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[2017] ZALAC 44
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NUMSA v Assign Services and Others (JA96/15) [2017] ZALAC 44; (2017) 38 ILJ 1978 (LAC); [2017] 10 BLLR 1008 (LAC) (10 July 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA 96/15
In
the matter between:
NUMSA
Appellant
and
ASSIGN
SERVICES
First Respondent
COMMISSION
FOR CONCILIATION
MEDIATION
AND ARBITRATION
Second Respondent
COMMISSIONER
A.C. OSMAN,
NO
Third Respondent
KROST
SHELVING & RACKING (PTY)
LTD
Fourth Respondent
CASUAL
WORKERS ADVICE OFFICE (CWAO)
First
amicus curiae
CONFEDERATION
OF ASSOCIATIONS IN THE
PRIVATE
EMPLOYMENT SECTOR (CAPES)
Second
amicus curiae
Heard:
14 December 2016
Delivered:
10 July 2017
Summary:
Interpretation of section 198A(3)(b)(i) of the LRA – the status
of the employment relationship
when employees are deemed to be
employees of the client in terms of section 198A(3)(b)(i) –
whether the labour broker remains
the employer of the workers placed
with a client notwithstanding the triggering of section 198A(3)(b)(i)
– court called upon
to decide whether the triggering of section
198A(3)(b)(i) giving rise to either a dual or sole employment
relationship.
Held
that:
Section
198A(3)(b)(i) was introduced to protect the vulnerable employees from
being abused by Temporary Employment Services (TES)
and such
protection was extended to other subsections of section 198A. The
protection against unfair dismissal and unfair discrimination
in the
context of s198A of the LRA should not be interpreted to support the
contention that the deemed employees are employed by
both the TES and
client. The protection is a measure to ensure that these employees
are not treated differently from the employees
employed directly by
the client. The purpose of these protections in the context of s198A
is to ensure that the deemed employees
are fully integrated into the
enterprise as employees of the client. The sole employer
interpretation does not ban the TES. Its
purpose is to restrict the
TES to genuine temporary employment. The TES remains the employer of
the placed employee until the employee
is deemed the employee of the
client. The plain language of s198A(3)(b) of the LRA, interpreted in
context unambiguously supports
the sole employer interpretation and
is in line with the purpose of the amendment, the primary object of
the LRA and protects the
rights of placed workers. The Labour Court
misdirected itself in its interpretation of s198A(3)(b) of the LRA.
Appeal upheld. Labour
Court’s judgment set aside.
Coram:
Waglay JP, Tlaletsi DJP and Phatshoane AJA
DRAFT
JUDGMENT
TLALETSI DJP
Introduction
[1]
The controversy in this
appeal has to do with the proper interpretation and effect of section
198A(3)(b)(i) of the Labour Relations
Act, 66 of 1995 (LRA),
introduced by the 2014 amendment to the LRA. The relevant s198A(3)
provides as follows:
‘
For the
purpose of this Act, an employee-
(a)
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.’
[1]
[2]
The
matter was referred in terms of s198D(1)
[2]
and was placed before the Commission for Conciliation Mediation and
Arbitration (CCMA) by way of a stated case detailing common
cause
facts and the issue for determination.
[3]
The first respondent is
Assign Services (Pty) Ltd (Assign), a temporary employment service
(TES), as defined in s198 (1) of the
LRA and is a member of the
Confederation of Associations in the Private Employment Sector
(CAPES).
[4]
The second respondent
is Krost Shelving & Racking (Pty) Ltd (Krost), a company duly
registered in accordance with South African
company laws.
[5]
The appellant is the
National Union of Metal Workers of South Africa (NUMSA), a registered
trade union in terms of the LRA.
Background
.
[6]
The agreed or common
cause facts are recorded as follows in the stated case:
The
business of Krost and the placement of workers by Assign
(a)
Krost offers storage
solutions. This entails manufacturing steel racking, shelving,
mezzanine floors and lockers. While Krost does
carry some stock, it
generally quotes and works on projects. Accordingly, the product
manufactured by it is generally customised.
(b)
Krost employs 40
salaried employees and approximately 90 wage staff who work in the
factory. Krost manages and pays its own employees.
(c)
Assign supplies labour
to Krost. The number of placed workers fluctuated from between 22 and
40 at any given time, with fluctuation
being dependent on the nature
of the projects awarded to Krost.
