Labour-broking public hearings Committee Report: adoption

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Employment and Labour

22 March 2010
Chairperson: Ms Lumka Yengeni (ANC)
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Meeting Summary

The Committee discussed the Draft Framework Document that identified a list of abusive behaviour practiced by labour brokers. Members struggled with point 5 of the document that said that outsourcing and subcontracting was identified as a problem area that had to be debated by the Committee. Some Members did not believe that primary contractors should be held liable for the payment of workers used by subcontractors (when subcontractors failed to pay their workers), while other Members felt that they should. The Committee agreed to disagree on the matter. However, they agreed that point 5 should be included as one of the recommendations that would be given to the Department of Labour. The Committee also agreed that the Draft Framework Document should include the three-page document that outlined the abuses and concerns associated with labour broking as identified in the public hearings.

The Draft Framework Document was adopted with amendments, with the DA’s concerns noted.

Meeting report

Consideration of Committee Report: Abusive practices by Labour Brokers
The Chairperson informed the Committee that the meeting was organised so that Members could adopt the report that was compiled during the public hearings on labour broking. There was a draft framework document compiled by a task team consisting of a few Committee Members that focused on five abusive practices by labour brokers. She was sure that the Committee would deliberate and expand on the points made in the document.

A Member stated that she appreciated the work done by the task team. The Committee needed to stipulate all of the abuses so that the Department of Labour (DoL) could work out ways to prevent them from happening again. She thought that the first point in the document, which spoke about fly-by-night brokers, should be excluded from the document as it was not seen as an abusive practice.

The Chairperson replied that Members had to expand on the points. The first point referred to the workplace where there were workers who could be subjected to abusive practices. The Committee could rephrase the way the point was written so that it related to abusive practices used by labour brokers.

A Member stated that the Committee should define what the “workplace” was as well as the “employer”. This had to be included in the Report. There were many violations that could be found in labour broker contracts. Some contracts spoke about the right to strike in contravention of the Land Reform Act (LRA) and the Constitution. Some contracts also forbade workers from joining unions. Illegal forms of discipline were sometimes adopted and it was found that there was non-compliance with the processes of workers’ rights. Dismissals without following proper procedures were common in the labour broker industry and scarce skills were used as a mechanism to undermine workers’ rights and diminish the power of collective bargaining so strikes could not occur. Often, full time workers were retrenched, only to be rehired or replaced with short term workers where wages and employment conditions were substantially downgraded. Workers were often mislead by the nature of their contracts and believed that they were hired on a permanent basis, only to discover they were employed on short term contracts.

Mr V Ndlovu (IFP) thought the mandate of the task team was to isolate some points that were made in the main report. The team was supposed to have summarised the main points in the report so that if officials from the DoL failed to read the entire report, they could turn to the last page and see the main points that were made. The DoL would then have to target all the problems outlined by the Committee.

Ms L Makhubele-Mashele (ANC) was of the understanding that what the task team was going to prepare was not conclusive and that the entire Committee would continue to debate the important points isolated from the main report. The Member wanted to focus on the fifth point in the document, which looked at outsourcing and sub-contracting. The task team deliberated on this issue, as they thought that part of the abusive practices was because of outsourcing and sub-contracting. The task team agreed to disagree on this matter as there was one Member within the team that did not agree with the rest of the Members on the point that outsourcing and sub-contracting needed to be addressed. Most Members believed that legislation was needed to address the matter. The task team wanted to bring the matter to the Committee for further discussion.

A Member stated that it was the Committee’s responsibility to adopt the report. The Committee had to look at what had to be done to resolve the issues identified by the Committee and the public.

The Chairperson stated that she was sure that Members would engage on the issue of outsourcing and sub-contracting. She agreed that the Committee had the responsibility to engage on the points made in the document prepared by the task team. Where the Committee felt that there would be redrafting or removal of points, they would do so. She addressed the first point, which focused on “fly-by-night” brokers, saying that there was a suggestion that it should be removed. She did not think there was a problem with the point. However, she wanted the public to understand what the point entailed. There were rumours floating around in the public that the Committee wanted to regulate labour broking. The Committee only wanted to limit some abusive practices in the labour broking industry. The report on labour broking contained many issues that the public wanted addressed. The information contained in the report would be translated in to legislation.

