Labour Relations Amendment Act, what has changed?

This past Sunday saw the announcement of the enactment of the Labour Relations Act. The gazette was made available yesterday and this is an attempt to summarise some of the more pertinent changes.

Temporary Employment Services:

One of the more controversial and debated amendments is the amendment of s198 which makes provision for temporary employment service (TES) employees who earn below the threshold (currently R205,433.30 per annum) to be deemed permanent employees of the client after a continuous period of 3 months’ employment.

Our interpretation of the impact of the 3 months’ deeming clause is that due to the extended joint and several liability provisions, enforcement may occur against both the TES and the client, and both the TES and the client may be referred to the CCMA and equal treatment applies unless there is a justifiable reason for differential treatment. The extra protections will force users to use legitimate TES as they would need to ensure that any indemnity provided by the TES would be able to be honoured.

Fixed Term Contracts:

S198B(3) adds numerous restrictions for the utilisation of fixed term contracts in excess of 3 months for employees earning below the threshold. An employer may engage an employee on a fixed term contract or successive fixed term contracts for longer than three months of employment only if certain factors are present.

This is further supplemented by S198B(8) which provides that fixed term contract employees of more than 3 months must be treated equally to indefinite employees.

An important addition which adds to the cost of utilising fixed term contract employees on a project is that one week’s remuneration per year of service would need to be paid to employees engaged in a fixed term contract for a genuine project after a period of 24 months. Industries using long term project based work, such as the construction industry will now be faced with the extra financial burden of this payment in a time where the industry is already under enormous financial pressure

The retail sector is not spared from the impact of the amendments as part time employees earning under the earnings threshold are to be treated equally to full time employees after 3 months of employment.

Security for Reviews:

One of the changes which has been the subject to much criticism for its one sidedness and its restriction of the constitutional right of access to courts is the addition of

s 145(8) which makes provision for 24 months’ security or the full amount of a compensation award to be paid by an employer pending review of a matter. Employers, not employees or trade unions, will now be required to lodge security in all review cases. The question is whether this is fair and equitable and also whether it is a reasonable limitation of the constitutional right of access to courts.

Retrenchments:

S187 is amended by an insertion which will lead to a restriction on retrenchments for operational requirements by expanding the grounds for automatically unfair dismissals. The implication is that it seems that a Fry’s Metal type retrenchment where a change in conditions of employment is required will no longer be possible.

A further restriction on employers embarking upon a retrenchment exercise is set out in S189A, where more onerous provisions are inserted in relation to large retrenchments. No party in a large scale retrenchment may unreasonably refuse an extension beyond the 60 day period. A licence is in a sense given to a facilitator to extend the 60 day consultation period. Under the circumstances one can suspect that an employer may now bank on a 90 day period.

Trade Union Rights:

S21 is amended to ease access to previously majority trade union rights in respect of trade union officials, leave and access to information. This may lead to a union with a representation of 40% of the workforce (as an example) receiving majority status.

To further ease recruitment there has been an extension of the definition of workplace to include permanent staff, fixed term contract workers as well as Temporary Employment Service employees.

Other interesting changes:

• The amendment of S69(6)(a) which provides that picketing rules may apply to third parties who are not the employers, such as mall owners;

• An award will have the same power as an order of court;

• An amendment in respect of representation at CCMA will limit the utilisation of consultants

There is no effective date for the legislation as yet. We have representatives at the coalface of the process and aim to keep the reader updated on the impact of the amendments and expected timeframes.

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