(d)
As at 01 April 2015, 22
placed workers (“the placed workers”) had been supplied
by Assign to Krost for a period in excess
of three months on a
full-time basis, and their placement predated 01 January 2015.
(e)
The placed workers fall
within the scope of application of section 198A(3)(b), and are not
affected by any of the exclusions listed
in section 198A(1) or (2).
(f)
As at
present, the
placed workers continue to be assigned by Assign to Krost, and,
subject to the outcome of this matter, the TES arrangement
between
Assign and Krost is likely to continue in the foreseeable future.
(g)
The placed workers work
shoulder to shoulder with Krost’s workforce. Krost manages the
placed workers on a day-to-day basis.
Assign is responsible for
disciplining them.
(h)
Of Krost’s 90
wage staff in the factory, about 80% are NUMSA’s members.
Several of the placed workers are also members
of NUMSA.
(i)
Often Krost’s
management will meet with NUMSA’s representatives together with
workers placed by Assign who are NUMSA’s
members. Occasionally,
representatives from Assign’s management will be called to
attend meetings together with NUMSA. This
is normally when collective
issues such as wages are discussed.
(j)
There is pay parity
between Krost’s wage staff and the placed workers.
(k)
Krost has, however,
received feedback that the placed workers are inclined towards
asserting a right to being employed exclusively
by Krost, which
obviously has the potential for labour unrest (in the absence of the
issue being determined by the CCMA).
[7]
The controversial
question is who becomes the employer of the placed workers when a
period of three months referred to s198A(3)(b)
of the LRA kicks in.
[8]
Assign’s
contention has been that the correct interpretation of s198A(3)(b),
which is also referred to as the deeming provision,
should be that
workers placed by it at Krost remain employees of Assign for all
purposes, and are deemed to also be employees of
Krost for the
purposes of the LRA. This situation is referred to as the “dual
employment” position.
[9]
NUMSA, on the other
hand, contended that in terms of the deeming provision, the placed
workers are with effect from 01 April 2015,
deemed to be employees of
Krost only for purposes of the LRA. This position is referred to as
the “sole employment”
position.
[10]
However, Krost’s
position was not to support any of the two positions taken by the
respective parties but to abide by the
ruling of the Commissioner.
The
award
.
[11]
The Commissioner
concluded that s198A(3)(b) should be interpreted that “deemed”
means that the client (Krost) becomes
the sole employer of the placed
workers for purposes of the LRA once the threshold of the three-month
period elapsed. The Commissioner
was satisfied that his
interpretation is the one that will provide greater protection for
the vulnerable class of employees identified
by s198A(3)(b).
[12]
The Commissioner
reasoned further that the deeming provision in s198A(3)(b) should be
interpreted akin to how the law deals with
the concept of “adoption”:
‘
In the
case of adoption, a legal fiction is also created, in that, for
purposes of the law, the adoptive parent is regarded as the
parent of
the adopted child. In this regard the best interest of the child is
considered to be in the scenario where the adoptive
parent is
afforded full right in terms of guardianship and/all obligations in
terms of parenting and upbringing of the adopted
child.
The
law does not regard a biological parent and the adoptive parent as
dual parents, as doing so would lead to uncertainty and confusion.
Equally
in the case at hand there are a number of problems that could arise
in the ‘dual employment’ interpretation,
for example, who
would be responsible for the disciplining of the placed workers and
who’s [sic] disciplinary code would
be applicable, that of the
TES or that of the Client? Furthermore, how would ‘re-instatement’
occur if there is dual
employment? Clearly this would lead to greater
uncertainty and confusion for the vulnerable employees the Act is
seeking to afford
greater protection to.’
[13]
And that:
‘
Furthermore,
the fact that the employee may institute proceedings against either
the (TES) or the Client or both the TES and the
client in terms of
S198 (4)(a) and that any order or award made against a (TES) or
client in terms of this subsection may be enforced
against either,
does not in its plain reading make the TES a dual employer. The
purpose for instituting proceedings is to determine
liability and the
fact that one may institute proceedings against either the TES or the
client, or both and enforce an order or
award against either, does
not necessarily create dual employment. In the amended LRA, in
sections relating to organisational rights
and picketing, the
sections allow for the citing of a third party controlling access to
the workplace eg. (landlord), and the enforcing
of awards against
such parties. This however does not render the third party concerned
to be a dual employer of the employees of
the actual employer.’