A Member stated that if the Committee removed the point on fly-by-night brokers, it did not mean that the Committee did not appreciate the work done by the task team. If the Committee looked at point four of the document, which looked at defining the workplace and employer, it spoke to what the first point on fly-by-night brokers alluded to. She supported the idea that the first point be removed or replaced with the fourth point. 

The Chairperson noted that the first point was reflected in point number four. Therefore, the Committee would do away with point number one. She asked if Members wanted to engage on points two and three.

A Member noted that point number two said that there was no contractual relationship amongst the broker, employer and Client Company in a triangular employment situation. Members found that people were being abused. She suggested that the point just speak about the types of abuses found “on the ground” and how the DoL would prohibit these practices. The Minister had to look at defining the terms “workplace” and “employer”. He also had to look at ways to prohibit the abusive practices and in doing so; he had to amend the appropriate pieces of legislation. 

Mr I Ollis (DA) stated that if the Member wanted the task team to merely list the abuses contained in the main report, then the Committee Secretary could do this. It was an administrative task. What the task team tried to do was to apply their minds to the matter at hand. The whole Committee agreed that the content of the task team document was an accurate reflection of what was said in the public hearings. The task team tried to note the key problems to put before the Committee for debate.

A Member stated that it was the duty of the Committee to draw up recommendations that would be included or reflected at the end of the main report. Many workers did not know who their employers were. This meant that there was no communication between workers and employers. The Committee was aware that there was no piece of legislation that reflected on labour brokers. Labour broker was a term given to these abusive employment practices. The labour brokers were given leeway to do whatever they wanted to workers. The task team was just asked to list the important points so that the whole Committee could officiate whatever needed to be made official. Point 2 in the Draft Framework Document showed that there was no contractual relationship amongst the worker, employer and labour broker. There was a mistake made in the point. “Employer” should have been written as “employee”. It should say that there was no contractual relationship between the employee, the broker and the client company. The Committee needed to apply its mind to everything that it did.

The Chairperson stated that the Members had to be careful when saying that points in the framework had to be expanded on. It undermined the work done by the task team. It had been widely publicised that the Committee was going to list the abusive practices used by brokers. Most educated people would understand terms such as “fly-by-night” brokers. However, other people that were not as educated would wonder what the Committee was talking about. The Draft Framework report was perfect for people that could understand it, but it had to be expanded upon for those that did not. Nobody was disagreeing with the report; some Members just wanted it to be more detailed.

Ms F Khumalo (ANC) agreed that the Committee should expand on the points contained in the draft framework report. Members were not criticising the work done by the task team, they were trying to “beef” it up so it made more sense. The report had to be detailed so people could understand what the Committee was saying.

Mr V Ndovu (IFP) stated that the task team was given a very short mandate, which was to recommend what the DoL should do after they received the report on the abusive practices used by brokers. This was why the draft framework report was written in short points. The Committee had the right to debate each point and conclude on it.

A Member stated that a lot had been said about the term “labour broker”. He suggested that the Committee look at the name regardless of what the outcome of the report was going to be.

The Chairperson noted that many good things had been said about the work produced by the task team. She suggested that the Committee move away from discussing whether the work completed by the task team was good or not. All the information that was needed was included in those five points; it just needed to be elaborated on for those that did not understand the points.

Mr E Nyekemba (ANC) proposed that the Committee debate on point 5, which focused on outsourcing and subcontracting, as consensus had to be reached on the matter. Point 4 in the report was a recommendation about what needed to be done by the DoL. He suggested that the three-page document that gave an outline of the abuses and concerns associated with labour broking, as the list of abusive practices.

The Chairperson noted that Members did not object to Mr Nyekemba's proposal. The Committee would include its recommendations in the three-page report.

Mr Nyekemba agreed, but stated that the Committee still had to debate point 5 of the draft framework report. Once this was completed, the Committee could talk to the recommendations.

The Chairperson noted that there were no objections to the suggestion. She called on Members to debate point 5.

