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On 11 July 2017 Jonathan Jones from Norton Rose Fulbright reported that The Labour Appeal Court on 10 July 2017, confirmed the CCMA’s view that the employment relationship that existed between the TES and its temporary employee, will come to an end if that employee has worked for the client of the TES for a period exceeding three months. The temporary employee of the TES will therefore automatically, in terms of legislation, become a permanent employee of the client.

The court considered the provisions of sections 198 and 198A on the whole and held that the “joint and several liability” provision, found in section 198, is intended to deter the TES from further involvement in the employment relationship between the “new” employer and the (no longer temporary) employee. It was further held that the “equal pay for equal work” provision is “to ensure that the deemed employees are fully integrated into the enterprise as employees of the client.”

It was also held that:

  • section 197 of the Act would not apply under the aforementioned circumstances;
  • the termination of employment by the TES would not prevent the operation of section 198A; and
  • the continued involvement of the TES in the employment relationship in an administrative capacity does not reinstate the TES as the employer.

It is important to note that section 198A of the Act and the Labour Appeal Court judgement are only applicable to employees earning less than the prescribed threshold that is currently set at R205 433.30 p.a.

Johannesburg – 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.

A ruling by the Labour Appeal Court this week struck down a hugely influential 2015 labour court judgment by acting Judge Martin Brassey on the deeming question.

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 told City Press.

This final legal showdown marks the endpoint of nearly a decade of union campaigning against labour brokers.

In 2010, the department of labour initially proposed to ban labour brokers outright. Amendments to the Labour Relations Act were subsequently reworked and on January 1 2015, the new deeming dispensation came into effect.

According to this dispensation, after three months a broker-provided worker is “deemed” to be an employee of the client company where they work.

This is subject to a number of exceptions, but likely covers a majority of labour broker staff, generally estimated to total between 600 000 and 1 million people in South Africa.

Unfortunately, the new rule could be interpreted in two opposite ways.

The “dual employer” interpretation sees the worker remain employed by the broker, but gain the ability to pursue disputes about working conditions, pay or dismissal against the client as well.

The alternative “sole employer” interpretation, favoured by campaigners such as the National Union of Metalworkers of SA (Numsa) against labour brokers, sees the broker disappear from the equation.


The deeming provision has led to numerous disputes at the Commission for Conciliation, Mediation and Arbitration (CCMA) and the establishment of other labour dispute forums such as bargaining councils.

At first, CCMA commissioners faced with deeming cases applied the sole employer rule.

Then the Brassey judgment made them fall in line and apply the dual employer rule.

The Casual Workers’ Advice Office (CWAO), a small non-governmental organisation based in Germiston, participated in about 70 of these disputes, which affected about 4 500 workers altogether.

CWAO coordinator Ighsaan Schroeder called this week’s judgment “a huge thing”.

“Companies have just stalled and made maximum use of Brassey,” said Schroeder.

“In all cases but one, the companies have insisted on the dual employer status, right down to wearing [the broker’s] branded overalls.”

The CWAO joined the case against Assign Services as a friend of the court. Assign Services had supplied workers to Krost Shelving and Racking. Many of them had worked for the company for more than three months.

In joining the legal action, the CWAO was hoping to show how the dual employer system had failed in its main aim: equalising employment conditions between brokered and directly employed workers.

“Some do equalise conditions, but most just ignore it,” said Schroeder.

“We have ‘permatised’ almost 5 000 people, but the companies behave as though nothing has changed.”

The industry makes the opposite argument.

“The goal was to prevent abuse. I think dual employment achieved that,” said the brokers’ lawyer, Kirchmann.

“I cannot begin to imagine how sole employer protects workers any better. Sometimes the labour broker is the more stable player and it is the client that will present the worker with more precarious job security and rights. Should the Constitutional Court rule against us, there will be an upheaval and a degree of chaos,” he told City Press.

Jose Jorge, a director at law firm Cliffe Dekker Hofmeyr’s employment practice, agreed that the dual employer system was already an effective intervention to root out the so-called bakkie brigade – low-end labour brokers.

“It is perfectly able to achieve the ends of labour law – to eliminate unfair pay differentials,” said Jorge.

“I had high hopes for the dual employer system.”

Optimistically, it would take a year to resolve this question if the Chief Justice choose to expedite it, he added.

Ruth Edmonds, Numsa’s attorney, was more optimistic, saying it would likely be six months.

The case against the dual employer argument was largely about job security, she said.

“There is a great deal more job security in having a single employer.”

(Published with acknowledgment to City Press and Fin24)

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