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[2018] ZACC 22
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Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and Others (CCT194/17) [2018] ZACC 22; [2018] 9 BLLR 837 (CC); (2018) 39 ILJ 1911 (CC); 2018 (5) SA 323 (CC); 2018 (11) BCLR 1309 (CC) (26 July 2018)
Links to summary
Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
194/17
In the matter
between:
ASSIGN SERVICES
(PTY)
LIMITED
Applicant
and
NATIONAL UNION OF
METALWORKERS OF
SOUTH
AFRICA
First
Respondent
COMMISSION FOR
CONCILIATION,
MEDIATION AND
ARBITRATION
Second
Respondent
ABDOOL CARRIM
OSMAN
N.O.
Third
Respondent
KROST SHELVING &
RACKING (PTY) LIMITED
Fourth
Respondent
and
CASUAL WORKERS
ADVICE
OFFICE
Amicus
Curiae
Neutral citation:
Assign Services (Pty) Limited v National Union of Metalworkers of
South Africa and Others
[2018] ZACC 22
Coram:
Zondo
DCJ, Cachalia AJ, Dlodlo AJ, Froneman J, Goliath AJ, Jafta J,
Khampepe J, Madlanga J, Petse AJ and Theron J
Judgments:
Dlodlo AJ (majority): [1] to [85]
Cachalia AJ
(dissenting): [86] to [109]
Heard on:
22
February 2018
Decided on:
26 July 2018
Summary:
Labour
Relations Act 66 of 1995
—
section 198A(3)(b)
— temporary
employment services — placed workers deemed employees of the
client — section supports the sole employer
interpretation
ORDER
On appeal from the
Labour Appeal Court (hearing an appeal from the Labour Court):
1. Leave to appeal
is granted.
2. The appeal is
dismissed with costs.
JUDGMENT
DLODLO AJ (Zondo
DCJ, Froneman J, Goliath AJ, Jafta J, Khampepe J, Madlanga J,
Petse AJ and Theron J concurring):
Introduction
[1]
This application for leave to appeal against a judgment of the
Labour Appeal Court enjoins this Court to finally determine
the correct interpretation of section 198A(3)(b) of the Labour
Relations Act
[1]
(LRA). Section 198A(3)(b) provides that an employee who
earns less than the stipulated threshold and is contracted through
a
temporary employment service (TES) to a client for more than
three months is deemed to be employed by that client.
[2]
The issue before us is what happens to the employment relationship
under the LRA between the placed employee and the TES
once this
deeming provision kicks in. In particular, does
section 198A(3)(b) give rise to a dual employment relationship
where a placed employee is deemed to be employed by both the TES and
the client? Or does it create a sole employment relationship
between the employee and the client for the purposes of the LRA?
[2]
Statistics South Africa reports that the unemployment rate is
26.7% and that figure excludes more than two million discouraged
work-seekers.
[3]
Behind this number lies the legacy of systematic deprivation of
opportunities for black South Africans and within it
is the
undeniable skew of racial inequality. This dire state of
affairs is coupled with a history of very poor working conditions
and
pay for black employees.
[3]
The Legislature has stopped short of banning labour broking
but it has enacted several amendments to the LRA to give security to
marginalised workers and to regulate the industry. Section 198A
is one such amendment. The dispute we are called upon
to
resolve is which interpretation of section 198A(3)(b) is correct.
Parties
[4]
The applicant in this case, Assign Services (Pty) Limited
(Assign Services/Assign), is a registered TES as defined in
section 198
of the LRA and also duly registered in accordance
with South African company laws. Assign recruits, places,
manages and pays
employees who are placed with client companies
including the fourth respondent.
[5]
The first respondent is the National Union of Metalworkers of
South Africa (NUMSA), which is a registered trade union. NUMSA
opposes Assign Services’ application for leave to appeal the
Labour Appeal Court judgment.
[6]
The second respondent is the Commission for Conciliation,
Mediation and Arbitration (CCMA), which was approached by the
applicant
and first respondent to provide an interpretation to
section 198A(3)(b) of the LRA. The CCMA is a statutory body
established
in terms of the LRA.
[7]
The third respondent is Commissioner Abdool Carrim Osman, the
commissioner appointed by the CCMA to determine the dispute that gave
rise to the application.
[8]
The fourth respondent is Krost Shelving and Racking (Pty)
Limited (Krost), a company offering storage solutions, duly
registered
in accordance with South African company laws. Krost
is the client with whom Assign Services placed its workers in terms
of section 198 of the LRA. It has not participated in the
proceedings and it gave notice it will abide by the interpretation
of
the CCMA and the decisions of subsequent courts.
[9]
The Casual Workers Advice Office (CWAO) has been admitted as
amicus curiae. CWAO is a non-profit, independent advice
office that focuses on the rights of employees undertaking precarious
work. It professes knowledge of the lived experiences
of
employees placed by TESs with clients and asserts a substantial
interest in these proceedings on this basis.
Background
[10]
The TES or “labour broker” was legislatively
determined to be the true employer of placed employees through a 1983
amendment
[4]
to the old Labour Relations Act of 1956.
[5]
The legislature at the time created a legal fiction by which the
placed employees were “deemed” to be employed
by the
broker. This provision, though with different construction, was
carried through to section 198(2) of the 1995
LRA. Then,
in 2014, the LRA was amended to introduce several protections for
employees in precarious employment.
[6]
These included section 198A, which came into operation on 1
January 2015.
[11]
Section 198A regulates “temporary service”
employment, which is limited to a period not exceeding three
months.
[7]
Section 198A(3)(b) explicitly provides another “deeming
provision”. It states that an employee not performing
a
temporary service for a client is deemed to be an indefinitely
employed employee of that client and the client is deemed to be
the
employer.
[12]
Krost employs 40 salaried employees and approximately 90 wage
staff. Assign Services supplies labour to Krost in the
region of 22 to 40 workers at any one time, depending on the projects
awarded to Krost, to supplement Krost’s salaried employees.
[13]
On 1 April 2015, Assign Services placed 22 workers with
Krost. The workers rendered services at Krost on a full time
basis
for a period in excess of three consecutive months. This
continued employment, post the three-month period of a temporary
employment service, triggered section 198A(3)(b) of the LRA.
Several of the placed employees are members of NUMSA.
[14]
A dispute arose between Assign Services, Krost and NUMSA
regarding the interpretation and effect of section 198A(3)(b).
Assign
was of the view that the consequences of the deeming provision
were that the placed workers remained their employees for all
purposes
but were also deemed to be Krost’s employees for
purposes of the LRA. Assign termed this the “dual
employer”
interpretation of section 198A(3)(b).
NUMSA disagreed. Its view was that Krost became the only
employer of the
placed workers when section 198A(3)(b) was
triggered. NUMSA termed this the “sole employer”
interpretation.
[15]
On 23 April 2015 Assign Services referred the dispute as a
stated case for arbitration to the CCMA in terms of section 198D of
the
LRA.
[8]
Litigation
history
CCMA
[16]
The CCMA heard the dispute on 22 May 2015. Much of the
argument centred on the meaning of the word “deemed” and
whether it supported a sole or dual employer interpretation. I
will come back to this later when I consider the correct textual
interpretation of section 198A(3)(b).