Mr Ollis explained that point 5 was problematic because the task team did not agree with some of the examples that were given to show what was wrong with outsourcing and subcontracting. For example, Company A was awarded a contract and decided to sub-contract to Company B, Company C and Company D. Company D then became bankrupt and did not pay its staff. The principle contractor, Company A, was not liable by law to pay the salaries that Company D should pay to its workers. If the Committee recommended to the DoL to develop an amendment at law that linked sub-contractors' staff salaries to the principle contractor, it would not “stand up” in law. It was the examples that were tabled in the sub-committee that created the problem for members of the task team. They could not support a programme that told the DoL to either stop outsourcing and subcontracting completely, or to link the staff salaries of the sub-contractors to the primary contractor. The task team disagreed profoundly on this matter. There were companies that outsourced and subcontracted that were not labour brokers.

Mr Ndlovu stated that there was another example that could be used to show why the task team disagreed on the matter. Sometimes companies applied and were awarded tenders, only to find they could not pay the salaries. This caused them to “run away”. These companies were listed as abusers. However, the task team wondered who was actually supposed to be held responsible at the end of the day. Was it the company that ran away or was it the primary company that signed the contract for getting the tenders? The task team wanted to put this matter before the Committee so a decision could be made.

Mr Nyekemba recalled that one of things that was consistently mentioned during public hearings was that Parliament had to look at how ordinary people on the ground were treated by their employers in the public and private sectors. Members would not be out of line in thinking about what Parliament had to do to resolve this matter. There were problems in deciding whether the primary contractor or the sub-contractors should be held responsible when something went wrong. However, the Committee should be looking at the contracts themselves. This was the problem that had to be dealt with.

A Member stated that she could understand where the task team was coming from. The Committee should say that the government should revisit all forms of work and define what typical workers and employers were. The task to revisit the types of employment could be given to the DoL. This was the fourth point in the draft report and would cover everything that the Members were saying. She stated that perhaps the Committee should do this instead of debating about outsourcing. The government needed to revisit the definition for what a worker was, whether the worker was outsourced or not. The fourth point in the draft framework report should be taken out and put in the recommendations that would be given to the DoL. The DoL should define all types of employment and come back to the Committee to tell Members what subcontracting was according to their own definition.  

Mr Ollis clarified that the Member wanted to modify point 4 in the draft framework instead of debating point 5. Point 5 should be removed and point 4 should say that the Department should clearly define the employer and the workplace for all types of work in South Arica. He thought this was a better suggestion and that the Committee should agree to it.

Mr Ndlovu understood what the Member was suggesting. However, what she was suggesting was completely different from what the task team was talking about. They were talking about primary contractors that were awarded tenders and their subcontractors that “ran away” when they realised they would not be able to pay workers that were outsourced. The task team was not talking about definitions. He asked the Committee to understand what the task team was talking about.

The Chairperson stated that the Committee was dealing with a very complex system of labour broking. If the Committee was not careful, and if they did not examine the system carefully, it could fall into a trap. The system would get the services needed at the end of the day. The question was how the Committee could protect vulnerable workers. The communities were the victims of the labour broking system.

A Member stated that she did not want the Committee to make a decision on the matter before the Members deliberated on it. This issue could not be left unresolved.

Ms L Makhubela-Mashele (ANC) stated that the Member was correct. The matter could not be left unresolved. The vulnerable workers were not able to defend themselves. Outsourcing and subcontracting needed to be addressed through legislation.

Mr Ollis suggested that point 4 should say that the DoL should define the employer and the workplace clearly. He also suggested that point 5 should be modified to say that the DoL should investigate the basic conditions of employment within the outsourcing and subcontracting industries with the aim of preventing similar exploitation to what was seen in the labour broking industry.

A Member understood what Mr Ollis was suggesting, however, she thought that the Committee should not entertain the amendment that he suggested because the Committee had already received information about the situation first hand. The Committee did not need the Department to go out and investigate the matter because people had already informed the Committee of the situation during the public hearings. The Committee had to tell the DoL what to do. Outsourcing and subcontracting needed to be addressed through legislation so that the principle company, the one that was awarded the tender, could be held liable for all the workers used, even the ones that were subcontracted.