[14]
The Commissioner
referred to the memorandum of objects accompanying the first version
of the Labour Relations Amended Bill and held
inter
alia
, that if the
placed workers are not employed to perform temporary services, they
are deemed to be employees of the client and not
the TES.
The
Labour Court
[15]
Assign sought to review
the award of the Commissioner on the basis that the Commissioner
committed a material error of law and a
gross irregularity; that the
award is unreasonable (as an erroneous interpretation of a statute
cannot be reasonable), and on the
grounds of unlawfulness in that the
material error of law in interpreting s198(A)(3)(b) by the
Commissioner infringed s 3(1) of
the Constitution of the Republic of
South Africa which guarantees the right to lawful, reasonable and
procedurally fair administrative
action that suffuses s145(2) of the
LRA.
[16]
The Labour Court was
satisfied that the award of the Commissioner was susceptible to being
set aside on the basis that the Commissioner
had committed a material
error of law in reaching the conclusion that he did. The Labour Court
reasoned, among others, that:
16.1 nothing in the
deeming provision can be taken to invalidate the contract of
employment between TES and workers
or derogate from its terms and
they remain firmly in place.
16.2 there seems no
reason, in principle or practice, why the TES should be relieved of
its statutory rights and
obligations towards the placed workers
because the client has acquired a dual set of such rights and
obligations. That the employment
relationship between TES and the
placed workers on the one hand and the employment relationship
created by s198A(3)(b) of the LRA
on the other, operate in parallel.
16.3 section 198(2)
of the LRA placed beyond doubt that a TES, the employer of placed
workers at common law, is
equally the employer for the purposes of
the LRA,
16.4 that the
contractual relationship between TES and placed workers, is
“indubitably one of employment”.
16.5 that placement
as contemplated in s198 of the LRA has no bearing on the contract
between TES and placed workers
and therefore both parties continue to
be bound by their contractual rights and obligations before
placement.
[17]
The Labour Court
decided to neither substitute nor refer the award back to the CCMA
because it was of the view that the dispute
before it was academic
and that the Commissioner ought to have declined to entertain the
matter.
[18]
The Labour Court
mero
motu
raised a
further point to the effect that all the workers placed with Krost by
Assign should have been joined in the matter in
order to give them an
opportunity to be heard. This fact alone, the Labour Court held,
constituted a ground for reviewing and setting
aside of the
Commissioner’s award.
The
Appeal
[19]
In this Court, the Casual Workers Advice Office (CWAO) applied and
was admitted as first
Amicus curiae
in terms of rule 7(1) of
the Rules for the Conduct of Proceedings in the Labour Court.
Similarly, the Confederation of Associations
in the Private
Employment (CAPES) also applied and was admitted as second
Amicus
curiae.
The
Parties’ submissions
[20]
Mr van der Riet SC,
[3]
who
appeared on behalf of NUMSA made the following submissions: that the
Labour Court erred in holding that the Commissioner committed
an
error of law in finding that Assign continued to be the employer of
the placed workers after 01 April 2015. The finding of the
Commissioner that once s198A (3)(b) of the LRA is triggered, the
client is the only employer of the placed workers for purposes
of the
LRA was correct. He submitted that the Labour Court misunderstood the
purpose of s189(2) of the LRA. The subsection, he
contended, does not
seek to affirm the common law, but to create a legal fiction in order
to identify one of the parties as the
employer of a placed worker
under the LRA because the conventional test of employment, both at
common law and statutorily, are
inadequate in the circumstances of
triangular employment and accordingly leave placed workers without
protection.
[21]
Mr van der Riet contended further that the Labour Court erred in
finding that the contractual relationship between the TES
and the
placed workers is always an employment relationship. He submitted
that it is clear from the provisions of s198 and s 198A
of the LRA
that a TES can operate without concluding a contract of employment
with the workers it places as employees.
[22]
Counsel submitted that in any event, s145 of the LRA does not allow
an award to be reviewed and set aside on the basis of an
error of law
as contemplated in the common law. He submitted that the award of the
commissioner is not one that no reasonable arbitrator
could not
reach.
[23]
In the finding by the court
a quo
that the dispute was
academic, Mr van der Riet submitted that NUMSA’s refusal to
agree that Assign continued to be the employer
of the placed workers
after 01 April 2015 created a concrete dispute between the parties
which was not academic.
