Showdown over labour looms

November 5, 2012

How the outcome of the Labour Law Amendment Bills could impact on growers, contractors and workers.
By Jeanette Clarke

The media has recently been full of the debates sparked by the labour law amendment bills. In the last week of July, the amendment bills were before the Parliamentary Portfolio Committee on Labour and various stakeholders have been making submissions, including our own industry. One of the issues at the centre of the debate is the practice of labour broking, and the provisions tabled in the Amendment Bills to regulate it. COSATU has been campaigning for some time to have labour broking banned altogether. The Minister has taken a decision not to outright ban labour broking, but to introduce provisions in the Labour Relations Act Amendment Bill regulating labour broking. The portfolio committee was hearing views from both sides of the debate about the nature and effect of these controls.

So of what relevance, if any, is this debate to forestry? To answer the question, we need first to clarify the concerns that motivated the amendments related to labour broking.

One of the central problems that the amendments seek to address is the now widespread practice of employing workers on a temporary basis to do permanent work. Is this an issue in forestry?

In a survey of working conditions in forestry recently conducted for DAFF, I collated figures on the number of workers employed in the sector, by employment category. There are three basic categories of workers: directly employed on contracts of indefinite duration (commonly called permanent workers); directly employed on fixed term contracts; and indirectly employed through contractors (contractor workers).

It is evident from the table below that only a small minority of workers (13%) on large grower plantations are directly employed on permanent contracts. Among large growers on privately owned land, the figure is even lower – 6%. The vast majority of workers in the sector are employed on insecure fixed term contracts, directly by companies, or indirectly, through contractors. Contractor workers' employment contracts are even more insecure than those directly employed on fixed-term contracts, owing to the triangular employment relationship.

Why is there so much concern about the rise in temporary and insecure forms of work? From the employers' point of view, it increases labour flexibility and significantly reduces the cost of employment. The concern arises from the negative impact on working conditions, in particular, on job security, wages and employment benefits of workers, as compared to those employed on a permanent basis. In forestry, in particular among large growers, wages of contractor workers and many of those directly employed on fixed term contracts, are on average 61% of those paid to permanent workers (average minimum wage in 2011 of permanent, unionised workers R2 093 vs minimum wage R1 278). Further, most of these workers do not have access to employment benefits such as provident funds and medical care.

Certain of the LRA amendments seek to address these problems. The first aspect addressed by the amendment Bill is the problem of insecure employment.

Employees who are employed on fixed term contracts for longer than six months in categories of work that the bill does not consider to be appropriate for such fixed term contracts, shall be deemed to have been engaged for an indefinite duration.

Fixed term employees employed for a period exceeding 24 months, must be paid a severance package calculated on the basis of at least one week's remuneration for each completed year of service following the termination of the fixed term contract.

These amendments will apply to forestry contractor workers and workers directly employed on fixed term contracts. The only exception is for work that is genuinely short term and temporary in nature, and quite clearly 87% of the work on large grower plantations is not temporary in nature. The purpose of this amendment is to discourage the practice of employing permanent workers on fixed term contracts, and to provide for greater job security.

Secondly, the Amendment Bill seeks to address the problem of inferior wages and working conditions of fixed term workers and those indirectly employed.

Employees employed on fixed term contracts for longer than six months must be treated on the whole no less favourably than employees employed by the same employer indefinitely doing the same work, unless there is a justification for doing so.

In the case of forestry, 5% of workers are directly employed on fixed term contracts. A number of forestry companies employ fixed term workers at lower wages than permanent workers, without access to employment benefits. This amendment will apply to such workers if they are employed for more than six months. The case of forestry contractor workers is not so clear-cut. The amendment applies to workers employed by labour brokers, or, as the Act refers to them, temporary employment services (TES). TES employees engaged for longer than six months will be deemed to be workers of the client company and therefore according to this clause, cannot be treated less favourably than the client's own workers.

Does this second amendment apply to contractor workers? According to FSA, forestry contractors do not qualify as TES. The definition of TES is, however, still a contested one. There is a CCMA ruling that found a cleaning contractor qualified as a TES. Labour law specialist, Dr Jan Theron, of the UCT Institute for Development and Labour Law, thinks that ultimately the definition will have to be tested in court.

In any case, the second provision is unlikely to address the problem of low wages and lack of employment benefits of most contractor workers. This is because many of the largest forestry companies do not employ any of their own workers, and there is no better set of conditions to match. The other danger is that companies could elect to bring wages and working conditions of all their workers down to the level of the statutory minimum, minimum wages and only the statutory benefits (UIF and COIDA).

The next column will look at means to address the ongoing problem of low wages and lack of employment benefits of the vast majority of forestry workers.



Published in August 2012

*Jeanette has worked for over 25 years in South Africa and the southern African region, with a focus on the developmental role that forestry and forests can play in poverty reduction and livelihood security.

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