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[2015] ZALCJHB 283
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Assign Services (Pty) Ltd v CCMA and Others (JR1230/15) [2015] ZALCJHB 283; [2015] 11 BLLR 1160 (LC); (2015) 36 ILJ 2853 (LC) (8 September 2015)
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: JR1230/15
DATE: 08 SEPTEMBER 2015
Reportable
In the matter between:
ASSIGN SERVICES (PTY)
LTD
.............................................................................................
Applicant
And
CCMA
............................................................................................................................
First
Respondent
COMMISSIONER A.C. OSMAN
N.O
..................................................................
Second
Respondent
NUMSA
........................................................................................................................
Third
Respondent
KROST SHELVING & RACKING (PTY)
LTD
....................................................
Fourth
Respondent
Heard: 3 September 2015
Delivered: 8 September 2015
Summary: The relationship created by
the amendments to the LRA forcing labour brokers both operate subject
to the provisions of
the Act. The broker (TES) must comply with the
Act if it takes any action regulated by the Act. The client must do
so equally.
The decision of the CCMA, which
concludes otherwise, is reviewed and set aside.
JUDGMENT
BRASSEY AJ:
Introduction
[1] In a stated case referred to it,
the first respondent (the CCMA) was asked to pronounce on the proper
construction of statutory
innovations governing the relationship
between a labour broker (a Temporary Employment Services (TES) as it
is technically termed),
the workers it engages and the client with
whom they are placed. Pivotal to the innovations, which were
introduced by ss 37 and
38 the Labour Relations Amendment Act 6 of
2014 and are located in ss 198 and 198A-D of the main Act (the LRA),
is a deeming provision
that, speaking broadly, makes a worker an
employee of the client three months after placement. The issue that
arises is whether
the TES continues to have a relationship with the
worker and, if so, whether the relationship remains one of
employment. The controversy
it has engendered is, I am told,
profound, and the interests at stake doubtlessly run deep. This
litigation, which is expected
to go well beyond this Court, is
designed to lay the dispute to rest but whether the means invoked are
appropriate to the end is
by no means obvious (as to this, see
below).
[2] In the stated case, the stance
adopted by the protagonist, a TES called Assign, is that ‘the
placed workers remain employees
of Assign for all purposes, and are
deemed to also be employees of Krost [the firm with which they are
placed], for the purposes
of the Act.’ The response by NUMSA,
the antagonist in the fray, is that the placed workers are deemed,
for the purposes of
the LRA, to be employees only of Krost. Krost,
which is joined in the proceedings, takes part in the fray only to
assert that
it wants the issue to be resolved so it may know where it
stands.
[3] NUMSA says in the stated case that
its position can be characterized by the phrase ‘sole
employment’. In fact, however,
this is a very misleading way of
describing its stance. In its heads of argument the union conceded
that the contractual relationship
between worker and TES remains in
force and, when pressed, it accepted that there is nothing in the
innovations that deprives them
of rights and obligations embodied in
their contract. Since the contractual bond is indubitably one of
employment, its continuance
must mean that, following the placement,
two employment relationships are discernible that operate in tandem.
[4] In an effort to point up the
contrast, Assign described its own position as one of ‘dual
employment’, but this is,
I think, every bit as misleading. The
phrase suggests that the two sets of relationships – i.e. the
ones the TES and the
client separately have with the worker –
are co-extensive in content when this is not in fact what the company
contends.
Assign makes no argument that the rights and obligations of
the TES under its contract with the worker vest equally in the client
following the placement. It simply contends that, once a placement
occurs, the client becomes invested with the rights and obligations
that, by operation of the LRA, cleave to an employer and, since the
TES has in no sense been deprived of its status as employer,
the two
relationships now operate in parallel. In the words of Assign’s
counsel, ‘where placed workers are deemed to
be the employees
of “the client”, their contracts of employment with the
TES, nevertheless, remain in force.’
[5] Common to the contending positions
is an acceptance that, since a placement under the current regime has
no bearing on the contract
between the TES and the worker, each party
to the contract continues to be bound by the obligations and enjoy
the rights with which,
subject to the overriding statutory regime,
they were vested upon entering the contract. Under neither position,
moreover, is
it suggested that the client, following a placement,
becomes privy to the TES contract or otherwise becomes invested with
the rights
and obligations that are contained in the TES contract.
The focus is solely on the statutory rights and obligations that
inform
the relationship governing an employer’s interaction
with an employee under the LRA. Assign contends that these rights and
obligation inhere equally in both the TES and the client, whereas
NUMSA contends that they inhere only in the client.
[6] To the casual observer, each party
seems by its stance to be favouring the interests of the other.
Workers and their union,
being the beneficiaries of the protections
created by the statutory regime, seem better served by having two
employers to call
to account. By a parity of reasoning, a TES seems
better favoured by a construction that serves to relieve them of the
burdens
the LRA imposes on employers in consequence of the placement.
What this thinking overlooks, however, is that the provisions
governing
employers are not monolithically burdensome, but are
coupled with powers and counterweighed by rights. By invoking qua
employer
these rights and exercising the powers, the TES can, so it
seems to believe, relieve the client of its comparable burdens. The
thinking seems to be that, as a member of the dual employer
structure, it can suspend or dismiss the placed employee and this
will
produce a concomitant suspension of dismissal of the employee
qua client. By these means it envisages that it can continue to
provide
a justification for the service that it offers the client and
so warrant the charge it levies in the conduct of its labour broking
business.
[7] Whether this would indeed be the
result of a finding in favour of the TES is highly debatable. If the
two relationships operate
in parallel, then an exercise by the TES of
its own powers and rights would, it seems more than likely, have an
effect only on
its bond with the placed worker. The bond between
worker and client, operating as it does on separate lines, would
remain unaffected.
This obstacle, I hazard, could only be overcome by
postulating a single employment relationship over which the TES and
client have
several (not joint) control over the continuance of the
work, for only then could a decision by the TES have a legal bearing
on
the client’s status as employer. Such a relationship,
unitary in form but under bifurcated control is, it should by now be
clear, most certainly not what Assign contends for in these
proceedings
[8] Despite being so invited by me,
neither party elected to explain the rationale underlying the TES
position, so the remarks I
have just made deserve only the attention
that is typically given to speculation so rank. The hazards of such
judicial musings,
which are probably ever-present, become
particularly acute when the issues are framed in such abstract terms
and the terrain in
which they arise is so politically charged. I
would, I am sure, be better advised to concentrate on the issues as
the parties
have chosen to frame them, for they provide, in the words
of Gerald Manley Hopkins, a ‘comfort [that] serves in a
whirlwind’.
They are what the parties have asked me to consider
and it is they, therefore, that should be the focus of my mind.
[9] For as long as it has been in
force, the current LRA has embodied provisions regulating Temporary
Employment Services, and they
are what have been supplemented by the
amendments. Section 198, the operative clause as now amended, begins
by placing it beyond
doubt that the TES, the employer of the placed
worker at common law, is equally the employer ‘for the purposes
of this Act’.
By reason of this clause, the TES becomes obliged
to observe the provisions of the Act and instruments deriving their
force from
it. The obligation is reinforced by a clause making the
client jointly and severally liable for breaches of the instruments
and
of the provisions contained in or in force under the Basic
Conditions of Employment Act (the BCEA). Finally, the TES is
expressly
enjoined to comply with these requirements, the employment
contract and the provisions of any other employment law and
mechanisms
are put in place for the enforcement of these duties.
[10] Section 198A, a section created by
the amendments, starts by defining a temporary service as work
provided by an employee earning
below a prescribed threshold for a
client over a period of less than three months, or as a replacement
for a temporary absentee
or in circumstances denoted by a designated
statutory instrument. Subsection (3), the one at the heart of this
dispute, then states
as follows:
‘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.’
[11] Above I have rehearsed the stances
of the parties and, in particular, the concessions they have made.
The first concession,
I repeat, is that the provision makes the
client the employer for the purposes of the Act and for no other
purpose; in particular,
the client is not drawn into the network of
rights and obligations created by the contract between TES and
worker. This concession
is uncontroversial and was correctly made.
The second is that the section does not serve to make the client the
employer for any
purpose other than the operation of the LRA. If this
is equally uncontroversial between the parties, their respective
concessions
are properly made. Nothing in this deeming provision can
be taken to invalidate the contract of employment between TES and
worker
or to derogate from its terms. They remain firmly in place. If
the TES has, as sometimes happens, undertaken to provide the placed
worker with training, it must provide the training; if, less
plausibly, the TES has contractually accepted that the worker need
not report for work before 9 am, he or she cannot be forced to arrive
at the client’s clock-in time of eight; if the worker
has
agreed to a covenant in restraint of trade, then the covenant must
(subject to the usual scrutiny for unlawfulness) be observed;
and so
on.
[12] So (and once again I repeat) the
only issue, on the stated case at any rate, is whether the TES
continues to be an employer
of the worker and, by reason of this
fact, is concurrently vested with the statutory rights/obligations
and powers/duties that
the Act generates. I see no reason why this
should not be so. There seems no reason, in principle or practice,
why the TES should
be relieved of its statutory rights and
obligations towards the worker because the client has acquired a
parallel set of such rights
and obligations. The worker, in
contracting with the TES, became entitled to the statutory
protections that automatically resulted
from his or her engagement
and there seem to be no public policy considerations, such as pertain
under the LRA’s transfer
of business provisions (s 197), why he
or she should be expected to sacrifice them on the fact that the TES
has found a placement
with a client, especially when (as is normally
so) the designation of the client is within the sole discretion of
the TES.
[13] Two practical examples suffice to
show how this construction might work in practice. They are
conjectural only, since they
have not been made the subject of
argument before me.
• Under the Act, a worker’s
engagement cannot be terminated in the absence of a fair procedure
and good substantive cause.
The client, obliged by s 198A(3)(b) to
treat the worker as engaged for an indefinite period, cannot bring
the services to an end
without heeding these requirements. The same
is true of the TES: obliged by the contract of employment to keep the
worker in its
service (albeit, no doubt, intermittently in a limbo in
which, when no work is done, no wage is paid), the TES cannot
terminate
the relationship without observing the self-same statutory
requirements.
• Under the Act, workers are
subject to a headcount in order to determine levels of union
representativeness for the purposes
of collective bargaining and
organizational rights. In the industry or area in which each employer
operates, the worker will be
counted once and his or her presence
will go to make up the numbers in each case. This double-counting no
doubt creates something
of an anomaly, but this seems to be an
inescapable consequence of the broad-brush way in which the new
provisions have been drafted.
[14] Much of the argument in the
proceedings was focussed on the meaning of the word ‘deemed’.
High authority
was cited – S v Rosenthal
1980 (1) SA 65
(A) at
75G-76A - for the proposition that, by using the word, the
legislature makes a circumstance notionally true that might
not, or
would not, actually be true. The effect of its use, we are told, is
either to substitute the deemed for the actual or to
augment the
actual with the deemed. Depending on the intent underlying the
provision, moreover, the substitution or augmentation
may be legally
irrefutable or just rebuttably presumptive. Intriguing as this
analysis is, I am not sure whether in this case it
does much more
than remind us to look at the deeming provision as a whole and place
it within the matrix, legal and social, in
which it was enacted. Here
the reminder is salutary, for we see from the provision itself that
the deeming clause is expressly
made to operate only for the purposes
of the Act. But if we feel driven to pigeon-hole the effect of the
word here, we can say
that it serves to create an augmentation, not a
substitution, and that it produces this result decisively and so
irrefutably.
[15] The construction I favour by my
finding seems to be consonant with the general architecture of the
new provisions. It explains
why the legislature has injected so much
energy into upgrading the joint and several liability provisions of
the pre-existing s
198. They continue to have important consequences
for the TES, and thus potentially the client, even after the
temporary service
has lapsed. It explains the singular language of s
198(4A)(b), which empowers the enforcement of the BCEA ‘against
the temporary
employment service or the client as if it were the
employer’ – the provision is necessitated by the fact
that the deeming
provision: since the deeming provision with which we
are concerned operates only for the purposes of the LRA, the BCEA
would not
be enforceable against the client qua ‘employer’
in the absence of this clause. Finally, it explains why s 198(4E)
subjects the contract between the TES and the client to scrutiny to
determine whether it impermissibly generates an obligation
to flout
the statutory and contractual protections that clothe the worker.
[16] The scope and exigibility of these
protections will, I expect, give rise to considerable litigation in
the future. I take
but one example. Suppose the contracts concluded
by the TES with the worker on the one hand and the client on the
other embody
a clause obliging the worker to stop working for the
client if the TES so directs. If the clause were invoked to
circumvent the
client‘s duty to observe the fair dismissal
requirements of the Act, the transfer would certainly constitute a
dismissal
since s 198A(4) deems a termination by a TES of an
employee’s service with the client to be a dismissal by the
client if
its object is to avoid the operation of the deeming
provision (ie subs 3(b), the one at the heart of this dispute). Would
the dismissal
be unfair, however, or could the client plead that it
had no alternative but to submit to the contractually-sanctioned
decision
to terminate taken by the TES? The matter, one conceives,
might well turn on whether the client asked for the worker to be
withdrawn
from its workplace. It would, after all, be hard to condemn
the client for unfair conduct were the decision made unilaterally by
the TES in order to promote its own interests – say, by
transferring the worker to a more lucrative placement.
[17] Beneath these examples is a deeper
conundrum. A contract of employment is one in which one person (the
employee) subjects his
or her productive capacity to the behests of
another (the employer). To exploit this capacity, the employer must
instruct the employee
on the work to be performed and, if untenable
conflicts are to be avoided, the source of this control, whether
individual or collective,
must always be unitary. ‘No man can
serve two masters’, says the Bible, and with this the law
concurs. When a TES concludes
a contract of employment, it becomes
the source of control and, as we have discovered, it retains this
power notwithstanding the
enactment of the new statutory provisions.
If, as typically happens, the client sets the tasks that the worker
must perform, it
does so not in its own right but as a person deputed
to exercise, as agent or representative, a power that originally
vested, and
ultimately continues to vest, in the TES. If the TES,
whether at the request of the client or otherwise, terminates its
relationship
of employment with the worker, the source of the power
of control is gone and the objects of the employment relationship
become
impossible to achieve. Unless the client concludes a fresh
contract with the worker, its relationship must come to an end by
operation
of the principles of supervening impossibility of
performance or, better put, frustration of substratum tacitly agreed
to be necessary
for the continuance of the relationship. The
situation is equivalent in legal terms to the one that arises when an
employer dies
or is placed in liquidation. Whether this result
entails an exercise of managerial discretion that must be subject to
the imperatives
of the fair dismissal regime is highly debatable, but
the result is the same: the worker must go. If the employee has an
unfair
dismissal claim, it is against the TES alone.
[18] If this is true, one wonders
whether the drafters of the amendments have realized their ambitions.
Time and further litigation
will tell. In this case to consider
these matters is to succumb, once more, to the meretricious lure of
gratuitous speculation
and this is culpably to travel beyond my
judicial remit.
[19] The fault, it must be said, is not
all mine. In a case such as this, framed as it is to consider a point
of legal construction,
speculation is all but inevitable, for it is
by such means that the lawyer generates hypothetical scenarios by
which to test interpretative
conclusions provisionally entertained.
That the court is confronted by the siren-song of unwise speculation
says much about the
legitimacy of this case. The general rule is that
a court will decline to entertain a suit that entails no concrete
dispute between
the parties. It is of little or no moment that one or
both sides have a keen interest in the determination and would like
to regulate
their dealings by reference to it. The principle, which
is deeply embedded in our jurisprudence, was expressed thus by Innes
CJ
in Geldenhuys and Neethling v Beuthin
1918 AD 426:
'After all, Courts of Law exist for the
settlement of concrete controversies and actual infringements of
rights, not to pronounce
upon abstract questions, or to advise upon
differing contentions, however important. And I think we shall do
well to adhere to
the principle laid down by a long line of South
African decisions, namely that a declaratory order cannot be claimed
merely because
the rights of the claimant have been disputed, but
that such a claim must be founded upon an actual infringement.'
[20] The passage was cited with
approval as recently as this year: see Zhongji Development
Construction Engineering Co Ltd v Kamoto
Copper Co SARL
2015 (1) SA
345
(SCA) at para 38, in which the court declined to construe an
agreement in order to declare a dispute arbitrable.
[21] The rule is a salutary one, not
just because it is not the function of a court to dispense legal
advice, but also because making
decisions on abstract questions of
law is a task of considerable complexity that is pregnant with the
potential for error. If this
issue was being entertained by this
court sitting as a court of first instance, its proper response
would, I believe, have been
to decline to consider it. The CCMA
commissioner should, in my view, have responded in the same way.
State time and money should
not have been expended in a process that
really entails the giving of legal advice. Be this as it may, I
refrain from making this
a basis for reviewing the commissioner’s
award, however, since the point, being raised only by me, is not one
he has been
invited to deal with. This is a deficiency that, I
appreciate, might have been cured by referring the question back to
him for
consideration, but I have been discouraged from taking this
step and countenancing the concomitant delay by the fact that this
matter comes before me as a matter of urgency.