[17]
Assign argued that there is nothing in sections 198 and 198A
that reflects a decision by the Legislature to impose a ban on TESs,
whether as a consequence of the deeming provision taking effect or
not. They asserted that, while it is clear that for the
first
three months the TES is the only employer, once the three-month
period lapses the deeming provision does not terminate the
commercial
agreement between the client and the TES. It also does not
terminate the contractual employment relationship between
the TES and
the placed workers. Assign asserted that the dual employer
interpretation provides greater protection for placed
workers.
[18]
NUMSA argued that a dual employer interpretation creates
confusion and uncertainty, and prejudices vulnerable employees.
[19]
The CCMA Commissioner who presided over the matter issued an
award to the effect that the triggering of section 198A(3)(b)
resulted
in the client becoming the sole employer for the purposes of
the LRA. In reaching his decision, the Commissioner attempted
to interpret section 198A(3)(b) to give effect to its primary
objects.
[20]
The Commissioner was of the view that the dual employer
interpretation would bring about a number of problems, such as
confusion
relating to the disciplining of placed workers and which of
the parties’ disciplinary codes would be applicable.
There
could also be difficulties regarding the re-instatement of
placed workers under the dual employer interpretation that would lead
to greater uncertainty and confusion for the vulnerable employees to
whom the LRA aims to afford greater protection.
Labour Court
[21]
Assign sought to have the CCMA arbitration award reviewed and
set aside, contending that the Commissioner committed material errors
of law in his interpretation. It contended that section 198A
should be read together with section 198(2), which provides
that
“a person whose services have been procured for or provided to
a client by a temporary service is the employee of that
temporary
employment service, and the temporary employment service is that
person’s employer” for the purposes of the
LRA. Assign
views this as the controlling provision which persists despite the
legal fiction created by section 198A.
[22]
NUMSA asserted that both sections 198(2) and 198A create legal
fictions and, once section 198A(3)(b) is triggered, section 198(2)
no
longer has any application to the affected employees. The two
provisions are mutually exclusive.
[23]
The Labour Court (per Brassey AJ) held that the CCMA
Commissioner had committed a material error of law.
[9]
It considered the contract of employment between the TES and the
employee to be the “source of control” in the
employment
relationship. The TES therefore retains control despite any new
statutory relationship between the employee and
the client.
[10]
The client is only an employer for the purposes of the LRA, while the
common law contract between the TES and the employee
remains “firmly
in place”.
[11]
The Labour Court held that the rights of employees are therefore best
protected by the dual employer interpretation.
It reviewed and
set aside the Commissioner’s decision.
[24]
NUMSA applied for leave to appeal the judgment of the Labour
Court to the Labour Appeal Court. It refused leave to
appeal.
Labour Appeal Court
[25]
The Labour Appeal Court granted NUMSA leave to appeal directly
to it. On 2 March 2016, NUMSA brought its notice to
appeal against the Labour Court’s judgment. The CWAO and
Confederation of Associations in the Private Employment Sector
(CAPES) were admitted as amici curiae.
[26]
CWAO supported NUMSA’s submissions and contended that
the dual employer interpretation is not supported by the plain
language
of section 198A(3)(b) read in context. The
relationship between the placed employees and the client companies
came about
by operation of law and independently of any common law
contract with the TES.
[12]
The sole employer interpretation gives effect to the purpose of the
amendments and to the constitutional rights of workers
in section 23
of the Constitution.
[27]
CAPES supported Assign’s submissions and contended that
the LRA should also be read together and reconciled with the Basic
Conditions of Employment Act
[13]
(BCEA), in terms of which the TES is and remains the employer of all
placed employees.
[14]
The only way in which the LRA and BCEA could be reconciled
post deeming is through the dual employer interpretation.
[28]
The Labour Appeal Court held that the sole employer
interpretation best protected the rights of placed employees, and
promoted the
purpose and objects of the LRA and the 2014 Amendments.
It considered the definition of “temporary service” in
section 198A(1) and held that only persons performing a truly
temporary service should be employed by a TES.
[15]
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 section 198A(3)(b).
In this Court
Assign’s submissions
[29]
Assign Services applied for leave to appeal to this Court.
It contended that the Labour Appeal Court decision was
“tantamount
to a ban on labour broking” and noted the
serious implications of this for the whole South African labour
market. Assign
contended that the Labour Appeal Court did not
properly consider the language of the deeming provision and focused
on the purpose
of the provision to the exclusion of other necessary
considerations. Because the word “deemed” is
inherently
ambiguous, it argued, it must be considered in its
statutory context. The Labour Appeal Court failed to
properly consider
section 198A(3)(b) in the context of the rest of
sections 198 and 198A.
[30]
First, the LRA still allows a TES to offer employment services
after the three month cut-off. Second, section 198(2) was
not amended with the insertion of section 198A. This means
that the TES must remain an employer for purposes of the
LRA.
Third, employees’ rights are no better protected by the sole
employer interpretation. They would in fact
lose the protection
of several provisions of the LRA, including section 198(4)
which mandates joint and several liability
for certain contraventions
by a TES “in respect of any of its employees” and
section 198(4A). Last, employees
would be vulnerable to abuse
by a TES if common law employment agreements continued to exist
between placed employees and a TES
unregulated by the LRA.
Meanwhile, a placed employee will be transferred to a new employer
without the placed employee’s
consent and “forced”
into new employment relationships on terms to which they have not
agreed. Assign contends
that the only plausible interpretation
is of a dual employment relationship.
NUMSA’s submissions
[31]
NUMSA persists in its submission that sections 198 and 198A
create two separate deeming provisions that cannot operate
simultaneously.
It submits that this interpretation does not
ban TESs. Rather, it regulates them in respect of only lower
paid placed employees
in employment for more than three months.
Placed employees earning above the BCEA threshold can continue to be
employed through
TESs without restraint. The deeming provision
only alters the contract between the placed worker and the TES; it
does not
affect the contract between the TES and the client.
The TES may continue to perform services relating to the employee to
the extent that they do not purport to employ them.
[32]
NUMSA disputes Assign’s characterisation of the
employment relationship between a TES and an employee. It
contends that
the TES does not ordinarily “employ” an
employee before it places them with its clients. The
contractual relationship
only becomes an employment relationship when
the employee is placed and remunerated. The TES becomes the
statutory employer
of the worker once they are placed.
[16]
The common law contract between the TES and the placed employee
usually contains the terms and conditions of employment of
the
employee once they are placed with a client. These are a single
set of terms and conditions of employment that will shift
with the
statutory responsibility when it moves from the TES to the client.
The conditions can only change in favour of the
employee to align
with other employees in similar positions.
[17]
[33]
The absurdities that Assign reads into sections 198A(4) and
(5) and 198(4A) stand to give additional protection to placed
employees
and apply only where a TES continues to provide some
service to a client outside of acting as an employer.
