TES Labour Legislation

Does the pending TES labour legislation matter?
What is the impact of TES for HR teams and your organisation?

Spring-Cleaning HR Style: It sometimes seems like the ‘the pending TES labour legislation’ is never to stop ‘pending’ and actually become law. It’s been imminent for over two years, yet still not finalised by the legislator. And there is still no confirmed date for it becoming law; nor exact details of what will actually be passed. Does this mean it’s something you and your organisation can ignore for now. Well, no. Quite the opposite.

Based on expert opinion of ‘those in the know’, we do have a strong expectation that it will be enacted sometime during 2014 and a good sense of the key elements the legislation will encompass.

Some of these key elements, we believe, may well have some wide reaching implications on certain aspects of labour law and your business’ operations – particularly, those around organisational employee contracts, workforce management, supplier procurement, and HR/ER policies and processes.

In the absence of finalised legislation, we will highlight some of the key areas for your consideration and analysis when planning the future of your organisation’s policy to be compliant for the pending changes to the labour law. We will also explore how to mitigate potential non-compliance and avert relevant risks, and debunk one or two myths around this topic which have been propagated in the media by a range of ‘thought-leaders’.

Before we go further, though, we’d like to state that despite the challenges the pending legislation presents to a number of SA’s stubborn socio-economic trends and to our organisations, we see in it a great deal of opportunity – for both employers and employees.

Moreover, the opportunity in the circumstances that we all face as employers does not only become relevant only post its enactment. That is, there’s opportunity now, too. An opportunity to ‘clean house’, so to speak. Just like all houses require all year-round cleaning (as opposed to once off spring-cleaning), so do HR/ER policies and administration-records. The preparation needed for compliance with the pending legislation is an opportunity for checking that all your policies and records are compliant with the current legislation. (Yep, we are the glass half-full kind of folks!)

After in-depth consultation in 2014, with some major SA corporate brands concerning their preparation for the pending labour legislation, it has become apparent that there are gaps in their compliance with the current labour law. We are sure that this is more common in large organisations than perhaps is commonly admitted. These are real and immediate risks that could easily result in unexpected costs and brand damage, so better to address these now while you can proactively get ahead of them. Better safe than sorry, as they say.

In order to help with your work in this matter, we’ve outlined some steps for you to consider for TES preparation:

Audit: So our first recommendation in preparing for the pending TES legislation: conduct an internal HR/ER policy and records audit.

This audit should include the following elements:

  • All information pertaining to your employee contracts (including all permanent and fixed-term contractors, as well as any flexi-staff provided by your TES suppliers. Remember, if a sole-trader ‘contractor’ makes 80% or more of his/her income working for you, then they are deemed to be an employee and not a contractor.);
  • Ensure that all employees have contracts of employment, that those contracts are still valid and that there aren’t inconsistencies with aspects of their remuneration and benefits compared with other employees in your business doing equal work to them.
  • The policies and practices of your flexi-staff’s employers, as well as the contracts they have with their flexi-staff. Namely, those of your TES suppliers.
  • Your TES Supplier SLAs, for all suppliers on your PSL (and those not. [Yes, it does happen. That’s the joy of working in a decentralised environment.]);
  • Your PSL and Procurement policies and procedures for TES suppliers (will all your TES suppliers still be compliant post the enactment of the pending legislation and, if not, what is your risk of liability and exposure?);
  • Ensure that all relevant members of the HR team and line-management understand the changes of the pending legislation and how it affects their function and duties.
  • A report outlining the organisation’s compliance and gaps with both current labour legislation and the pending legislation, the risks they pose, and steps needed to address those risks.
  • A project and change-management plan for: 1. Addressing the risks associated with gaps on current compliance 2. Ensuring the successful organisational transition to compliance with the pending TES legislation, including the training of the relevant management and staff, and 3. The resources required for timeous execution.

When auditing your current TES suppliers, you might want to request they supply you with the following information:

  • Name of temporary employee(s) on site with you;
  • Their job title and brief description of their function;
  • Annual and/or hourly earnings (if the latter, provide their usual total monthly hours and overtime hours);
  • Do they receive medical aid provision and provident/pension/retirement provision? If so, how much per month for each?
  • Do they receive any allowances (i.e. housing or car)? If so, what type of allowance are they paid and how much per month for each?
  • Is provision made for funeral or death benefit schemes? If so, which and how much?
  • Are any other provisions and/or payments made to their employees servicing your organisation? If so, what are they and how much are they per employee?
  • Do they make any discretionary payments to their employees onsite with you, for example related to their hours of work or performance?
  • Is there any other information relating to their employees that will help your organisation’s audit in order to establish whether their temporary employees’ terms and conditions of employment are ‘on the whole’ similar and/or less favourable than those provided by your organisation to your employees?
  • If so, calculate the potential liability cost for your organisation if joint liability were applied to you on the basis of equal-work-for-equal-pay for all and any TES staff supplied by your current TES suppliers? (Scary, hey?)
  • Do they charge any attachment orders to their temporary staff pay? If so, then: what, how much, and who?
  • Is there any unpaid PAYE or associated tax related payments for any of their temporary staff? If so, then: what, how much, and who?
  • If any of the above is applicable, then to establish who’s liable, what’s the existing exposure, and how to manage/mitigate it?
  • That they scan and send a signed current copy of their SLA with you.

