October 12, 2005
Legislation and jurisdiction on Outsourcing practices in South Africa
Outsourcing in various industries is constantly on the rise in South Africa, and there is now a need to establish good practices by legislation and court decisions. Among the primary intention of employers outsourcing services are saving labor costs and improving business processes. This need has been largely met in industries including IT, security, printing, HR/IR, training and marketing. There is, however, suspicion among Unions and employees that outsourcing leads to curtailment of job opportunities. Now, with the enforcement of Section 197 of the Labour Relations Act (LRA) and section 187(1)(g), any retrenchment of jobs when only a portion of a business is outsourced is illegal.
It is also vital that employers are aware of the LRA's stipulations that the new employer automatically replaces the old employer regarding remuneration and other service terms. Int.iol.co.za highlights recent labor court cases where far-reaching practical consequences have resulted for employers and employees in the outsourcing service conditions. Int.iol.co.za reports:
...given the stringent provisions of section 197, which has the objective of protecting employees whose job security and employment benefits are in jeopardy as a result of a business transfer, or a part of a business being transferred, this cost saving argument is highly questionable.
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