LRA amendment grace period, as it ends
26 March 2015
The Labour Relations Amendment Act 6 of 2014 (LRAA) came into operation on 1 January 2015.
The amendments came into effect after raging debates by all stakeholders regarding implications to labour broking and foreign direct investment into the country, the right to strike, dispute resolution processes as well as job creation.
Substantive amendments have been introduced by the LRAA relating to aspects ranging from labour broking (or temporary employment services) to other forms of flexible employment contracting. This article only deals with this limited aspect of the LRAA, which on its own is significant.
Section 198A of the LRAA makes provision that employment contracts with TES staff may not be in excess of three months and deals with how the relationship with a TES employee is to be regulated after three months. Employees falling within the protection of this section are those earning below the threshold of ZAR205 433.30 per annum. Beyond a period of three months the TES employees become permanent employees of the client of the TES. This is a deeming provision. The three-month period takes effect on 1 April 2015 and this has serious consequences for businesses with TES employees. Bear in mind that TES employees after 1 April 2015 may not be "treated less favourably" than employees who are in permanent employment with the client (of the TES), and the client now has joint and several liability with the TES for claims instituted by the TES employee.
In addition, section 198B of the LRAA provides that an employer may not employ individuals on a fixed-term or successive fixed-term contracts for longer than three months, save in certain justified circumstances listed in section 198B(4). An employer employing less than 10 employees, or one that employs less than 50 employees and whose business has not been in operation for a period exceeding two years (subject to certain conditions imposed by the Act), is exempt from the application of this section. In addition, all fixed-term contracts that endure beyond March 2015 will have to be justified in terms of the amendments. Also, extensions of fixed-term contracts must be in writing.
We have advised and continue to advise a number of employers, who contract with labour brokers and employ large sections of employees on a fixed-term basis, on how to regularise their affairs with employees to ensure compliance with the law after 1 April 2015.