Battle over labour brokers takes to the courts

labour brokers
21 Oct 2015

This year’s most eagerly anticipated labour law case has been the battle over section 198A(3)(b) of the LRA which “deems” workers placed with a client by a Temporary Employment Service (TES) for more than three months to be employees of the client.

Trade union NUMSA and a TES, Assign Services, have locked horns in a “test case” on the issue before both the CCMA and the Labour Court.  NUMSA argues that the client becomes the sole employer of these workers.  Assign, on the other hand, argues that the TES continues to be the employer for all purposes and may, for instance, terminate the employee’s services on behalf of the client.  The union case is guided by their goal of marginalising the influence of labour brokers.  Assign is arguing the case that best suits the business interests of TESs.

The arbitrator upheld NUMSA’s argument but this award was set aside in the Labour Court in a judgment by Acting Judge Martin Brassey.  He queried the wisdom of a case involving such abstract issues of interpretation being referred to arbitration and refused to give a ruling in favour of Assign’s alternative construction of the “deeming” provision.

The learned Acting Judge should have left it at this point.  But he goes on to engage in a series of misplaced speculations as to how the law will operate in practice.  His reasoning is based on the flawed assumption that contracts between TESs and the workers they place are common law contracts of employment, although the Labour Appeal Court has ruled otherwise.  This error taints his subsequent reasoning.  He also suggests that the biblical aphorism that “no man can serve two masters” forms part of our law although this is clearly not the case.  There are numerous situations in which a worker may have rights and obligations in respect of more than one employer.  His comments will hopefully soon be forgotten.

What are the implications of the deeming clause?  Once its provisions kick in, employees have unfair dismissal and unfair labour practice protection against the client for whom they are working.  They will be covered by its collective agreements and must be treated no less favourably than the client’s other employees performing the same or similar work.  For most of these workers, this will mean a significant improvement in terms and conditions of employment.

These changes to the law seek to remove the major incentive to use workers placed by TESs on a long-term basis.  It will be more expensive for the client to pay workers the same as other employees and, in addition, pay the TES its fee.  The client may choose to terminate its relationship with the TES in respect of the employee and pay the employee directly; but is not compelled to do so. The client’s choice in this regard has no impact on the rights of these employees under the LRA.  However, if the TES remains in the picture it will be jointly and severally liable for any default by its client.

This and other pertinent labour law topics will be addressed at the 26th Current Labour Law Seminar, which will cover the key judgements of the past 12 months as well as legislative changes, including all the major amendments to the Labour Relations Act which came into effect as of 1 January 2015. For dates, venues and more information, contact Rene Naidoo on 031 303 9852, email [email protected]. To register online, visit

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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