Amicus’ submissions
[34]
CWAO was admitted as amicus in this Court. Their
application details practical experience working with temporary
workers employed
through TESs. They note a number of
difficulties arising from a dual employment relationship that
prejudice placed employees.
[35]
First, a TES is empowered to continuously move a placed
worker, reduce their wages and change their job descriptions.
This
self-evidently manifests employment insecurity. Second,
placed workers cannot demand equal pay from client employers and are
financially discriminated against. Third, placed workers have
difficulty enforcing LRA claims against employers. An
employee
dismissed by a client will usually be retrenched by a TES because
there is no longer work for them. As a result,
the employee’s
claim against the client would be to the CCMA, but their claim
against the TES would have to be taken directly
to the Labour Court.
There would be different claims, different employers and
different fora arising from the same set of
facts. Fourth,
placed workers are unable to meaningfully participate in collective
bargaining. The terms of their employment
are agreed to between
the TES and the client before they are placed and they are usually
too vulnerable to raise grievances through
strikes. Even if the
strike is protected as against the client employer, it is unlikely to
be protected as against the TES.
[36]
CWAO agrees with NUMSA’s interpretation that the two
deeming provisions cannot operate simultaneously. They describe
the section 198A(3)(b) deeming provision as “reversing the
fiction” created in section 198(2) for low earners performing
ongoing work.
Jurisdiction
[37]
The LRA gives effect to the right to fair labour practices in
section 23 of the Constitution. Its interpretation is a
constitutional issue.
[18]
This Court therefore has jurisdiction to hear the matter in terms of
section 167(3)(b)(i) of the Constitution, as the matter
concerns the
interpretation of the LRA.
Leave to appeal
[38]
Further, the point we are asked to consider is the correct
interpretation of section 198A(3)(b)(i) of the LRA. This
has
profound implications for the ability of TESs to provide a
service offering post-deeming. Assign may well be right that it
is tantamount to a ban on labour broking after the lapse of the
three-month period. A significant portion of the country’s
workforce is employed through TESs. In its papers before the
Labour Appeal Court, CAPES stated that its members
place
more than 700 000 workers on a daily basis. The
controversy underlying this application, therefore, has serious
implications for the South African labour market and the
continued role of TESs therein, the rights of TESs, the rights of
their clients and the rights of the hundreds of thousands of
employees engaged through TESs on a daily basis.
[19]
[39]
Assign bears reasonable prospects of success. The
correct interpretation of section 198A(3)(b) is widely disputed,
as
attested to by the conflicting judgments of the Labour Court and
the Labour Appeal Court. It is in the interests of justice
for
leave to appeal to be granted.
[40]
CWAO filed their written submissions two days late due to
delays in receiving this Court’s directions. The delay
was
not excessive and no prejudice resulted. Condonation is
therefore granted.
The appeal
Interpreting section 198A of the LRA
[41]
It is trite that legislation is to be interpreted textually,
contextually and purposively. In
NEHAWU
, this Court
held:
“The declared purpose of the LRA ‘is to advance economic
development, social justice, labour peace and the democratisation
of
the workplace’. This is to be achieved by fulfilling its
primary objects, which includes giving effect to section 23
of
the Constitution. It lays down the parameters of its
interpretation by enjoining those responsible for its application
to
interpret it in compliance with the Constitution and South Africa’s
international obligations. The LRA must therefore
be
purposively construed in order to give effect to the
Constitution.”
[20]
(Footnotes omitted.)
[42]
The purpose of section 198A must be contextualised within the
right to fair labour practices in section 23 of the Constitution
[21]
and the purpose of the LRA as a whole. This is set out at
section 1 of the LRA as follows:
“The purpose of this Act is to advance economic development,
social justice, labour peace and democratisation of the workplace
by
fulfilling the primary objects of this Act, which are—
(a)
to give effect to and regulate the fundamental rights conferred by
section 23 of the Constitution of the Republic of South Africa,
1996;
(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.”
[43]
Every provision of the LRA must therefore be read to create
clear and precise parameters through which both employers and
employees
can meaningfully participate in labour relations.
Section 198A(3)(b), on the face of it, lacks this clarity.
[22]
[44]
Section 198(2) reads: “
[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”. It is immaterial,
for the
purposes of section 198(2), whether an employee and TES enter into an
employment contract. Once the employee provides
a service to
the TES’s client, they automatically become the TES’s
employee.
[45]
Under both the 1956 LRA and the 1995 LRA (before the 2014
Amendments), the TES was expressly designated as employer for
purposes
of the LRA.
[23]
Section 198A(3)(b)
applies a different regime to employees who have provided a service
for more than three months if they fall
below a specified earning
threshold. But section 198A(3)(b) does not proclaim that
an employee “is” the
client’s employee.
Rather, the employee is “deemed to be” the client’s
employee. This disjunction
does not in itself mean that “deemed
to be” is lesser than “is” and
both
sections are, in their true senses, “deeming provisions”.
[46]
Our labour legislation historically tended towards express
allocations of employment law obligations to a single employer in
both
the 1956 and 1995 LRA, but this is no longer the case.
Section 200B(2) explicitly recognises that there may be more
than one “employer” for the purposes of liability.
Currently, the client is expressly designated the employer
for the
purposes of the Occupational Health and Safety Act
[24]
(OHSA). The TES is excluded from the definition of “employer”
in section 1 of the OHSA.
[25]
Meanwhile, the TES is expressly designated the employer for the
purposes of the BCEA.
[26]
[47]
Moreover, sections 198A(3)(b) and 198(2) do not expressly
refer to each other or indicate how they ought to relate.
Neither
section is made “subject to” the other, nor is
there explicit mention that the two sections can operate
simultaneously.
[48]
In Assign’s submission, this disjunction is indicative
of a second employer. It does not create a situation where the
employee as a matter of fact becomes employed by only the client.
NUMSA’s position is that both section 198A(3)(b)
and
section 198(2) are deeming provisions. They are triggered
by different events and can only operate separately in
these distinct
circumstances.
[49]
To discern its true meaning, therefore, section 198A(3)(b)
must be read in its context and in the light of its constitutional
purpose.
Contextual reading
[50]
First I will deal with the disjunction caused by the use of
the word “deemed”. Much was made of this before the
CCMA in particular. NUMSA argued on the basis of
County
Council of Norfolk
[27]
and the word’s Oxford dictionary definition (“regard as
being”) that “deemed” could easily be substituted
with “is”. Assign relied on
Rosenthal
[28]
and
Haffejee
[29]
to support their argument that the word has no meaning outside of its
context
[30]
and in this context it creates a different relationship from “is”
in section 198(2). My view is that nothing
turns on this.
It should not cause controversy in the interpretation process in
section 198A(3). Both sections create
statutory employment
relationships and whether one persists in parallel to the other does
not depend on how we read “deemed”.
[51]
Second I consider section 198A(3)(b) within section 198A(3).
Section 198A(3) deals with who an employer is for an employee
performing a temporary employment service and an employee not
performing a temporary employment service. It begins at
subsection 198A(3)(a) by defining a temporary employee as being “the
employee of the [TES] in terms of section 198(2)”.
It
then creates an alternative to this in subsection 198A(3)(b).
