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Labour Complexity

Legally Compliant Usage Of Labour Brokers

Changing labour law will impact entrepreneurs in many different industries.

Ivan Israelstam

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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 business
  • 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: Affects of New Legislation on Labour Brokers and Contractors

Implications for entrepreneurs

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.

Related: Play It Safe: CCMA

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 based on the entrepreneur’s compliance with labour legislation. Unregistered brokers will be likely to receive stiff fines and be closed down. As a result, entrepreneurs running brokers and agencies need to get their houses in order now.

They must, for example, 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. 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.

Ivan Israelstam is CE of Labour Law Management Consulting. Contact him on +28 11 888 7944, +27 82 852 2973, labourlaw@absamail.co.za, or go to www.labourlawadvice.co.za

Ivan Israelstam has a BA Honours degree from the University of Witwatersrand and an IPM Diploma in Personnel Management and Training. He has more than 20 years of experience in labour law and industrial relations. He is a member of SACOB’s Labour Affairs Committee and is involved with business sector decision-making on labour issues. He also writes a weekly column for The Star newspaper.

Company Posts

Is Your Critical Illness Cover Keeping Up With The Times?

Critical illness cover was originally the brainchild of a forward-thinking surgeon who noticed more and more patients were struggling to make ends meet after recovering from life-threatening conditions.

BrightRock

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Critical illness cover was originally the brainchild of a forward-thinking surgeon who noticed more and more patients were struggling to make ends meet after recovering from life-threatening conditions. This increase was driven by medical advances, which drove a spike in survival rates – and its consequential recovery costs – something that old school insurance policies did not factor into their products. And while we all know the medical field continues to move forward through innovation, it’s important to ask yourself: has your cover kept up?

Medical advances during the 1960s and 70s didn’t just lead to an increase in patients’ life expectancies, but it also led to financial difficulties for many survivors of critical illnesses and –injuries. Many of these patients were faced with rehabilitation costs and additional expenses caused by lifestyle and/or professional adjustments they had to make to stay on the road to recovery, and they struggled to make ends meet.

Dr Marius Barnard, brother of the famous Dr Christiaan Barnard and respected surgeon in his own right, identified an opportunity to provide these patients with risk cover for these needs. He partnered with a life insurer in 1983, and critical illness cover was born.

Initially covering only four major conditions, medical advances soon enabled the expansion of critical illness cover to many more conditions, like Alzheimer’s or Parkinson’s disease, paraplegia, major burns and brain damage. Lifestyle factors such as smoking, obesity and lack of exercise have increased the likelihood of critical illness claims, but the claims are becoming less severe, thanks to improved medical techniques for the treatment and detection of life-threatening conditions.

Related: How BrightRock Is Rocking The (Industry) Boat In Only 5 Years Since Launch

Where does critical illness fit into your financial plan?

While medical and, possibly, gap cover can make provision for medical expenses, critical illness cover is instrumental in covering any gaps and providing for lifestyle changes that result from conditions like paraplegia, like the expenses involving alterations to a home to be wheelchair-friendly.

Many medical aid schemes may also exclude certain treatments or not cover them in full, or you might have reached your annual limit. In these instances, critical illness cover may just come to the rescue.

Considering all the scenarios where critical illness products have the potential to come into play, it’s important to ask yourself how forward-thinking the insurance you signed up for really is. Does your insurer factor in the latest treatments, and have they adjusted the range of conditions they provide cover for to keep up with the latest medical research and survival rates?

How many conditions are covered?

Start by obtaining the list of conditions covered by your critical illness policy, because the number of conditions covered vary from company to company. There are life insurance providers that provide cover for over 300 conditions, while some assurers cover fewer than 100 conditions. Some life cover providers also take into account the treatment, clinical impact and effect of an illness, which ensures protection for as yet undiagnosed conditions – this is the kind of cover you should be signing up for.

How do the pay-outs work?

You should also consider the pay-out structure and/or –options of your critical illness policy. There are policies with pay-out options that are helpful for conditions that involve large expenses initially, followed by smaller amounts over a number of months. Importantly, you should be allowed to make certain choices about how your cover should pay out at claim stage, when you know what your physical and financial needs are.

What about smaller events, like accidents?

Forward thinking life cover providers have also identified a need for financial protection in instances where you might have less critical, but still traumatic illnesses or injuries and spent little or no time in hospital.

Related: BrightRock’s 5 Entrepreneurial Tips For Start-ups

Just think about the myriad of costs involving corrective procedures, medical aid co-pays, hospital costs, rehabilitation, assistive devices, physiotherapy, wound care, nursing and surgery costs – not to mention being unable to earn an income while you recover from a serious illness or injury. Many of these expenses might be typically incurred just because you aren’t fully covered by medical aid schemes and gap cover products.

Innovations like cover that precisely matches your needs are done in the same spirit of innovation and matching the needs of patients as we saw with Dr Marius Barnard. So before signing up for, or selling your next critical illness policy, ask yourself: Does my cover provider do the same?

  • Schalk Malan is the CEO of BrightRock, provider of the first ever needs-matched life insurance that changes as your life changes.

