Sustainability and financial implications of the Labour Relations Amendment Act No.6 of 2014 for Western Cape health services outsourcing

Lucas, Jonathan Winston (2017-03)

Thesis (MPA)--Stellenbosch University, 2017.

Thesis

ENGLISH ABSTRACT: The Labour Relations Amendment Act No. 6 of 2014 was gazetted during August 2014, and came into effect on 1 January 2015. This amendment act and specifically sections 198A and 198B changes the manner in which employers outsource certain employment functions by means of contract employment. Section 198A specifically changes the definition of temporary employment services and section 198B changes some aspects of fixed-term contracts. When the Act came into effect, employers were given three (3) months to ensure that they become compliant with this new stipulation. The Western Cape Department of Health (WCDoH) currently delivers certain health services through Non-profit Organisations (NPOs). The WCDoH sees this practice as a cost-effective method to reach more clients and areas where traditional formal health services are not available. The WCDoH thus relies on NPO contracts and outsourcing to deliver health services on its behalf. The WCDoH formalises relationships with NPOs through a Service Level Agreement which obligates NPOs to employ suitably qualified staff on an annual contractual basis to deliver these health services. The WCDoH in turn transfers funds to the NPOs for the payment of staff as well as for NPO administration activities. The WCDoH provides strict guidelines as well as standard operating procedures for how, where, when and what services have to be rendered and how payment has to be made for these services. The challenge is that the amended stipulations of the Labour Relations Amendment Act place a damper on the current manner of NPO outsourcing models. The Act stipulates that any employee of outsourced contracts that is in the employ of a contractor for more than three months; and who is not substituting a permanent employee; and / or where the service is not temporary and the contract employee earns less than a certain threshold, is regarded as an employee of the employer, outsourcing the service. The Act further stipulates that these contract employees must receive the same benefits regarding pension, medical aid, housing allowances and service bonuses, as well as leave benefits, as in the case of permanent employees of the employer. The WCDoH regards the current way of NPO outsourcing as cost effective, the reason being that the funding norms to NPOs do not include benefits and the majority of NPO employees receive a stipend, allowing NPOs to employ much more staff with the funding received from the WCDoH. The purpose of the research was to investigate sustainability and whether the Labour Relations Amendment Act of 2014 has financial implications for current NPO outsourcing models applied by the WCDoH. The current NPO outsourced model is applied uniformly in the WCDoH through all it districts and sub structures. The Northern Tygerberg Sub Structure was the area where the study took place. Documents containing the strategic directions for both the WCDoH and the NDoH were reviewed to determine the value placed on NPO outsourcing in health services in particular and the indications are that the strategic direction of the WCDoH is to continuously improve its methods regarding wellness. This direction is evident in the strategic document called “Healthcare 2030”. The document provides detailed analysis of and methods towards how the WCDoH will strengthen partnerships with NPOs and other private providers to keep communities healthy. Further to this document, the strategic direction of the National Department of Health in terms of primary health care services for South African communities is contained in a document called “primary health care reengineering”. Findings from this document indicate that the country is also moving towards rendering services outside of traditional health facilities and is moving towards forming partnerships with NPOs to deliver care in the communities. The aforementioned documents provide a definite indication of the importance of NPO service outsourcing both in the WCDoH as well as the NDoH. It is evident from the analysis of the WCDoH NPO outsourcing model that is applied, that NPO outsourcing is well structured in the WCDoH and documents such as the Services Package of Care for NPO funding, the Service Level Agreement and the Finance Instruction FA21 of 2015 in particular, direct the operationalisation and funding for NPO services. The analyses of NPO performance through outsourcing of services, as well as the access to health care that the model creates through service coverage, indicate the unmissable contribution NPOs make. NPO services have been described as beneficial by managers who were interviewed and there is a definite concern amongst them that the amendments to the stipulations of fixed-term contracts and what the Act regards as temporary employment services will have financial and service sustainability implications. Documentary evidence and findings further show that the South African Labour Court previously ordered that another province should employ staff on a permanent basis with full benefits as a result of the way current NPO staff are contracted. The aforementioned can have further implications for the WCDoH NPO outsourcing models as this province applies a similar approach to NPO outsourcing. To ensure that the WCDoH complies with the Labour Relations Amendment Act of 2014, in particular with the stipulations under sections 198A and 198B, recommendations in the form of different options of staffing funding models as well as organisation structures are made. These recommendations are made on the basis of the current staffing models and service coverage, funding norms, salary, and benefit packages for the public service, with due consideration of the current financial envelope and budgetary constraints.