If the employee is not performing temporary services, they
are
“deemed to be the employee of that client”. The
subsections are divided by an “or” and only subsection
198A(3)(a) is “in terms of section 198(2)”. The use
of “or” mandates a choice. It is a strong
indication towards an interpretation that either the TES or the
client are employers in terms of section 198A(3).
[52]
This interpretation is further strengthened by the textual
placement of section 198A(3). Section 198A is headed:
“Application
of section 198 to employees earning below earnings
threshold”. Section 198A tells us how section 198 applies
to marginal
employees in precarious working relationships and
restricts its application to truly temporary employment. It
begins by defining
a “temporary service” as “work
for a client by an employee” as a substitute for a temporarily
absent employee,
through a collective agreement, or any employment
“for a period not exceeding three months”.
[31]
It goes on to specify that the section applies only to employees
earning below the threshold set by the Minister in terms
of the
BCEA.
[32]
[53]
Next, it defines the employer for the categories of employment
regulated in this section. Here, section 198A(3)(b) becomes
the
operative clause determining the identity of the employer for
employees earning below the threshold. Then, once an employee
becomes employed by the client by operation of section 198A(3)(b),
the employee must, in terms of subsection (5), “be
treated not
less favourably than an employee of the client performing the same or
similar work, unless there is a justifiable reason
for different
treatment”. This would obviously apply only in the event
that the terms and conditions of the employment
applicable to the
placed worker are less favourable than those applicable to the
employees of the client. Last, to prevent
the client from
attempting to avoid the operation of section 198A(3)(b), the
legislature added subsection (4). This states
that if a TES or
client terminates an employee’s assignment to avoid the
operation of section 198A(3)(b), that termination
will be
considered a dismissal and the usual remedies available through the
LRA will apply.
[33]
[54]
A plain reading of section 198A(3)(b) clearly distinguishes
between employees employed by the TES for temporary work and those
deemed
to be employed by the TES’s client where the work is not
temporary. Interpreting this section to mean that the client
becomes “one of the employers” strains the language
used
.
If the Legislature intended the client to become a
joint or co-employer together with the TES, it could easily have
provided
for the client to “also” be the employer.
[55]
On Assign’s interpretation, however, this would create
an absurdity. They contend that a placed employee must be an
employee of the TES because they fit the definition under section 213
of the LRA. Section 213 provides that “employee”
means—
“(a) any person, excluding an independent contractor, who works
for another person . . . and who receives, or is entitled
to receive,
any remuneration; and
(b) any other person who in any manner assists in carrying on or
conducting the business of an employer.”
A placed worker
could not be a TES employee under section 213 and simultaneously not
a TES employee under section 198A(3)(b).
But the usual TES
employment relationship is not covered by section 213. If it
were, there would be no need for the employment
relationship to be
deemed to exist in section 198(2).
[56]
Assign, rightly, made little of the section 213 argument
before us at the hearing. Their counsel seemed to concede that
there
may be doubt as to whether a placed employee would ordinarily
be “employed” by the TES for the purposes of
section 213.
In response, counsel for CWAO strongly
asserted that “sitting on the books of a TES does not make you
an employee”.
In my view, this must be correct.
[57]
Section 198(4) and (4A) of the LRA, however, occasions some
difficulty. Section 198(4) reads as follows:
“The [TES] and the client are jointly and severally liable if
the [TES], 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 [BCEA]; or
(d)
a sectoral determination made in terms of the [BCEA].”
[58]
This section regulates liability for the period where a placed
employee is employed by the TES. Section 198(4) creates a
substantive
and statutory form of joint and several liability –
which does not equate to joint or dual employment but rather creates
a statutory accessory liability for the client in the circumstances
set out in the section – where the TES carries principal
liability as employer in terms of the LRA. Section 198(4A)
adds to this that—
“[i]f the client of a [TES] is jointly and severally liable in
terms of section 198(4) or is deemed to be the employer of
the
employee in terms of section 198A(3)(b)—
(a)
the employee may institute proceedings against either the [TES] or
the client or both the [TES] and the client;
(b)
a labour inspector acting in terms of the [BCEA] may secure and
enforce compliance against the [TES] or the client as if it
were the
employer, or both; and
(c)
any order or award made against a [TES] or client in terms of this
subsection may be enforced against either.”
[59]
Counsel for Assign submitted that section 198(4A)
“[f]acilitates the enforcement of the employees’ rights
as employment rights
as against the TES . . . and the client”.
(Emphasis added.) If the sole employer interpretation is
preferred,
he continued, the section would recognise only one
employer but would still introduce mechanisms to allow employees to
enforce
obligations against both the TES and the client.
[60]
CWAO’s counsel contended that the second part of
section 198(4A) merely permits a placed employee to bring or
enforce
a claim against either the TES or the client. It does
not make the TES liable for claims outside of section 198(4).
In a sense, all section 198(4A) provides is a practical solution to
placed employees being barred from instituting proceedings
if they
proceed against the incorrect party.
[61]
I am persuaded that the sole employer interpretation is not
hampered by section 198(4A). The section does not purport
to determine who an employer may be from time to time. It
provides that, while the client is the deemed employer, the employee
may still claim against the TES as long as there is still a contract
between the TES and the employee. This is eminently
sensible
considering that the TES may still be remunerating that employee.
The view is buttressed by section 200B, which
provides very broad
general liability for employers. Section 198(4) and (4A) seems
to carve out specific areas of liability
for a TES pre- and
post-deeming as opposed to the general liability applicable in terms
of section 200B.
[62]
It is likely that subsection (4A) was introduced to provide
recourse directly against the client for contraventions in terms of
section 198(4) without first having to institute proceedings against
the TES. Paul Benjamin explained the pre-amendment position
as
follows:
“The consequence of joint and several liability is that if a
labour broker fails to pay amounts owing to its employees, the
client
for whom the employees worked is liable to make those payments.
This liability arises regardless of whether the client
has paid the
TES or not. In theory, the introduction of this form of joint
and several liability transfers the risk of the
labour broker
defaulting on its obligations from the employee to the client.
However, the client’s liability is a default
liability; the
client cannot be sued directly in the [CCMA] or Labour Court . . .
because it is not an employer.”
[34]
[63]
In other words, before the 2014 Amendments, a claim had to be
brought against the TES first. The client would be held liable
by operation of law if the TES failed to comply with its
obligations. Under section 198(4A), however, the client’s
liability ceases to be “default liability”. The
client is deemed the employer of the placed worker and can thus
be
sued directly in the CCMA or the Labour Court. In this way,
section 198(4A) offers placed workers more protection than
section
198(4)’s joint and several liability protection. It also
allows an employee to sue a TES directly, despite
it not being an
employer.
[64]
A TES’s liability only lasts as long as its relationship
with the client and while it (rather than the client) continues to
remunerate the worker. Nothing in law prevents the client and
the TES from terminating their contractual relationship upon
the
triggering of section 198A(3)(b), with the client opting to
remunerate the placed employees directly. If this happens,
the
TES that placed the worker will cease to be a TES in respect of that
worker because it will no longer meet the requirement
in section
198(1) of remunerating the worker. The TES will then fall out
of the relationship entirely.
