The Constitutional judgment on labour brokers and who is ultimately an employee, which I delved into in last week’s column, raised some very interesting issues.
First, they looked at the unemployment rate (then in 2018), which they said was 26.7%, and that figure excluded more than 2 million discouraged work-seekers.
They went on to state: “Behind this number lies the legacy of systematic deprivation of opportunities for black South Africans, and within it is the undeniable skew of racial (discrimination) and equality. This dire state of affairs is coupled with a history of very poor working conditions and pay for black employees.”
In other words, the judges did not only look at the wording of the legislation but placed that wording in a political and sociological context.
One might disagree with the reasoning, but this judgment leaves no room for disagreement, and the statement certainly reflects some of the reasons why the outcome was the acceptance of a deeming provision.
The majority of judges, including Justice Zondo and Dlodlo, stated: “The legislature has stopped short of banning labour broking, but it has enacted several amendments to the Labour Relations Act to give security to marginalised workers, and to regulate the industry.” Section 198A is one such amendment.
The dispute then called upon to resolve is which interpretation of Section 198A(3)(b) is correct. The judges came down from nine judges to one judge to interpret the law meaning that the client of the labour broker becomes the permanent employer of the placed employee. As soon as the worker renders services to the employee full-time in excess of three consecutive months, then the judgment is triggered, and the placed employees are now permanently working for the client.
It is important for the client to understand that they take over all the liability and responsibilities as outlined in all our labour legislation. Invariably most client employers don’t understand that the deeming provision kicks in, and invariably they rely entirely on the old style of the contract.
On a daily basis, I speak to client employers who cannot understand the meaning of the word “deemed” and certainly don’t have any idea of their responsibilities and liabilities in the situation.
Most client employers still have a strong belief that it is the labour broker or the temporary employment service which provides those employees with the liability.
The client often thinks that they don’t need to check that the UIF is properly paid, or for that matter, even PAYE. When the client no longer wants those employees or wants to terminate the contractual arrangement with the labour broker, the client believes that it is as simple as a termination of the contract.
The client believes that the staff would then revert to the labour broker, and they would then, in turn, have to place those employees elsewhere. The client has made no provision for the ongoing employment relationship or, indeed, for the possibility of dismissal for operational requirements (retrenchments).
If it is shown that the labour broker had not been paying over the UIF, then the client would have to make good.
It must also be understood that during the first three months, the labour broker is the only employer, and once the three-month period lapses, the deeming provision does not terminate the commercial agreement between the client and the temporary employment service. However, it certainly does terminate the employment relationship between the temporary employment service and the workers. The placed workers are then deemed to be solely employed by the client for the purposes of our labour law.
There was confusion in the early days when some of the commissioners and judges thought there would be a dual employer interpretation. In the Assign Services Constitutional Court Case, the trade union Numsa submitted that the dual employer interpretation is not supported by the plain language of the act. Numsa was correct.
The court also said: “A placed employee who has worked for a period in excess of three months is no longer performing a temporary service, and the client becomes the sole employer by virtue of the legislation.”
* Michael Bagraim.
** The views expressed here are not necessarily those of Independent Media.
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