AFRIKAANSE OPSOMMING: Nadat dit gedurende Augustus 2014 in die Staatskoerant gepubliseer is, het die Wysigingswet op Arbeidsverhoudinge no 6 van 2014, op 1 Januarie 2015 in werking getree. Dit bevat spesifieke wysigings in artikels 198A en 198B wat implikasies het vir die huidige manier van uitkontraktering van dienste. Die gewysigde artikels stipuleer onder meer watter werknemers in werkverskaffings dienste as tydelik beskou kan word in artikel 198A en wysig ook sekere aspekte van vaste termyn kontrakte in artikel 198B. Nadat die wet in werking getree het, is werkgewers drie maande gegee om te verseker dat hulle aan die nuwe bepalings van die wysigingswet voldoen. Die Wes-Kaapse Departement van Gesondheid (WKDvG) lewer tans sekere dienste met behulp van Nie-Winsgewende Organisasies (NWO) en beskou die gebruik van NWO’s as ’n meer koste effektiewe metode van dienslewering en kan op dié manier meer klante bereik, sowel areas waar die department nie formele tradisionele gesondheidsdienste beskikbaar het nie. Die WKDvG maak dus staat op uitkontraktering van dienste aan NWO’s om sy gesondheidsdiensmandaat te eerbiedig. ’n Diensvlakooreenkoms word gesluit om te verseker dat beide die WKDvG en die NWO hulle verpligtinge nakom. In die diensvlakooreenkoms word sekere verpligtinge en verwagtinge vir beide partye uiteengesit; daar word byvoorbeeld van NWO’s verwag om geskikte en gekwalifiseerde personeel in diens te neem om die verwagte gesondheidsdienste te verrig. Die personeel word op ’n jaarlikse kontrakbasis aangestel. Die WKDvG moet op sy beurt die dienste befonds. Fondse wat aan die NWO’s betaal word, sluit personeel en administratiewe uitgawes van die NWO’s in. Verder word streng riglyne deur middel van standaard operasionele prosedures vir NWO’s vasgelê en finansiële instruksies bepaal hoe, waar, wanneer en deur wie dienste verrig moet word en hoe betaling vir dienste moet geskied. Die uitdaging wat die gewysigde bepalings van die Wysigingswet op Arbeidsverhoudinge stel, plaas 'n demper op die huidige metodes van NWO-modelle vir uitkontraktering. Die Wet bepaal onder andere dat 'n werknemer wat van uitgekontrakteerde dienste gebruik maak, nie ‘n kontrak met ‘n werknemer vir meer as drie maande mag sluit nie tensy die werknemer 'n permanente werknemer van die in gevolge van die wysiging as permanente weknemers van die werkgewer gesien word en moet dieselfde diensvoordele geniet, sowel as besoldiging soos in die geval van permanente weknemers van die werkgewer. Die huidige NWO-befondsingsmodel sluit nie voordele in nie en stel daarom die WKDvG in staat om veel meer personeel deur middel van NWOs in diens neem. Die doel van die ondersoek was om vas te stel of die Wysigingswet op Arbeidsverhoudinge van 2014 volhoubaarheids- en finansiële implikasies sal hê vir die huidige NWO uitkontrakteringsmodelle wat deur die WKDvG toegepas word. Die huidige NWO uitkontrakteringsmodel word eenvormig in alle distrikte en sub-strukture in die WKDvG toegepas en die Noordelike/Tygerberg Sub-Struktuur was die fokus area vir hierdie ondersoek. Om die waarde wat op NWO uitkontraktering in gesondheidsdienste geplaas word spesifiek aan te dui, is dokumente wat die strategiese rigting vir beide die WKDvG en die NDvG aandui, nagegaan en die aanduiding is dat die WKDvG besig is om sy metodes ten opsigte van gesondheids dienste voortdurend te verbeter. Hierdie rigting is duidelik in sy strategiese dokument genaamd 'Healthcare 2030'. Die dokument verskaf gedetailleerde ontleding en metodes van hoe die WKDvG vennootskappe met NWO's en ander private verskaffers sal versterk om gemeenskappe gesond te hou. In aansluiting by hierdie dokument word die strategiese rigting van die Nasionale Departement van Gesondheid aangehaal in terme van primêre gesondheidsorg dienste vir Suid-Afrikaanse gemeenskappe wat vervat is in 'n dokument genaamd “Primary Healthcare Reengineering”. In hierdie dokument dui bevindinge aan dat Suid Afrika ook op pad na die lewering van dienste buite die tradisionele gesondheidsfasiliteite, en nou meer sal fokus op die vorming van vennootskappe met NWO's om sorg in gemeenskappe te lewer. Die bogenoemde dokumente verskaf dus ‘n definitiewe aanduiding van die belangrikheid van NWO diens uitkontraktering beide in die WKDvG asook die NDvG. Dit blyk uit die analise van die WKDvG se NWO uitkontrakteringsmodel wat toegepas word dat NWO uitkontraktering goed gestruktureerd in die WKDvG is, en dokumente soos die dienspakket (Service Package of Care) vir NWO befondsing, die Diensvlakooreenkoms en die Finansiële Instruksie FA21 van 2015 in die besonder, die operasionalisering en befondsing vir NWO dienste stuur. Die ontleding van NWO prestasie deur uitkontraktering van dienste, sowel as die toegang tot gesondheidsorg wat die model deur diensdekking skep, dui op die onontbeerlike bydrae van NWO's.NWO dienste is deur bestuurders met wie onderhoude gevoer is,as voordelig beskryf en daar is definitiewe kommer by hulle dat die wysigings aan die bepalings van vaste-termyn kontrakte en wat die Wet as tydelike indiensneming beskou, finansiële implikasies en implikasies vir diensvolhoubaarheid sal hê Dokumentêre bewyse en bevindings toon verder dat die Suid-Afrikaanse Arbeidshof voorheen beveel het dat 'n ander provinsie personeel op 'n permanente basis met volle voordele in diens moet neem vanweë die manier waarop die huidige NWO-personeel gekontrakteer word. Dit kan verdere implikasies vir die WKDvG se NWO-uitkontrakteringmodelle hê as dié provinsie 'n soortgelyke benadering tot NWO-uitkontraktering toepas. Om te verseker dat die WKDvG aan die Wysigingswet op Arbeidsverhoudinge, 2014 en in die besonder aan die bepalings kragtens artikels 198A en 198b, voldoen, word aanbevelings in die vorm van verskillende opsies vir personeelbefondsing sowel as organisasiestrukture gemaak. Hierdie aanbevelings word op grond van die huidige personeelmodelle en diensdekking, befondsingsnorme, salaris en voordeelpakkette van die staatsdiens met inagneming van die huidige finansiële posisie en begrotingsbeperkings gedoen.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/101271
This item appears in the following collections: