The uncertainty in relation to employees in Temporary Employment Services (TES) has taken another step towards clarity with a recent decision of the Labour Appeal Court.*
The case is plotted as a test case and is winding its way through the judicial system, and it is likely that it will ultimately be considered by the highest court.
This constant uncertainty complicates existing basic employment rights cases, their interpretation and ongoing general employment practices, directing us further away from basic simple dispute resolution for employment disputes.
The CCMA dealt with 370 such cases, requiring specific legal interpretation, in its last financial year. This adds to time spent on dealing with employee disputes on a technical level for employees and employers alike as opposed to dealing with the actual problem in the employment relationship.
Differing interpretations
The uncertainty stems from the interpretation of the section in the Labour Relations Act (section 198A) where recent amendments attempted to codify the rights of workers employed in non-standard forms of work.
Colloquially put it tries to clarify employment rights and duties when using a labour broker.
The intention of the case is to clarify the status of employees when they are deemed to be employees of a client of a labour broker. The use of the word “deemed” while legalistic, is intended to be used as a term for the role-over from when temporary employees (initially employed by the broker) become the client’s employees (so they are then considered an employee of the client from a legal perspective).
It is in the main around this area that the confusion, and different interpretations have been focused.
In essence there have been two schools of thought:
One supports the idea that the client of the labour broker “automatically” becomes the employer of the workers after three months.
The other argues that the workers while now employed by the client, also remain employees of the Labour broker. Effectively saying the employees then have two employers. When streamlined like this it is evident how absurd this thinking is.
Adjudicative determinations
The initial CCMA hearing determined that the client of the labour broker became the only employer after three months.
On review the Labour Court then subsequently decided that nothing in the provisions in the law did away with the employment between the broker and their employees, and hence the broker also remained an employer.
Concluding that this is a belts and braces approach enriching the employment contract. Confirming that after three months these employees have two employers.
The Labour Appeal Court has disagreed and now said that there are not two employment contracts. The motivations for the changes to the act were that the new permanent employees shouldn’t be treated any differently to the other full time employees, and should get all the benefits of full-time employment. The court concluded lumping them with two employers doesn’t achieve this, saying the amendment and the section is very clear on this.
In my view this correctly interprets the intention of the amendment, and that after a three-month period the employees become employees of the labour brokers’ client only.
Future
This does not mean that there is no place for labour brokers, or that they are “banned”.
It rather means that the employment of employees though TES needs to be for truly temporary work assignments only. This requires businesses when engaging employees through such a service to be prescriptive and clear. Planning is necessitated to ensure that upfront needs are established with recognised timeframes.
There are various circumstances recognised by the law however, where the role-over of fixed term contracts longer than the three months may be permissible, for example replacing someone who is absent (Illness, maternity leave), seasonal work (including a specific contract for a defined period), students working to gain experience.
In other words, if the planned work assignment morphs into something else over time, then the employment relationship needs to change along with it, into a more permanent one.
Of course this could all change again when the next court makes its findings if the employers now take it there. But I think that that is unlikely that the higher court will rule differently.
As a recap, section 198A was amended to address non-standard work and improve protections for part time work, fixed term contract work, or employment through a labour broker, giving protection to employees earning below the threshold of Basic Conditions of Employment Act (BCEA)**and working for longer than three months at the same client.
*NUMSA V Assign services, CCMA , Commissioner A.C. Osman NO, Krost shelving and racking (Pty) LTD,CWAO,CAPES(case no :JA91/11(2017)LAC )
**Current BCEA threshold is R 205 433.30 per annum
Nerine Kahn | Employment Relations Exchange | nerine@erexchange.co.za | http://erexchange.co.za/ |
Nerine Kahn previously held office as Director at the helm of the Commission for Conciliation, Mediation and Arbitration (CCMA) for more than a decade, prior to which she held the position as Chief Director of Labour Relations for the Department of Labour.
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This decision is, I believe, faulty as it does not take into account of the provision that the deeming provision is “for the purposes of the Act” (section 198A (3) which purpose is to protect rights in the employment relationship rather than to create a relationship that does not exist. Secondly, the Act, at section 198 (4A) provides that remedies for breaches of the deeming provision may be sought from either the broker or the client or both. If the client is, after three months, the sole employer, on what basis can the broker then be held jointly or severally liable? Finally, if the client becomes the sole employer, this goes against the primary requirement of contract that there must be consent to the contract between the contracting parties. This is a fundamental change to common law. It was, in my opinion, the intention that the client would, if subject to the deeming provision, take the decision to offer employment, rather than have a contract forced upon it.
Why do the amendments to the LRA then make provision for indefinite employment?
Secondly, with reference the LRA amendments, why would it be necessary to use the word “deemed” rather than plainly state that TES employees become direct employees of the clients after 3 months?
The whole purpose of the amendments was not to force permanent employment but to afford vulnerable employees additional rights and protection and to make clients more accountable in the employment relationship when utilizing a TES.
I get the impression that because you are unable to get your head around a new way of thinking, that automatically this way of thinking or an abstract idea is incorrect.
Kevin I understand your frustration however I had carefully given view based on the decision, and tried to write in an easily comprehensible way.
Not sure writing a personal comment is appropriate as you clearly don’t know any of the roles or innovations that I have personally been responsible for in labour Market ,( or in fact my views in these amendments). As a start let’s just say I was instrumental in suggesting that this be run as a test case.
On another point I am firmly of the view the ” over legalization” of interpreting employment relationships is not a constructive use of Dispute Resolution services or encouraging employment growth. I personally am aware of the pivotal role that labour brokers (In formal sector,properly managed)have played in creating employment and giving job entrants great working experience which then gives them the chance to move onward in their careers. I think much of this is lost now and been detrimental to our economy .
I think TES properly set up have a pivotal role to play , but not convinced that the industry is actually getting the message across effectively! Incidentally is also why I ended my article saying broker have a place in our labour market.
labour brokers are existing here in South Africa or not