Innovative Staffing Solutions Committed to Saving Close to a Million Jobs Through Outsourcing

The future of almost a million workers hangs in the balance following last week’s Constitutional Court ruling which dealt a major blow to labour brokers. The court ruled that workers‚ provided by labour brokers to companies‚ should not be regarded as temporary employees after three months.

Image Courtesy Innovative Staffing Solutions

This means they become permanent employees of the clients where they have been placed with job security. Many workers are, however, unsure about what the future holds.

However, Innovative Staffing Solutions Managing Director, Arnoux Maré has called on companies, who make use of temporary employment agencies, not to dismiss short-term workers to avoid permanently employing them. He has invited these organisations to speak to his company instead. He says that Innovative Staffing Solutions has the capacity to take on more than 10 000 workers per month.

“We welcome the ruling as the Constitutional Court effectively changed the lives of hundreds of thousands of workers for the better. The ground-breaking judgement essentially freed low-paid workers, often exploited by labour brokers, giving them much needed security. In the past the majority of these workers could not apply for a loan or a house bond due to their temporary employment status. The status quo has therefore changed in their favour,”

continues Maré.

Recent amendments to the Labour Relations Act (LRA) dictate that clients of labour brokers have to hire contractors who earn below R205 433.00 annually after three months. A drawn-out battle over the right interpretation of the section has seen unions and labour brokers battling it out in several courts.

“This essentially means the Temporary Employment Services will not have any legal standing in the employment terms of contract workers‚ nor be involved any further in the equation with regards to the Labour Relations Act,”

Maré explains.

While the ruling brings about much needed stability for some, others are not sure whether they will retain their jobs in the near future.

“The model used by labour brokers does not allow them to employ an unlimited number of workers for long periods of time. They are therefore also dependent on the needs of the clients, which determine the length of the contract. If the client decides not to renew the contract after three months because he doesn’t want to employ these workers on a permanent basis, the labour brokers will have no choice but to cancel the staff’s contract.”

Temporary Employment Services or labour brokers currently employ about 970 000 employees and has created about 770 000 jobs since 1995. This represents about 14% of the 5.6 million jobs created in total across all sectors in the last 19 years. Temporary Employment Services’ companies have complained that the ruling would have adverse effects on the labour market and employment figures. A recent study by financial advisory firm, Deloitte, identifies outsourcing as a key enabler of economic growth and job creation. The outsourcing industry has elevated the economies of other emerging markets such as India and the Philippines.

“This is where Innovative Staffing Solutions provides the answer. As an outsourcing company we employ more than 10 000 permanent staff in a variety of sectors including transport, mining, logistics, engineering, hospitality and agriculture. We do not employ any temporary staff. All our employees are permanently employed and outsourced to various clients. Should our client’s contract be terminated for any reason, the employ retains his or her job and are simply redeployed onto another contract. With this approach we are not only creating sustainable employment, but we ensure workplace stability and continued security for workers and their families.”

Maré’s company takes responsibility for their clients’ complete staffing needs, which allows its clients to focus on their growth strategies and core competencies.

“At Innovative Staffing Solutions, we contractually employ our clients’ semi-skilled staff on a permanent basis. This means we take over their drivers, hospitality employees, or farm workers for instance, by reinstating them as permanent Innovative Staffing Solutions employees, but they continue to work for the said client. In exchange, employees receive benefits they may not have received previously such as pension and medical aid, while the client’s staffing needs are completely handled. This includes employing suitably qualified or experienced staff, dealing with disciplinary issues, managing administrative issues, training and labour negotiations,”

he stresses.

Maré says outsourcing also effectively deals with instances where companies are faced with delays on projects and employees who are not productive.

“In these instances, the company may have employed people to deliver on a project, only to find it has been delayed by a few months and they have surplus staff on their payrolls. This is a stressful scenario for the employees, who then live in fear of losing their jobs. If a company outsources its staff to an outsourcing operation, the employees without work can be re-deployed to other organisations where their skills are required. Through staffing solutions’ businesses, companies don’t have to pay salaries for redundant roles or, alternatively, retrench staff members, who were employed in good faith,”

adds Maré.