Purposive approach
[65]
As I have already mentioned, the 2014 Amendments were effected
in the wake of persistent, widespread protests against labour
broking.
In negotiations leading to the amendment, one trade
union conglomerate famously insisted that the then six month
limit on
temporary employment should be reduced to zero months.
[35]
The amendment that materialised did not ban labour broking.
Instead, it aimed “to provide greater protection
for workers
placed in temporary employment services”.
[36]
There appear to be two offshoots of this purpose: the first is to
protect marginal workers in temporary employment; and the
second is
for temporary services to be truly temporary.
[66]
We have some insight to the purpose of the legislation through
the explanatory memorandum to the 2012 Bill.
[37]
This does not speak to the Act in its final form and should be
treated with caution, but it gives some credence to the two-fold
purpose described above. It describes the “main thrust”
of the new provisions introduced in sections 198 and
198A as aiming
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”.
[38]
(Emphasis added.)
[67]
The restriction of TES employment to genuine temporary work
affords the clarity and precision needed by the LRA to realise the
constitutional
rights to fair labour practices and meaningfully to
participate in trade union activity.
[68]
The restrictions are sufficiently circumscribed in the
language of the LRA to give effect to this purpose. By adding
sections
198A and D, the legislature identified the parameters of
“temporary services” and detailed the protection afforded
to placed employees.
[39]
[69]
Part of this protection entails that placed employees are
fully integrated into the workplace as employees of the client after
the
three-month period. The contractual relationship between
the client and the placed employee does not come into existence
through negotiated agreement or through the normal recruitment
processes used by the client. The employee automatically
becomes
employed on the same terms and conditions of similar
employees, with the same employment benefits, the same prospects of
internal
growth and the same job security that follows.
[70]
The purpose of the section 198A amendments is clear. It
exists to fill a gap in accountability between client companies and
employees who are placed with them.
[40]
Triangular
relationship
[71]
One of the main difficulties raised by Assign is: what happens
to the contract between the TES and the placed employee if they are
no longer the employer? Assign points out that a TES may
continue in an employment relationship with a placed employee after
the three-month period by virtue of their common law and residual
legislative functions, even if the TES is no longer deemed to
be the
employer through section 198A(3)(b). This, they say, may lead
to an employee losing the protections of the LRA in
ongoing
relationships with a TES.
[72]
Ancillary to this is a second argument, that an employee
contracts with a TES on very favourable terms and that all these
benefits
may be lost on transfer to a client company. Counsel
relied, in part, on section 198(4C) of the LRA in support of this.
Section 198(4C) precludes employment by a TES “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”.
[73]
In evaluating these arguments, it is necessary first to
consider the “triangular” nature of the TES/client/placed
employee
relationship. The triangular relationship exists to
split the functions of the employer between the TES and the client
for
a fee. However, the functions for which the TES is
responsible seldom relate to the actual work of the employee.
[41]
Their primary responsibilities are to pay and manage the human
resources component of employment, while the day-to-day management,
work allocations and performance assessment in most circumstances are
conducted by the client only. The client is also responsible
for the employees’ working conditions because employees are
placed on the client’s premises. Importantly, the
client
also has the power to discontinue the employee’s services.
[42]
In a sense, the TES is merely the third party that delivers the
employee to the client. The employee does not contribute
to the
business of the TES except as a commodity. And, on a practical
level, the contract between a TES and a placed worker
seldom
constitutes an employment contract.
[74]
In
Lad Brokers,
[43]
the Labour Appeal Court held that the common law does not necessarily
regard the TES as the employer of the placed workers.
[44]
In truth, a TES can operate without concluding contracts of
employment with the workers it places.
[45]
All that is required for the TES to constitute a statutory
employer in terms of section 198 of the LRA is that it places
workers with clients for a fee and remunerates those workers. Of
course, this is less onerous than the test for establishing
conventional employment either at common law or in terms of the
relevant definitions. It is therefore incorrect to contend
that
a TES is usually in an employment relationship with workers it places
with clients.
[75]
This also makes it difficult to accept Assign’s argument
that the sole employer interpretation forces employees into a new
employment relationship, without their consent, on terms of
employment to which they have not agreed. Section 198(2) gives
rise to a statutory employment contract between the TES and the
placed worker, which is altered in the event that section 198A(3)(b)
is triggered. This is not a transfer to a new employment
relationship but rather a change in the statutory attribution of
responsibility as employer within the same triangular employment
relationship. The triangular relationship then continues
for as
long as the commercial contract between the TES and the client
remains in force and requires the TES to remunerate the workers.
[76]
In this scenario, there is no question of an infringement of
the placed employee’s right to choose their trade or
profession.
The point is that the employee continues to perform
work in the position into which they were placed. This does not
prejudice
the worker or infringe their right in any manner.
[77]
Assign’s strongest argument is not that TESs offer equal
or better terms of employment than client companies, but rather that
the placed employees’ constitutional and LRA rights are better
protected by a dual employer interpretation. I now turn
to deal
with this argument.
Does a dual
employer interpretation offer greater protection?
[78]
Assign argues that having two employers against whom an
employee can equally claim provides greater protection to the
vulnerable
workers in these circumstances. This poses the
question: what is so wrong with having two employers? I accept
that
not every dual employer relationship will prejudice employees,
but I do not accept this to be the case for the TES/client/placed
employee triangular relationship.
[79]
The first reason for this is that, before the 2014 Amendments,
the TES existed to obfuscate. Its purpose was to protect the
client from consequences of employment relationships and to relieve
them from having to concern themselves with the human resources
needs
of people working for them.
[46]
The TES is incentivised to offer lower prices in order to be awarded
the client’s contract, necessarily translating
to lower wages
for placed employees.
[47]
This is now circumscribed by the LRA but, while triangular
relationships exist, companies may and do contract out of their
employment obligations in respect of placed employees.
Retaining the TES as employer may have the effect of frustrating the
purpose of these amendments.
[80]
Second, the placed employee retains the right to claim against
a TES through section 198(4A) to the extent that they are still
remunerated
by the TES. The employee is largely protected
against the TES regardless of whether the claim is made against an
employer.
But this liability relates only to claims brought by
the employee. The protections afforded by the sole employer
interpretation
go beyond this. They give employees certainty
and security of employment.
[81]
The promotion of certainty in employment is not, as contended
by counsel for Assign, to patronise placed employees. The
absence
of certainty threatens employees’ ability to exercise
their LRA rights. CWAO set out a number of practical
difficulties
arising from this uncertainty. They include:
complying with two sets of terms and conditions and two disciplinary
codes which
may characterise misconduct and poor performance
differently;
[48]
ascertaining which employer dismissed the employee, which should
reinstate them, whether reinstatement applies to both or only
one
employer; and which LRA procedure applies to a dismissal.
[82]
Another difficulty raised by CWAO is the practicality of
embarking on strike action, which is afforded constitutional
protection
in section 23(2)(c) of the Constitution.
