Rules intended to protect temps are having the opposite effect

As South Africa is pushing the Labour Bills into Parliament, in UK’s new Agency Worker Regulations, one of the hot issues “same pay and benefits as permanent workers” is resulting in an opposite effect. 

Extracts from The Telegraph article

Under the changes, which stem from European law, temps are entitled to the same pay and benefits as permanent workers after just 12 weeks in a job. Previously, they had to wait one year to clock up employment rights. ( SA has proposed 6months. We should be doing one year)

A Government analysis said the new rules would cost firms £1.8bn (over R10bn!) a year to implement, raising fears that cash-strapped businesses would stop hiring temps as it no longer made commercial sense. A typical small business would have to pay an extra £2,493 a year, increasing to £73,188 for larger companies. (Experts in SA have always been saying more people, if not more households will suffer as a result)

The new 12-week rule also damages temps’ flexibility to cover peaks and troughs in demand, experts said.

Scores of employers have revisited how they will use temps following the new rules, and are either recruiting fewer agency staff or urging them to waive their rights under a legal loophole. (This is one of my fears for the SA market)

Tom Hadley, policy director at the REC, said the decline in temp hiring “may in part be linked to employer uncertainty over the agency worker regulations”. (Unfortunately this has already commenced in SA without even the bills finalised)

The number of people placed in short-term jobs fell in March at the fastest rate for two-and-a-half years, research from the Recruitment and Employment Confederation (REC) and KPMG revealed. (The Namibia case comes to mind. SA should bear this in mind)


Credit to worradmu for the image

Credit to worradmu for the image

Labour Broking Versus Temporary Employment Services

March 2012 has been an interesting Month on the Labour Broking front with Cosatu protesting on the 7th of March 2012 calling for the ban thereof. I thought of sharing the definitions of Labour Broker and Temporary Employment Service (TES) as they are currently contained in the South African Legislation

Definition of Labour Broker in the INCOME TAX ACT, NO. 58 OF 1962 (the Act)

The definition of “labour broker” has been changed so that it includes only natural persons. This is effective from 1 March 2009. The new definition reads as follows:

“Labour broker” means any natural person who conducts or carries on any business whereby such person for reward provides a client of such business with other persons to render a service or perform work for such client, or procures such other persons for the client, for which services or work such other persons are remunerated by such person.
SOURCE: SARS Income Tax Act

Keyword for me in this definition are the words “natural person” meaning a Labour broker is an individual not a company

Definition of Temporary Employment Service in the Labour Relations Act

Section 198 Chapter IX. Temporary Employment Services

(1) In this section, “temporary employment service” means 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.

(2) For the purposes of this Act, a person whose services have been procured for or provided to a client by a temporary employment service is the employee of that temporary employment service, and the temporary employment service is that person’s employer.

(3) Despite subsections (1) and (2), a person who is an independent contractor is not an employee of a temporary employment service, nor is the temporary employment service the employer of that person.

(4) The temporary employment service and the client are jointly and severally liable if the temporary employment service, in respect of any of its employees, contravenes-

(a) a collective agreement concluded in a bargaining council that regulates terms and conditions of employment;

(b) a binding arbitration award that regulates terms and conditions of employment;

(c) the Basic Conditions o Employment Act; or

(d) a determination made in terms of the Wage Act.

SOURCE: Labour Relations Act Section 198. Chapter IX