[24]
Regarding the issue of joinder, counsel submitted that the court
a
quo
erred in finding that placed workers who were not members of
NUMSA, constituted a ground of review, because those workers who are
not members of NUMSA do not have a direct and substantial interest in
the outcome of the case. Counsel contended that this is not
a matter
where the award made by the commissioner will be a “
brutum
fulmen”
because some persons who will have to cooperate in
carrying it into effect will not be bound by it.
[25]
Ms S Harvey, for CWAO, mainly supported the submissions made on
behalf of NUMSA. She submitted that the parallel/dual employer
interpretation of the s198A of the LRA is not supported by the plain
language of the provision read in context and that the sole
employer
interpretation is the one giving effect to the purpose of the
amendments and to constitutional rights. Counsel further
submitted
that the fundamental error of the court
a quo
lay in its
failure to appreciate that the employment relationship between the
placed workers and the client arises by operation
of law, independent
of the terms of any contract between the placed workers and the
labour broker, or the placed workers and the
client.
[26]
Mr Myburgh SC, on behalf of the first respondent, summarised his
submission thus: the court
a quo
correctly found that the
commissioner’s interpretation of the deeming provision was
wrong, and thus constituted a reviewable
error of law; that in line
with the court
a quo
’s construction, correctly
construed, the effect of the deeming provision is to leave the bond
between the TES and the placed
workers intact, whilst creating an
augmentation by introducing the client as an employer vis-à-vis
the placed workers for
the purposes of the LRA. Regarding the
non-joinder and academic issues, counsel conceded, correctly in my
view, that for the purposes
of the appeal, nothing turns on the court
a quo
’s remarks. The parties in the court
a quo
accepted that the dispute was not academic and never raised nor
pursued the non-joinder point. I need not say anything more about
the
non-joinder and the academic issues raised
mero motu
by the
court
a quo
. The two issues are of no assistance in the
interpretation inquiry to be embarked upon in this appeal.
[27]
Mr Myburgh appeared on behalf of CAPES as well. He indicated that
CAPES supports the submissions made on behalf of the first
respondent. In addition, counsel submitted that in interpreting the
deeming provision, it is necessary for the Basic Conditions
of
Employment Act, 75 of 1997 (BCEA), in terms of which the TES is and
remains the employer of all placed workers, to be reconciled
with the
LRA in so far as the dispensation of the TES’s post-deeming is
concerned; that the only manner in which the LRA
and the BCEA can be
reconciled post-deeming is through the TES being a parallel employer
for the purposes of the LRA when deeming
provision takes effect.
Regarding the Private Employment Agencies Convention,1997 (no 181)
relied on by CWAO, counsel submitted
that even though the said
convention has not been ratified by the Republic of South Africa and
is therefore not part of the Republic’s
international law
obligations, the parallel employment construction is not in any way
in conflict with the provisions of the convention.
Analysis
.
[28]
The issue in this appeal concerns the interpretation of s198A (3)(b)
of the LRA. Before embarking on the process of interpretation
it is
necessary to restate the applicable principles of interpretation of
legislation. The starting point is s39(2) of the Constitution
of the
Republic of South Africa. The relevant part of s39(2) provides that:
‘
(1)
When interpreting the Bill of Rights, a court, tribunal or forum-
(a)
must promote the values that underlie an
open and democratic society based on human dignity, equality and
freedom;
(b)
must consider international law; and
(c)
may consider foreign law.
(2)
When interpreting any legislation, and when developing the common law
or customary
law, every court, tribunal or forum must promote the
spirit, purport and objects of the Bill of Rights.
(3)
The Bill of Rights does not deny the existence of any other rights or
freedoms that
are recognised or conferred by common law, customary
law or legislation, to the extent that they are consistent with the
Bill.’
[29]
Section 3 of the LRA reads:
‘
Any person
applying this Act must interpret its provisions-
(a)
to give effect to its primary objects;
(b)
in compliance with the Constitution; and
(c)
in compliance with the public international law obligations of the
Republic.’
