by the labour broker. This can only be avoided where the worker is supplied to meet a genuinely temporary need.
Terms and conditions
“In addition, the amendments also contemplate that the labour broker workers who are deemed to be employees of the client courtesy of the above, have to be given terms and conditions of employment that are on the whole lot less favourable by comparison to the employer’s ordinary, permanent employees doing similar work,” says Brian.
Similarly, Ross Alcock, Employment law director at ENS explains, employers who use rolling or long term fixed term contracts to employ less expensive labour and avoid providing group benefits such as retirement fund and medical scheme membership or the equivalent, will have to revisit their modus operandi in this regard as the scope for the use of fixed term workers, particularly for those workers earning below an earnings threshold (currently R172,000.00), will be narrowed substantially.
“Under the proposed amendments, fixed term contracts longer than six months will not be permitted unless the employer can demonstrate that the appointment of a fixed term worker is for an objectively genuine fixed term need.
“Moreover, all employees employed on fixed term contracts of longer than six months will be entitled to terms and conditions that are on the whole not less favourable for the employee than permanent employees doing the same work, unless there is an objectively justifiable reason for treating them differently,” he says.
Permanent vs contract employees
Alcock warns that providing exactly the same benefits as permanent employees can be an administrative nightmare when it comes to moving fixed term employees in and out of medical schemes and pension funds on a regular basis. However, he says simply providing fixed term employees with an additional cash payment equivalent to what the contributions to these schemes would have been, has its own problems.
“The additional cash payment could result in the take-home pay of fixed term employees being greater than that of the permanent employees, which is likely to cause internal discontent. Furthermore, the cash equivalent does not necessarily get the fixed term employee the same insured benefits that s/he would be able to get as a member of the employer’s retirement fund or medical scheme,” he says.
According to Stuart Harrison, Head of Employment Law at ENS, similar issues will arise with part time workers, some of whom would be entitled, under the amendments, to treatment (on a pro rata basis) that is on the whole not less favourable than a full-time employee doing the same or similar work.