Heineken issue ferments: Labour-broking shows few signs of disappearing

Martha Xakaza is a single mother born and raised in Soweto. She takes three taxis from her house in Vosloorus to get to work for her 12-hour shift, which starts either at dawn or at 6pm.

She is a line packer at Heineken’s Sedibeng brewery in the Vaal and takes home R300 for a day shift. But she works for LSC Masakhe, one of the seven or more labour-broking companies that operate at Heineken, according to workers.

On LSC’s website, the “staffing solutions” company promises businesses like Heineken that, “with less staff costs, you’ll have less overall expenses”.

Despite years of sustained campaigning by trade union federation Cosatu and recent amendments to the Labour Relations Act, labour-broking shows few signs of disappearing, as companies appear to be exploiting apparent loopholes in the Labour Relations Act.

Ighsaan Schroeder, of the Casual Workers’ Advice Office (CWAO), explained how this cost-cutting strategy works.

“Labour-broking replaces permanent workers with lower-earning, unorganised workers to increase client company profits. It is simply continuing the cheap black labour system of apartheid by different means.” Schroeder said many of the companies are large national and multinational corporations.

LSC is contracted to the Imperial group, which is a “third-party service provider” to Heineken. LSC is not the lowest paying of the companies used by Heineken. The payslips of labour-broker workers who worked for CJK Labour Services — another company that until recently was contracted to Imperial at Heineken — show that the most a worker took home after a 12-hour workday was R185.

On some occasions workers made as little as R24 for a 12-hour shift. This is because CJK paid “piece job” rates, which depends on the number of items of work completed. This means that the amount of money a worker makes depends on, for example, the number of crates there are to pack that day.

The payslips, provided by the CWAO, also reflect the unpredictability of this type of work. A worker who made R96 for a day shift on May 29 took home only R36 the next day, barely enough to cover the cost of transport home.

‘Third-party service providers’

“If I’m honest, the money doesn’t even cover my own needs,” Xakaza said. With the R800 she has to dedicate to transport each month, added to her bond repayment and the cost of electricity and water, it means there is little left over, and the two older children of the three in her care have to help to pay for groceries.

Xakaza and 293 of her colleagues have brought a case to the Commission for Conciliation, Mediation and Arbitration, alleging that labour brokers at Heineken are contravening the labour laws.

Zodwa Velleman, Heineken South Africa’s legal and corporate relations director, initially denied that any Heineken employees could have been be paid what the workers were claiming. “Of our almost 900 employees, all of them are paid salaries that we pay in line with industry norms.”

But she was referring to Heineken’s permanent employees and not necessarily the labour-broker workers, who are employed by other companies although they perform duties integral to the brewery’s production.

Velleman insisted that Heineken does not employ labour-broking companies but “third-party service providers”, who use labour brokers. According to her, if labour codes are breached, it is the responsibility of the third-party service providers such as Imperial.

Andries Tloome, another LSC Masakhe worker, said labour-broker workers like him have no recourse to Heineken. “We do have some problems amongst our workers but, when we go to our line manager to complain about the working situation, they say ‘no’, and we can’t go and face the client.”

Line managers are often also labour-broker workers, meaning that, if a worker wants to raise an issue with the client, in this case Heineken, representatives of the company are usually difficult to reach.

The 2015 amendment to the Labour Relations Act (LRA) granted new rights to labour-broker workers. Section 198A limits labour-broking contracts to three months, after which the law considers the worker a permanent employee of the client company. These workers are also supposed to be treated “not less favourably” than the client company’s longstanding permanent workers — meaning that they should earn the same wages and get the same benefits.

Despite working at Heineken for more than five years, Xakaza was never told about her right to be made permanent under the LRA and her working conditions haven’t changed.

Katishi Masemola, the general secretary of the Food and Allied Workers’ Union (Fawu), the main union operating in the industry, said that, as an integral part of the production process, labour-broking practices mean that workers work side by side with permanent employees but enjoy vastly different benefits.

Xakaza pointed out the various kinds of inequality at the brewery and said the permanent workers receive free alcohol at month’s end, but labour brokers get nothing, or sometimes on a rare occasion expired drinks. She also said permanent workers get food in the canteen for a small monthly fee, but she and her colleagues don’t.