[30]
Section 1 of the LRA states that the purpose of the LRA is to advance
economic development, social justice, labour peace and
the
democratisation of the workplace by fulfilling the primary objects of
the LRA. The primary objects of the LRA are:
‘
(a)
to give effect to and regulate the fundamental rights conferred by
section 27 of the Constitution;
(b)
to give effect to obligations incurred by the Republic as a member
state of the International
Labour Organisation;
(c)
to provide a framework within which employees and their trade unions,
employers and
employers' organisations can-
(i)
collectively bargain to determine wages, terms and conditions of
employment
and other matters of mutual interest; and
(ii)
formulate industrial policy; and
(d)
to promote-
(i)
orderly collective bargaining;
(ii)
collective bargaining at sectoral level;
(iii)
employee participation in decision-making in the workplace; and
(iv)
the effective resolution of labour disputes’
[31]
It is trite that a purposive approach to interpretation of
legislation is imperative. The Supreme Court of Appeal
[4]
held that:
‘
The present
state of the law can be expressed as follows. Interpretation is the
process of attributing meaning to the words used
in a document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading
the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming
into existence. Whatever the
nature of the document, consideration must be given to the language
used in the light of the ordinary
rules of grammar and syntax; the
context in which the provision appears; the apparent purpose to which
it is directed and the material
known to those responsible for its
production. Where more than one meaning is possible each possibility
must be weighed in the
light of all these factors. The process is
objective not subjective. A sensible meaning is to be preferred to
one that leads to
insensible or unbusinesslike results or undermines
the apparent purpose of the document. Judges must be alert to, and
guard against,
the temptation to substitute what they regard as
reasonable, sensible or businesslike for the words actually used. To
do so in
regard to a statute or statutory instrument is to cross the
divide between interpretation and legislation. In a contractual
context
it is to make a contract for the parties other than the one
they in fact made. The ‘inevitable point of departure is the
language of the provision itself’, read in context and having
regard to the purpose of the provision and the background to
the
preparation and production of the document’.
[5]
[Footnotes omitted]
[32]
An incorrect interpretation of the law by a commissioner is,
logically, a material error of law which will result in both an
incorrect and unreasonable award. Such an award can either be
attacked on the basis of its correctness or for being
unreasonable.
[6]
[33]
The relevant provisions section198 reads:
‘
198.
Temporary Employment Services
(1)
In this section, ‘temporary employment services’ means
any person who,
for reward, procures for or provides to a client
other persons -
(a)
who perform work for the client; and
(b)
who are remunerated by the temporary employment service.
(2)
For the purposes of this Act, a person whose services have been
procured for or provided
to a client by a temporary employment
service is the employee of that temporary employment service, and the
temporary employment
service is that person‘s employer.
(3)
Despite subsections (1) and (2), a person who is an independent
contractor is not
an employee of a temporary employment service, nor
is the temporary employment service the employer of that person.
(4)
The temporary employment service and the client are jointly and
severally liable if
the temporary employment service, in respect of
any of its employees, contravenes -
(a)
a collective agreement concluded in a bargaining council that
regulates terms and
conditions of employment;
(b)
a binding arbitration award that regulates terms and conditions of
employment;
(c)
the Basic Conditions of Employment Act; or
(d)
a sectoral determination made in terms of the
Basic Conditions of
Employment Act.
(4A
) If the
client of a temporary employment service is jointly and severally
liable in terms of
section 198(4)
or is deemed to be the employer of
an employee in terms of
section 198A(3)(b)
—
(a)
the employee may institute proceedings against either the temporary
employment service
or the client or both the temporary employment
service and the client;
(b)
a labour inspector acting in terms of the
Basic Conditions of
Employment Act may
secure and enforce compliance against the
temporary employment service or the client as if it were the
employer, or both; and
(c)
any order or award made against a temporary employment service or
client in terms
of this subsection may be enforced against either.
(4B) (a) A
temporary employment service must provide an employee whose service
is procured for or provided
to a client with written particulars of
employment that comply with
section 29
of the
Basic Conditions of
Employment Act, when
the employee commences employment.
(b)
Paragraph (a) applies, three months after the commencement of the
Labour Relations
Amendment Act, 2014, to a person whose services were
procured for or provided to a client by a temporary employment
service in
terms of subsection 198(1) prior to the commencement of
the Labour Relations Act, 2014.
(4C) An
employee may not be employed by a temporary employment service on
terms and conditions of employment
which are not permitted by this
Act, any employment law, sectoral determination or collective
agreement concluded in a bargaining
council applicable to a client to
whom the employee renders services.
