Staffing services provider launches labour law app

USER-FRIENDLY INTERFACE Using surveys, Re-Act assesses a company’s understanding of the most important aspects of the country’s recently amended legislation, further providing that company with a protocol that indicates areas of improvement

PREPARING FOR A BUMPY ROAD The mining industry will probably face greater challenges than many other sectors, as it has to deal with additional regulation and significant inflexibility in a volatile economic and labour environment

31st January 2014

By: Jonathan Rodin


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Staffing, human capital management and business process outsourcing services provider Adcorp has launched its new labour law interactive website application (app), re-Act, which, through a set of survey questions, assesses a company’s understanding of the most important aspects of the country’s recently amended legislation, as well as provides the company with a protocol that indicates areas of improvement.

Labour law specialist and consultant to Adcorp John Botha describes re-Act, launched in November, as crucial, as it “forces certain discussions about legislation and clarifies misunderstandings in respect of labour law amendments that have generally been very poorly understood and misinterpreted”.

He explains that significant changes to several labour-related statutes will come into effect in the first half of this year, leaving companies with insufficient time to prepare for the impact of these legislative changes, unless they start immediately. These changes will include amendments to the Labour Relations Act, the Employment Equity Act and the Basic Conditions of Employment Act. The newly drafted Employment Services Act is also due for promulgation this year.

He believes that if companies do not approach legislation with a clear under-standing of each provision, a sustainable business strategy, innovative ideas and a reputable Temporary Employment Services (TES) partner, it could result in decreased economic growth, increased pressure on profitability and a decline in job creation.

Botha adds that a lack of legislative understanding could ultimately and, perhaps, unintentionally increase inequality.

He highlights that the mining industry will probably face greater challenges than many other sectors in this regard, as it has to deal with additional regulation and significant inflexibility in a volatile eco-nomic and labour environment. Mining is also subjected to pressure with regard to foreign national labour, given a clamp-down on the employment of non-South African individuals.

Botha further explains that labour law consultants who were not aware of the detailed intent of the National Economic Development and Labour Council process and negotiations could misinterpret certain amendments that may prejudicially impact on the human capital strategy of businesses and undermine their sustainability.

“Unfortunately, this contingent of bad advice is quite large – businesses need to ensure that they are informed to make the correct decisions and ensure that they retain their flexibility in uncertain and often volatile trading and labour markets,” he adds.


Botha highlights two key concerns, which he considers to be myths, with regard to the new legislation.

Firstly, the future rights of businesses to use flexible assignees from labour brokers and, secondly, the concept of equal pay for work of equal value – which is classified under ‘equal treatment’.

The first myth is that a TES/labour-broking partner cannot play a role after three months of partnership. The reality is that such a partner can be used virtually as regularly as in the past.

However, going forward, the new legislation does require labour-broking clients to ensure that they are partnering with the right labour brokers – those who are financially stable, have excellent information technology systems to manage compliance and risk and have the capacity to deliver against the amendment statutory requirements.

Botha explains that using the services of reputable labour brokers will enable businesses to benefit materially from improved preferential procurement scores, lower compliance costs and flexible salary costs aligned to revenue.

The second myth is that temporary employees must be paid the same as their permanent counterparts. However, it is not possible for everyone to earn the same salary and benefits. If a company employs people with different skills, years of experience and length of service, these considerations, among others, serve as legitimate reasons for salaries and benefits to differ.

Botha explains that these considerations are taken into account in addition to performance considerations – everyone is not equal in the workplace and the law recognises that.

However, he advises companies to ensure that they have justifiable systems in place, which enable them to differentiate objectively between employees. “A labour broker who is truly a strategic partner will work through these options with you,” Botha notes.

Global Considerations

Botha says that if South Africa wants to compete on a global stage, it must behave in a fitting manner. He highlights that similar amendments to labour legislation have been made in the European Union (EU) – including legislative changes in the UK, Switzerland, Germany and the Netherlands. Some of these amendments were made more than five years ago and several trends have emerged in these markets.

Botha notes that TES partners in some EU countries that do not have the required resources, including financial and tech-nological resources to address the increased complexity and financial risks to themselves and their clients, have been largely eradicated as a result of the potential risk that results to the client end-user.

Further, the partners that offer clients a meaningful value proposition have not only survived but have also significantly grown their market share, as clients worldwide aim to establish strategic partnerships.

Botha says the legislative changes are not considered to be good for business and that, if businesses are to grow and compete, they will unfortunately also have to mechanise, automate and introduce new technologies offshore, or make even greater use of outsourcing or subcontracting TES partners.

The net effect will probably be that unemployment will either increase or stay the same, at best, says Botha. He explains that restructuring of businesses will become much more difficult with retrenchment procedures being prolonged under the amended statute. Using the most flexible staff members will also mean that temporary workers will have equal treatment rights after three months of being contracted, he adds.


or any business operating in South Africa and using flexible labour or labour brokers, it is imperative to gain a comprehensive understanding of the country’s labour legislation. Therefore, getting an assessment from a reputable partner of where the business currently stands is of paramount importance, he says.

Characteristics such as good technology, access to thought leaders and strong balance sheets and systems are factors that need to be carefully considered, adds Botha.

He also notes that businesses will increase their flexible staff component in an attempt to keep their in-house payroll as low as possible. This is because many of the broad-based black economic-empowerment and other statutory costs are based on a percentage of payroll.

“If South Africa’s labour force – including labourers and the unions – is to grow and prosper, it must be cognisant of international trends and local perspectives,” Botha


Edited by Samantha Herbst
Creamer Media Deputy Editor


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