This article focuses on the changes to section 198 of the
The purpose of this study was to explore the perceptions of employees regarding the changes to section 198 and the potential implications of these changes for the company and its employees.
The changes to section 198 of the LRA are new and the impact of the changes to a company and its employees is still unclear.
The qualitative exploratory study was conducted with six employees of a large integrated petroleum and chemical company making use of labour brokers, until data saturation was reached. The data were collected by means of individual interviews and telephonic interviews.
The results indicated that the changes to section 198 have positive and negative implications for the organisation as well as its employees. The negative implications for the organisation are higher costs, new policies and guidelines, and less employment flexibility. The negative implications for the employees are unemployment, negative attitudes, poor employability, and a situation where the permanent employees have to do all the work.
The outcome of the study can be used to develop an employment policy and dispute resolution to minimise the negative implications for the organisation and its employees.
The study represents original research, extending the current body of knowledge on the perceptions of employees in the human resources department regarding the changes to section 198 of the LRA.
The workplace and the employment relationship are governed and supported by three fundamental pieces of South African labour legislation: the
More recently, South African labour legislation has undergone some changes, specifically to section 198 of the LRA, which deals with labour broking. Labour broking is defined in the LRA as an institution or person who renders out the services of an individual to his or her client for a fee. These proposed changes caused much debate regarding the impact they might have on employment rates, company expenses, international competition and the free labour market system, which is very similar to the system operating in Namibia, one of South Africa’s neighbouring countries (Botes
Similar conditions exist in some sectors of South Africa. Cosatu organised a nationwide strike to abolish labour broking because of the exploitation of temporary employees (Sapa
There are arguments both for and against the changes in labour broking. Such changes in labour legislation will have implications for companies making use of labour broking, as they will have to adapt to stay competitive and legally compliant (Barker
Labour broking in South Africa started as early as 1652. Labour broking became an important form of employment for businesses wishing to increase their profits by employing few or no skilled workers (Swanepoel & Slabbert
Namibia has experienced much trial and error with regard to labour broking, because labour broking is a primary form of employment in Namibia (Botes
A similar situation has arisen in South Africa. According to ADCORP (
After the demise of apartheid and the birth of a new democracy, South Africa joined the ILO, which meant that it had to comply with international labour legislation (Swanepoel & Slabbert
However, with the increase in temporary workers and the difficulty of organising union membership among such workers, unions have increasingly called for the abolition of this type of employment (De Lange
The government’s rationale for amending section 198 of the LRA was mainly to prevent the exploitation of workers earning below the minimum wage and being subjected to inhumane working conditions (Harvey
TESes and companies have found loopholes in the amended legislation and ways to adapt to the amendments, as labour broking activities continue to grow (ADCORP
The African National Congress’s (ANC) 2009 manifesto states that laws must be introduced to prevent worker exploitation, ensure decent work for all workers and protect the employment relationship; it also stipulates that laws must regulate contract work, subcontracting and outsourcing (Brand, Todd & Laubcher
The Labour Relations Amendment Bill of 2012 included a few changes to section 198 in support of the ANC manifesto. The changes to this section were aimed at regulating labour broking and preventing worker exploitation. Section 198 retained its key components, for example, a TES that procures a person’s service for work at a client company is still regarded as the employer of that person. However, the changes allow the employee to hold the TES and the client company jointly and severally liable for contravention of bargaining council and collective agreements, arbitration awards and BCEA regulations (Brand et al.
The Amendment Bill added four new sections to section 198 (section 198A–D) to deal with the different types of atypical employment. Section 198A focuses on temporary services. A temporary service is a service provided by a person who does not work for more than three months for a client company, where the person works as a substitute for an absent permanent employee, or where a sectoral determination or collective agreement permits a determined period as temporary. According to section 198A, the TES is deemed to be the employer of the temporary employee, except where the employee works longer than three months or is not a substitute worker. A temporary employee may not be appointed on less favourable terms than those permanent employees who are doing similar work (Brand et al.
