Victory for temporary workers in Labour Appeal Court
Labour Broker Employees the permanent employees of the client after a period of three months
The recently inserted section 198A of the Labour Relations Act has resulted in a significant amount of debate surrounding the “deemed to be” provision.
In terms of the aforementioned section of the Act, an employee placed by a Temporary Employment Service Provider (“TES”) with a client, is deemed to be an employee of the client if that temporary employee has worked for the client for a period exceeding three months.
After three months of employment with a client, the temporary employee may not be significantly treated less favorably than a permanent employee of the client performing the same or similar work, unless there is proper justification for doing so.
It has been widely accepted that the “deemed to be” provision found in section 198A is to be interpreted to mean that after three months of employment with a client, a dual employer relationship will come into existence between the temp, the client and the TES. This was however rejected in the 2015 NUMSA v Assign Services interpretation arbitration award.
In the stated case, the stance adopted by the TES was that the placed workers remained employees of Assign for all purposes, and were deemed to also be employees of Krost (the client), for the purposes of the Act. NUMSA’s position was that the placed workers were deemed, for the purposes of the LRA, to be employees only of Krost. The subsequent judgement of acting judge Brassey in the Labour Court resulted in further confusion regarding the aforementioned.
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 R205433.30 p.a.
It is anticipated that this judgement will have serious implications for both Temporary Employment Service Providers and its clients and will as such have to finally determined by the Constitutional Court.
By Jan Du Toit
Assign Services & Others (case no JA96/15) – Labour Appeal Court