Court rules against labour brokers
Publish date: 19 July 2017
Issue Number: 196
Diary: Legalbrief Workplace
Category: General
Employers who use labour brokers are obliged to take on workers after three months if they fall below a certain earning threshold, putting to rest a long-disputed provision of the Labour Relations Act. Business Day reports that in a recent landmark judgment, the Labour Appeal Court settled a protracted battle among unions, employers and labour brokers – or temporary employment services – over the interpretation of the most recent amendment to the Act regulating labour brokers. The court found that companies that use labour brokers are the sole ‘employer’. The clarification arose after there was confusion among unions, companies and labour brokers about a ‘deeming provision’ that some parties misinterpreted to mean that labour brokers and their clients were dual employers. The report says the amendment to the Act was effected in January 2015 after a protracted campaign against labour brokers by labour formations including Cosatu. Employees who earn less than R205 433 a year will now qualify for permanent employment if they complete three-month stints on contract.
Labour brokers will have at least another year’s grace before the contentious ‘deeming’ provision – introduced into labour law at the beginning of 2015 – potentially shuts down a large part of their industry, reports City Press. An appeal to the Constitutional Court was already being prepared, said Craig Kirchmann, attorney of record for the Confederation of Associations in the Private Employment Sector. This is the broker industry’s umbrella lobby group. Most importantly, merely filing this appeal would suspend this week’s judgment, he is quoted in the report as saying. The potential fallout of the Constitutional Court ruling against the labour brokers is hard to predict. ‘Practically, you will probably see a culling of temporary employment service companies if they lose,’ said Jose Jorge, a director at law firm Cliffe Dekker Hofmeyr’s employment practice. ‘I am not saying it is bad in the long run, but it will probably stifle employment ... This is not a philosophical debate, it is an economic one.’ ‘There is no doubt labour brokers are good for the economy,’ said Kirchmann. ‘This idea that all the labour broker workers will get taken in by the clients is a fallacy. It will be only a share of them.’
Regarding the role of a temporary employment service in the employment relationship, Deidre Venter, partner and Belinda Price, associate at Webber Wentzel write in a report on the Polity site that the matter between the National Union of Metalworkers of SA (Numsa) and Assign Services (Pty) Ltd amongst others, was the first dispute referred to the CCMA, and then reviewed by the Labour Court, on the proper interpretation of section 198A(3)(b)(i) of the Labour Relations Act, 1995 (LRA) since it came into effect on 1 January 2015. They write that the CCMA agreed with Numsa’s interpretation but its decision was reviewed and set aside by the Labour Court who adopted the approach put forward by Assign. Numsa then appealed against the decision of the Labour Court. Venter and Price write that the LAC was of the view that the sole employment interpretation offers the greatest protection to vulnerable employees, which it views as the purpose of the amendments to the LRA. From the judgment it appears that, on the expiry of the three-month period, the TES is not required to be party to any employment relationship. The only employment relationship that exists thereafter is the relationship between the client and the employee for all purposes of employment. Venter and Price write that this judgment will no doubt raise further questions in relation to the practicalities surrounding the relationships between the TES, the client and the employees.
The National Union of Metalworkers of SA (Numsa) is, meanwhile, ready to pull out all the stops to ensure that all workers who work for labour brokers are made permanent after three months, reports News24. ‘This is a victory for contract and temporary workers everywhere! It confirms that labour brokers may not exploit workers on contract for indefinite periods of time,’ said Numsa general secretary Irvin Jim. ‘Numsa will now pursue their plight even more aggressively and demand justice for our members.’ While the union would continue to press the government to abolish the labour broker system, Jim called on all Numsa members to ensure that all temporary workers working at a company for three months be made permanent employees.