Section 198B focuses on fixed-term contracts. Such a contract will have a specific end date or is subjected to a specific project. Employees excluded from section 198 are those earning above the threshold of R205 433.30 and employees who work for a business that employs fewer than 10 employees, as well as a new business less than two years old that employs 50 employees. Where a fixed-term contract exceeds three months, the employer must provide a valid reason to allow a longer contract provided the work that needs to be performed has a limited period. Section 198B also stipulates that persons working longer than three months must receive the same opportunity to apply for a permanent position as a permanent employee; they may not be treated less favourably than a permanent employee (Brand et al.
Part-time employees are regulated in terms of section 198C. Such employees are considered to be persons who are paid per hour and work fewer hours than a permanent employee who does the same type of work. These employees may also not be treated less favourably than those who are doing the same type of work, and are subject to the same jurisdiction as per section 198A and 198B. Part-time employees working less than 24 hours per month do not fall within the scope of section 198C (Brand et al.
In the past, a contract worker could only approach the Labour Court for unfair labour practices. But section 198D now enables contract workers to take their case to the Commission for Conciliation, Mediation and Arbitration (CCMA) for arbitration. Labour inspectors may also enforce legislative compliance on both the labour broker and its clients; moreover, those employees who are hired must be provided with written particulars of their employment that comply with section 29 of the BCEA (Brand et al.
The ILO and South Africa’s Bill of Rights provide for fair labour practices and, according to Harvey (
Harvey (
Numsa and Cosatu are some of the unions that are strongly opposed to labour broking; the abolishment of labour broking is always on their list of demands during a strike. Finnemore and Joubert (
The argument against labour broking is directly related to the welfare of contract workers. Political influences and union membership play a role, as can be seen from the sudden reduction of the six-month employment contract to a three-month employment contract at the National Assembly during June 2013 (De Lange
When South Africa became a democracy, it opened the door to the world, with many international investors and businesses hoping to gain a foothold in this resource-rich country. South African companies were introduced to world-class manufacturing and globalisation, which resulted in stiff competition in the form of quality, quantity and production costs (Barker
BUSA argue that labour broking is an important form of employment and is needed for businesses to compete with the low wages paid by countries such as China and Brazil. They also argue that only a handful of TESes are guilty of exploiting contract workers. Permanent employees are a significant expense for a company and, with the stringent labour legislation and union demands, it is becoming increasingly difficult to retain permanent employees (Finnemore & Joubert
The argument for labour broking is largely focused on improving the country’s economic growth and unemployment situation. It also supports the right of a company to do business, as can be seen from the experience of the Namibian government. When the latter tried to prohibit labour broking through legislation, it was opposed by the Supreme Court of Appeal of Namibia, which was guided by the ILO conventions and provisions,
The Namibian labour broking industry has a long history of slavery and unfair treatment. The natives in Namibia were coerced into accepting harsh working conditions with low wages, no benefits and no protection from unfair labour practices. With those wrongs in mind, the Namibian government decided to ban labour broking outright (Bösl, Horn & Du Pisani
Section 128 of the
Africa Personnel Services, one of the largest employment agencies in Namibia, contested the ruling in the Namibian Supreme Court of Appeal, in
According to Van Eck (
The changes to labour broking came into effect on 01 January 2015 and businesses had until March 2015 to comply with the new legislation (De Lange
Harvey (
Given the arguments for and against labour broking, it is clear that labour broking is a form of employment that is here to stay, because everyone has a right to work and to improve their living standards, and temporary employment provides more opportunities for employment than permanent employment (Gericke
An exploratory qualitative approach was applied in this study. Qualitative methods were used to interpret the participants’ views regarding the changes to section 198 of the LRA; this would have been difficult to achieve if the researchers had used only quantitative methods (Padgett
Six participants from a large petroleum and chemical company were approached to participate in this study. According to Elo et al. (
Employees working in integrated petroleum and chemical companies and making use of labour brokers constituted this study’s research population. Six participants from one large integrated petroleum and chemical company were selected for this research. A purposive sample was used because the participants served a very specific purpose – one of the criteria of the participants was to have knowledge about the changes in labour relations (Robinson
A purposive sampling technique was used to identify six participants for this study. The criteria to participate in the study were as follows: participants must have worked in the HR department of an integrated petroleum and chemical company, and the company must have made use of labour brokers. Individual face-to-face interviews were conducted with four participants; the remaining two participants were interviewed telephonically because they were based at a satellite branch of the company more than 200 km away from the main branch.
