How New Legislation Affects Labour Brokers & Contractors

How New Legislation Affects Labour Brokers & Contractors

SHARE

Labour legislation currently being designed will have far reaching effects on entrepreneurs in several sectors, including labour brokers, temporary employment agencies, security firms, cleaning contractors and catering companies. In fact, any business that provides or uses contracting services will be affected. To minimise the impact of this new legislation on your business, and to ensure that they continue to operate within the bounds of the law, all entrepreneurs must take the following steps:

  • Understand why this new legislation is being implemented
  • Understand the implications of this new legislation for their own businesses
  • Develop strategies for coping with these changes in the law

Why is the legislation being implemented?

South Africa’s trade union movement has the view that any basis for employment other than permanent, full-time jobs is exploitative, unfair and unconstitutional.The unions view labour brokering, sub-contracting, casual labour, seasonal work, part-time work and fixed-term employment as Atypical Employment and have launched a powerful attack on such “slave labour”, demanding that it be banned outright.

While our government is unlikely to go to this extreme, it does agree with the unions that people employed in this way are often treated very badly. The new legislation will therefore be aimed at preventing employers from unfairly exploiting such employees.

Related: How to Deal With Employee Misconduct

Implications for entrepreneurs

1. Conversion of business model:
It is likely that labour brokers will only be allowed to provide labour for temporary periods in circumstances where they can prove that such interim arrangements are operationally necessary.Entrepreneurs who run labour brokering businesses and temp agencies need to develop plans to convert their operations to, for example, the provision of temporary replacement of employees on leave, relief of backlogs, and other short-term operational requirements. These types of brokers and agencies could also plan to expand their businesses into areas such as payroll services, sourcing of permanent employees (to be employed by the client) and personnel administration.

2. Requirements for labour broker registration:
It is likely that the registration requirements controlling whether labour brokers will be allowed to operate will be very stringent and will be based on the entrepreneur’s compliance with labour legislation. Unregistered brokers will be likely to receive stiff fines and to be closed down. As a result, entrepreneurs running brokers and agencies need to get their houses in order now. They must, for example, to ensure that the conditions under which they employ their workers are not infringing the law. And they need to ensure that their record keeping systems clearly reflect such legal compliance.

3. Legally compliant usage of labour brokers:
The strategies of entrepreneurs who make use of labour brokers and contractors need to be amended so that they no longer rely on labour broker workers to fill permanent posts. Entrepreneurs who use labour brokers also need to make sure that the brokers they use are complying with all aspects of labour law. Otherwise, the entrepreneur can be sued jointly with the offending labour broker.

Related: Good HR Management = Success

Entrepreneur
Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.