(4D) The issue
of whether an employee of a temporary employment service is covered
by a bargaining council
agreement or sectoral determination, must be
determined by reference to the sector and area in which the client is
engaged.’
[34]
Section 198A reads:
‘
Application
of section 198 to employees earning below earnings threshold
(1)
In this section, a ‘temporary service’ means work for a
client by an employee—
(a)
for a period not exceeding three months;
(b)
as a substitute for an employee of the client who is temporarily
absent; or
(c)
in a category of work and for any period of time which is determined
to be a temporary
service by a collective agreement concluded in a
bargaining council, a sectoral determination or a notice published by
the Minister,
in accordance with the provisions of subsections (6) to
(8).
(2)
This section does not apply to employees earning in excess of the
threshold prescribed
by the Minister in terms of
section 6(3)
of the
Basic Conditions of Employment Act.
(3
)
For the purposes of this Act, an employee—
(a)
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.
(4)
The termination by the temporary employment services of an employee‘s
service
with a client, whether at the instance of the temporary
employment service or the client, for the purpose of avoiding the
operation
of subsection (3)(b) or because the employee exercised a
right in terms of this Act, is a dismissal.
(5)
An employee deemed to be an employee of the client in terms of
subsection (3)(b) must
be treated on the whole not less favourably
than an employee of the client performing the same or similar work,
unless there is
a justifiable reason for different treatment.
(6)
The Minister must by notice in the Government Gazette invite
representations from
the public on which categories of work should be
deemed to be temporary service by notice issued by the Minister in
terms of subsection
(1)(c).
(7)
The Minister must consult with NEDLAC before publishing a notice or a
provision in
a sectoral determination contemplated in subsection
(1)(c).
(8)
If there is conflict between a collective agreement concluded in a
bargaining council,
a sectoral determination or a notice by the
Minister contemplated in subsection (1)(c)—
(a)
the collective agreement takes precedence over a sectoral
determination or notice;
and
(b)
the notice takes precedence over the sectoral determination.
(9)
Employees contemplated in this section, whose services were procured
for or provided
to a client by a temporary employment service in
terms of section 198(1) before the commencement of the Labour
Relations Amendment
Act, 2014, acquire the rights contemplated in
subsections (3), (4) and (5) with effect from three months after the
commencement
of the Labour Relations Amendment Act, 2014.’
[35]
It is significant to note that subsection (1) gives special meaning
to the term “
temporary service”
to mean work for a
client by an employee for a period not exceeding three months, or as
a substitute for an employee of the client
who is temporarily absent;
or an employee who falls into a category of work and for any period
of time which is determined to be
a temporary service by a collective
agreement concluded in a bargaining council, a sectoral determination
or a notice published
by the Minister, in accordance with the
provisions of subsections (6) to (8).
[36]
What s189A(1) does is to place emphasis on the nature of the service
as defined and not on the person rendering the service
or the
recipient of the service
per se
to determine who the employer
of the placed worker is. What it therefore means is that a placed
worker other than the employee
referred to in ss(2), earning in
excess of the threshold prescribed by the Minister in terms of s6(3)
of the BCEA, who does
work for a client of the TES for a period
exceeding three months; who is not working as a substitute for an
employee of the client;
or does not fall into a category of work and
for any period determined in a collective agreement referred to in ss
(1)(c), is not
rendering a temporary service for the purposes of
s198(A) and therefore not an employee of a TES. Put differently, a
service by
a placed worker which does not fall within the category
defined above and which is in excess of a three month period is not a
“temporary
service” for the purposes of s198A(1) of the
LRA.
[37]
In order to ascertain who the employer of the placed worker in that
position for the purposes of the LRA is, one is enjoined
to resort to
the provisions of s198A (3)(b). Such a worker is therefore deemed to
be the employee of the client and the client
deemed to be the
employer of the worker. Furthermore, a worker in this situation is,
subject to the provisions of s198B, employed
by the client of the TES
on an indefinite basis.
[38]
The sole employer interpretation is consonant with the main thrust of
the amendments to s198 and 198A outlined in the Explanatory
Memorandum accompanying the LRA Amendment Bill as tabled in 2012 in
Parliament, which is among others:
‘
Section
198 has been amended, and a new section and further provisions
introduced into the LRA, in order to address more effectively
certain
problems and abusive practices associated with temporary employment
services (TESs), or what are more commonly referred
to as “labour
brokers”.
