27.1.2009

Can Prohibitionon Labour Hire affect health sector?

WINDHOEK - As many as 330 medical professionals have received letters of retrenchment from Potentia, the company that has hired (our) their services. These professionals include doctors, nurses and pharmacists, community councillors and computer data entry clerks.

Potentia, said Managing Consultant Craig Dennis, acted on advice from their lawyers, after the new Labour Law of 2007 came into effect in November last year, and in particular Section 128 of that law prohibiting labour hire companies.

According to Section 128, no person "may, for reward, employ any person with a view to make that person available to a third party to perform work for the third party".

This sub-section of the law does not apply in the case of a person who offers services consisting of matching offers of applications for employment "without that person becoming a party to the employment relationship that may arise therein".

Further, any person who contravenes or fails to comply with this section commits an offence and is liable on conviction to a fine not exceeding N$80 000 or to imprisonment for a period not exceeding five years, or to both such fine and imprisonment.

A lot of confusion of the meaning and scope of the section ensued, but officers at the Ministry of Labour and Social Welfare were adamant that the piece of legislation was misconstrued.

Now, it seems that the confusion and panic that set in certain sectors of the economy, was not too far-fetched.

Although Dennis showed some reluctance to say too much about the retrenchments, he said: "We are working on a solution to ensure continued employment of our staff."

The High Court ruling made in favour of the Namibian Government in the case brought to it by Africa Personnel Services (PTY) Ltd clearly set a precedent in November, namely that "outsourcing of staff" to a third party is illegal.

Potentia has operated as a wholly owned Namibian human resource consultancy that was established in 1998 to, according to its website, provide a spectrum of human resource management services such as organisational development and human resource administration.

"Working in concert, these activities serve both individuals, assisting them to assimilate successfully with a future career path, and organisations, guiding them on a path of meaningful transformation and development," goes on the Potentia website.

It further states that the company has followed a "rigorous and proven professional process of recruitment, assessment, selection and placement", as far as its recruitment services went.

Permanent Secretary of the Ministry of Labour, Uitala Hiveluah, yesterday afternoon said she was unaware of the Potentia retrenchments, or of any other similar retrenchments by labour hire companies as a result of the new legislation.

Labour Commissioner, Bro-Matthew Shinguadja, said he received a legal notice by Potentia in December last year of its retrenchment plans, but added that no other company that in fact operates as a labour hire company has come forward to do the same.

According to a most recent study, said Shinguadja, there are 14 labour hire companies operating in Namibia, some that he described as one-man-shows and some as briefcase companies.

"They are not many, but it is clear that such companies want to avoid legal requirements afforded to workers under the Labour Law," said Shinguadja.

And by yesterday afternoon, Shinguadja was, however, not clear what the full scope of services Potentia had offered to the Ministry of Health in terms of recruitment of medical specialists.

According to him, Potentia was specifically created to recruit such specialists for the health ministry, but he could not say if the ministry employed the specialists after the recruitment process - which would be legal in terms of the prohibition of labour hire - or whether these specialists remained as 'staff' of Potentia - which would be considered as illegal.

"If it were a company like Jobs Unlimited where recruitment and placement takes place, then what is the problem with Potentia?" came a rhetorical question from Shinguadja.

That means, a prohibition on a triangular type of relationship between recruitment agent, the worker and the company to whom the worker is "outsourced"', as opposed to an employer-employee relationship, with certain rights and obligations afforded to each of these two parties.

The health ministry responded to questions sent by New Era by saying no health professionals would be laid off at this stage, and that discussions between the labour and health ministries will be conducted today to sort issues out.

Acting Permanent Secretary of the Ministry of Health, Dr Norbert Foster, confirmed these discussions between the two ministries, and explained the Potentia arrangement as a contract agreement between the US Government and Potentia.

This, he said, is a "technicality" that needs to be sorted out between the ministries because of the health sector's reliance on these specialists due to Namibia's skills deficit.

"We need these people; we cannot do without them," said Foster.

Foster said a "sizable" number - in excess of 1 000 - of professionals are affected by this issue, adding that staff was not only recruited through Potentia, but also other organisations as well.

Whichever way the discussions go today and whatever effect it may have on professionals working in critical sectors, Government has made it clear that labour hire companies will not be tolerated.

Government officials felt the intent of the labour hire legislation - as set out in the court case last year - is not fully appreciated.

To begin with, the argument given by the Government's legal representative in the High Court was that not every trade or business is entitled to protection of the Namibian Constitution, that means business that is for a criminal enterprise, such as stock theft, keeping a brothel, trafficking in women or children, and slavery - hence, a business or trade that yields a profit or income from such a business or trade.

Politically, parliamentarians rallied against labour hire, likening it to the old SWANLS system of labour recruitment.

The court argument stated that "labour hire" involves "splitting", so to say, what would otherwise be a contract of employment into a number of contract for the provision of personal service between one party supplying the service, a labour hire agency, and a host or client - the triangular employment arrangement as stated by LaRRi.

A legal interpretation hereof, said the court argument, is that labour hire is a "form of indirect employment relationship in which the employer (the labour hire agency) supplies it employees to work at a workplace controlled by a third party (the client) in return for a fee from the client".

It concluded that labour hire is not only not part of Namibia's law of contract of employment, but also "smacks of the hiring of a slave by his slave-master to another person", concluding: "[Any] form of business or trade involving the splitting of what would otherwise be a contract of employment into a number of contracts for the provision of personal service between a person who is to supply the service and an agency and between the agency and a client of the agency to who the person renders his or her personal service is unknown to our law of contract of employment". (New Era)

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