Ms A Rantsolase (ANC) stated that the DoL should work on how they were going to prohibit abusive practices in the subcontracting and outsourcing industries.

Mr A Louw (DA) stated that there were subcontractors that ran away and did not pay their workers after they realised they could not afford to. This was the real problem that the Committee needed to talk about. The crux of the matter was that if someone took some responsibility that opened up opportunities for people, then this person had to ensure that they could do the job. There had to be rules that potential tender and subcontractors had to follow in order to qualify for the job. The DoL could assist with this.

Mr Ndlovu stated that if one looked at Mr Ollis’ suggestion and then looked at recommendation number two in the draft framework, one would see that it was the same thing but with different wording. The Committee was “dilly-dallying” on the matter and it was clear that they would not come to a consensus. He suggested that the Committee agree to disagree.

The Chairperson thought that Mr Ndlovu’s suggestion to agree to disagree was the right one. The Committee had already agreed that the three-page document outlining the abuses and concerns associated with labour broking would accompany the draft framework document. The Committee had to come up with recommendations for point 5, which the Committee agreed to disagree on.

Mr Ollis understood that some of the Members did not like the term “investigate” in his amendment proposal. He agreed it implied that the DoL should do another investigation. This was not what he wanted and he agreed with the Committee on this. He wanted to change the proposal so that point 5 could say that the DoL should consider the basic conditions of employment within the outsourcing and subcontracting industries with the aim of preventing similar exploitation to what was seen in the labour broking industry. The Committee could then refer to the three-page document.

A Member said that she was not happy with the proposal. She suggested that point 5 say that the DoL should introduce a legislation that would address abusive practices found in outsourcing and subcontracting and that all parties should be held accountable.

The Chairperson noted that the Committee had agreed to disagree on the matter. There was no amount of reasoning that could be done for the Committee to agree. She did not think that the Members understood one another on the matter.

A Member stated that there had to be a policy in place that dealt with outsourcing and subcontracting.

Ms Rantsolase asked Members to consider the proposal made by Mr Ollis, as it did not exclude the other forms of employment. If the Committee did not revisit the other forms of employment, they were going to have a problem. She suggested that Mr Ollis amend his suggestion to include other forms of employment.

The Chairperson stated that there was a difference in what the two Members were suggesting. Mr Ollis disagreed that the primary contractor and the subcontractor should both be held accountable for the outsourced workers. She clarified that Mr Ollis was happy with what the other Member proposed, except for the part where the primary contractors could also be held accountable for workers outsourced by subcontractors.

Mr Ollis stated that he did not agree with the last part of the sentence because he did not think that the Committee should tell the DoL what to do. The DoL should be left to formulate the Act according to what their lawyers would advise.

Mr Ndlovu thought that the Committee had concluded on the matter already. The Committee was now moving backward.

Mr Nyekemba agreed with Mr Ndlovu. The Committee could agree that the practice of outsourcing and subcontracting exploited ordinary people. The report had to reflect that outsourcing and subcontracting contributed to the vulnerability of workers. The issue should be put to a vote if Members disagreed. 

The Chairperson stated that matter had to be voted on so that the Committee could conclude the matter and adopt the report.

A Member stated that her proposal stated that the DoL had to introduce legislation to address the abusive practices brought by outsourcing and subcontracting by holding all parties liable for the conditions of workers.

Mr Louw wanted to make it clear that the Democratic Alliance disagreed with the last part of the proposal, which held all parties liable for payment of workers.

Ms Rantsolase proposed that the Committee say that all abusive practices in outsourcing and subcontracting should be prohibited. It should be left to the DoL to decide how the practices should be prohibited.

The Chairperson stated that the Committee would take the three-page document that outlined abusive practices by labour brokers and they would attach it to the draft framework. The point 5 suggested by the Member would be included as one of the recommendations made to the DoL. The third recommendation would say that the DoL had to introduce legislation to address the abusive practices brought by outsourcing and subcontracting by holding all parties liable for the conditions of workers.

Members agreed to this.

The report was adopted with amendments. The DA’s concerns were noted, but this would be the report that would be tabled in Parliament.

The meeting was adjourned. 


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