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Employment Law: The Constitutional Court rules on Temporary Employment Services

In the matter between Assign Services (Pty) Ltd and National Union of Metal Workers of South Africa (“NUMSA”) the Constitutional Court (the “CC”) handed down the judgement in relation to the interpretation of section 198A (3) (b) of the Labour Relations Act (the “LRA”) in terms of Temporary Employment Services (the “TES”) and employees. As of the handing down of the judgement, the conclusion in terms of TES staff has been made that after a period of three months of the employee being placed on the client site, the employee becomes a permanent employee of the client. This is true, however within the parameters of sole employment between the client and the employee.

The purpose of the case concerned the interpretation of Section 198A (3) (b) of the LRA 66 of 1995 and whether this section and its elements resulted in a “sole employment” relationship between the TES and the employees or a “dual employment” relationship between the TES, the client and the employees.

In this matter, a TES placed twenty two workers with the client, Krost shelving and paving (Pty) Ltd, in 2015 who were members of NUMSA. The workers provided a service for the client exceeding a three (3) month period. The client was of the view that a “dual employment” relationship existed between themselves and the TES regarding the rights and obligations of the employees, however NUMSA was of the view that a “sole employment” relationship existed and as such any action to be taken would be against the client, Krost shelving and paving (Pty) Ltd.

Section 198A (3) (b) stipulates the following in terms of TES:

  • An employee earning below the stipulated threshold and whose employment on the client premises exceeds a three month period:
  • is deemed to be the employee of that client and the client is deemed to be the employer and;
  • Subject to the provisions of section 198B, is deemed to be employed on an indefinite basis by the client.

In the absence of the LRA making mention of the expectations of the TES involvement with the employees post three months of employment on the client site, thus being deemed a permanent employee of the client, it had been deduced that it can be read into law and legislative requirements that the TES would cease to be the employer after three months’ service on the client’s site.

As seen from the above, the purpose of the LRA is to protect the employment rights of low earners, to bring about job security and eradicate of unemployment rates, with this being said the outlook of the CC supports this as the “sole employment” relationship best protects the rights of placed workers and promotes the purpose of the LRA.

What does this mean for TES and clients?

  • Clients may be more apprehensive to enter into agreements with a TES based on the foundation that after three month’s service, they will be fully responsible for the employees in terms of obligations and rights.
  • The fear of formulating business deals with a TES will reduce the number of TES industries, bringing about more opportunities for permanent employment of employees and thus reducing the unemployment rate, this being the purpose of the LRA.

In conclusion, the LAC found that section 198A (3) (b) of the LRA introduces a “sole employment” relationship after a three month period lapses of the TES employees having worked on the client premises. Companies conducting business agreements with a TES is to be fully aware of this as they will be held fully responsible in terms of rights and obligations moving forward, bearing in mind that permanent employment relationships exist.

 

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