THE TRUTH ABOUT LABOUR BROKERS The Background, Process, Positioning, Prophecy, Impact

1. THE TRUTH ABOUT LABOUR BROKERS The Background, Process, Positioning, Prophecy, Impact John Botha & Johnny Goldberg: NEDLAC Business negotiators on A-typical employment BUSA A-typical employment task team Confederation of Associations in the Private Employment Sector (CAPES)

2. TODAY • We will cover: • Background to the debate • The international position • Namibia and the ban • SA elections issues • Post election sentiment • The Department of Labour’s document at NEDLAC • The likely outcome • Some options around joint and several liability • Panel discussion 2

3. Labour market context Industry superstructure

4. DEFINITION OF LABOUR BROKER (LB) The only reference in law to LB is in s1 of the OHSA where the definition of “employer” excludes LB Temporary Employment Service (TES): Temporary employment services are defined as businesses who, for reward, procure and provide to a client employees who work for the client, but who are paid by the temporary employment service. Although physically working for another, such employees are nevertheless regarded as employees of the temporary employment service. It is thus held responsible in the event of them being unfairly dismissed. However, both the client and the temporary employment service may be held liable where the temporary employment service contravenes: A collective agreement; An arbitration award; The Basic Conditions of Employment Act; or A determination under the Wage Act.

5. DEFINITION OF EMPLOYEE Employee: means- a) any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration; and b) any other person who in any manner assists in carrying on or conducting the business of an employer, and "employed" and "employment" have meanings corresponding to that of "employee"; 5

6. DEFINITION OF TEMPORARY HELP AGENCIES (ILO) Temporary Help Agencies: Provide temporary employees to user enterprises to cover employee absences, skills shortages and varying seasonal workloads. Workers are employed and paid by the agency, but contracted out to a client for either a pre-arranged fee or and agreed hourly wage. Some companies choose to use temporary workers on a long-term basis rather than employ permanent staff. Temporary Agency Workers: Workers work with either a contract for service or a contract of employment with the agency who finds them work…workers may be able to use it to try out different kind of work, as a stepping stone to the job they want, as a way of re-entering the labour market or of working more flexibly to suit their circumstances. However, they have less control over their work, more pressure and shift work, and fewer rights than regular staff colleagues. The user enterprise has the flexibility to stop temporary work, and the agency may be liable for unfair dismissal and redundancy pay. 6

7. ILO: CONTRIBUTION TO THE LABOUR MARKET (20/10/09) “Ratifying C181 encourages improved efficiency of national labour markets by permitting private actors to enhance matching supply of and demand for workers. It promotes co-operation between the public and private employment services…it effectively regulates services provided by private employment agencies, thereby ensuring professional service providers for human resources while preventing human trafficking and unfair practices. Ratification could help to promote and implement the Decent Work Agenda by ensuring protection of the rights and working conditions of agency workers”. 7

8. WHAT HAPPENED IN NAMIBIA? “THE ARM THAT FEEDS…” • Namibia’s Labour Act (and other statute) has NO reference to LB’s whatsoever; • The Namibian Social Partners did not call for a ban, but rather for regulation (at their “NEDLAC”); • It was the Namibian Cabinet that effectively over-ruled the above recommendations by social partners and declared that LB’s were immoral and the word “slavery” featured in a Roman-Dutch Law context; • Namibia has a population of 2 000 000 and around 20 LB’s placing an estimated 20000 – 30000 assignees each day whereas SA has a population of 49 000 000 and LB’s place upwards of 500 000 assignees each day; • Court determined in November 2009 that: ban was unconstitutional; social contribution required regulation; ILO recognition; EU status 8

