Earlier in 2015 the Labour Relations Act, 66 of 1995 (“LRA“) was amended. The amendments sought to provide additional protection to employees perceived as particularly vulnerable, such as those employed by labour brokers (Temporary Employment Services/TES). These additional protections have resulted in –
- the client and the TES being jointly and severally liable if the TES contravenes the Basic Conditions of Employment Act, 75 of 1997 (“BCEA“) (or sectoral determinations under the BCEA), as well as collective agreements or arbitration awards which apply in respect of these employees;
- If the TES employee works for a client for a period exceeding three months, and is paid less than the annual earnings threshold (currently R205 433.43 per annum), the client is the “deemed employer” of the TES employee;
- once the TES employee is deemed to be the employee of the client, he or she must be treated “on the whole no less favourably than an employee of a client performing the same or similar work, unless there is a justifiable reason for different treatment”.
Faced with applying and interpreting the “deemed employer” provision, the TES industry and its stakeholders adopted two mutually exclusive positions, the one being that once the deemed employer provisions are applicable, the TES employees in question automatically transfer to the client and their employment with the TES comes to an end. The other position being that the TES employees remain in the employ of the TES and that a dual employment relationship arises in respect of the client, for the purposes of the LRA. In the case of the dual employment relationship, the TES employees will remain on the “books” of the TES. These employees would nevertheless be entitled to –
- be treated “on the whole no less favourably than an employee of a client performing the same or similar work, unless there is a justifiable reason for different treatment”; and
- institute employment claims (such as unfair labour practice, unfair dismissal and discrimination claims) against the client.
THE CCMA JUDGEMENT
In two recent awards, handed down by the Commission for Conciliation, Mediation and Arbitration (“CCMA“) (Assign Services Proprietary Limited and Krost Shelving and Racking Proprietary Limited and NUMSA) and National Bargaining Council for the Road Freight and Logistics Industry (“NBCRFLI“)(Refilwe Esau Mphirime and Value Logistics Ltd / BDM Staffing Proprietary Limited), the CCMA and NBCRFLI came to the conclusion that, in order to give effect to the LRA amendments, the client becomes the sole employer of the TES employee.
Although not expanded on in the above awards, the findings would have the consequence that the client would step into the shoes of the employer and become solely responsible for discharging all of the obligations of an employer in respect of the TES employee. The sole employer approach would undoubtedly have significant legal and commercial consequences for the TES, such as whether the client once it becomes the sole employer, would still have to pay the contractually agreed fee to the TES, or face breach of contract claims, despite becoming the sole employer and potentially having to pay the employee’s salaries and other benefits directly.
Given the significant consequences of the recent awards handed down, position, the CCMA award in the matter involving Assign Services was reviewed on an urgent basis by the Labour Court. In the case of Assign Services Proprietary Limited and CCMA / Commissioner Osman N.O., NUMSA and Krost Shelving and Racking Proprietary Limited JR 1230/15, Brassey AJ reviewed and overturned the CCMA award, and found that despite the deemed employer provisions in the LRA, the TES remains the employer of its employees, and that it must – as an employer – continue to comply with the obligations of an employer in terms of the LRA, as well as its contractual obligations under its contracts of employment with the TES employees. Equally, the client must ensure compliance with the LRA in respect of employees assigned to it, and will be liable if there is non-compliance.
IMPLICATIONS OF THE JUDGEMENT
The practical implications of this judgement are that –
- there is no transfer of the employment relationship from the TES to the client;
- the TES remains an employer of the employees, and must continue to pay salaries and must provide the BCEA as well as its contractual obligations in respect of its employees;
- the client of the TES is deemed to be the employer solely for the purposes of the LRA. As such, if the employee is dismissed by the TES, or subjected to an unfair labour practice by the TES, the employee can claim the remedies for unfair dismissal or unfair labour practice against the client dirtectly;
- the client of the TES is jointly and severally liable for contraventions of the BCEA and the employee may claim against the client directly;
- two employment relationships are established that are discernible from each other, and that these operate in tandem. Each relationship has its own individual rights and obligations, as well as shared rights.
The Labour Court has, for the time being clarified the uncertainty that prevailed when the CCMA awards came into effect. However, given the significance of the LRA amendments and the impact of these amendments on TES employees it is unlikely that the Labour Court will have the last word on this issue.