court rules on labour brokers

Court rules on labour brokers

A recent Labour Court ruling has attempted to wade through the murky waters of the relationship between Temporary Employment Services (“TES”) organisations – commonly referred to as “labour brokers”, client employers and employees. The ruling, delivered on 8 September 2015, overturns a decision previously reached by the Commission for Conciliation, Mediation and Arbitration (“CCMA”). The CCMA ruling deemed the client employer to be the sole employer of workers placed by a TES organisation, provided that these employers earned below the prescribed threshold (R205 433.30 per annum) and a three months period of employment had elapsed. The Labour Court set aside this decision in favour of the adoption of an approach which saw the TES organisation and the client employer deemed to be concurrent employers, equally liable for compliance with the Labour Relations Act (“the Act”).

The ruling to end uncertainty

The ruling appears to have ended the long-standing uncertainty surrounding the issue of whether the client employer or TES organisation was liable to the employee for breaches of the Act. In reaching its conclusion, the Court was required to interpret section 198A(3), referred to as “the deeming provision” which reads:

“For the purposes of this Act, an employee—

 

  • Performing a temporary service as contemplated in subsection (1) for the client is  the employee of the temporary employment services in terms of section 198 (2); or

 

(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.”

 The Court was required to determine whether the TES organisation remained bound by its statutory rights and obligations towards an employee earning below the prescribed threshold after a placement period with a client employer of more than three months. The interpretation of the word “deemed” in the above section was crucial to reaching a final determination on the matter. Acting Judge Brassey found that the use of the word “deemed” was intended to be an augmentation rather than a substitution and it follows that in disputes arising in terms of the Act, an employee may elect to institute proceedings against either the TES organisation or the client employer.

The hopeful return of stablity to the industry

The decision was welcomed by members of the TES industry who felt that it would bring stability and optimism back to the industry. It remains to be seen whether the matter will be taken on appeal.

court rules on labour brokers

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