Outlawing outsourcing - an objective take

Labour minister Membathisi Mdladlana recently stated that "quick and decisive action" will be taken to ensure that proposed amendments to the Labour Relations Act and Basic Conditions of Employment Act are made.

The proposed amendments see the definition of independent and subcontractors reconsidered, potentially changing the labour broker and outsourcing landscape as we know it today.

However, in order to understand the impact of the above, it is important to evaluate what has led to the proposed amendments, why labour brokers and the outsourcing industry are under fire?

The aim of the amendments to the Act is to protect the main labour or 'blue collar' workforce, which has fallen victim to blatant firing without justified reason or cause. And unfortunately, a certain segment of the labour broker industry is behind this conduct. These brokers - also referred to as the 'bakkie brigade' - simply pick up and deliver workers at sites, mines and the like.

Moreover, the Labour Act - in its current form - protects, if you will, the clients of these labour brokers from providing any benefits to these contracted workers, which results in the hiring and firing of individuals at will without any control or regard for their livelihood and well-being.

Plainly put, this is a foul practice, which has led to animosity towards labour brokers. However, the proposed amendments state that the joint and several liabilities of the labour broker and client will be enforced. This implies that an employee should be able to institute proceedings against the labour broker and the client or both in the CCMA or Labour Court. However, in the event that a client makes use of an unregistered labour broker, the client will be a liable party.

Unfortunately, the above is not representative of the labour broker and outsourcing industry as a whole, and has lead to negative generalisation impacting those that have been providing ethical services to both workers and business.

This distorted view now sees decision-makers disregarding the impact it will have on industries such as building, retail and security, which require seasonal workers and cannot afford to permanently employ staff.

These industries will have to downscale their staff to support these permanent workers, which in turn will lead to widespread unemployment throughout the country.

Again, decision-makers fail to take cognisance of the far-reaching impact of the amendments to the Acts, which will ultimately mean the end to millions of jobs. Furthermore, the good work of labour brokerages, which are run according to good practice, is not considered either.

However, the ICT industry is and has been in the throes of a dearth of skills, and therefore outsourcing is a means to a tricky problem for companies that require specialist skills for short-term projects.

The threat to the financial services industry will also be significant, as project and temporary contracts will no longer be taken on due to a lack of skills and necessary support. Permanent staff contingents will simply not be able to meet the needs of these project obligations.

It is foreseen that fixed-term contracts will become illegal, unless the employer can demonstrate that it had an operational justification to enter into a fixed-term contract with an employee, eg, taking on a short-term project.

This means that consulting and labour hire organisations will have to significantly downscale their operations or worse. The effect on the economy will be grave and the proposed amendments show little consideration for this.

The ANC recently released a statement commenting that it will not ban labour brokers outright, but will rather work towards tightening up regulations.

As such it is predicted that labour brokers and outsourcing won't be banned outright, but will be regulated and required to register, subject to minimum requirements. They will also most probably be restricted to operate only in certain sectors of the economy.

Undoubtedly, employment brokers and personnel services will welcome regulation and policing, which will ultimately protect workers and their all-important livelihood.

Furthermore, hopefully it will put an end to labour broker practices that have led to this knee-jerk effect that now threatens the survival of the entire industry.