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Recruiting and the Competition Act: Legal Implications.

SA Law Requires Firms To Compete for Talent

Read about the implications of the Competition Act on recruitment and fair competition for talent.

Unfair advantages during recruitment are not legal. This article explores how common recruiting practices contravene the Competition Act.

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This article outlines the significance of the Competition Act in light of current recruitment practices.

Some CEOs, HR directors and recruiters are frothing about why ‘competition’ and ‘anti-trust’ is relevant to their interests in securing talent and fixing wage rates.

This article explains how the Competition Act sets out a pretty direct description of what a fair and competitive environment is.

Workers are not pawns, they are deemed to be on an equal footing with the employees who are interviewing them and cannot be unfairly treated simply because they are in a vulnerable job-seeking position.

The opening statement of the Competition Act says:

To provide for the establishment of a Competition Commission responsible for the investigation, control and evaluation of restrictive practices, abuse of dominant position, and mergers; and for the establishment of a Competition Tribunal responsible to adjudicate such matters; and for the establishment of a Competition Appeal Court; and for related matters.

WHAT’S RELEVANT FOR RECRUITMENT?

Control and evaluation of restrictive practices

  • the omission of pay information in job adverts: firms not being upfront about pay create asymmetric information advantages in their favour when asking applicants their pay expectations or for pay slips.
  • forcing applicant submission to the demand for pay slips used as selection criteria for recruitment. This practice, reported by the public and visible on social media, discriminates against the unemployed who often fail to provide current records. The wages offered could be lower than those with current salary information.
  • using pay slips as a wage determinant fixes rates unfairly, particularly women and black people
  • spying on rival firm pay slips prevents fair competition for talent among firms

 Abuse of dominant position

  • Recruiters force job applicants to surrender this information or not be considered for the job
  • Applicants usually submit out of fear or ignorance regarding the implications of disclosing pay information to a firm not transparent about remuneration
  • Applicants who have been unemployed and fail to provide pay slips can be dropped from the recruitment process
  • Firms force recruiters to obtain this information or there are no business agreements
  • Firms place restrictions on wage offers based on information contained in pay slips, this is a breach of the applicant’s confidentiality as the firm is using the information provided by the applicant – against the applicant. This is illegal and has been cross-referenced with a legal case in South Africa, Dun and Bradstreet.
  • Firms assume a position of dominance by unfairly forcing applicants to surrender pay expectations or  pay slips
  • Firms can use pay slips to poach staff from rival firms
  • Firms can use pay slips to collude and agree to fix wage rates

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Recruitment and the Competition Act: How Violations Impact