9. UNIVERSAL EMPLOYMENT CRISIS & SA RESPONSE Average jobs cut per month in US = 643 000 (May 2008 – September 2008) Currently 80 000 positions cut per month in US (Oct 2009) Unemployment in US = 9% Unemployment more than doubled in some EU countries (9% - 18%) SSA’s 3Q LFS reflects 418000 jobs lost & 510000 people joined the discouraged work seeker category which equals 24.5% direct unemployed (1% GDP = 200000 jobs) & 34.2% including discouraged Hardest hit was manufacturing & retail Pres. Zuma wants to create 4 million jobs by end 2014 – EPWP (poverty alleviation – temp & low paid) Public spending, NIPF/ IPAP & HRDS-SA drive employment creation Training layoffs (s189/A) – R2.4 bn UIF/ NSF

10. ELECTIONEERING? Mantashe said Mdladlana got carried away when he made the promise. “When you are an official, it will be very reckless of any leader of the ANC to go on an election campaign and say that we will ban labour brokers”. (Business Day, 13 May 2009)

11. SLAVERY & HUMAN TRAFFICKING Higher Education Minister Blade Nzimande yesterday called for labour brokers to be banned, saying they were ‘modern-day slave owners’. (The Times, 14 May 2009)

12. HUMAN TRAFFICKING… Human trafficking is the recruitment, transportation, harbouring, or receipt of people for the purposes of slavery, forced labor (including bonded labor or debt bondage), and servitude. Trafficking victims typically are recruited using coercion, deception, fraud, the abuse of power, or outright abduction. Threats, violence, and economic leverage such as debt bondage can often make a victim consent to exploitation. Exploitation includes forcing people into prostitution or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery and servitude. (Wikipedia)

13. DIFFERENT CHANNELS TO EMPLOYMENT… Patel said there was a synergistic relationship between quantity of jobs created and their quality. The 500000 jobs created under the EPWP would in themselves not be proper permanent, well-paid jobs, but they would create a bridge into the formal labour market and allow for the progressive achievement of decent work. (Saturday Star, 13 June 2009)

14. ABUSE IS THE PROBLEM! Labour Minister…says he is “prepared to die” to stop private labour brokers from abusing workers in SA… Mdladlana argues that there is currently nothing in SA law that governs private labour broking. He reiterated that government was not opposed to PrEA’s or temporary employment but rather wanted to “prevent the kind of abuses that are happening…” (Saturday Star, 13 June 2009)

15. DEPARTMENT CHANGES ITS TUNE ON BROKING March 10, 2010 The Labour Department appears to have done an about-turn on labour broking. People who ran such businesses by computer "in car boots" would be cracked down upon, but the rest of the industry would simply be regulated appropriately, Labour Minister Membathisi Mdladlana said yesterday. "Let us talk about the professional ones... but with the bad ones, we need to do away with the milking cows," the minister said. He explained that the latter were those people who ran unprofessional and unaccountable labour broking businesses from "a computer in the car" or from "car boots".

16. MDLADLANA’S ‘BAN’ ON LABOUR BROKING FALTER 2010/03/03 LABOUR Minister MembathisiMdladlana has backtracked on his intention to ban labour broking and may not even be able to regulate the practice unless he gets a bill to Parliament by Friday. According to Parliament’s legislation cycles, any legislation that is to be passed by August 27 — the end of the first of two legislative cycles this year — must reach it by Friday. Department of Labour spokesman MzobanziJikazana said yesterday: “Despite what the media may say, the minister has never once used the word ‘ban’. He has only said that he wants to ‘deal with’ the issue of labour brokers, and, if necessary, will change laws to do that.” Mdladlana will have a chance to get a bill into Parliament’s second cycle, with it being passed by November 26, if he submits it by July 19.

