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Liability Insurance
Monday, September 14, 2015 - 02:16
Permanent solution

With effect from 1st April 2015, all employers are required by law to appoint temporary workers as permanent employees, following a three-month continuous working period. This is in terms of changes to Section 198 of the Labour Relations Act. The alternative is an award of up to 12 month’s salary for unfairly dismissed ‘temporary employees’ through the Commission for Conciliation Mediation and Arbitration (CCMA).

Simon Colman, Underwriting Executive at SHA Specialist Underwriters, says that employers and labour brokers who employ casual workers are now facing an increased risk of unfair dismissal cases lodged against them. “According to the new legislation, once the three-month employment period has lapsed, the temporary worker becomes entitled to the same benefits as any of the permanent staff members of the company, and this includes medical and retirement benefits.
“The only exceptions lie within a few categories of employment where a particular project is set for a specific duration or in the case where foreign employees with work permits are employed temporarily.”
So, for example, should an employer decide to terminate a temporary worker’s contract after four months, he would be required to follow the same dismissal procedures as in the case of permanent staff. “Failure to do so could result in a worker rightfully lodging an unfair dismissal dispute with the CCMA. Should the employer be found guilty of unfair dismissal activities, the award could amount to as much as a 12 month’s salary.”
He suggests employers consider labour dispute insurance, as part of an employment practices liability policy, to ensure they are not overwhelmed with unfair labour practice disputes. He also notes that the legislation affects labour brokers. Indeed, they are invariably the ones responsible for placing employees in temporary positions. “The new labour amendments could easily result in an increase of cases lodged with the CCMA as confusion generally exists as to who the ultimate employer of these workers is. In any case, clients of labour brokers could find themselves considered as joint employers after the first three-month employment period has passed.”
The new labour law amendments seek to restrict the use of temporary employees in positions that require permanent employment. This in turn means that labour brokers may find it more difficult to conduct their business as they did before 1st April.
Many companies use labour brokers to avoid having to employ workers on a ‘permanent basis’. They hope to reduce wage costs, improve job flexibility and make it easier to readjust staff complements.
Colman says, “Labour brokers should speak to their insurance providers to ensure their liability policies are extended to protect their clients who could now be the joint employers of these casual workers. Above all, labour brokers should consult with their legal representatives to ensure they comply with the changes to the law.
When employers decide to dismiss or not renew a temporary worker’s contract, they should first determine whether the position needs to be filled on a permanent basis. “Should this be the case, employers would be well advised to move the particular casual worker into that permanent employment. If this is not possible, the employer will face the tedium of constantly refilling the temporary position with a new casual worker every three months.
 

Copyright © Insurance Times and Investments® Vol:28.9 1st September, 2015
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