Labour Law Amendments

Labour Law Amendments

The Labour Relations Amendment Act (LRAA) of 2014 came into effect on the 1 January 2015 and it is important for everyone in the working environment to understand these changes and the consequences that non compliance can impose.

The Labour Relations Amendment Act (LRAA) responds to the increasing number of people engaging in informal employment. The Act sets out to ensure that vulnerable categories of workers receive proper protection. The Act further responds to enhance the effectiveness of the Labour Court, the CCMA and other labour market institutions.

Abuses occurred in the labour market such as:

  • Labour brokers rolling contracts over of employees thereby making workers permanent temporary employees;
  • Workers employed by labour brokers earn less than other employees employed by the labour brokers’ client doing the same job;
  • Workers employed by labour brokers are not able to take up their dismissal cases with the CCMA/Labour Court as they are unclear as to who their employer is;
  • Workers employed by labour brokers often do not have access to benefits;
  • Appointment of employees for a temporary period without a valid reason, but rather to avoid potential future labour procedures to get rid of the employee if they do not perform according to the company’s expectation or if they are disliked.

Companies made use of services of labour brokers to gain the advantage of obtaining manual and/or temporary labour without the administrative burden. The employees were supplied by the labour brokers and were not employees of the company.

These employees could be hired and fired and could not claim unfair dismissal against the company to whom their services have been supplied, since the employment relationship was between the employee and the labour broker.

With the amendments to the LRA this practice which once existed of hiring and firing employees with no recourse was closed. The labour legislation now makes provision for an agreement existing between the labour broker, the company and the employees, resulting in an employment relationship existing between the company, the employee and the labour broker.

As mentioned temporary employment contracts were also used in cases where employers who in actual fact have permanent employment available, but want to ensure that they like the candidate or want to determine how the candidate functions within the position during the temporary period before permanently appointing the employee – the temporary employment route was ideal. The benefit employers gained from this was that if they disliked the temporary employee they could get out of a sticky situation by indicating that the temporary contract came to an end, without following any procedure and without any labour “headaches”.

 

However according to the LRAA, temporary employment is now limited to a period not exceeding 3 months and must be for genuinely temporary work and not to get out of a sticky situation or to avoid labour procedures. Temporary employees must be treated in the same manner as permanent workers unless there is a justifiable reason. The LRAA further sets out to protect temporary employees against unfair dismissal and as mentioned the temporary employees may pursue either the Temporary Employment Service (labour broker) or the client in cases of abuse.

The question can be asked if temporary contracts are then now completely banned and the answer is simple – no. As mentioned above the main purpose of the LRAA is to protect vulnerable employees and to stop cases of abuse.  Employers can still fix the term of the contract if the nature of the work is of a limited or definite duration or for any justifiable reason which will include, but is not limited to the following:

  • Replacing another employee who is temporarily absent;
  • Students gaining work experience;
  • Non-citizens with a work permit for a limited period;
  • Seasonal work;
  • Reached retirement;
  • Temporary increase in work, but this cannot be longer than 12 months;
  • Public works scheme.

Section 198B states that an employee on a fix-term contract for longer than three months must not be treated less favourable than permanent employees performing the same or similar work, unless there is a justifiable reason which is described by section 198D(2). Justifiable reasons for different treatment refers to the application of a system which takes into account seniority, experience, length of service, merit, quality or quantity of work and any other similar criteria. Lastly one can definitely say that the more controversial and debated amendments is the amendments of Section 198 and employers should familiarise themselves with the broad changes to ensure compliance with the LRAA.

Should you have any inquiries, please feel free to contact one of our consultants.

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