Adcorp drops almost 10% on labour broking ruling
The labour broker struggled after the Constitutional Court dismissed its appeal against dual employment, on Thursday
Labour broker Adcorp’s share price fell as much as 10% on Friday morning, after being dealt a major blow on Thursday in the Constitutional Court.
The employment services group said in a statement that the judgement would not "negate" the role of labour brokers, noting that it would not mean a complete end of a triangular relationship between employees, clients and labour brokers.
On Thursday, the Constitutional Court ruled that labour brokers were not considered dual employers when their clients absorbed contracted workers as permanent staff The Labour Relations Act (LRA) requires clients of labour brokers to hire contractors who earn below a certain threshold after three months, unless the job can be demonstrated to be temporary in nature.
The Court ruled that clients of labour brokers were sole employers, and the language in section 198A of the LRA was clear enough, a ruling described by some unions as presaging the "extinction" of the labour broking sector.
Adcorp said on Friday that the triangular relationship would continue as long as the contract between the broker and worker remained in force, for example, if the broker were still paying the employee.
The sole employer provision would only apply to issues of the LRA, and SA’s rapidly changing economic, social and political environment would continue to drive labour broking activities.
"The temporary employment services (TES) industry has been proven to be a primary driver of skills development and an essential labour market enabler to ensure the long-term employability of individuals," Adcorp said.
At 12am Adcorp’s share price was 4.85% lower, having earlier fallen as much as 9.3%. The group has lost 15.88% so far in 2018.