[22] In the referral, the commissioner
held that Krost, the client, was deemed to be the ‘sole
employer’ of the placed
employees. In coming to this conclusion
I have found that he erred. The error is one of law but, even so, it
is by no means axiomatic
that I can set aside his decision on review.
Until 1992, errors of law were said to provide a basis for common law
review only
if they went to jurisdiction, but in Hira and another v
Booysen and another
1992 (4) SA 69
(A) the court enlarged the test.
Included in the criteria for review are the following elements:
• ‘Where the complaint is
that the tribunal has committed a material error of law, then the
reviewability of the decision
will depend, basically, upon whether or
not the Legislature intended the tribunal to have exclusive authority
to decide the question
of law concerned. This is a matter of
construction of the statute conferring the power of decision.
• ‘Where the tribunal
exercises powers or functions of a purely judicial nature, as for
example where it is merely required
to decide whether or not a
person's conduct falls within a defined and objectively ascertainable
statutory criterion, then the
Court will be slow to conclude that the
tribunal is intended to have exclusive jurisdiction to decide all
questions, including
the meaning to be attached to the statutory
criterion, and that a misinterpretation of the statutory criterion
will not render
the decision assailable by way of common-law review.
In a particular case it may appear that the tribunal was intended to
have
such exclusive jurisdiction, but then the legislative intent
must be clear.’
[23] The point of law upon which the
commissioner pronounced in this case can scarcely be regarded as one
entrusted exclusively
to his discretion. On the contrary, it is far
from obvious that he had any jurisdiction to decide a question that,
if judicially
cognizable at all, should properly have been placed
before a superior court, the Labour Court specifically, for a
decision at first
instance. I appreciate that s 198D(1) makes
provision for the determination by the arbitral bodies of disputes
engendered by the
new provisions, but, so far as is here relevant,
they must be disputes ‘arising out of’ their
interpretation, not ones
concerning the interpretation per se. But
this point is not taken by either party and we are where we are. I
must consider whether,
despite the strenuous submissions to the
contrary by NUMSA’s counsel, a proper basis for review is laid
by the error of law
that I have discerned in the commissioner’s
award. In consider that it has, for the decision by the commissioner
falls squarely
within the framework of legitimate review articulated
in the passages from Hira cited above. These principles find echo in
the
judgment of Murphy JA in Head of the Department of Education v
Mofokeng & others
[2015] 1 BLLR 50
(LAC), in which he states that
‘if but for an error or irregularity a different outcome would
have resulted, it will ex hypothesi
be material to the determination
of the dispute.’
[24] In making this finding, I must
emphasize, I have not overlooked the fact that, under s 145 of the
LRA, the grounds of review
are narrower than the comprehensive powers
of review that prevail at common law or under the Promotion of
Administrative Justice
Act 3 of 2000. On this issue I take the
decision in Irvin & Johnson v CCMA & others
[2006] 7 BLLR 613
(LAC) at para 49 to be controlling.
[25] One further issue engages my
attention. It is one that I can, indeed must, raise mero motu. I can
find nothing on the papers
to suggest that the workers placed with
Krost by Assign were invited to join in the proceedings. Given the
tenor of the commissioner’s
award, which focuses specifically
on them, they should have been given the opportunity to be heard
since their interests were indubitably
implicated in the award. As I
propose by my order to do no more than restore the status quo ante,
no harm has resulted, but if
the parties elect to take this matter
beyond further, they will certainly want to consider the point I have
made here.
Conclusion
[26] In the Notice of Motion, Assign
prays for an order that, upon a proper construction of the deeming
provision, placed employees
are ‘employed dually’ for the
purposes of the LRA. For reasons I have already given, the expression
is a fertile source
of confusion and, even were I willing to make an
order on an issue framed in such abstract terms, I should want it to
be far more
precise than this. In my view, therefore, it is highly
undesirable to make an order substituting the commissioner’s
award
with a substantive order of my own.
[27] The parties are agreed that no
order for costs should be made in these proceedings.
[28] I make the following order:
1. The arbitration award issued by the
second respondent on 29 June 2015 under case number ECEL 1652-15 is
reviewed and set aside.
2. There will be no order as to costs.
Brassey AJ
Acting Judge of the Labour Court of
South Africa
Appearances
For the Applicant: Adv. A Myburgh
SC, Adv. G Fourie, Adv. R Itzkin
Instructed by: Kirchmanns Inc.
For the Third Respondent: Adv. JG
Van der Riet SC
Instructed by: Ruth Edmonds
Attorneys