The amendments further
regulate the employment of persons by a TES in a way that seeks to
balance important constitutional rights.
The main thrust of the
amendments is to restrict the employment of more vulnerable, lower-
paid workers by a TES to situations
of genuine and relevant
“temporary work”, and to introduce various further
measures to protect workers employed in
this way
.’
[39]
The measures introduced to protect the vulnerable employees referred
to in the memorandum includes further provisions of s198A.
Section
198A(4) protects the employee deemed the employee of the client
against termination of his or her services by either the
TES or the
client to avoid the operation of subsection (3)(b) or the services
were terminated because the employee exercised a
right in terms of
the LRA by declaring such termination a dismissal. Subsection (5)
further protects the employee against unfair
discrimination by the
client by treating him or her on the whole, less favourably than an
employee of the client, performing the
same or similar work. The
deemed employer would be required to justify the differentiation in
treatment if that takes place.
[40]
The protection against unfair dismissal and unfair discrimination in
the context of s198A of the LRA should not be interpreted
to support
the contention that the deemed employees are employed by both the TES
and client. The protection is a measure to ensure
that these
employees are not treated differently from the employees employed
directly by the client. The purpose of these protections
in the
context of s198A is to ensure that the deemed employees are fully
integrated into the enterprise as employees of the client.
The
protection provided for takes into account the fact that the
contractual relationship between the client and the placed worker
does not come about through a negotiated agreement or through the
normal recruitment processes of the client. The employment
relationship
is created by a statutory deeming clause. Hence the
placed workers become employed by the client for an indefinite period
and on
the same terms and condition to the employees of the client
performing the same or similar work. The dual or parallel employer
interpretation is therefore not consonant with the context of s198A
and the purpose of the amendments.
[41]
The fact that in terms of s198(4A) the deemed employee may institute
proceedings against either the TES or the client or both,
or that in
terms of the BCEA the labour inspector may secure and enforce
compliance against the TES or client as if it were the
employer or
both, and that any order or award made against a TES or client in
terms of the subsection may be enforced against either,
is a measure
to reinforce protection of lower-paid workers and to restrict the
TESs to employing employees only for work of a temporary
work as
defined in s198A of the LRA. The joint and several liability
provisions have the potential to discourage the TESs from
being
further involved in the administrative arrangements regarding
employees placed with a client for a period in excess of three
months.
[42]
The sole employer interpretation does not, in my view, ban the TESs.
It however, regulates the TESs by restricting the TESs
to genuine
temporary employment arrangements in line with the purpose of the
amendments to the LRA. The TES remains the employer
of the placed
employee until the employee is deemed the employee of the client. The
TES will be responsible for its statutory obligations
regarding the
placed workers for as long as the deeming provision has not kicked
in. This interpretation reconciles the perceived
conflict between
s198(2) and 198A(3)(b) referred to in s198(4A) of the LRA.
[43]
It is correct to observe that there is no provision in the LRA
Amendment Act of 2014 to the effect that the contract of employment
is transferred from the TES to the client as is the case in instances
of s197 transfers. There is also no provision to the effect
that the
client steps into the shoes of the TES after the three-month period.
Provisions to this effect would have contributed
to the
interpretation that the purpose of the amendment was to have a sole
employer relationship on the expiration of the three-month
period.
However, there is also no provision in the amendments to the LRA that
the TES and the client become joint employers on
the expiration of
the three-month period. Neither do the amendments stipulate that the
client is added as an employer. The purpose
of the deeming provision
is not to transfer the contract of employment between the TES and the
placed worker to the client, but
to create a statutory employment
relationship between the client and the placed worker. Bearing in
mind that the purpose of the
amendment was to have the temporary
employment service restricted to one of “true temporary
service” as defined in
s198A of the LRA, the intention must
have been to upgrade the temporary service to the standard employment
and free the vulnerable
worker from atypical employment by the TES.
It would make no sense to retain the TES in the employment equation
for an indefinite
period if the client has assumed all the
responsibilities that the TES had before the expiration of the
three-month period. The
TES would be the employer only in theory and
an unwarranted “middle-man” adding no value to the
employment relationship.
