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The Amended Employment Equity Act. Current definition of labour brokers and important changes

by , 18 February 2015
While keeping in mind that when it comes about temporary employment service, we deal with the labour broker, the worker and the client, we consider it important to specify that major changes have been made to the emplyment equity act by the insertion of new sub-sections (4A), (4B), (4C), and (4E) and the new section 198A.

Do note that sub-section (4F) which deals with the registration of labour broker businesses is not yet in force.

In this context, the  labour broker employees should revisit the actual contract agreements in order to identify the most obvious risk areas.

Nigel Carman, Partner in Fasken Martineau's Employment Department addresses this question and the recent changes, explaining that the definition of labour broker has been very slightly changed and currently refers to a person who, for reward, procures for or provides to a client other persons who perform work for the client, and who are remunerated by the client.

Here are the four most important changes made to the previously mentioned act:

1. Firstly, collective bargaining, organizational rights and industry wage regulating measures are changed by these amendments. As Carman explains it, a major alteration refers to the fact that when determining in which industry or sector the worker is engaged, regard is to be had to the industry or sector in which the client is engaged.

As an example,  workers supplied to a client operating in the mining industry are therefore engaged in the mining industry. This means also that a labour broker may have workers in different industries or sectors.

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2. The previously mentioned demarcation principle is important 'because workers supplied into a particular industry must be employed on the terms and conditions applicable to that industry'. As Nigel Carman  states, labour broker workers in a specific industry would be obliged to become members of one or other of the industry retirement funds. The labour broker would also need to be registered as an employer in that industry, he adds.

3. 'Where the labour broker and the client are jointly and severally liable for breaches by the labour broker of certain wage regulating measures, the worker may institute proceedings against either the labour broker or the client or against both', according to the third change brought by recent amendments.

As a conclusion, this is an attempt to 'water down the limitations of the joint and several liability of the client and thereby to increase the client's risk'.

4. The temporary service concept refers to submitting work for a client by a worker provided by a labour broker:

for a period not exceeding three months;
as a substitute for an employee of the client who is temporarily absent; or
in a category of work and for any period of time which is deemed by the Minister or by an applicable wage regulating measure to be a 'temporary service'.

The previous source mentions that for as long as the labour broker worker is provided in circumstances amounting to a temporary service, the labour broker, and not the client, is the employer of the worker.

However, the following risk may be encountered due to the circumstances introduced by the new section 198A where the client will be deemed to be the employer:

-  the client will become responsible for the unfair dismissal of a worker by the labour broker, and for any unfair labour practice by the labour broker.

-  the worker must be treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is a justifiable reason for different treatment.

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