On 22 February 2018 the Constitutional Court will hear the appeal by a Temporary Service Provider (TES) which contends that LRA s198A(3)(b) creates a ‘deeming’ statutory temporary employment relationship after 3 months when workers earning below the statutory threshold (currently about R17,000 per month) are placed with a client, but still remain employees of the TES.
The outcome of this important appeal will be awaited with great interest. According to the media summary the TES, Assign Services, will argue that its ability to provide a service post-deeming would be tantamount to banning so-called Labour Brokers and that the legislature could not have intended to impose such a ban. It is argued that the Labour Appeal Court acknowledged that Labour Brokers could continue to provide their services and this indicates that the relationship was intended to be of a ‘dual’ nature.
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
“On 22 February 2018 at 10h00 the Constitutional Court will hear an application for leave to appeal against the judgment of the Labour Appeal Court, which dealt with the proper interpretation of section 198A(3)(b)(i) (deeming provision) of the Labour Relations Act 66 of 1995 (LRA). Section 198A was one of several amendments to the LRA made in August 2014 aimed at regulating non-standard employment.
In 2015 Assign Services (Pty) Ltd and the National Union of Metalworkers South Africa (NUMSA) referred a stated case to the Commission for Conciliation, Mediation and Arbitration (CCMA) for clarification on the meaning of the section.
Assign Services is a Temporary Employment Service (TES) that in 2015 had 22 workers placed with the fourth respondent, Krost Shelving and Racking (Pty) Ltd (Krost). Each placed worker had provided services to Krost for at least three consecutive months, on a full time basis, and earned below the threshold earnings required to place them within the scope of section 198A of the LRA. Several of the placed workers are members of NUMSA.
Assign Services considers section 198A(3)(b) to create a “dual employer” relationship, where placed workers remain employees of Assign Services for all purposes, but are also deemed to be Krost’s employees for the purposes of the LRA. NUMSA on the other hand contends that Krost became the only employer of the placed workers once section 198A(3)(b) was triggered. The CCMA Commissioner found in favour of NUMSA’s “sole employer” interpretation. This means that, once a placed worker has spent more than three consecutive months with a particular client of the TES, they are no longer considered “temporary workers” and are deemed to be employees of that client.
Aggrieved by the CCMA’s decision, Assign Services instituted proceedings in the Labour Court to have it reviewed and set aside. It persisted in its interpretation that section 198A(3)(b) gives rise to dual employment for the purposes of the LRA. The Labour Court found that there was nothing in section 198A(3)(b) that could be read as invalidating the contract of employment between the workers and Assign Services, as section 198A(3)(b) simply created a dual set of rights and obligations to be exercised by both Krost and Assign Services. The Labour Court set aside the CCMA’s award.
NUMSA appealed to the Labour Appeal Court. In overturning the Labour Court’s award, the Labour Appeal Court held that the purpose of section 198A(3)(b) was not to transfer the contract of employment between Assign Services and the placed workers to Krost, but to create a statutory employment relationship between Krost and the placed workers. The purpose of the amendment must be to upgrade the temporary service to standard employment, and to free the vulnerable workers from atypical employment. As such, a dual employer relationship would be nonsensical.
In the Constitutional Court, Assign Services contends that the Labour Appeal Court’s finding impacts the ability of TESs to provide a service post-deeming and is tantamount to the banning of TESs. There is no indication that the legislature intended to impose a ban on TESs, and the Labour Appeal Court’s acknowledgment that TESs may continue to provide their services serves as an indication towards dual employment. Additionally, the Labour Appeal Court and NUMSA’s interpretation gives rise to absurdities in the LRA where it is clearly stipulated that workers remain employees of a TES outside of section 198A.
NUMSA submits that the sole employer interpretation does not ban TESs, but rather regulates them in respect of only lower paid placed workers in employment for more than 3 months who cannot, in any event, be considered “temporary workers”. The LRA clearly provides that, regardless of any common law contract, the TES is deemed an employer once a worker is placed until the end of the three-month temporary period, when the TES’s client will be deemed to be the worker’s employer.
The Casual Workers Advice Office (CWAO), a non-profit organisation that provides advice and support to workers has been admitted as amicus curiae in this Court. CWAO supports NUMSA’s “sole employer” interpretation and submits that dual employment cannot afford employees better protection because it undermines the purpose of the amendments to the LRA. CWAO also argues that dual employment gives rise to uncertainties, increases employment insecurity, perpetuates wage discrimination and undermines the ability of workers to bargain collectively”.