TEMPORARY EMPLOYMENT SERVICES: THE CONSTITUTIONAL COURT HAS THE FINAL SAY

On the 26th of July 2018, we (finally) saw the end of the debate on the deeming provision in terms of s198A(3)(b) of the Labour Relations Act 66 of 1995 (“of LRA”).

S198A(3)(b) of the LRA provides:-

“(3) For the purposes of this Act, an employee –
     (b) not performing such temporary service for the client is –
(i) deemed to be the employee of that client and the client is deemed to be the employer; and
(ii) subject to the provisions of section 198B, employed on an indefinite basis by the client.”

This section was introduced amongst a number of legislative amendments which took effect on the 1st of January 2015. It is important to note that this section is only applicable to employees whose remuneration is below the earnings threshold of R205,433.30 per annum.

A brief summary of the facts:

Assign Services are a Temporary Employment Service (“TES”) provided 22 workers at Krost Shelving & Racking who remained for a period exceeding 3 months. The workers referred a dispute in terms of s198D of the LRA and sought to enact the deeming provision under s198A(3)(b), thereby making Krost their Employer.

The matter first came before the CCMA, where the commissioner had to determine whether the deeming provision favoured a dual or sole employer interpretation. The CCMA ultimately held that the sole employer interpretation should be preferred as the application of a dual employment scenario would create too much confusion and would be problematic.

Not satisfied with the CCMA’s award, Assign took the matter on review to the Labour Court. The Labour Court took a contrary view to that of the CCMA and held that the dual interpretation should be applied. The Court reasoned that the client could only be considered the employer for purposes of the LRA and that the TES would retain control of the employee.

NUMSA then referred the matter to the Labour Appeal Court, who overturned the decision of the Labour Court and supported the sole employer approach taken by the CCMA. The Court held that the sole employer interpretation protected the rights of the placed employees and promotes the purpose and objects of the LRA.

With a final bite at the cherry, Assign referred the matter to the Constitutional Court for determination. The issue that the Court had to determine, once and for all, was what happens to the employment relationship under the LRA between the placed employee and the TES once the deeming provision kicks in. By a convincing majority decision, the Court supported the interpretation of the Labour Appeal Court – i.e. that of a sole employment interpretation.

The debate is now over, where a TES employee’s placement at a client exceeds 3 months the client WILL become the sole employer of the placed employee. Time will tell as to how this judgement changes the face of TES’s in South Africa, but we no longer need wonder who is (or isn’t) the Employer any longer.

Lee-Ann Harris
Associate

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