The Labour Relations Amendment Bill, which is due to be enacted later this year, will more strictly regulate labour brokers in South Africa and how they are used by businesses. Cosatu’s protest action on 7 March called for an outright ban on labour brokers.

Johan Botes, Director in the Employment practice at Cliffe Dekker Hofmeyr business law firm, says that in this regard, South Africa could learn lessons from China, who have recently been through similar issues.

“The Shanghai Municipal Human Resources and Social Security Bureau (SMHRSSB) recently issued a “guiding opinion” aimed at better regulating the use of labour brokers in Shanghai. Following the promulgation of the Employment Contract Law on 1 January 2008, the use of labour brokers (or labour dispatch, the local term used for employment service agencies) increased, despite the intention of the legislature to restrict the use of these agencies.

“As is the situation in many other jurisdictions around the world where labour brokers are prevalent, many Chinese employers seek to use labour brokers as a mechanism to escape obligations attracted by employers,” he notes.

Botes explains that the guiding opinion issued by the SMHRSSB aimed to close a loophole in the Employment Contract Law which stated that the restrictions on the use of labour brokers to temporary, auxiliary and substitute jobs applied “generally”. Employers argued that the restriction was vague and that it did not restrict the practice of using labour brokers as a main means of supplying workers to a business. The guiding opinion aimed to restrict the use of labour brokers by means of the following limitations:

· The use of labour brokers will gradually be restricted to allow use only in temporary, auxiliary or substitute jobs;

· Providing salary equality for labour broking and directly employed staff;

· Permitting staff hired by a labour broker to join the trade union and employee representative council of the client (company) and allowing them to participate in collective bargaining.

“The SMHRSSB plays a role akin to the South African Department of Labour in that it may supervise and investigate the use of labour brokers. It may issue a compliance order to a company falling foul of the law, similar to the powers of Labour Inspectors employed by the Department of Labour.

“Perhaps South African labour legislation can benefit from learning lessons from our Chinese counterparts,” he adds.