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First they saw their pay double and received benefits such as medical aid and a provident fund for the first time. Days later, they got retrenchment letters.
This has been the experience of workers placed by labour broker Adcorp at a factory in Springs, Ekurhuleni, belonging to breakfast cereal giant Kellogg’s following the watershed Constitutional Court ruling on the contentious “deeming” provision in the Labour Relations Act two weeks ago.
At crisp maker Simba’s Isando facility in Ekurhuleni, 142 out of 328 packers and boxmakers, who were also placed by Adcorp, face retrenchment after becoming permanent workers.
The precedent at these two household name brands could be repeated at several workplaces where labour broker workers have been fighting to be “deemed” in terms of the Labour Relations Act and receive equal pay to their directly employed colleagues.
Companies where cases like these are pending include Heineken, DHL, Bakers Biscuits, Clicks, Midas and online retailer Takealot.
These are just the large cases involving the Casual Workers Advice Office, a nongovernmental organisation in Germiston that has organised and represented hundreds of labour broker workers in cases to be “deemed” and receive equal pay.
After the Constitutional Court ruling, Kellogg’s took on its 116 brokered workers as staff.
The improvement in conditions over what Adcorp had paid was spectacular – hourly wages went up from about R20 (about R3 500 a month as a full-time worker) to R34 (about R5 950 a month), and the workers got medical aid as well as a provident fund, according to Kellogg’s head of legal Emmanuel Hinson.
However, almost immediately after their wages were increased and they started receiving the other benefits, retrenchment letters were delivered saying that 57 of them would lose their jobs so that the factory could safeguard profits.
‘Not the reason’
Hinson said it was just an unfortunate coincidence that the retrenchments came just days after the workers succeeded in getting Kellogg’s to accept them as employees and raise their wages.
He told City Press that the retrenchments were due to a restructuring of the Kellogg’s factory’s shift system that was in the works before the workers got deemed.
The company has shifted to a continuous operation model in consultation with the Food and Allied Workers’ Union (Fawu), removing the need for casual workers who used to be called to work if they were needed, he said.
Despite Hinson’s statement, the retrenchment letters given to workers explicitly cite the cost of equal pay as one reason for the job cuts.
“Were the company to operate the current shift system with the number of employees it currently has, this would result in increased operational costs of approximately R14 million per year, taking into account the harmonisation of remuneration and benefits between the original employees of the company and those who were previously supplied by Adcorp Blu,” Kellogg’s told workers.
One of the retrenchment letters, which City Press has seen, offers a worker who has been at the Kellogg’s factory for eight years a severance payout of R15 600.
In an attempt to expedite the process, Kellogg’s offered workers four times this “normal” severance package if they immediately agreed to leave. They can still get double the normal severance package if they leave before Friday.
Hinson said that “less than 60” workers had taken up the incentive to leave.
Brokered workers outnumbered permanent employees at Kellogg’s. Of the total 208 production workers, only 95 were permanent before the deeming.
Fawu, which negotiated the new shift system that made 57 workers redundant, said that it hoped the losses could be reduced in retrenchment talks.
The union’s Gauteng provincial secretary Vuka Chonco told City Press that, even though the labour broker workers were by and large not Fawu members, this did not mean that the union treated them as separate from its members.
At Simba, which is a subsidiary of global food and drink behemoth PepsiCo, the deeming of workers is also given as one of the reasons for retrenchments.
“As the employees of Adcorp Blu either have become or are the employees of Simba, they will cease to be part-time employees and will work 40 hours each week. Accordingly, they will take up hours and fewer employees will be needed by Simba,” reads the retrenchment letter the company sent to workers.
Simba also claimed that the Isando factory was “one of the least efficient PepsiCo manufacturing plants worldwide”.
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Other crisp factories have completely automated the job performed by the affected packers, it said, including Simba’s Prospecton plant in KwaZulu-Natal. In Cape Town, Simba outsourced the packing function at its Parow factory to a contractor – FunxionO – in May.
City Press is aware of several other arbitration cases about deeming and equal pay pending at the Commission for Conciliation, Mediation and Arbitration (CCMA), which have been waiting for the Constitutional Court.
Following the ruling, thousands of workers could see their wages improve, but they also face severe employer reactions.
Labour broker workers have cases pending against several well-known companies and brands, including Heineken, chocolate maker Ferrero Rocher and Bakers Biscuits, a subsidiary of JSE-listed AVI.
At Heineken, there are more than 400 brokered workers placed by Value Logistics, and Ferrero Rocher has 400 workers placed by Adcorp.
One big deeming case that could be swayed by the Constitutional Court ruling involves more than 500 labour broker workers at Clicks, who were placed by brokers Adcorp and Ziphi Nkomo.
Clicks spokesperson Susann Caminada told City Press by email that the ruling “is being considered by the group and will be taken into account”.
“The group’s decisions in this regard may impact on how any pending matters before the CCMA are dealt with,” she said.
CCMA referrals involving the labour broker workers at Clicks were set down for arbitration in July, but Adcorp asked for a postponement to wait for the Constitutional Court ruling.
The Clicks case will now be heard on September 7.
Since the beginning of 2015, the provision “deems” a labour broker worker to be an employee of the client after three months, unless the job is genuinely temporary, which would include, for example, a job in construction. This only applies to people earning less than R205 000
a year.
The labour brokering industry fought hard for a so-called dual employer interpretation of the deeming provision, which would legally keep them in an employment relationship with workers after three months. The Constitutional Court sided with unions and worker advocacy groups to instead endorse a “sole employer” interpretation, which puts all legal obligations on the client after three months.
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