APSO POSITION PAPER: CANDIDATE LIABILITY CLAUSES (CLC)

Transcription

1 APSO POSITION PAPER: CANDIDATE LIABILITY CLAUSES (CLC) Unpacking the practice & it s impact on the industry Advocate Janet Early, APSO Legal & Ethics Officer

2 Contents Contact... 2 For your action... 3 Background... 4 Complaints, Findings and Compliance... 5 Damage as a legal concept... 6 Positional Stance... 7 APSO Strategy... 8 Concluding Remarks... 8 Contact Any questions in this regard can be addressed to: Advocate Janet Early janetearly@apso.co.za APSO Position Paper: Candidate Liability Clauses (CLC) 2 P a g e

3 For your action Given the current spotlight on the industry and the impending conclusion of the labour law review process, it is critical that we conclude the matter of the Candidate Liability Clause. APSO has an opportunity to take a proactive stance on this practice and failure to address this timeously will have a potentially negative effect on the credibility of the organisation and our members. It is therefore of the utmost importance that all of our members take responsibility for understanding the rationale behind APSO s decision, by reading this position paper, and exercise your right to vote. We invite members who have questions to address them, in writing, to Advocate Janet Early, janetearly@apso.co.za. An Extraordinary General Meeting (EGM) has been called and you can expect to receive further communication in this regard. The EGM is scheduled as follows: Date: Thursday 15 March 2012 Time: Venue: 14h30 for 15h00 (please ensure timeous arrival as proceedings will begin promptly) APSO Head Office Ground Floor, Block B EOH Office Park Gillooly s View Bedfordview Due to the importance of this matter, we strongly encourage members to attend the EGM. Should you be unable to do so, the option exists to submit your vote by proxy. You will be asked to vote (For or Against) the banning of the Candidate Liability Clause practice. You have three options in respect to casting your vote: 1. Attend the EGM scheduled for Thursday 15 March 2012 at the APSO Head Office; or 2. Nominate a proxy who will attend the meeting on your behalf and cast your vote; or 3. Complete the proxy form, nominating the APSO representative, attached to the EGM notice and return to APSO

4 Background During the period 2008/2009, APSO became aware, as a result of numerous complaints from candidates to the Ethics Committee, that some members were requesting candidates to sign agreements or undertakings that made them liable for the placement fee in the event that they renege on a signed offer obtained via the agency. Recognising that APSO had no formal basis on which to address such complaints, the Ethics Committee approached members to decide a way forward that was in the interests of us all. After a consultative process lasting 14 months, it was agreed that members required a directive in the Code of Ethical and Professional Practice ( The Code ). Based on the understanding that members were seeking a protection mechanism to recover costs/damages such as advertising, expenses, consultant time and costs relating to travel for candidates, the Code was amended at the 2009 AGM to govern these undertakings. Clause 3.19 read: Members shall ensure that any agreements and/or contracts between Candidates and Members are clearly explained by the Member to the Candidate to ensure that these are understood and entered into openly and transparently. Any financial implications shall be fully disclosed and clearly defined in a written agreement, a copy of which shall be provided to the Candidate. Following an increase in complaints, it became clear that members were using this clause to merely pass on their placement fee and that they were not doing so in an open and transparent manner. Clause 3.19 was therefore amended a second time in 2011 and ratified at the 2011 AGM to read: Members shall ensure that any agreements and/or contracts between Candidates and Members are clearly explained by the Member to the Candidate to ensure that these are understood and entered into openly and transparently. Any financial obligation shall be fully disclosed at the outset and clearly set out in words and figures in a separate written agreement, a copy of which shall be provided to the Candidate. [My Emphasis]. This amendment was also made to bring Clause 3.19 in compliance with the Consumer Protection Act 1 which recognises the right to fair and honest dealing and just and reasonable terms and conditions. Full compliance with this Act would require (but not limited to) that a Candidate Liability Clause be contained in a separate document to a Candidate Application Form; that financial terms and obligations be pointed out in plain language and consented to before the candidate agrees to join the agency; that a reasonable cooling off period be included and that a signed copy be given to a candidate. Notwithstanding the recent amendment to 3.19 as outlined above, it has become apparent to the Executive of APSO that the practice of passing on placement fees, in whole or in part, is inimical to our industry. 1 Act 68 of 2008

5 Complaints, Findings and Compliance In the period assessed, 2 the Ethics Committee have, in all resolved cases, ruled against the agency in favour of the candidate and issued directives or rulings requiring amendment of the candidate liability clause. Non-compliance with Clause 3.19 is only dealt with should a complaint be made and APSO is not therefore aware how wide the practice has become. In addition, numerous calls are made to APSO on a weekly basis from candidates and clients requiring clarification of this practice and seeking advice and some protection after summonses have been served on them for a placement fee claimed under a Candidate Liability Agreement. In some cases the amounts have been significant and beyond the candidates ability to pay and have even ended in civil judgments against the candidate. Apart from the fact that such dire consequences for candidates are surely the opposite of the reason they engage us, the practice potentially exposes APSO to both legal and reputational risks should a candidate choose to bypass our ethics complaints process and seek redress in the media or engage in social networking platforms. 2 November 2010 to November out of the 19 cases considered by the Ethics Committee involved complaints by candidates who had signed a candidate liability clause. APSO Position Paper: Candidate Liability Clauses (CLC) 5 P a g e