[49]
They contend that a matter of mutual interest between the employee
and TES may be different from a matter of mutual interest
between the
employee and the client company. As a result, a strike may be
protected as against one employer but not the other,
rendering the
employee vulnerable to dismissal. I am persuaded by these
arguments that the sole employer interpretation best
protects the
rights of placed workers.
Conclusion
[83]
Regard being had to the language employed in section
198A(3)(b) read with sections 198 and 198A, the following is
discernible:
(a) Section 198 deals with the general position with regard to TESs,
while section 198(2) is a deeming provision creating a statutory
employment contract between the TES and a temporarily placed
employee.
(b) Section 198A deals with the application of section 198 to a
specific category of workers, being marginal employees employed
below
the BCEA threshold.
(c) Section 198A(3)(a) provides that, when vulnerable employees are
performing a temporary service as defined, they are deemed
to be
employees of the TES as contemplated in section 198(2).
(d) Section 198A(3)(b)(i) provides that when vulnerable employees are
not performing a temporary service as defined, they are deemed
to be
the employees of the client.
(e) The deeming provisions in sections 198(2) and 198A(3)(b)(i)
cannot operate at the same time.
(f) When marginal employees are not performing a temporary service as
defined, then section 198A(3)(b)(ii) replaces section 198(2)
as the
operative deeming clause for the purposes of determining the identity
of the employer.
[84]
As stated above, the language used by the Legislature in
section 198A(3)(b) of the LRA is plain. And, when
interpreted
in context, it supports the sole employer interpretation.
It certainly is also in line with the purpose of the 2014
Amendments,
the primary object of the LRA, and the right to fair
labour practices in section 23 of the Constitution.
Order
[85]
In the result, the following order is made:
1. Leave to appeal is granted.
2. The appeal is dismissed with costs.
CACHALIA AJ:
[86]
I have had the benefit of reading the judgment of Dlodlo AJ
(first judgment) and regret that I am unable to agree that on a
proper
interpretation of section 198A(3)(b) of the LRA, the
client replaces the TES as the employer. I would hold that both
continue jointly as employers of the workers. The factual
background and litigation history of the dispute has been set out
in
some detail in the first judgment and needs no repetition. I
gladly adopt them.
The nature of the
dispute
[87]
The dispute between the parties arises as follows: sections
198 and 198A regulate labour brokers, who render temporary employment
services. Section 198(1) defines a TES as a person who,
for reward, procures for or provides to a client, the services
of
workers whom it remunerates. The LRA treats the TES as the
employer of the employees placed with its clients. That
is so
firstly because section 213 says so, and secondly, because section
198(2) classifies them as such.
[50]
[88]
Section 198A was introduced in 2015 to provide additional
protection to vulnerable lower paid employees, who continue working
for
a client beyond three months. Section 198A(3)(b) provides
that these employees are “deemed” to be employees of
that
client, who in turn is deemed to be their employer. The issue
is whether this deeming provision has the effect of making
the client
an employer
in addition
to the TES or
in substitution
for the TES as the employer. In the industry the debate is
characterised as being over the sole employer interpretation or
dual
employer interpretation.
[89]
Assign, the labour broker, contends for the dual employer
interpretation whilst NUMSA, the trade union, argues for the sole
employer
interpretation. Intuitively, one may be tempted to
think that because a union is more likely to advance the interests of
vulnerable workers than labour brokers would be, then the union’s
interpretation must be correct. This is more so because
unions
have waged a consistent battle to curb labour broking.
Conversely, because there has been reported abuse of vulnerable
employees by labour brokers, one’s instinct is that their
interpretation may be wrong.
[90]
But statutory interpretation eschews any intuitive responses.
It is an objective exercise that requires, instead, a proper
analysis of the language, context and purpose of the relevant
provision. In addition, and where appropriate, its alignment
with other statutes and constitutional implications of the meaning
attributed to it must be part of the equation.
The language
[91]
The TES usually engages the worker under a common law
employment contract. The applicant refers to this as an
innominate contract,
and for present purposes I accept this
nomenclature. Sections 213 and 198(2) render these workers
employees of the TES, with
the full protection of the LRA. Section
198A was enacted to give vulnerable employees additional protection,
which is the
section’s primary purpose. Section
198A(3)(b) does so by “deeming” the client to be their
employees’
employer indefinitely after three months has
elapsed. This is common ground between the parties.
[92]
Deeming provisions are often used in statutes to give the
subject-matter a meaning not ordinarily associated with it. What
section 198A(3)(b) does, therefore, is to recognise that the TES is
ordinarily the employer as stipulated in section 198(2) but
that the
client is also regarded as the employer after the three month period
has elapsed. If the object was to make the
client the sole
employer after the effluxion of this period, section 198A(3)(b)(i),
instead of the deeming provision, could have
been drafted quite
simply to read
“(3) For the purposes of
this Act
an employee—
. . .
(b)
not performing such temporary service for the client. . .—
(i) ceases to be the employee of the temporary employment service and
is deemed to be the employee of the client.”
[93]
Alternatively, section 198A(3)(b) could equally easily have
been drafted to override or qualify the worker’s status as an
employee of the TES in terms of sections 213 and 198(2). The
choice of language used – or rather, not used –
in the
section is therefore consistent with the dual employer meaning. But
I accept that, read in isolation, this may not
be conclusive. As
the first judgment observes, another plausible interpretation is that
the section distinguishes between
employees employed by the TES and
those deemed to be employees of the client,
[51]
which also tends to support the sole employer model. It is
therefore necessary to also examine whether the contextual
indications
point in either direction.
Purpose and
context
[94]
Sections 198(4) and 198(4A), which the first judgment freely
admits creates some difficulty for the sole employer model,
[52]
are critical in this analysis.
[53]
Section 198(4) renders the TES and the client jointly and
severally liable for certain TES contraventions “in
respect of
any of its employees”. Under the dual employer
interpretation, the vulnerable employees continue to enjoy
this
provision’s protection. But under the sole employer
interpretation, they lose it when they pass the three month
mark
because they cease to be employees of the TES under the deeming
provision. This is plainly at odds with the purpose
of giving
placed employees additional protection.
[95]
Section 198(4A), was introduced at the same time as section
198A and cross refers to the deeming provision. It says
expressly
that if a client “is deemed to be the employer”
of an employee in terms of section 198(A)(3)(b), certain employer
duties
may be enforced against either or both the TES and the client.
In other words, the employee may sue either or both. A
labour inspector may enforce compliance with the BCEA. An order
or award made against the one is enforceable against the
other.
[96]
The applicant contends, in my view persuasively, that these
provisions proceed from the premise that, if the deeming provision is
triggered, that is, if the client is deemed to be the employer in
terms of section 198A(3)(b), both the client and the TES are
deemed
to be the employers of the workers. It is only on this basis
that the section may render the duties of an employer
enforceable
against both the TES and the client. This gives the employees
added protection by allowing them to enforce their
employment rights
against two employers. The section makes no sense otherwise.
[97]
The first judgment, however, asserts that section 198(4)
creates a “substantive and statutory form of joint and several
liability”,
[54]
which does not equate to joint or dual employment, but is merely a
statutory accessory liability for the client.