[44]
The TES may continue, for example to be the party paying the salary
of the deemed employee for several reasons. Should the
TES fail to
pay the salary in compliance with the existing practice, the client’s
employee retains the right to institute
proceedings against either
the TES or the client or both in terms of s198(4A(a) of the LRA.
This, however, does not elevate the
TES to being an employer.
Similarly, should the TES cease to pay the salary of the employee of
the client, the joint liability
burden will also cease.
[45]
It is important to appreciate that the employment relationship
between the placed worker and the client arises by operation
of law,
independent of the terms of any contract between the placed worker
and the TES. The dismissal of the worker by the TES
has no bearing on
the employment relationship created by operation of law between the
placed worker and the client.
[46]
The plain language of s198A(3)(b) of the LRA, interpreted in context
unambiguously supports the sole employer interpretation
and is in
line with the purpose of the amendment, the primary object of the LRA
and protects the rights of placed workers. In light
of the view I
take of this matter, it is not necessary to consider the evidence
submitted by the
Amicus Curiae
. The evidence relates to the
disputes between labour brokers and placed workers as well as the
arbitration awards in resolving
some of the disputes. The said
evidence was not placed before commissioner and the court
a quo
and does not, with respect, contribute to the proper interpretation
of s198A(3)(b) of the LRA.
[47]
In conclusion, the Labour Court misdirected itself in its
interpretation of s198 A(3)(b) of the LRA. On both tests the award
of
the commissioner is not susceptible to review. The outcome is
reasonable and is a correct one. The commissioner likened the
adoption scenario to s 198 A(3)(b). The comparison is an incorrect
one. As it was submitted on behalf of Assign, s 242 of the Children’s
Act expressly provides that an adoption order serves to terminate all
parental responsibilities and rights of the natural parents
and
confer them on the adoptive parents. This is, in my view, a process
related error in the reasoning by the commissioner which
is
immaterial and does not have a bearing on the outcome of the award.
[48]
The appeal should therefore succeed. This matter raised an important
question to be decided by this Court and involved the
rights of
workers guaranteed by the Constitution and the LRA. It is in my view
in accordance with the requirements of the law and
fairness that each
party carry its costs.
[48]
In the result, it is ordered as follow:
(a)
The appeal succeeds and the order of the Labour Court is set aside
and replaced with the
following:
“
The
Review application is dismissed.”
___________
Tlaletsi
DJP
Waglay
JP and Phatshoane AJA concur in the judgment of Tlaletsi DJP
APPEARANCES:
FOR
THE AMICUS:
Adv S Harvey
Instructed
by Lawyers for Human Rights
FOR
THE APPELLANT:
Adv J Van Der Riet SC with Adv H Barnes
Instructed
by Ruth and Edmonds Attorneys
FOR
THE FIRST AND SECOND
RESPONDENTS:
Adv A Myburgh SC with Adv G Fourie and Adv R Itzkin
Instructed
by Kirchmann Inc
[1]
Labour
Relations Amendment Act 6 of 2014- Sections 37 and 38.
[2]
S 198D(1)
provides that any dispute arising from the interpretation or
application of sections 198A, 198B, and 198C may be referred
to the
Commission or Bargaining Council with jurisdiction for
conciliation and if not resolved, to arbitration
[3]
Mr van der
Riet relied on many of the arguments advanced by Paul Benjamin in
his article: “Restructuring triangular employment:
the
interpretation of section 198A of the Labour Relations Act (2016) 37
ILJ 28. He mentioned that the author was the advisor
to the
Department of Labour in the drafting process that led to the
amendment of section 198 and the insertion of sections 198A-D
of the
LRA in 2014. What matters the most though for us to interpret is the
final text passed by the legislature. The article
provides a useful
analysis of the judgment of the Labour Court which is the subject of
this appeal.
[4]
Natal
Joint Pension Fund v Endumeni Municipality
2012 (4) SA
593 (SCA).
[5]
At para
18.
[6]
Herholdt
v Nedbank Ltd (COSATU as amicus curiae)
[2013] 11 BLLR 1074
(SCA) at para 25;
Democratic
Nursing Organisation of South Africa obo Du Toit and Another v
Western Cape Department of Health and Others
(2016) 37 ILJ 1819 (LAC) at para 21-22;
MacDonald’s
Transport Upington (Pty) Ltd v Association of Mineworkers and
Construction Union and Others
(2016) 37 ILJ 2593(LAC) at para 30.