ENS
October 1, 2015 - South Africa
Temporary Employment Services: an Important Decision
by Peter le Roux
Amendments to the Labour Relations Act, 66 of 1995 (“LRA”),
which came into force in January of this year, introduced important and
controversial provisions dealing with temporary employment services (“TES”), commonly
known as labour brokers.
The most important of these provisions is found in the newly-enacted section
198A. It makes a distinction between what can be regarded as the “acceptable”
use of a TES services and the “unacceptable” use of its services. Acceptable
use is described as the provision of a “temporary service” and is defined as
the following, namely if:
- a TES employee is assigned to a client
for a period of less than three months;
- a TES employee is assigned to a client as a substitute for an employee who is
temporarily absent from work;
- a TES employee is assigned to a client to perform a category of work which is
determined to be a temporary service by a collective agreement concluded in a
bargaining council, a sectoral determination or a notice published in the
Government Gazette by the Minister of Labour.
This provision is clearly aimed at discouraging the use of the employees of a
TES on a long-term basis to avoid the costs of the employment of permanent
employees. The sanction it imposes if a client makes use of a TES in
circumstances that fall outside the definition of a temporary service is an
interesting one and consists of two parts:
- The first is that the employee assigned to the client is “deemed” to be the
employee of the client, for the purposes of the LRA and is employed on an indefinite
basis by the client.
- The second is that the client must treat the deemed employee “on the whole not
less favourably” than an ordinary employee who performs the same or similar
work, unless there is a justifiable reason for not doing so.
The deemed employment provisions only apply if the employee earns less than the
threshold prescribed by the Minister in terms of section 6(3) of the Basic
Conditions of Employment Act, 75 of 1997. At present, this is ZAR 205 433.30
per annum.
There has been much debate whether the operation of the deemed employment
provision results in the client being regarded as the sole employer or whether
the TES also remains the employer. If the latter scenario applies, the employee
assigned to the client will, in effect, have two employers, at least for the
purposes of the LRA.
The CCMA and bargaining councils have been called upon to consider this issue
in at least two arbitration proceedings. In both awards, the client was
regarded as the sole employer. InAssign Services (Pty) Ltd v CCMA & others
(Unreported JR 1230/15 8 September 2015) the Labour Court was required to consider
an application to review and set aside an award where it was held that the
client became the sole employer for the purposes of the LRA.
The Court found that the commissioner had erred and came to the conclusion that
the employment relationship between the TES and the assigned employee continued
to exist for the purposes of the LRA. It did so in the following terms:
“[12] So (and once again I repeat) the only issue, on the stated case at any
rate, is whether the TES continues to be an employer of the worker and, by
reason of this fact, is concurrently vested with the statutory
rights/obligations and powers/duties that the Act generates. I see no reason
why this should not be so. There seems no reason, in principle or practice, why
the TES should be relieved of its statutory rights and obligations towards the
worker because the client has acquired a parallel set of such rights and
obligations. The worker, in contracting with the TES, became entitled to the
statutory protections that automatically resulted from his or her engagement
and there seem to be no public policy considerations, such as pertain under the
LRA’s transfer of business provisions (s 197), why he or she should be expected
to sacrifice them on the fact that the TES has found a placement with a client,
especially when (as is normally so) the designation of the client is within the
sole discretion of the TES.”
It is highly unlikely that this decision is the last word on the issue as an
appeal is likely; but the question is what effect the decision may have in
practice?
From the perspective of a TES, the decision does seem to be of importance. It
appears that at least some TES’s want to be seen as remaining the employer of
the assigned employee. As the Court pointed out –
“[6] … By these means it envisages that it can continue to provide a
justification for the service that it offers the client and so warrant the
charge it levies in the conduct of its labour broking business.”
These TES’s will therefore be happy with the outcome.
From the client’s perspective, it may well be asked whether the decision has
any meaningful consequences in practice. In most cases, it is likely that an
employee will seek to exercise his or her LRA rights against the client rather
than a TES, irrespective of whether there is one or there are two employers.
Only time will tell as this complex piece of legislation is interpreted.