6 Damage as a legal concept Current industry practice used in Candidate Liability Clauses is to simply demand, after breach, payment of a said amount (say R20 000) but without any attempt to prove actual damages. Breach of contract in the form of a candidate liability clause is a source of an action for damages of patrimonial loss. However, it is important that this legal process is clearly understood. Damage is the diminution as a result of a damage-causing event, in the utility or quality of a patrimonial or personality interest in satisfying the legally recognised needs of the person involved. [1] Damages are generally calculated as the amount of money which is required to place a plaintiff in the position he/she would have occupied if there has been proper performance. However the assessment of damages remains a complex legal process and will depend on the judicial evaluation of the facts of the case and the application of the general principles governing the Law of Damages. Before a party to a contract may institute a claim for damages the following requirements must be met: The other party must have committed a breach of contract; The plaintiff must already have suffered actual patrimonial loss in a determined or determinable amount as a result of the breach; A causal nexus between the breach of contract and the patrimonial damage has to be proved; The party who commits a breach must be liable in law to compensate for such loss. [1] Visser & Potgieter s Law of Damages (2008).

7 Positional Stance a) Although the Code has managed and regulated the practice after complaint, the number of enquiries and complaints received indicate that a more rigorous stance is needed, not only to protect the legal, reputational interests and risks of APSO as a professional organisation, but also to free APSO s Ethical Committee to deal with more serious infringements of the Code. b) Objective recognition needs to given to the root cause as to why this practice developed (including candidate counter-offers and the scare skills environment) and most importantly the right of members to independently mitigate against contractual breaches and damages actually suffered. However, this must be done within the restraints of the law and acceptable industry practice. c) Government has indicated its clear intention to promulgate the Employment Services Bill 3 in APSO, in its drive to position itself as both a relevant professional body and potential industry regulatory inspectorate, has been advised that this practice is in contravention of this Bill 4 and should take a proactive stance to ensure that our members are not at risk as a result of contravening the provisions of this Bill. Further, we must consider the opinion of the International Labour Organisation (ILO) 5, CAPES and CIETT. At this sensitive time of negotiations at NEDLAC we are advised by Johnny Goldberg, chief negotiator on behalf of our industry that we should remove clause 3.19 from the Code as soon as possible. We are seen as advocates for not only creating employment via temporary staffing for the youth, but also as promoters of career opportunities and planning for permanent placement opportunities. Our fees have always been recovered from our clients and not from candidates. This practise will be seen as exploitation of candidates and we have great difficulty in defending a practice that will be an affront to vulnerable work seekers and decent work programmes. As a member of the International Confederation of Private Employment Agencies (CIETT) we have consulted widely with that body as well as employer organisations in the UK, Europe, Australia and The USA. The practice is not in use anywhere else and our associate bodies would never contemplate such a practice. 3 The Act when promulgated will provide for public employment services, the registration of private employment agencies and the establishment of the Employment Services Board. 4 Section 16 deals with the charging of fees by private employment agencies and provides in s16(1) that an employment agency must not charge a fee to any work seeker for providing employment services to that work seeker while s16(5) states that an agreement concluded with an employee that is in breach of this section is invalid and of no force and effect. Section 19 provides the registrar with the right to withdraw a licence issued to a private employment agency for contravention of any provision of this Act. 5 Although not yet ratified in South Africa, the International Labour Organisation s convention 181 on Private Employment Agencies is clear on the issue of fees/costs being levied against work seekers. ILO c181 Article 7, Point 1 states: Private employment agencies shall not charge directly or indirectly, in whole or in part, any fees or costs to workers.

8 APSO Strategy This matter was debated at some length by the APSO EXCO at a Strategy Workshop held in September 2011 and a resolution was passed to: a) Appoint a task team to manage the process of removing the clause from the Code in order to ban the practice of Candidate Liability Clauses, in accordance with the APSO Constitutional procedure the appointment of the task team has been concluded; b) Re-work the Code to exclude the clause; c) Begin the process of amending the Code which would include, but is not limited to, setting up an Extraordinary General Meeting (EGM) within the first quarter of 2012 to follow required ratification procedures; d) To engage with membership and external stakeholder (where appropriate) to provide individual and collective legal, compliance, technical and educational support to those members who are currently engaging in the practice within acceptable time-frames and scope to ensure compliance. Concluding Remarks Whilst this particular practice is untenable, and APSO therefore proposes that the use of Candidate Liability Clauses be banned, it remains the objective of APSO to assist members in combating the practice of counter-offer shopping and similar bad faith practices. It is our intention to provide support to members in the form of information, education (training) and tools to manage the problems being faced as a result of the scarce skills market. APSO Position Paper: Candidate Liability Clauses (CLC) 8 P a g e