Proposed changes to the Employment Services Act are on the horizon

15 Aug 2022

The Employment Services Act 4 of 2014 came into effect on 7 April 2014. The primary purpose of the Act is to inter alia:

1. Provide public employment services;
2. Provide for the establishment of schemes to promote the employment of young work seekers and other vulnerable persons;
3. Provide for schemes to assist employees in distressed companies to retain employment;
4. Facilitate the employment of foreign nationals in a manner that is consistent with the objects of this Act and the Immigration Act, 2002;
5. Provide for the registration and regulation of private employment agencies; and
6. Other similar matters connected therewith.

On 28 February 2022, the Minister of Employment and Labour published a draft bill for comment. The new draft bill effectively provides for minor changes to certain sections including definitions of certain individuals. However, the main thrust of the proposed amendments relates to the employment of foreign nationals, the introduction of Digital Labour Platforms and the change in the definition of a private employment agency.

Employment of foreign nationals

Some of the changes alluded to above include, but are not limited to the following:

1. The Minister’s ability to set maximum quotas for the employment of foreign nationals as employees or workers in any sector. The Minister may set a quota to apply by sector, occupation, region or on a national scale. What is pertinent for employers in this regard is that an employer will only be entitled to exceed the maximum quota on the condition that it has applied for and has been granted an exemption, or if the foreign national fills a position for which critical skills are required.

2. The draft bill seeks to empower the Minister to make regulations that will further regulate the employment of foreign nationals, including:

2.1 measures employers must take to confirm that there are no suitable persons for the role within South Africa;

2.2. requirements for employers to use a public employment service or private employment agency to assist employees to recruit suitable candidates;

2.3. requirements for the preparation of a skills transfer plan;

2.4. the criteria and procedure to apply for an exemption from the Minister;

2.5. the records employers must keep in respect of foreign nationals.

Introduction of Digital Labour Platforms and the term “workers”

The draft bill proposes a new section in the Act which is aimed at work or services provided to Digital Labour Platforms. A Digital Labour Platform is defined as:

“an electronic entity that enables the provision of work or services to any other person in the Republic”.

For the purpose of the draft bill, a platform that meets the aforementioned definition is considered an employer of the person who performs the services or work. The person performing the services is classified as a worker, which is defined as:

“any person who works for another and who receives, or is entitled to receive, any payment for that work, whether in money or in kind“.

A Digital Labour platform will be considered an employer of the workers if:

1. The Digital Labour Platform determines the payment and/or terms and conditions of the work or services provided; and
2. The Digital Labour Platform remunerates the worker.

Should these provisions be enacted, they shall have far-reaching implications for those businesses falling within the definition of a “Digital Labour Platform” and may result in such platforms gaining “workers” in terms of this Act. Therefore, these businesses would be well advised to prepare for the possible enactment of this draft bill and ensure that they have appropriate contingency plans and measures in place should the bill be passed.

Definition of private employment agency

As the Act currently stands, a private employment service provides employment services “for gain”. However, in terms of the new draft bill, this has been changed. The words “for gain” have been removed with the resulting effect being that a company which provides employment services to any other company will need to be registered and licensed to operate as a private employment agency.

Conclusion

The Employment Services Act was not a well-publicised or commonly referenced piece of legislation, especially when compared to other more common employment legislation, such as the Labour Relations Act or Basic Conditions of Employment Act. However, should the proposed changes be enacted in their current form, the majority of employers may be tasked with the need to familiarise themselves with the ambit and provisions of the Act and may be required to make certain necessary changes to their workplaces as a result.

It is important that employers prepare for these changes, since the Act prescribes fines and imprisonment for up 24 months for non-compliance with certain provisions of the Act. Further, the draft bill has given the Labour Court authority to impose fines up to R100 000,00 and for other contraventions, fines in terms of the Adjustment of Fines Act and the Immigration Act.

See also:

• Employing foreign nationals in South Africa
• Employment Policy in the pipeline
• Just dismissal – Unpacking employment law in South Africa
• Proposed amendments to the Employment Equity Act and what they mean for your business

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)