Johannesburg - A total of 150 former owner-drivers at beverage company ABI – an affiliate of SAB – have lodged a damage claim totalling R6.3 billion against the company.
ABI is the soft drink division of SAB and the major distributor of Coca-Cola in South Africa.
Owner-drivers are former employees who have been converted into nominally independent contract drivers.
The summons was served on October 9 and accuses ABI of unlawfully terminating its owner-driver contracts with the lead plaintiff, Thabo Tsolo, and 149 others.
Their claim is that ABI progressively squeezed their earnings downwards, allegedly making their owner-driver businesses, which can’t really generate other income, unsustainable.
Earnings were sometimes driven to below what normal employees would have earned, said the drivers’ lawyer, Andries Nkome.
Nkome said earnings sometimes fell to R8 000 a month less than what an employed truck driver earned.
The enormous R6.3 billion figure is up for argument at trial, admitted Nkome. It is based on the alleged earnings of owner-drivers at the other major Coca-Cola distributer, Shanduka Beverages.
According to the particulars of the claim, this was R350 000 a month, while the contracts were generally 10 years long. Multiplied by 150 owner-drivers, that comes to R6.3 billion.
ABI’s lawyers have responded by saying the claim was “vague”.
“They say they cannot comprehend the comparison with Shanduka,” Nkome told City Press. “We will argue about that in court.”
Tsolo had his owner-driver contract with ABI terminated in 2012, three years to the day before the case was filed. That is the maximum time allowed by the Prescription Act before damage claims expire.
Losing the contract has landed him in financial trouble because of the debt incurred to buy his truck, he told City Press.
He and other former ABI drivers have been lobbying fiercely against the alleged abuses in ABI’s system, including the fact that it had previously qualified for broad-based BEE points.
The case will shine a light on one of the most pervasive forms of outsourcing worldwide – the conversion of employees into contractors, which is commonplace in the local logistics sector, but less politicised than labour brokering or subcontracting.
ABI has, starting in 1991, completely converted its logistics network into an owner-driver system – a model embraced by many other companies, including SAB, Cargo Carriers, Famous Brands and courier companies such as UTi Distribution.
The schemes are touted as empowerment initiatives that promote entrepreneurship instead of mere employment.
The distinction can, however, be hazy.
Late last year, the Labour Appeal Court dismissed a case where 20 owner-drivers from UTi SA claimed they were in effect employees and protected by labour law because their actions and earnings were still completely controlled by the “employer”.
Owner-drivers have to start a company and then get help to finance a truck, which they use to do more or less what they would do if they were employed as drivers.
The department of trade and industry, however, no longer considers them empowerment candidates worthy of broad-based BEE points because the businesses they create are not independent or really controlled by the owner-drivers.
According to Nkome, the claims about “empowering” and “partnering” with former employees that accompanied the scheme were belied by what it actually achieved: declining earnings.
He said the plaintiffs would show this in court.
According to ABI logistics director Eddie du Plessis, the average earnings of the company’s owner-drivers was R22 000 a month, with the lowest-earning drivers receiving R13 000.
Earlier this year, ABI had told City Press its owner-drivers “on average” could earn 30% more than an employed one.
The ABI scheme lost about 50 of its 300 owner-drivers a year and recruited about the same number to replace them, said Du Plessis at the time.
Most of the terminations were voluntary, he said. Many have to do with the drivers racking up tax arrears – something proscribed in their contracts.
In Tsolo’s case, however, it was a “breakdown in the relationship”.
His letter of termination cites “no cause whatsoever” as the reason for the termination.
Du Plessis and Tsolo both recount his various complaints about conditions imposed by the scheme.
These range from allegedly having to use a business adviser Tsolo accuses of cheating him to having to get his truck’s tyres replaced at a dealer who used inferior tyres.
Tsolo was terminated during the 2012 truck drivers’ strike, which saw owner-drivers – who cannot strike – targeted by strike enforcers.
Tsolo refused to make deliveries over a weekend and was terminated the following week.
This article was amended on December 10 2015 to reflect the correct number of owner-drivers. The original article said that the ABI scheme lost about 50 of its 3000 owner-drivers a year. The correct number of owner-drivers was 300.