[98]
But this is not so. Section 198(4) does not create an
accessory liability – akin to a suretyship obligation –
for the client. It says explicitly that the TES and client are
jointly and severally liable
in solidum
(in the whole), which
means that the worker can sue either or both. Put differently,
the worker has a right of action against
either or both and they have
a corresponding joint obligation towards the worker. This is
why the section, as the applicant
correctly contends, renders the
duties of an employer enforceable against both the TES and the
client.
[99]
In the same vein section 198(4A) creates substantive rights
for vulnerable employees against both the TES and the client.
It recognises that they assume joint obligations towards the
employees as employers. This is why any order or award made
against a TES or a client may be enforced against either.
[55]
There can be no other reason for imposing liability upon both.
Once the section is understood in this way, there is
no room for
attempting to explain away the difficulty posed by its language, as
the first judgment does, as merely conferring “a
practical
solution to placed employees being barred from instituting
proceedings if they proceed against the incorrect party”.
[56]
On the sole employer interpretation, liability is imposed upon
the TES without it having any obligations, as an employer,
towards
the employees. This cannot be. It follows that section
198(4A) supports the dual employer interpretation.
Adverse
consequences of sole employer interpretation
[100]
On the sole employer interpretation the deeming provision has
the following consequences: the worker ceases to be an employee of
the TES for purposes of the LRA; the employment contract between the
worker and the TES remains, but without the additional benefits
the
LRA confers upon workers; and the worker is involuntarily transferred
to a client who becomes her employer without her accrued
employment
rights – such as accrued leave, annual bonus and pension from
the TES to the client.
[101]
In addition, the employee does not have a contract of
employment with her new employer, the client. Her only
protection is
that she is deemed to be employed by the client on an
indefinite basis in terms of section 198A(3)(b)(ii), and that she
cannot
be treated less favourably than an employee performing the
same or similar work under section 198A(5).
[102]
These provisions are of little comfort to employees
transferred to a client who has no employees performing the same or
similar
work, which means that there is no baseline for the
determination of an employee’s terms of employment. On
the other
hand the TES may have agreed conditions of employment with
the employee that are more generous than those applying to the same
or similar work for the client, in which case the employee is likely
to suffer an involuntary downgrade of the terms of her new
employment
with the client.
[103]
Another obvious consequence of the single employer model is
that employees will be left more vulnerable in the event of a
client’s
liquidation. The employee will, in that event,
not be able to look to the TES to be protected from the consequences
of a
loss of employment.
[104]
These adverse consequences of the sole employer interpretation
are all antithetical to the primary purpose of the enactment of
section
198A(3)(b), which is to give protection to vulnerable
employees, in addition to the protection already enjoyed as employees
of
the TES. Instead, the sole employer interpretation
unavoidably places vulnerable employees in an even weaker position in
some instances. Neither NUMSA, nor the amicus curiae, who
support the sole employer interpretation, have advanced cogent
reasons to demonstrate that their interpretation grants additional or
better protection than the dual employer interpretation.
The
sole employer interpretation is therefore clearly wrong.
[105]
This conclusion is fortified by the fact that there are no
transitional provisions that cater for the transfer of the employee
from
the employ of the TES to the client in section 198A. Nor
is there any language in the section saying that the workers are
deemed to be transferred to the client after three months. The
unavoidable inference is that the section does not envisage
a
transfer. The lawmaker intended both employment relationships
to continue in tandem. It did not enact any transitional
arrangements because none were necessary.
Alignment with
the BCEA
[106]
It is apparent that the lawmaker has aligned the provisions of
the LRA and the BCEA so that they work together. Section 1 of
the BCEA defines an “employee” and a “temporary
employment service” in the same terms as the LRA. Section
82(1) of the BCEA is identical to section 198(2) of the LRA. The
two statutes are therefore perfectly aligned to reflect
that the TES
is “employer” of its employees placed with the client.
The dual employment interpretation is consistent
with this
alignment. When the deeming provision is triggered, the TES
remains the employer under both the BCEA and the LRA,
except for the
limited purpose of section 198A(3)(b) of the LRA, where the client is
also deemed to be the employer of the employee.
[107]
The sole employer interpretation disturbs this alignment.
Once the deeming provision is triggered, the client is the only
employer for purposes of the LRA while the TES remains the employer
for purposes of the BCEA. The sole employer interpretation
thus
offends the principle that where statutes cover the same terrain,
they should, unless the difference is clear and unambiguous,
be
construed in a manner that is consistent.
[57]
The Labour Appeal Court has endorsed this principle.
[58]
It has also applied the rule specifically to interpret the BCEA and
the LRA harmoniously.
[59]
Constitutional
implications
[108]
Having analysed the purpose, language and context of the
deeming provision, and having also considered its alignment with the
relevant
sections in the BCEA, there is no room for any ambiguity –
the dual employer interpretation is the only interpretation that
can
reasonably be ascribed to it. But to the extent that the
section is arguably reasonably open to the alternative sole
employer
interpretation, this is also inconsistent with the Constitution. It
forces the employees into a new relationship
without their consent
and on terms of employment to which they have not agreed. This
brings the deeming provision into conflict
with the employees’
rights to fair labour practices in section 23(1) and to choose their
trade, occupation or profession
freely in section 22 of the
Constitution. And, as this Court has made clear, where a
statute is capable of being reasonably
read in a manner that is
consistent or not in conflict with the Constitution, that is the
interpretation that must be given.
[60]
The sole employer interpretation therefore falls to be rejected
for this reason as well.
Conclusion
[109]
For all these reasons I conclude that the dual employer
interpretation is the correct one. The deeming provision
creates a
statutory employment relationship between the employee and
the client. But it does so
in addition
to the existing
employment relationship between the employee and the TES and not in
substitution
thereof. I would accordingly uphold the
appeal.
For the Applicant: W
Trengove SC, A Myburgh SC and R Itzkin instructed by Kirchmanns
Inc.
For the First
Respondent: H van der Riet SC, H Barnes, G Phajane and L
Monnakgotla instructed by Ruth Edmonds Attorneys Inc.
For the Amicus
Curiae: S Harvey and T Ngcukaitobi instructed by Lawyers for Human
Rights.
[1]
66 of 1995.
[2]
Section 198A(3)(b) provides:
“
For the purposes of this Act, an employee—
. . .
(b) not performing such temporary service for the client is—
(i) deemed to be the employee of the client and the client is deemed
to be the employer; and
(ii) subject to the provision of section 198B, employed on an
indefinite basis by the client.”
[3]
Statistics South Africa
Statistical
Release P0211, Quarterly Labour Force Survey Q4: 2017
(13 February 2018).
[4]
Labour Relations Amendment Act 2 of 1983.
[5]
28 of 1956. See Theron “Intermediary
or Employer? Labour Brokers and the Triangular Employment
Relationship”
(2005) 26
ILJ
618 at 623.
[6]
Labour Relations Amendment Act 6 of 2014 (2014
Amendments).
[7]
Section 198A(1)(a) of the LRA.
