The pro’s and con’s of labour brokers

It has become more and more common for companies to use the services of an outside party (called a temporary employment service or a labour broker) to obtain temporary workers and to avoid all the hassles and obligations flowing from employment contracts and labour legislation.

The labour broker provides the temporary workers to the client. The labour broker is their employer.  If the client no longer needs the services of an employee, the labour broker will be liable for his or her dismissal (or placement in another position).
The Basic Conditions of Employment Act 75 of 1997 (BCEA) defines “temporary employment service” to mean any person who, for reward, procures for, or provides to, a client, other persons—
(a)          who render services to, or perform work for, the client; and
(b)          who are remunerated by the temporary employment service;
In this arrangement, the client pays the labour broker who, in turn pays the workers (less). Obviously, it would be cheaper for the client to employ and pay the workers, directly, but the client prefers to have no obligations towards the worker.
Often, the Labour Brokers exploit the workers and, as a result of these abuses, many jurists and trade unions have called for the abolition of the labour broker system. The workers are vulnerable and have no job security and generally don’t join trade unions that would otherwise protect their rights. A client tells the labour broker that he is unhappy with a worker and his job with the client simply comes to an end, and the client is not accountable. The labour broker effectively circumvents the normal provisions of the Employment Equity Act, the BCEA and the Labour Relations Act, 1995 (LRA) that unless the contrary is proven, a person who works for or renders services to any other person is generally regarded an employee of that person.
Typically, a labour broker will get the workers to sign fixed term contracts and dismiss them when the contracts have run their course (or when the client no longer wants the services of a particular worker). Sometimes, contracts are renewed, year after year. Some labour brokers convince semi-literate workers to sign complicated contracts in blank and then simply fill in the dates, when it suits the labour broker to inform the unsuspecting worker that his contract has ended! Even worse, some contracts oblige the parties to arbitrate disputes, so that the CCMA (which is free) cannot hear the matter and the worker simply cannot afford the high costs of arbitration.
Section 185 of the LRA provides:
185. Right not to be unfairly dismissed or subjected to unfair labour practice
Every employee has the right not to be
(a)          unfairly dismissed; and
(b)          subjected to unfair labour practice.
In the case of SACCAWU v Primeserv ABC v Recruitment Ltd 2007 (1) BLLR 78 the court confirmed that a temporary employment service has a duty to treat employees fairly at the time that their contract with the client comes to an end. The labour broker must thus ensure that the dismissal is both substantively and procedurally fair. Unfortunately, the labour brokers often resort to the stratagem described above that allows them to circumvent this duty.
In the case of LAD Brokers (Pty) Ltd v Mandla 2002 (6) SA 43 (LAC), the court held that the worker was the employee of the labour broker but the labour broker (temporary employment service) and the client are jointly and severally liable in case of any contravention committed by the labour broker, in respect of:
(a) any applicable collective agreement concluded in a bargaining council;
(b) applicable arbitration regulating conditions of employment;
(c) the Basic Conditions of Employment Act; or
(d) a determination made in terms of the Wage Act.
So what is the future of labour brokers in South Africa? Some lobbyists are advocating their total ban and others ask that the industry be better regulated.
Contrary to what the trade unions argue, our labour laws are too restrictive and discourage employment. The temporary employment services offer a convenient way around that. What the legislators need to do (short of making our labour laws less restraining) is to try to introduce more integrity into the labour broking market. To ban labour brokers outright would be disastrous and lead to huge job losses. Employees of labour brokers need better job security and protection of their rights.
Proponents of reform and regulation propose mandatory registration for all labour brokers, the establishment of a Board to regulate and enforce set standards, a code of conduct enforced by the industry board, annual consideration of profit margins and promotion of job creation initiatives.
These would go a long way to give temporary workers more security and protection.

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