Labour broker clients: The purpose of sec 27 of the Employment Equity Act (EEA) is to eliminate disproportionate pay differentials within enterprises.  So when ‘clients’ use the services of labour brokers and those workers are not treated as employees of that client it is possible to avoid the consequences of EEA s 27.  The recent amendments to the EEA and Labour Relations Act (LRA) were intended to cure that problem.

But as Wallis JA decided in Roshcon (Pty) Ltd v Anchor Auto Body Builders CC  parties are permitted to “arrange their contractual or business affairs so as to obtain a benefit for themselves that a different arrangement may not permit or so as to avoid a prohibition that the law imposes”.

So large employers can conclude a service level agreement (SLA) with smaller entities, service level providers (SLP), that use the services of labour brokers.  Provided the SLA is not a sham and even if the workers provided by the labour brokers are regarded as being employed by the SLP, it will not make any real difference because in effect all the workers will be treated the same with regard to their employment terms and pay.  If the SLP does employ managers they will be graded at the higher levels and the SLP will be able to justify the proportional differential based on the extra value added by the managers who are then paid accordingly.

See: Thabiso v Shoprite (Adfusion) [2017] 10 BALR 1128 (CCMA) dated: 16 March 2017 per R Byrne, Commissioner