Outsourcing also represents a viable way to address skills shortages in the engineering and related industries.

“It is the outsourcing company’s role to source the relevant skills and contractually employ the person on a permanent basis. It is also responsible for developing and retaining key technical skills and keeping abreast of industry trends,”

concludes Maré.

The differences between Innovative Staffing Solutions’ model and that of labour brokers:

Business Process Outsourcing Sector Model*

Labour Broking Model**

Fulltime status: Innovative Staffing Solutions workers are fulltime employees of Innovative Staffing Solutions and are placed on contract at clients. That contract does not affect the status of the worker’s employment.

Temporary status: Labour brokers’ staff are always temporary workers, often called a ‘limited duration contract’, even where employment contracts or policies refer to them as ‘permanent’.

Contract fee: Innovative Staffing Solutions charges its clients a fixed rate, and absorbs all additional costs of labour itself. A fixed cost structure enables clients to budget accurately. The efficiencies Innovative Staffing Solutions achieve (and which is its intellectual property) are therefore passed on to the client. Innovative Staffing Solutions estimates its discount compared to labour brokers is anything up to 60% through these efficiencies.

Contract fee: Labour brokers charge a variable per-hour rate based on pro-rata leave and sick pay, PAYE, UIF and all the extra costs which a company ordinarily pays for a full-time worker. This means that the client company does not benefit from efficiencies that a company such as Innovative Staffing Solutions can achieve. It therefore pays the maximum possible cost.

Labour Relations Act: Innovative Staffing Solutions is not required to register under the Labour Relations Act as a temporary employment agency. Innovative Staffing Solutions does not have temporary employees but only permanent employees.

Labour Relations Act: Labour brokers are required to register under the Labour Relations Act as a temporary employment agency, and to abide by its regulations.

No Tax Implications: Innovative Staffing Solutions charges clients a fixed fee which has no tax implications. Because Innovative Staffing Solutions handles all contracted employees tax matters in-house, the employees tax affairs never involve clients.

Tax Implications: Labour brokers are required to recover taxes such as PAYE from clients and on-pay to SARS. A typical practice is that they charge the client but do not on-pay to SARS. This is a feature of the temporary labour market and can rebound on clients.

Benefits: As Innovative Staffing Solutions employees are permanent staff members, they are entitled to all the benefits which any permanent employee is entitled to. Innovative Staffing Solutions aims to always exceed these.

Benefits: As limited duration contract workers, labour broker workers are not entitled to the same benefits as permanent employees. It is this factor which has primarily brought labour broking into disrepute.

Efficiencies: The only extra cost Innovative Staffing Solutions ever adds on to its agreed rate with a client is for overtime. It absorbs and manages all costs of sick and annual leave and absenteeism. None of these affect the client.

Efficiencies: Labour brokers charge a pro rata additional cost for every single benefit, thereby denying its clients the benefits of managing down costs. They pay pro rata for sick leave, for instance, even where a worker takes no sick leave.

Building skills: Innovative Staffing Solutions’ workers are all permanent employees, though on contract to specific clients. This gives those clients the benefit of flexibility in labour, but on-site workers can also sufficiently build up necessary expertise in their role with that company.

Building skills: Under SA legislation, it is now illegal to hire workers in temporary employment for more than three months without justifiable reasons. This makes it difficult for companies to use temporary staff while building up on-the-job expertise.

Regulated benefits: Innovative Staffing Solutions fully complies with all the rights and obligations of permanent employees. It is precisely for this reason that contract companies such as Innovative Staffing Solutions were not required to adhere to the same regulations as labour brokers. Existing regulations for employers has been deemed sufficient. 

