Businesses in South Africa may soon find the benefits of using agency workers far less attractive if proposed amendments to the Labor Relations Act (“the LRA”) are enacted into law. The proposed amendments to the LRA seek to restrict the employment of more vulnerable and lower-paid workers by temporary work agencies to situations of genuine temporary work.
Agency workers procured and provided by temporary work agencies will, if the proposed amendments are enacted into law, still be deemed to be employees of the temporary work agency, provided, they are employed to perform genuine ‘temporary work’. This term is defined, inter alia, to mean services that do not exceed a period of six months. This means that for the purposes of the LRA, agency workers will be deemed to be employees of the organization (“hiring client”) if they work for a period in excess of six months. To prevent the abuse of the six months period that constitutes temporary work, the proposed amendments provide that a termination by an employment agency of an employee’s assignment with the hiring client for the purposes of avoiding deemed employment by the hiring client constitutes a dismissal. The proposed amendments also provide that agency workers who are deemed as employees of the hiring client must be treated on the whole not less favorably than employees of the hiring client who perform the same or similar work, unless there is a justifiable reason for different treatment.
In addition, a recent South African labor court decision, Dyokwe v De Kock NO Mondi Packaging SA (Pty) Ltd, has shown that irrespective of whether or not the proposed amendments to the LRA become law, the courts are likely to examine the use of agency workers very closely.
This case involved packaging company Mondi, temporary work agency, Adecco, and an employee by the name of Dyokwe. Dyokwe was employed by Mondi from 2000 to 2002. In December 2002 he was told by Mondi that his contract would be terminated. For reasons that are not entirely clear, he stayed on at Mondi. In July 2003 he was told by Mondli that he would have to sign a new contract with Addeco. Dyokwe signed the contract after being assured by employees of Addeco that ‘nothing would change’. The contract was headed ‘Contract of employment defined by time’ despite the fact that it had no termination date, and specified that Dyokwe would be ‘employed at Mondi’. Even though Dyokwe continued doing the same job at Mondi, his wages was reduced by 20 percent. After some five years Dyokwe’s employment was summarily terminated by Adecco. Dyokwe referred an unfair dismissal dispute to the Commission for Conciliation Mediation and Arbitration (“CCMA”), citing Mondi as a party. The commissioner ruled that Adecco was Dyokwe’s employer, which meant that Mondi was excused from the unfair dismissal dispute proceedings. Dyokwe took the decision of the commissioner on review to the South African labor court. The question the court had to decide was who was Dyokwe’s employer, Mondi or Adecco?
The court ruled that the facts of the case indicated that Mondi was Dyokwe’s employer and set aside an earlier decision of the CCMA which had excused Mondi from the unfair dismissal proceedings.
The court stressed the need to examine the substance rather than the form of the employment relationship, to determine whether a company has sought to avoid its responsibilities under labor law by using temporary work agencies.
What do the proposed changes mean for you as the employer?
If the proposed changes become law and you use the services of someone provided by a temporary work agency for more than six months:
- that person will be deemed to be your employee unless you prove to the contrary,
- you will need to treat that person the same way that you treat your other employees, and
- you won’t be able to avoid these consequences by simply terminating the person’s services before the expiry of the six-month term.
Given the likelihood that the courts in South Africa will in future examine the use of agency workers more closely you should ensure that:
- your contractual arrangements with a temporary work agency are properly ordered in terms of the law,
- the services of agency workers are only procured if there are good operational reasons for doing so and it should be for genuine temporary work, and
- work contracts for agency workers are not continuously rolled over for long periods of time.
The longer the agency worker has been with the company, the more likely that the courts will find that the hiring client is the employer of the agency worker.