In this context, the work ahead of HR team in a large multisite corporate organisation can look rather daunting, especially as this workload is over and above business-as-normal activities. However, the risk of inaction is rather more daunting and certainly scarier.

Some additional elements of what you might assess (and incorporate in your audit) are as follows:

The ‘Deeming’ Provision: Ensure that your organisation has clarity on the definition and application of the ‘deeming’ provision in the pending legislation and find out exactly how it applies to your staffing strategy, policies and procedures moving forward.

There is a move to position the pending legislation to try deem all workers as employees of the client, as opposed to those of the TES supplier.

This deeming provision is merely that, i.e. deeming. It does not mean that they are actually employees of the client, but – if they claim to be employees of the client – then they would have to show why they are employees of the client.

The deeming provision does create certain challenges for the TES model, but these challenges are easily overcome: you need merely to discharge an onus to show that in fact they remain employees of the TES supplier.

Often, it’s important to find out what paperwork is given to the TES employee, what paperwork is given by the client and what paperwork is given by the TES supplier itself. Furthermore, it would be important to see what promises have been made and how these promises can be managed properly. Hence the importance of the audit recommendation above and the need for ongoing audits of your TES suppliers.

There will be many arguments on this matter, but each case is decided on its own merits. And each case is decided in terms of each actual employee and the circumstances surrounding that particular employment case. The reality of the situation is that the TES supplier has to accept the liability and is obliged to manage the situation very carefully. This bring us on to the next point, in regards to your TES suppliers.

Indemnity Clauses & SLA Contract for TES Suppliers: In light of the pending TES labour legislation’s focus on joint and several liability, then employers should clarify if their TES supplier offers indemnity (or not). And if the indemnity offered is legally compliant and provides you with the coverage needed to mitigate your risk?

Normally, indemnity protects the client against any claim that arises or might arise in terms of The Basic Conditions of Employment Act and the Labour Relations Act. This indemnity is only valid if any action taken by the client in terms of The Basic Conditions of Employment Act or the Labour Relations Act or any other labour legislation would be done by the TES supplier and/or its agents.

Employee Contracts: Employees are defined in the Labour Relations Act, under Section 200A. Although there are many types of employment and many employees who have contracts structured as short term, fixed term or part time, yet they are all employees. In essence, our courts have been at pains to define employees as anyone who earns the majority of income from one source and who forms part of the organisation.

After three months of employment, if the contract of employment is continued (or ongoing), then the employee will be deemed permanently employed, unless the contract of employment can demonstrate why the non-permanent status of the employee is needed beyond a three month period. For example, a finite work function comes to an end after three months, such a building a wall at a certain property.

Temporary and Flexi-Staffing: The option of flexi-staffing will remain open to employers post the implementation of the pending TES legislation, but it will require consideration of the following changes and requirements:

  • Mitigating the liability using TES suppliers and the importance of the ‘Indemnity’ clause.
  • Equal-Pay-For-Equal-Work: its application in TES context, its opportunities and its risks, as well as how to manage it.
  • Temporary staffing becomes an ‘outsourcing’ staffing model, which can include the following:
    • Outsource staffing model;
    • Learnership & Academy Training Pool;
    • RPO Model;
    • (If you’d like to discuss any of these models and how they might work for you, please contact us for further discussion.)

Change Management & Training for HR and Line Managers: Given the wide implications for your organisation, we recommend that a project management strategy and Roll Out Plan is developed, ensuring that your operations are informed of the impact and that they are trained to manage the new policies and. This includes:

  • Training for your HR staff & Ops Management for new law: best practice and processes;
  • New hiring guidelines and processes;
  • Performance management policy and best practice in the new labour law environment;
  • Disciplinary policies and processes.

Conclusion: As we mentioned earlier, we believe that in this legislation lies a great deal of opportunity to make it work for the employer, as well as the employee, despite the challenges the pending legislation presents for a number of SA’s stubborn socio-economic trends.

At Status, in partnership with Bagraims Attorneys, we have developed products and services that will enable you to make the best of the pending TES legislation. They will help you maintain your workforce management flexibility, while keeping the costs and associated risks of staffing at a minimum. Now, that’s us knowing how to make talent work for you, whatever the legislative weather.

If you’d like to meet with us to discuss TES or other staffing matters, including how to approach preparation for compliance with the pending legislation and our recommended TES Roadmap Plan, then please contact us directly.

We have the expertise and resources to help you achieve all the elements highlighted above. For more on our post-TES staffing services and products, including post TES flexi-staffing and indemnity cover, please contact us.