Regulated benefits: South African law extensively addresses the rights and obligations of permanent employees and has extended them so as to award more rights to temporary staff earning lower-end remuneration. This is aimed at addressing what has been regarded as abuse of such individuals by labour brokers.

 

MORE ABOUT ARNOUX MARÉ

Entrepreneur extraordinaire, Arnoux Maré, is a rising star on South Africa’s business stage. Driven to push through difficulties and transform challenges into opportunities, the award winning, self-made millionaire grew his turnover from R32 million in 2013 to an astonishing R780 million in 2017.

His motto - adapt and thrive – has served him well since starting a labour consultancy back in 2011 with a mere R500 in his pocket. He spent the first nine months growing the operation by spending 12 hours on the road every day promoting his business in Pretoria, Johannesburg, Middelburg and Mpumalanga.

Maré says canvasing for new business required a huge amount of courage.

“Trying to get people to buy into my vision required digging deep and selling myself and my vision with conviction. Progress was slow, and it took hard work and determination and many ‘no’s’ before I got a ‘yes’, but little by little I built up a solid client base.”

It also helped that Maré made it his business to fully understand South Africa’s complicated labour law when he started out.

“I knew I need to understand labour procedures and legislation, especially as they relate to the Commission for Conciliation, Mediation and Arbitration (CCMA). By gaining an in-depth understanding of labour law, I was able to position myself as an expert in the field.”

Today his company, Innovative Solutions GroupTM, incorporates 17 subsidiaries, more than 10,000 employees and offices in all major operational areas across the country. The first and largest arm of the business is Innovative Staffing Solutions, which outsources staff to businesses in the transport, engineering, manufacturing, agriculture, hospitality, retail, administration and labour sectors.

Innovative Staffing Solutions was started when Maré realised that the only way to mitigate his clients’ labour risk was to bear it himself.

“By placing appropriately-skilled Innovative Staffing Solutions’ employees with our clients, we assume responsibility for their labour needs.”

Maré believes that the measure of a man’s character is determined by the difference he makes in the lives of others.

“The wellbeing of my staff is non-negotiable. Only when employees are well taken care of can they, in turn, deliver the industry-leading services that we offer our clients.

“We believe that focusing on the wellbeing of our employees and their families will result in greater productivity and efficiency for everyone. An employee who is feels valued is more likely to be productive and, importantly, to remain with the organisation, an important consideration in an economy where employee retention is an on-going challenge,”

adds Maré.

Key to Maré’s business success is his ability to keep abreast of industry trends and harness innovation to stay relevant.

“Many businesses fail when they don’t heed the warning signs, whether it’s technology that is changing the landscape or new legislation that threatens to upend the norm.”

When Maré’s original business model was threatened by various changes to the labour landscape in 2011, he reengineered his business. It was a big risk, but his foresight paid off and turnover increased significantly between 2013 and 2017.

For Maré, growing a business is all about remaining upbeat when challenged and not panicking when the chips are down.

“Rushing to solve problems can create new challenges and lead to rash decision-making processes. A more measured approach can help uncover more viable and longer-lasting solutions as well as identify new opportunities.”

Maré is aware of what is happening in his business at all times. As CEO of Innovative Solutions Group and MD of Innovative Staffing Solutions, he could be excused for deciding to let his team handle most of the operational aspects of the business.

But, that’s not Maré’s style. He likes to be hands-on and, if the truth be told, his mind is always busy, even when he’s on holiday. He’s always thinking – about new ideas, new ways to expand the business, new approaches to customer care and better ways to streamline operations.

Underpinning Mare’s success is a never-give-up approach to life and business. The challenges he faced when he started his company taught him how to be persistent and pursue his goals with single-minded determination. When the business landscape changed, he drew on his earlier experiences to transform his company and reach even greater heights.

He does not understand the concept of giving up.

“When I’m thrown in the deep end, I don’t get emotional and I don’t brood. I look for solutions. I’m also a great believer in ‘what you put in is what you get out’ – if you’re willing to work hard, you’ll be rewarded.”

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