She said they are excluded from functions at the brewery and are told to stay at home without pay. “We are hurt by this,” she added.

Tloome said Heineken’s permanent workers also get incentives for hitting their targets for the month, but labour-broker workers do not receive any bonuses for additional work.

29 workers ‘dismissed’

According to Heineken, the company is dealing with apparent breaches of their supplier code and local labour laws, and it confirmed that CJK was not compliant.

“For this reason, their contract was terminated by Imperial, effective September 16. Imperial proposed a plan to us on how they will deal with the CJK employees, which entails offering them permanent employment with Imperial effective September 18. This we welcomed as the correct thing to do,” Velleman said.

The CWAO confirmed that the CJK workers have been offered other one-month contracts — but with LSC Masakhe and not as permanent workers for Imperial.

According to the CWAO, 29 former CJK workers have been dismissed in the month since this compromise was brokered, though LSC has denied this.

“For clarity’s sake, the staff that we have taken over from CJK are engaged in project work. By the nature of such projects, their work is not continuous, nor has it ever been,” said Michelle Nielson, LSC’s marketing director.

Themba Samuel Radebe, one of the allegedly dismissed CJK workers, said they were simply told that the containers they had been packing were not coming back.

Other workers said they were handed a document that gave them the choice of terminating their service or of returning to the site once work had been found for them.

He said that he and others refused to sign the contract, though others felt obliged to.

Masemola said there is “something very interesting” about this arrangement between Heineken and Imperial. “I think it’s one step forward. It’s not the whole journey but it’s a move in the right direction. Ultimately, the union wants workers to be employed by Heineken.

“CJK is a typical labour broker. Imperial is still a labour broker, but it has benefits that it gives to workers at least. I’m not saying that it’s a better labour broker, I’m only saying that it’s better than CJK,” Masemola said.

A trilateral structure

Heineken’s use of so-called third-party service providers complicates the terms of section 198A of the Act.

Labour lawyer and former trade unionist Jan Theron said this trilateral employment structure — between a client company, third-party service provider and labour broker — is ubiquitous.

He said the 2015 amendment to the LRA contains a poorly defined outline of what constitutes temporary employment services, under which labour broking falls. He said the Act’s failure to distinguish between labour-broking companies and third-party service providers is a big shortcoming.

Xakaza said nothing will deter her from pursuing permanent employment at Heineken.

“I can’t go searching all around South Africa knowing that I already rightfully have a job. I have thought about leaving to get another job, but you know when I think that I’ll have to start all over again — at a place that could be even worse — I have to tell myself that I have to fight for this,” she said.

Workers go it alone

Martha Xakaza and Andries Tloome were, until recently, members of the Food and Allied Workers’ Union (Fawu).

Xakaza said the demands of labour-broker workers, who also paid their membership fees, are often left off the agenda at meetings and excluded from strikes organised by the union. “Since we joined Fawu two years back, they never did anything for us. Even this law of section 198A, we weren’t told about it,” she said.

According to Casual Workers’ Advice Office, a large number of workers at Heineken have resigned from Fawu since September 8 in a bid to prevent the union from negotiating a compromise with the beer company on their behalf.

Xakaza was a Fawu shop steward. She said, despite promises of better conditions, she has earned more or less the same amount — between R3 700 and R4 000 a month — during her time at Heineken.

Velleman said Fawu did not make Heineken aware of the complaints raised by labour-broker workers and Masemola added that the trade union appreciates that they might not have taken the workers’ demands seriously enough, but their resignation from Fawu won’t stop the union from taking up the issue of permanent employment.

In response to the compromise negotiated by Heineken to offer new contracts with LSC to CJK workers, a petition — circulated and signed by labour-broker workers — says: “Workers signing new contracts are doing so only because they are being threatened. We also know that Fawu is collaborating with management to sell out our rights to be permanent workers of Heineken.”

More than 280 workers have signed the petition.

It demands that Heineken and Fawu adhere to legislation that states that both permanent and casual workers of labour-broking companies, such as CJK and Imperial, should be made permanent by the client company only — in this case Heineken.

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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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