What is labour broking?
December 8, 2016 Business
Matthias Ruziwa Hr Issues—
“In Zimbabwe, there is no express provision found within the Labour Act [Chapter 28:01] with regards the practice of labour-broking. “Our courts are beginning to interpret the phenomenon as witnessed in the matter between Schweppes Zimbabwe v Stanley Takaendesa, judgement No LC/107/2014”.Over the past two decades, business owners in South Africa have increasingly sought to externalise the traditional full-time, permanent, employer-employee relationship into a triangular labour broker connection.
Labour broking which is also known as “labour hire” is a form of labour intermediation or subcontracting.
This occurs when labour brokers make workers available to third-party clients that assign their duties and supervise the execution of their work. Most often the labour broker enters into a contract of employment with the worker, administers the payroll of persons who have been placed with clients and assumes the responsibilities of deducting employee’s tax from the worker’s salary.
The contract of employment is often made subject to the condition that the agreement continues for as long as the client requires the services of the employee.
The labour broker concludes a commercial agreement with the client in terms of which the client is invoiced for the services being rendered, the labour broker pays the worker’s wages and there is no contractual relationship between the client and the worker.
Major benefits associated with labour broking revolve around risk transfer as there is no responsibility on client for issues like unfair dismissal, benefits payable upon termination and less time spent on recruitment, discipline, performance management etc.
In Namibia and South Africa, the business communities prefer labour broking mainly for flexibility purposes. On the contrary, labour broking is characterised by low wages, job insecurity, exclusion from collective bargaining, unsafe working environment, violation of labour rights and the absence of written contracts.
In this article, the writer looks at how labour broking is perceived in other countries and how it is also viewed in Zimbabwe.
In South Africa, approximately one million workers work under labour brokers mainly in manufacturing, construction, mining, wholesale/retail trade and in some ministries. It is justified that labour broking is necessary due to seasonal change in product demand, need for employees with scarce skills only for short periods e.g. plant shut downs project work such as in construction industry etc.
Labour brokers are permitted to operate in South Africa subject to strict regulation in terms of section 198 and 198A of the Labour Relations Act, 66 of 1995.
COSATU has, and continues to call for outright ban of labour broking which it blames for exploitation and enslavement of workers. It organised mass demonstrations against labour brokers in 2012.
Labour Relations Amendment No 6 of 2014 was gazetted on 19 December 2014 to be operational effective 01 January 2015 compelling labour broker staff to be deemed permanent after 3 months, established joint and several liabilities between labour broker and client for contravention of employment laws and envisaged that labour broker employees be treated no less favourably than permanent employees of the client.
In Swaziland, Labour brokers operate on the strength of section 32 of the Constitution which guarantees the right to practice a profession and carry on a lawful occupation, trade or business. Section 110 of the Employment Act of 1980 (as amended) makes provision for private employment agencies, also known as labour brokers.
Dual employment is not envisaged in this provision. In Uganda Labour brokerage and dual employment are permissible. This is governed by Regulation 12 of the Employment Regulations of 2011 which provides for the operation and licensing of private employment agencies.
Labour broking (labour only — subcontracting) is permitted in Gambia under Section 33 of the Labour Act Cap 56:01 Act No.5 2007 Volume 8 Revised Laws of The Gambia 2009.
However, the labour broker is required to obtain a permission (a certificate of exemption) from the labour commissioner who must be satisfied that the circumstances which led to the desire of the contractor to secure labour by way of a labour – only subcontractor are exceptional and without such a resort, Gambian workers will fail to secure employment (Section 36 Labour Act).
Such a labour broker is deemed for all purposes to be the employer of the workers engaged by him.
The Kenya Employment Act does not provide for labour brokers. Part III of the Employment Act provides that an employment relationship arises when a contract of service is made between an employer and an employee.
There is no provision for labour brokers to handle any aspect of employment
Labour brokers are allowed to operate within Namibia, though its operations are regulated under the Labour Act, 2007 (Section 128 & 128A) and the Employment Services Act.
The essence of Section 128, is that an individual, other than an independent contractor, placed at an employer (user enterprise) by a labour broker (private employment agency), becomes the employer of the employee and such employee should not be treated less favourable than existing employees.
The employee is deemed to be an employee of the employer rather than the labour broker. Section 128 also provides for criminal sanctioning in the case of different treatment being meted out to employees employed through labour brokers.
In Zimbabwe, there is no express provision found within the Labour Act [Chapter 28:01] with regards the practice of labour-broking. In terms of the Labour Act, an “employer” is defined as any person whatsoever who employs or provides work for another person and remunerates or expressly or tacitly undertakes to remunerate him.
In essence, the relationship between a labour broker and his/her employees may be regarded as valid in terms of the law.
However, the validity of the sub-contracting of such employees is not clearly established.
Professor Lovemore Madhuku in his book (Labour Law in Zimbabwe, 2015), states that the establishment of who is regarded as an employer in the case of a labour broker and his client is dependent on the merits of each case. According to The Herald edition of December 13, 2012, the former director of labour administration in the Ministry of Labour and Social Services, Mr Paul Dzviti declared the practice illegal, but in my view the law is not clear with regards to the validity of such practice.
Our courts are beginning to interpret the phenomenon as witnessed in the matter between Schweppes Zimbabwe v Stanley Takaendesa, judgement No LC/107/2014. We are waiting for the Supreme Court`s ruling on this matter.
The ILO Private Employment Agencies Convention 1997 (C181) recognises and regulates “private employment agencies” but workers working under these must be protected in relation to collective bargaining, freedom of association, minimum wages, working conditions, statutory and social benefits, occupational health and safety etc. However, most countries in southern Africa have not ratified this convention.
In conclusion, I must mention that labour broking is likely to continue existing and growing due to elements like globalisation and flexible labour markets.
Social partners need to fully address gaps in current labour law and a clear policy framework needs to be put in place to ensure registration and inspection of labour brokers’ business.
I recommend that the Ministry of Labour puts in place mechanisms that closely supervises the activities of Labour brokers in Zimbabwe.
Disclaimer: Opinions expressed herein are solely those of the author.
Matthias Ruziwa is an experienced Arbitrator and progressing Strategic Human Resource Practitioner based in the Midlands Province, City of Kwekwe.You can contact Matthias at the following email address: [email protected]; whatsapp 0773 470 368.