Companies using labour brokers to evade workers’ rights
Labour Relations Act unlawfully circumvented by middlemen despite judgment
The Labour Relations Act 1995 (LRA) gives workers important rights and protections, such as protection against unfair dismissal, the possibility of reinstatement, and the right to unionise and take part in collective bargaining.
The worker’s direct employer is responsible for these rights. But many companies avoid this by using labour brokers. This allows them to avoid negotiating with casual workers as they do with unionised employees, even if they are employed long-term. Outsourcing services allow employers to arbitrarily or unfairly dismiss workers by requesting they be “reassigned”.
This means that many workers are employed at client companies for lengthy periods of time without becoming part of the client’s work force. These casual workers are among the most vulnerable. They are often paid low wages, have poor working conditions and uncertainty in their employment. In some industries these employees are a majority of the work force.
The LRA was amended in 2015 to address this.
One of the amendments provided that workers placed by a temporary employment service (such as a labour broker) would be deemed to be employees of the client company if they had worked there for more than three months. This amendment, according to the explanatory memo that accompanied the draft bill, was intended to allow these workers the same rights as other employees, including a means to collectively bargain with the company and to be reinstated if unfairly dismissed.
However, according to the Casual Workers Advice Office (CWAO), the effect of this amendment has been stymied by litigation by employers and a decline in the effectiveness of the CCMA. While there have been victories for workers in making the CCMA more accessible, the application of the LRA amendments is still being litigated.
Employers and labour brokers have tried to interpret the law to say that both the client company and the broker should be deemed employers. This leaves casual workers without recourse against the client company because the broker remains their primary employer.
A recent judgment from the Labour Appeals Court confirmed that this interpretation is incorrect and that under the LRA amendment, the worker is deemed to be an employee of only the client.
While this judgment should have been a victory for the rights of casual workers, the industry intends to appeal the decision.
While an appeal means that the decision could be overturned, no appeal has been filed yet and, for the time being, casual workers should be protected under the amendment. But this is not what is happening in practice. According to lawyers for CWAO, workers are being incorrectly told that they are not deemed employees of their client companies because of this potential appeal.
Trying to dilute the amendments is not the only way that companies undermine the LRA. According to CWAO, another strategy by labour brokers is to claim they are “service providers”, a term that has not been properly defined, but that allows them to escape the reach of the amended LRA. Whether this exception will be accepted has yet to be seen. It is currently the subject of several cases before the CCMA and Labour Court.
For now, the amendment deems workers placed at client companies by temporary employment services for longer than three months to be employees of the client company only, and they are entitled to all of the rights that go with that.
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