[8]
Section 198D(1) states:
“
Any dispute arising from the
interpretation or application of sections 198A, 198B and 198C may be
referred to the [CCMA] or a
bargaining council with jurisdiction for
conciliation and, if not resolved, to arbitration.”
[9]
Assign Services (Pty) Ltd v Commission for Conciliation,
Mediation & Arbitration
(2015) 36 ILJ 2853 (LC) (Labour
Court judgment).
[10]
Id at para 17.
[11]
Id at para 11.
[12]
National Union of Metalworkers of SA v Assign Services
[2017]
ZALAC 44
; (2017) ILJ 1978 (LAC) (Labour Appeal Court judgment)
at para 25.
[13]
75 of 1997.
[14]
Section 82(1) of the BCEA.
[15]
Labour Appeal Court judgment above n 12 at para 36.
[16]
In terms of the deeming provision in section 198 of the LRA.
[17]
Pursuant to section 198A(5).
[18]
See
National Union of Metalworkers of SA v Intervalve (Pty) Ltd
[2014] ZACC 35
; (2015) 36 ILJ 363 (CC);
2015 (2) BCLR 182
(CC)
at para 25;
Food and Allied Workers Union v Ngcobo N.O.
[2013]
ZACC 36
;
2014 (1) SA 32
(CC);
2013 (12) BCLR 1343
(CC) at para 24;
and
National Education Health and Allied Workers Union v
University of Cape Town
[2002] ZACC 27
;
2003 (3) SA 1
(CC);
2003
(2) BCLR 154
(CC) (
NEHAWU
) at para 14.
[19]
See Botes “Answer to the Questions? A Critical Analysis
of the Amendments to the
Labour Relations Act 66 of 1995
with Regard
to Labour Brokers” (2014)
SA Merc LJ
110 at 113, which
states that the use of TESs benefits the South African labour market
because it provides some relief to the
unemployment crisis in the
country. Furthermore, the temporary nature of the particular
employment allows a measure of
flexibility in the labour market,
which could benefit the South African economy as a whole.
[20]
NEHAWU
above n 18 at para 41.
[21]
Section 23(1) and (2) of the Constitution
provides:
“
(1) Everyone has the right to fair labour
practices.
(2) Every worker has the right—
(a) to form and join a trade union;
(b) to participate in the activities and programmes of a trade
union; and
(c) to strike.”
[22]
See fn 2 above for the full text of the
subsection.
[23]
Section 1(3)(a) of the 1956 LRA as amended reads:
“For the purposes of any provision of this Act or any
applicable agreement . . . the [TES] concerned shall be deemed to
be
the employer of such workers, any service rendered to the client or
work performed for him shall be deemed to have been rendered
to or
performed for the [TES], and the workers concerned shall be deemed
in respect of such service or work to be the employees
of the
[TES].”
[24]
85 of 1993.
[25]
Section 1 of the
OHSA
reads:
“‘
[E]mployer’ means . . . any
person who employs or provides work for any person and remunerates
that person or expressly
or tacitly undertakes to remunerate him,
but excludes a labour broker as defined in section 1(1) of the
Labour Relations Act,
1956 (Act No. 28 of 1956).”
[26]
Section 82(1) and (3) of the BCEA reads:
“(1) 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) The temporary employment service and the client are jointly and
severally liable if the temporary employment service, in
respect of
any employee who provides services to that client, does not comply
with this Act or a sectoral determination.”
[27]
R v
County Council of Norfolk
(1891) 65 LT 222.
[28]
S v Rosenthal
1980
(1) SA 65
(A).
[29]
S v
Haffejee
1945
AD 345.
[30]
Id at 352-3.
[31]
Section 198A(1).
[32]
Section 198A(2).
[33]
See Botes above n 19 at 129-30 for a discussion on section 198A(4)
of the LRA.
[34]
Benjamin “Decent Work and Non-Standard Employees: Options for
Legislative Reform in South Africa” (2010) 32
ILJ
845
at 850.
[35]
Craven “COSATU’s response to FMF and DA on labour
brokers”
COSATU Press Statements
(7 June 2013)
available at
http://www.cosatu.org.za/show.php?ID=7428
.
[36]
Preamble to the 2014 Amendments.
[37]
Which would become the 2014 Amendments.
[38]
See Department of Labour “Memorandum of Objects/Labour
Relations Amendment Bill, 2012” (2012) available
at
http://www.labour.gov.za/DOL/downloads/legislation/bills/proposed-amendment-
bills/memoofobjectslra.pdf
.
[39]
Section 198A focuses on labour broker employees of the TES.
Section 198B provides for employees involved in fixed-term
contracts. Section 198C protects part-time employees.
Section 198D contains general provisions applicable to sections
198A-C.
[40]
See Botes above n 19 at 129-30, which provides:
“It has come to light that clients have been exploiting TESs
in an attempt to avoid restrictive labour laws by keeping
labour
broker employees on their staff for years at a time, performing work
of permanent nature but with terms less favourable
than permanent
employees. It was a way to cut costs and to sidestep various
employer responsibilities.”
[41]
See Botes above n 19 at 120.
[42]
Id.
[43]
Lad Brokers (Pty) Ltd v Mandla
[2001] ZALAC 9
;
(2002) 6 SA 43
(LAC) (
Lad Brokers
).
[44]
Interestingly, the same is true of the common law in the United
Kingdom. See Benjamin “Restructuring Triangular
Employment: The Interpretation of Section 198A of the Labour
Relations Act” (2016) 327
ILJ
28 at 37.
[45]
Id at 33.
[46]
Theron above n 5 at 626 goes so far as to say:
“[T]here is much anecdotal and other evidence to support the
proposition that labour broking, along with other forms of
externalization, is motivated by a desire to avoid labour
legislation. . . . [And] to avoid unfair dismissal
proceedings,
coupled with a desire to reduce wage levels for workers
performing non-core functions, or lesser-skilled workers.”
[47]
Id at 629.
[48]
Id at 630 and 641.
[49]
See fn 21 above.
[50]
See [55] and [21].
[51]
At [54]:
“If the
legislature intended the client to become a joint or co-employer
together with the TES, it could easily have provided
for the client
to ‘also’ be the employer.”
[52]
See [57].
[53]
See [57]-[61].
[54]
See [58].
[55]
Section 198(4A)(c) of the LRA.
[56]
See [60].
[57]
Petz Products v Commercial Electrical Contractors
1990 (4) SA
196
(C);
[1990] 3 All SA 452
(C) at 204H quoted with approval in
Arse v Minister of Home Affairs
[2010] ZASCA 9
;
2012 (4) SA
544
(SCA) at para 19.
[58]
Amcu v Buffalo Coal Dundee
[2016] ZALAC 18
; (2016) 37 ILJ
2035 (LAC) at para 43.
[59]
Ekurhuleni Metropolitan Municipality v SAMWU
[2014] ZALAC 61
;
(2015) 36 ILJ 624 (LAC) at para 30.
[60]
University of Stellenbosch Legal Aid Clinic v Minister of Justice
and Correctional Services
[2016] ZACC 32
;
2016 (6) SA 596
(CC);
2016 (12) BCLR 1535
(CC) at para 135.