How to use Labour Brokers – risk free for companies in the metals and engineering industry

• Seek a guarantee from the labour broker that it is observing all the provisions of the bargaining council agreements; and
• Ensure that the broker has adequate professional indemnity insurance cover to protect the client against any subsequent claims from the bargaining council.

Professional indemnity insurance is available to the labour broker who meets certain qualification standards and this, in itself, is an important safeguard to client companies.

The Main Agreement Employer Obligations

The MEIBC Main Agreement imposes the following obligations on companies’ intent on utilising the services of labour brokers.

No employer should utilise the services of workers supplied by a labour broker unless the broker provides proof of:

• Registration with the Unemployment Insurance Fund;.
• Registration with the Compensation Commissioner in terms of the Compensation for Occupational Injuries and Diseases Act; and
• Registration with the bargaining council.

The employer is required to complete a form to notify the Bargaining Council of the business name and physical address of the labour broker within seven days from the date on which the services of the broker are utilised.

The employer is required to complete a form in respect of each person supplied by the broker, detailing the following particulars:

• The name, telephone number, residential address and identity number of the worker;
• The business name, telephone number and business address of the labour broker;
• The date from which the services of the worker will be utilised and the expected termination date;
• The site or workshop address where the worker will be located;
• The anticipated normal hours and overtime to be worked by the worker;
• Whether the worker will be engaged on Rate A work; and
• The scheduled occupation applicable to the worker.

Management should also ensure that employees supplied by the broker are members and contributors to either the Engineering Industries Pension Fund or the Metal Industries Provident Fund. A special dispensation is available to a labour broker’s employees permitting coverage only in respect of the death and disability components of these Funds. Management should request adequate proof of the existence of an appropriate exemption issued by the Bargaining Council where this arrangement is observed by the broker.

Bargaining Council Accreditation of Labour Brokers

The Bargaining Council has in place an accreditation process to enable individual labour broker companies, on a voluntary basis, to request a six-monthly audit and inspection to certify their compliance with the council’s agreements. The Bargaining Council, SEIFSA and the industry trade unions recognise and promote those broker companies which have been accredited.

The objectives of this comprehensive labour broker accreditation system are to:

• Provide some protection to client companies against financial risks associated with the use of labour brokers who fail to comply with bargaining council agreements;
• Ensure that employees of labour brokers benefit from all the negotiated provisions of the council’s agreement;
• Promote the utilisation of accredited labour broker companies in the industry; and
• Attempt to regulate the labour broker sector in more a positive and effective manner.

Management should utilise the services of these accredited broker companies. SEIFSA will keep members informed of the names of these accredited companies.

Recommended Management Action

SEIFSA believes that proper use of the Federation’s services will help to ensure that:

• Management satisfies itself that the labour broker is in possession of a valid tax exemption certificate;
• The client company does not become liable for arrear income tax deductions;
• The broker is in possession of appropriate professional indemnity insurance cover; and
• Management has ensured that the broker has complied with the requirements of the Main Agreement, including, but not limited to, proof that the broker is registered with the bargaining council and is observing its various agreements.

Casual Employment

Casual employees are generally employed on a daily basis or for a very limited number of days per week. The Basic Conditions of Employment Act (BCEA) defines a casual employee as “…employees who work for less than 24 hour a month.” Previously this was three days per week.

As this is the only definition of a casual employee in our labour legislation, a great deal of emphasis will be placed on this definition in making a distinction between a casual employee who works less than 24 hours per month and a temporary employee whose contract is terminated on a specific date or upon completion of a specific task.

Nevertheless, management should be aware that casual employees are covered by the definition of employee in the Labour Relations Act (LRA) and are thus entitled to all the protections and rights under it. This is a point often overlooked by management who believe that employees employed on a casual basis may be treated differently in terms of the laws of equity and fairness. Management should be aware that casual workers may join unions, go on strikes, are protected against being unfairly dismissed and may approach the Council, the CCMA or the Labour Court for relief on the same basis as any other employee.

In a manufacturing environment where activities are governed by the MEIBC, management must ensure that all work being performed is in terms of the minimum rates of pay as set out in the Main Agreement.  On the other hand, where casuals are employed to perform work falling outside of the scope of jurisdiction of the Bargaining Council and the Main Agreement, management is free to free to pay casuals any amount mutually agreed upon.

In summary, then, casual workers should not be employed for more than 24 hours per month and their employment must automatically terminate when a particular job or task has been completed. In cases where management has employed the same casual worker every month, the casual worker may, after a reasonable period of time, have an expectation of continued casual employment. In other words, the casual may argue that he/she has become a permanent temporary employee.

Recommended Management Action

Where management needs to terminate the services of casual employees who have worked for a reasonably long period, it would be advisable not to do so unilaterally, but to follow the procedures as would be the case for any other employee.

Conclusion

The use of temporary or fixed-term contracts of employment, casuals and persons provided by labour brokers to regulate the relationship between employer and employee in order to maximise flexible working arrangements is not unique to South-Africa.

With the increased reliance by management on non-standard forms of employment, the workforce of the future consists of two distinct categories of employees, all of whom will fall under the ambit and protection of the LRA, the BCEA and/or the Main Agreement.

At one level, there will be a core group of employees, employed for an indefinite period of time on a traditional and full-time basis fully integrated into the company. At the next level will be persons employed on a casual or temporary basis or via a labour broker who enjoy the protection of our labour system, but are not fully integrated into the organisation.

Non-standard or temporary forms of employment, when utilised correctly as a means of cost-effective manning in an attempt to keep wages and the costs of doing business in line with increasingly competitive markets, is an entirely acceptable and beneficial arrangement for both parties.

From a management point of view, the importance of observing the provisions relating to different employment relationships correctly cannot be overstressed.

It is strongly recommended that all contracts of employment –  be they permanent, temporary, casual or on the basis of persons provided by labour brokers – must be in writing, setting out the terms and conditions of employment, no matter how short the employment period may be. There is far more certainly when the contract has been recorded in writing, is compliant with relevant laws, rules and regulations and has been entered into knowingly and willingly by the parties.

Ends