Qualitative research can be conducted through words (Tesch
The interviews were semi-structured and consisted of broad objectives, which were reflected in the questions asked. The participants were encouraged to explain their views and experiences in a specific situation and the researcher explored matters that arose therefrom (Charmaz
The questions asked during the interviews, which enabled the researchers to collect the necessary data for this study, were as follows:
What positive impacts do the changes in labour broking have on your organisation?
What are the benefits for the employees?
What negative impacts do the changes in labour broking have on your organisation?
What negative effects will the changes to labour broking specifically have on the employees?
The same questions were asked during the telephonic interviews with the two participants who were based at a satellite branch of the company more than 200 km away from the main branch.
Tesch’s (
To meet ethical requirements, the researchers obtained written informed consent from each participant prior to each interview. The interviews were conducted in a private boardroom and confidentiality was guaranteed by making sure that the data were available only to the researchers. The participants remain anonymous and no one had access to the data except the researcher. University of South Africa (Ref #: 2014_HRM_003).
Biographical characteristics of the participants in this study.
No. | Race | Age | Gender | Language | Religion | Marital status | Job designation | Number of years’ service in the HR department | Types of interviews |
---|---|---|---|---|---|---|---|---|---|
1 | White | 60 | Female | Afrikaans | Christian | Married | HR manager | 28 | Individual interview |
2 | White | 54 | Male | Afrikaans | Christian | Married | Procurement manager | 31 | Individual interview |
3 | White | 28 | Female | Afrikaans | Christian | Married | HC specialist | 5 | Individual interview |
4 | White | 56 | Male | English | Christian | Married | Maintenance manager | 26 | Individual interview |
5 | White | 31 | Female | Afrikaans | None | Single | HC specialist | 2 | Telephonic interview |
6 | Indian | 27 | Male | English | Hindu | Single | HC specialist | 8 | Telephonic interview |
HC, human capital; HR, human resources.
Owing to the fact that this study involved a small sample group and was conducted at an integrated petroleum and chemical company making use of contract workers, the findings of this study cannot be generalised to other organisations that use labour brokers (Flick
The participants all concurred that the main positive impact on the organisation resulting from the changes in labour broking was an increase in productivity. Another positive impact was that the organisation would have an opportunity to identify high-quality employees. Below are some of the answers obtained in response to the question:
‘[They] will definitely improve the employees’ morale in their work performance and such which will make the organisation more productive.’ (Participant 5, White, female, HC specialist)
‘Quality of the people from the labour brokers is very poor, so what do we do now? If you need a boilermaker or welder then we pay very high rates for a guy that has a boiler shop and we hire his best employees to do the job and he goes away when he is finished. With the changes we can see that contract workers become more productive to try and become permanent.’ (Participant 4, White, male, maintenance manager)
‘If they see that a certain employee is actually a good contractor then they keep them on.’ (Participant 5, White, female, HC specialist)
The participants also agreed that the changes to section 198 of the LRA will have a positive impact on the employees in that such changes will protect the lower income employees and will provide permanent employment and better dispute resolution procedures. Below are some of the answers obtained in response to the question:
‘I see something positive for the guy who has been cheated for 10 years not being able to get permanent employment … for him it is prime time as he will now get benefits that he did not receive for the past 10 years.’ (Participant 2, White, male, procurement manager)
‘ … We had a few temporary workers or labour broker employees that had worked on our site for a long time, maybe three or four years and now at least we make them permanent. It will definitely improve the moral in their work performance and such. So we see the benefits, yes.’ (Participant 5, White, female, HC specialist)
‘ …An employee that is currently employed by a labour broker will be deemed to be a permanent employee after three months. Before the changes in labour broking, the client company and the labour broker are jointly and separable liable for any dispute. The contract employee can now, after the changes in labour broking, approach the client company directly with any dispute or grievance.’ (Participant 5, White, female, HC specialist)
‘With the new changes we will need to follow disciplinary procedural steps with contract employees as we will not be able to just dismiss contract workers as we did in the past.’ (Participant 2, White, male, procurement manager)
These findings support the views of the following authors regarding the positive impact that the changes to section 198 of the LRA have on an organisation and its employees.
