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The hidden costs and consequences of contracting non-compliant security providers

The hidden costs and consequences of contracting non-compliant security providers

A security officer who is unable to perform his duties properly, or one who may be open to the temptation of bribery, collusion and crime. Is this the type of security officer you would want protecting some of your most valuable assets at your home or place of work?

According to the Security Association of South Africa (SASA), that’s exactly what you’ll get if you hire a non-compliant security company. Not to mention the risk of heavy penalties or jail time, for consumers who continue to transgress the Private Security Industry Regulatory Authority (PSIRA) Act.

“In a country where many consumers still view private security services as a grudge purchase, or a token necessity at work site, we’re seeing a significant and alarming number of individuals and companies still selecting those security companies who have submitted tenders at the lowest price,” says Costa Diavastos, chairman of SASA. “What these individuals don’t see, are all the costs associated with this unlawful practice, including a significant security threat and the fact that they are engaging in unlawful behaviour,” he says.

Flouting the law

As the regulatory authority for the private security industry, PSIRA is responsible for putting in place statutory minimums and enforcing legislative requirements.  According to a section of the PSIRA Act of 2001, any person who contracts a security service that goes against the provisions of the act is guilty of an offence. However, many fly-by-night security companies, who have identified the security industry as a quick and easy way to make money in a crime-ridden country, blatantly ignore the PSIRA act.

“These non-compliant companies save on costs by using untrained, unscreened and unregistered individuals as security officers, who more often than not, are also undocumented foreigners who are desperate for work,” says Diavastos. “These companies do not comply with the law, do not pay minimum wages,  or even training costs – and are easily able to quote the lowest price for their services and undercut all of the compliant security companies in the tendering process.”

You get what you pay for

According to independent calculations by PSIRA, based on statutory requirements laid out by the Department of Labour, the average monthly cost of a Grade A security officer working a 12-hour shift is between R10,947, of which R4,077 is the guard’s take-home salary. The balance is made up of statutory requirements, including sick pay and study leave.

“To cut costs, non-compliant operators are almost always forced to act illegally,” Diavastos believes. “This means not paying minimum wage. It could also mean using a junior security officer to perform the duties of a higher grade.”

An underpaid and exploited security officer is more likely to accept a bribe or become involved in crime to make ends meet.  “These are the unseen costs no one pays attention to when consumers seek out a cheaper security service,” he stresses. “At best, the security will be significantly substandard.”

Worrying trend

As part of the salary structure are statutory requirements, including compensation for occupational disease or injury, a contribution towards unemployment and a provident fund. “What we have noticed is that many non-compliant security companies will deduct a provident fund contribution from the security officer and will not match this amount or pay it over to fund administrators.”

In order to create a legitimate and functioning security industry, PSIRA can enforce the law. The costs of injury, non-payment of funds and other infringements, can become the burden of the company that has employed the security provider in the first place.  “This is especially an unforeseen consequence if the security officers have been sourced from labour brokers or if you use an independent contractor,” he points out.

SASA solutions

As world-class professional body, SASA supports industry compliance and seeks to provide awareness and support for businesses in South Africa. “We take the headache out of employing the right security provider,” says Diavastos. “We’re able to assist the private and public sector in vetting a service provider.”

As criteria for membership, SASA’s members must be fully compliant with all industry and national legislation, and have supporting documentation independently verified. “Our goal is not to put ethical and professional security brands out of business, but to ensure we all follow the same law and deliver exemplary service and professionalism,” he concluded.

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