Ruling deals crushing blow to zero-hours contracts

The future of zero-hour work in South Africa, which means employers do not have to guarantee workers a minimum number of hours per week, has been dealt a blow by the Commission for Conciliation, Mediation and Arbitration (CCMA). The practice is already outlawed in countries like New Zealand.

The commission’s Vereeniging office issued an arbitration award on 22 October repudiating the use of zero-hour contracts at a Ferrero chocolate and confectionery factory near Walkerville, south of Johannesburg, where 257 employees out of a workforce of 354 are employed on these contracts.

After the Labour Relations Act was amended in 2015, the workers were entitled to be treated as Ferrero employees and “no less favourably” than the permanent staff. In response, Ferrero offered the erstwhile casual workers contracts which guaranteed that they were paid the same hourly rates as their permanently employed counterparts. The contracts did not, however, guarantee them any minimum working hours. Whereas permanent workers could count on 40 hours’ work every week, the part-time workers could go months without work if Ferrero deemed it necessary.

The workers, who had worked at the factory through a labour broker for between two and nine years by the time of the 2015 changes, argued that those amendments guaranteed them the same working hours as permanent workers who were doing the same work at the Ferrero manufacturing plant. In what may turn out to be a significant ruling for the future of casualised work in South Africa, the CCMA agreed.

David and Goliath

Ferrero, which said that guaranteeing the workers 40 hours every week could increase its wage bill by over 250%, argued that because they are part-time employees, the casual workers are not entitled to guaranteed hours. The company also said that its operational requirements, in particular an erratic production schedule, meant that it was not in a position to guarantee the workers any hours.

The workers were represented at the CCMA by the Casual Workers Advice Office (CWAO), a small Germiston-based non-profit organisation. Ferrero, the South African arm of the multinational chocolate behemoth accused of using impoverished Kurdish children as seasonal labour, was represented by Webber Wentzel, one of the country’s “big five” law firms, and counsel.

The CWAO questioned why Ferrero’s operational requirements appeared to relate only to workers on zero-hour contracts and not to their permanently employed colleagues. Agreeing, the CCMA found that the requirements “do not amount to justifiable reason” for keeping workers on zero-hour contracts, as it “defeats the purpose” of the Labour Relations Act’s amended sections “to protect vulnerable employees”.

The CCMA held that the zero-hour contracts – whose highly erratic nature had thrown the lives of Ferrero’s casual staff, the majority of whom are women, into disarray – constituted an “unfair labour practice” and were structured in such a way that they undermined the rights guaranteed to workers by the Constitution.

The CCMA’s decision ultimately turned on an interpretation of the intentions behind the 2015 amendments to the act, and whether these efforts to put workers on an equal footing went beyond their hourly rates to include the same guaranteed hours. It suggested that the amendments were ultimately designed to remedy exactly the sort of “mischief” contained in Ferrero’s zero-hour contracts.

Uncertain future

The Covid-19 pandemic has taken South Africa’s already chronic unemployment crisis to dizzying new heights. With the expanded unemployment rate now at over 43%, the immediate future of the country’s labour market remains unclear. But some experts, such as Murray Leibbrandt of the University of Cape Town’s Southern African labour and development research unit, are certain that the burden of a steep recovery is likely to fall heaviest on workers in precarious and casualised employment.

If South Africa’s most recent run-in with a global financial crisis is any yardstick, the lot of casual workers in the country will get worse before it gets better. In the wake of 2008’s Great Recession, the use of labour-brokered workers grew dramatically, resulting in the widespread protests by labour federations, unaffiliated unions, left-leaning formations and non-profit organisations that eventually led to the 2015 amendments to the act. But if South Africa is again on the cusp of new forms of precarity, the Ferrero workers’ CCMA victory may mean that zero-hour work plays no part in them.

This article was first published on New Frame

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