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Company Posts

Keys To Simplify Payroll Compliance

Human resources departments across the country cite compliance as one of the top challenges they face. As an SME owner, it’s up to you to ensure that your company’s personnel business practices adhere to the current laws.

Sage

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Keeping accurate records to document your company’s compliance is just the beginning, says Ania Strydom, Compliance Specialist at Sage. 

1. Why is payroll compliance so important?

Payroll is the biggest expense for most employers. Employers must comply with all labour and tax laws that govern the payroll to avoid financial and legal risks and to protect the employees and the business. The risks of getting it wrong include:

  • Censure
  • Interest or fines by authorities
  • Imprisonment in cases of fraud or extreme negligence.

Payroll fraud is one of the most common white-collar crimes in the business world; what’s more, inaccurate payments and non-compliance can cost a business dearly.

Related: How To Get The Most From Your Payroll Solution With The Sage Academy

2. What are the implications for staff if a company is non-compliant?

non-compliant-companyThe payroll is one of the most crucial links in the employee-employer relationship. Late or inaccurate wage and salary payments, or inaccurate calculations of other earnings (such as overtime), deductions (such as PAYE and UIF), and contributions (such as retirement fund or UIF contributions) can be extremely damaging to the morale of the workforce.

By law, every employee is entitled to a payslip and tax certificate (IRP5/IT3(a)). Employees need payslips for purposes such as applying for personal or home loans. Accurate and easy to understand payslips will boost employee satisfaction and trust in the company, with a positive impact on business performance.

What’s more, employers must make sure UIF contributions are correct so that employees get the full amount they are entitled to if they need to claim.

3. How will the company’s growth prospects be affected if the company is non-compliant?

While an efficient payroll system enhances staff morale and boosts an organisation’s reputation, mistakes in record-keeping and compliance can result in punitive penalties and hurt the company’s brand. Compliance mistakes with payroll can be expensive and potentially catastrophic which subsequently results in business risks.

Related: How Do I Go About Valuing My Business?

4. How can a business ensure it is payroll compliant?

South African tax regulations and labour laws are and continue to be more complex. Keeping track of all the payroll legislative requirements can be challenging, but the risks of non-compliance are high and businesses can no longer rely on spreadsheets and other manual methods to do their calculations, report and file returns.

Automated solutions are becoming more essential for keeping reliable records, reporting and performing accurate payroll calculations.

The package you choose should:

  • Be tailored for the local tax law, labour law and regulatory environment
  • Manage all the complex calculations and regulatory reporting the business must do timeously
  • Feature automated updates to ensure the company always processes on the latest software and legislative version.

This will ensure it avoids censure, fines, penalties, interest and/or imprisonment as a result of non-compliance.

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Company Posts

Why Your Employees’ Health Is Your SME’s Wealth

Absenteeism costs R16 billion annually, according to Stats SA. That’s a lot more than it costs to sign up for a group offering that is specifically designed for small to medium enterprises.

Fedhealth

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Vital Stats

Fedhealth’s Commercial Executive, Michelle Morton explains the importance of group health cover to keep your SME’s pulse strong.

1. Why is it important for a SME to care about the health of its employees?

First, when an employee in a critical role within the SME falls ill, there’s often nobody else to fill the skills void created by his or her absence. This can have a detrimental effect on the daily operations and business output.

Second, offering sound medical aid may attract and retain the right talent to the business.

Third, choosing a medical aid like Fedhealth, which places a big emphasis on preventative health and wellness, can also assist the SME owner in cultivating a healthy culture in the workplace.

Related: Fedhealth Brings Healthy Benefits to your Staff

2. What should business owners consider when looking for a group medical plan?

Apart from factors like affordability, a good reputation, and ability to pay claims, look for schemes that offer value-added services, such as wellness days where staff can undergo crucial health screenings, and programmes to address specific health issues.

3. What are the top health concerns for today’s workforce?

Back and neck pain are second to headaches when it comes to painful conditions affecting humans — especially office workers, who are often desk-bound for hours on end. Fedhealth offers qualifying members a 12-week Conservative Back and Neck Rehabilitation programme to help correct the problem through exercise and behaviour.

Diabetes and hypertension are also on the rise, while some employees face HIV/Aids, weight issues or struggle to quit smoking. Fedhealth provides assistance for all these diseases and health concerns.

4. How will the employees benefit from working for a company with a great group medical plan?

I believe it makes the business a more attractive place of work for employees, as medical aid is a much-needed benefit and costly if one has to pay for it out of one’s own pocket.

Related: Why Fedhealth Believes In The Power Of The SMME Sector

5. Please explain the importance of the SOS Corporate Wellness benefit

The Sisters-on-Site service (SOS Corporate Wellness) is a value-add as it brings basic healthcare to the office. This means that staff can regularly see a qualified nursing sister at their place of work for minor health issues, instead of having to take time off work to visit the doctor or clinic.

Employees build a rapport with the sister, as they see her on a frequent basis. Through the SOS Corporate Wellness benefit, they can also conduct important health screenings that might flag serious health issues of which the employees might be unaware. Sisters-on-Site can also facilitate monthly health themes to raise employee awareness on issues like breast cancer.

 

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