Publications
Partners
A potentially game-changing amendment to South Africa’s labour law, followed by a precedent-setting Constitutional Court case, have still not delivered the goods for labour broker workers who face a number of tactics by employers to avoid the cost implications of the so-called deeming provision.
These range from instantaneous retrenchments as soon as workers get “deemed” to be permanent workers to “equalising” their wages to that of previously nonexistent or simply more junior job categories.
Some companies bring expensive lawyers to negotiate very unfavourable contracts with unrepresented workers.
After dozens of cases involving thousands of workers, the outcomes for workers are “poor”, said Bhavna Ramji, an attorney at the Casual Workers’ Advice Office.
The NGO has been helping labour broker workers at a number of well-known companies make use of the new “deeming” provision inserted in the Labour Relations Act in 2015.
This provision deems a labour broker worker who has worked for a client for more than three months to be an employee of the client.
This was accompanied by an “equalisation” provision allowing the deemed workers to insist on the same remuneration as the client’s pre-existing employees.
Employers have found ways around the impact of both provisions, Ramji told City Press.
Loopholes in the law are part of the problem, but the lack of organisation and bargaining clout among the largely un-unionised labour broker workforce is also contributing to constant semi-victories for brokered workers. Some recent cases illustrate the problem:
Ferrero Ithemba RSA
At chocolate-maker Ferrero Rocher’s local subsidiary Ferrero Ithemba RSA, 92 labour broker workers were deemed on October 23. Their contracts contain an “unconscionable” provision that essentially lets Ferrero cut their hours to zero at will.
Workers probably did not understand what they were signing, said Ramji.
According to her, this is a good illustration of the asymmetrical lawfare that comes with deeming disputes. At settlement talks, the workers were represented by a community advice officer, while Ferrero was represented by corporate law firm Webber Wentzel and counsel.
Ferrero workers now get the “monetary equivalent” of benefits, but not an actual provident fund.
Dis-Chem
At retail giant Dis-Chem, roughly 800 workers at the company’s Midrand distribution centre were deemed last year. This year, it has emerged that these workers are still being paid less than colleagues in the same positions who were not previously employed by a broker, claims Ramji.
This was established after employees who had been permanently employed before the deeming shared their payslips with the new deemed workers.
This case and similar ones show how hard it is to enforce meaningful equalisation of pay when you don’t have access to the payroll records of the company. The settlement signed by Dis-Chem simply said that workers would get “an hourly rate applicable to their positions”. No elaboration was supplied.
The workers were previously employed by Bidvest Vericon, Global TLS.
Competitor Clicks is also facing a deeming case involving 500 workers at its own distribution centre.
At many companies, deeming is almost immediately followed by retrenchments.
Simba
At Simba, which is a subsidiary of multinational food and drink group PepsiCo, labour broker workers settled a deeming dispute with the company on June 28. The next day, the company issued retrenchment notices to 142 of the 350 workers employed as packers as its factory in Isando.
A confidential retrenchment deal was subsequently reached.
The bigger problem at Simba was that the company spent almost a year delaying the Commission for Conciliation, Mediation and Arbitration (CCMA) case to deem its Isando workers, said Ramji.
In that time, the company allegedly shifted many of the labour broker workers out of their roles operating machines and into the lowest-paid job at the factory: packers. They then got deemed into this lower pay grade.
PepsiCo has not responded to City Press’ queries.
Kellogg’s
At breakfast cereal giant Kellogg’s’ factory in Springs, workers were deemed and equalised on favourable terms, but the company immediately issued retrenchment notices for more than half of the 116 workers involved. The workers, represented by the Casual Workers Advice Office, have promised to challenge these as unfair.
Bakers Biscuits
At Bakers Biscuits, a subsidiary of JSE-listed AVI, the labour broker Transman gave 150 workers contracts to sign in August, which would keeps them employed by Transman despite the deeming provision. This was while workers at the biscuit-maker had successfully lodged a CCMA case to be deemed and the company was taking it on review at the labour court. As of this week, the matter is instead going to arbitration.
The potential gains for labour broker workers seeking to be deemed are enormous. At JSE-listed Libstar, about 1 000 workers were deemed and saw their pay improve by about 30% as they received benefits for the first time. This is roughly the normal pay gap for brokered workers, according to recent research based on tax records presented at the annual African Review of Economics and Finance conference this year.
At Simba, the addition of benefits after deeming added 47% to workers’ pay. In some workplaces, the confluence of deeming and the national minimum wage would result in dramatic increases unless workers get put on shorter hours or are retrenched.
Mr Sweet
Mr Sweet, the manufacturer of many popular low-cost confectionary brands, is in the middle of a deeming and equalisation dispute involving 222 workers.
Workers supplied to it by the JSE-listed Workforce Group have been earning far less than the new national minimum wage of R20 an hour. City Press has seen a payslip for one Mr Sweet worker citing hourly pay of R12.70, or R527.47 a week.
This company will not only have to deem workers, it will sooner or later have to apply the minimum wage.
With hindsight, it is clear the labour law amendments that created the deeming provision should also have included some form of safeguard against instant retrenchment, said Ramji. For instance, she suggested a moratorium on retrenching the deemed workers for a few months.
Hours a week to work a problem
Another hole in the labour laws is the issue of hours worked. The Basic Conditions of Employment Act sets out maximum hours a worker may be made to work in a week. It does not set a minimum, which technically allows employers to semi-retrench workers by simply giving an employee no hours to work.
Many of these cases involve JSE-listed Adcorp, the largest labour broker in South Africa.
The deeming provision had a dramatic impact on the number of workers placed by Adcorp when it initially came into effect in 2015. According to the company’s annual reports, it had 101 113 temporary workers placed in South Africa in the beginning of 2015.
By March, this was 74 070 – before a number of deeming cases involving hundreds of Adcorp workers.
Much of that damage was already done in 2015, but Adcorp and other labour brokers now face a new wave of deeming cases due to the Constitutional Court’s
ruling in July on how the deeming provision actually works. Many cases had been suspended in anticipation
of that ruling.
Adcorp spokesperson Nomonde Xulu said that it could not share information on its recent loss of workers due to deeming as the company was listed and the information was “share price sensitive”.
 |
| ||||||||||||
| |||||||||||||