17. LEGISLATION, THE ANSWER? The ANC has noted the divergent views that have been expressed within the alliance on the future of labour brokers. Legislation to address labour brokers is on the cards … to regulate contract work, sub-contracting and outsourcing, address the problem of labour broking and prohibit certain abusive practices …” (Jesse Duarte, 27 and 28 May 2009)

18. THE BATTLE FOR CONTROL & POWER

19. FOR & AGAINST – BROAD STROKES • For: • Business (BUSA) • CAPES • FEDUSA • Solidarity • ANC (split) • DA/ COPE • UPP • DoL • Against: • COSATU • NACTU • ANCYL • SACP All parties are aware that there can not be a ban nor over-regulation as this would contravene s36 of the Constitution! We also have a legal view on the powers of the NCOP and Cabinet. 19

20. LB’s SUPPORT ASGISA, NIPF, HRDS-SA etc • Private employment agency statistics • R26,000,000,000 size of industry • 3,140 private employment agencies in services sector alone • 872 076 daily average assignees • Ages 16 – 35, 85% • 4.8m dependents • 32% flex-to-perm conversion each year • 83% black assignees • 50% previously unemployed • Clients across all sectors, predominantly in manufacturing, wholesale and retail, transport, construction, local government, banking, information technology and communication • R415,000,000 annual skills levy (2008) • TES currently facilitate around 20 000 - 40 000 learnerships • 40% covered by Bargaining Council Agreements & SD’s 20

21. Total formal employment: 10m Employment agencies’ contribution: The path to Decent Work in South Africa Total contract employment: 3m 7,000 branch offices countrywide 1m contract employees managed by agencies at any point in time, 3.5m contract employees introduced to the world of work since 2000 32% conversion to permanent employment within 12 months, 47% within 3 years Workforce optimization Career progression Performance enhancement Workplace readiness Talent acquisition Contract employee demographics Managed by agencies: 1m 92% previously disadvantaged Contract employment (percent of total sector employment) Estimated number of dependents: 4.6m 50% never previously employed 85% youth, aged 18 to 35 years

22. INDUSTRY RESPONSE • Pro regulation and negotiation at NEDLAC • Pro joint regulation of the industry • Hotline/ Call Centre • Employment Services Certification Institute (ESCI) • Pension Fund • Industry Levy (0.1%)

23. DOL: DISCUSSION DOCUMENT – OPEN DISCUSSION FROM FLOOR TO PANEL 23

24. DOL: DISCUSSION DOCUMENT – OPEN DISCUSSION FROM FLOOR TO PANEL 24

25. DOL: DISCUSSION DOCUMENT – OPEN DISCUSSION FROM FLOOR TO PANEL 25

26. DOL: DISCUSSION DOCUMENT – OPEN DISCUSSION FROM FLOOR TO PANEL 26

27. DOL: DISCUSSION DOCUMENT – OPEN DISCUSSION FROM FLOOR TO PANEL 27

28. APPROPRIATION OF LIABILITY 28

29. A WAY FORWARDS FOR JOINT & SEVERAL LIABILITY FOR DISMISSALS – REVISING s198? • “True Temp” (TES remains liable) • - contingency • - business cycles • - projects of limited term • - TES supervision & control • - Technical Contractors/ IC’s/ Skilled Technical • Employment Services (Joint and Several) • - is not a “true” temp • - completed at least 12 months service with client • - earns below a pay threshold • - predominantly client control 29

30. 2010 WAGE DEMANDS • 20% across the board wage increase • Minimum wage • 30 days annual bonus • 30 days annual leave • 4 weeks severance payment • 6 months fully paid maternity leave • 3 days per occurrence family responsibility leave • Review of job grading (wage model and job requirements) • 20% joint retirement contribution with 70-30 contribution ratio for employer and employee respectively • Limited duration contracts to be converted into permanent contracts • Terminate the labour brokers • Labour brokers to be banned

31. WAGE SETTLEMENT & CPIX 2007, 2008 & 2009

32. ANC ELECTION MANIFESTO In order to avoid exploitation of workers and ensure decent work for all workers as well as to protect the employment relationship, introduce laws to regulate contract work, subcontracting and out- sourcing, address the problem of labour broking and prohibit certain abusive practices. Provisions will be introduced to facilitate unionisation of workers and conclusion of sectoral collective agreements to cover vulnerable workers in these different legal relationships and ensure the right to permanent employment for affected workers. Procurement policies and public incentives will include requirements to promote decent work.

33. ENDThank you