Grogan et al. (
The data gathered during the interviews clearly indicated that the changes to section 198 of the LRA would have negative implications primarily in terms of the cost involved. Some of the participants’ responses were as follows:
‘It is going to have an impact and we will need to review our temporary contracts … so it has cost implications.’ (Participant 1, White, female, HR manager)
‘ …It is going to cost you a lot more on training because we need to employ a new worker every three months and these employees must be trained and supplied with safety wear and gear.’ (Participant 3, White, female, HC specialist)
Other disadvantages of the changes to section 198 of the LRA are that the organisation will have to draft new policies and guidelines. Employment flexibility was also cited as a negative impact. Below are some of the answers obtained in response to the question:
‘We will have to actually draw up a new policy/guideline for managers so that they can understand that a temp person cannot work longer than three months. For example in your recruitment policy you will add that if there is an internal vacancy that the temp employee will have to be included and seen as an internal candidate and not an external candidate.’ (Participant 6, Indian, male, HC specialist)
‘ …And if there have to be any temp worker or work needed, it needs to be cleared with the human resource department so we can give the guidelines in terms on how to apply the temp contracts so that we are always on the right side of the legislation.’ (Participant 5, White, female, HC specialist)
‘ …After three months the project must be completed and when the project is not completed then you must make a decision if you are going to employ that person and if that person is not a good candidate then you must again look for another person.’ (Participant 6, Indian, male, HC specialist)
Changes to section 198 of the LRA will also have negative effects on the employees. The participants concurred that some negative effects on the employees might include the following: unemployment, employees will have a negative attitude towards the organisation and they will not be readily employable and current or permanent employees will do all the work. Below are some of the answers obtained in response to the question:
‘You are not going to create jobs, but rather take away jobs. The employee knows that we are only going to take him for a certain time, where he now … every time hopes that you are going to renew and renew and renew, and now we say to each other that he must leave after a certain period so he is not going to do his best and it is going to have an impact.’ (Participant 1, White, female, HR manager)
‘Work security will be affected and I also think it will influence the employability, job satisfaction, autonomy etc. which will influence the employees’ attitudes towards the organisation.’ (Participant 2, White, male, procurement manager)
‘The amendments will negatively influence the employability of the contract workers because each time you conclude a new temporary contract you conclude it with a new contract worker.’ (Participant 2, White, male, Procurement manager)
‘ …Sometimes you need somebody quick and if you don’t use labour brokers anymore you have to do everything yourself.’ (Participant 6, Indian, male, HC specialist)
These findings support the views of the following authors regarding the negative impact that the changes to section 198 of the LRA have on an organisation and its employees. Brand et al. (
Summary of the impact of changes to section 198 of the LRA on an organisation and the employees.
The objective of the study discussed in this article was to explore the perceptions of employees in the HR department of an integrated petroleum and chemical company with regard to the changes to section 198 of the LRA in the workplace and the impact that these changes will have on a company making use of labour brokers.
The results indicated that the changes to section 198 will have both positive and negative implications for organisations and employees. The positive impacts on the organisation will include better and more productive employees. For employees, the positive implications include more job protection, more benefits and fair treatment.
However, organisations will also experience negative implications in the form of higher costs resulting from more benefits to the employees, as well as the need to employ new temporary employees every three months, with the associated costs of training them and providing them with gear. Furthermore, policies will have to be amended to reflect the changes. Negative implications for the employees may include job losses, because companies might decide not to use contract workers anymore, which in turn will have a negative effect on the employees’ employability, as well as their attitude towards the company.
Therefore, according to the employees in the HR department of the integrated petroleum and chemical company, the changes to section 198 of the LRA will have both negative and positive implications for an organisation and its employees.
It is recommended that this study should be repeated to involve other organisations to also include a larger and more diverse sample group of employees. Another recommendation is that further studies should also take into account the views and perceptions of contract workers.
The work presented in this research article formed part of a dissertation published at University of South Africa in 2015, entitled ‘HR employees’ perceptions regarding the changes in labour broking’ by Bennie Loggenberg.
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
Y.T.J. acted as supervisor and was involved in the analysis of the data. B.L. collected the data, conducted the literature review, analysed the data and wrote the report.