As an alternative to retrenching about 55 professional employees, a large facilities management company had partnered with contingent workforce solutions provider Highveld EOH to transfer the employees to Highveld, providing ad hoc employment for them.
Highveld marketing and sales GM Jabu Banda explains that an initial group of about 30 employees – typically electrical engineers and electricians – were transferred in September last year from a facilities management company to Highveld, with Highveld now finalising the transfer of an additional 25 employees.
Of the 30 employees that initially joined Highveld, about 17 remain; the rest have sought more permanent employment.
Banda states that, owing to the weak economy, cost-cutting is commonplace and the retrenchment of highly paid professionals is a significant way of doing so. He adds that Highveld’s partnership with the facilities management company proves that alternative employment options can be arranged and is becoming a trend in a climate of slower economic growth.
The pro rata scheme offered by Highveld is significantly better than being unemployed, he says, adding that Highveld’s outsourcing services have enabled the facilities management company to decrease its overhead costs, which are now more directly linked to revenue because the company now pays for work at an hourly rate instead of paying salaries.
In addition, Highveld can achieve economies of scale, enabling it to further reduce administration costs where clients would not be able to do so, he states.
Banda cites another of Highveld’s clients, safety and certification provider TÜV Rheinland, which employs quality and certification inspectors, highlighting the administrative burden that comes with inspection and certification, explaining that Highveld administrates TÜV Rheinland’s practice.
By allowing Highveld to employ a certain portion of their workforce, clients like TÜV Rheinland can mitigate labour risk and focus on the core aspects of their business, he says.
Banda remarks especially on the benefits of mitigating labour risk for a small to medium-sized business. He explains that smaller businesses must often negotiate unpredictable and irregular timeframes in terms of projects. In addition, smaller businesses might be unfamiliar with labour practices, such as hiring and firing, and could be forced to shut down if they lose a single case at the Commission for Conciliation, Mediation and Arbitration.
He adds that many of the 2 500 active contractors, including information technology technicians, engineers and accountants working at Highveld, choose to work on an ad hoc basis because of the flexibility it allows in terms of lifestyle, while still enjoying benefits such as medical aid and provident funds.
Banda stresses that the average salary of the contractors working at Highveld is about R73 000 a month and, therefore, the recent amendments to the Labour Relations Act and the Basic Conditions of Employment Act, which are designed to provide extra protection for temporary workers earning less than R205 433 a year, do not apply to Highveld employees.
Even though some of Highveld’s employees are paid on a pro rata basis, he notes , the packages are structured so that they earn above the threshold of R205 433 a year; this is a common area of misconception in the industry that Highveld is trying to correct.