Using the services of a labour broker can make you an employer

 

A recent Constitutional Court case is of relevance to labour brokers, employees and those who utilise the services of labour brokers.

In this case, a company was in need of additional workers. The company entered into an agreement with a labour broker (described in legislation as a Temporary Employment Service or TES). Subsequently, 22 workers were placed with the company (described as the client).  The 22 placed workers rendered services for more than three months.

A legal dispute arose as to who was considered to be the employer of the 22 workers. The TES was of the opinion that both it and the client were employers. However, the trade union was of the opinion that there was only one employer, the client.

The Constitutional Court agreed with the trade union’s argument. The court stated that, in terms of section 198A(3)(b) of the Labour Relations Act (“the Act”), the client is deemed to be the sole employer of an employee if:

  • the employee earns below the threshold of R205 433.30 per annum; and
  • the employee is not rendering a temporary service.

A temporary service is defined as work by an employee for a client:

  • for a period not exceeding three months; or
  • as a substitute for another employee of the client who is absent temporarily; or
  • for a period determined by a bargaining council, sectoral determination or by the Minister.

In this matter, the 22 placed employees earned less than the legislated threshold. Further, they were employed for more than three months. As such, they were not rendering temporary services.

The court held that the placed employees only had a single employer, this being the client. The court based its interpretation on the purpose of the various amendments to the Act, which were enacted to protect marginal workers, to regulate the industry, and to ensure that temporary services are genuinely of a temporary nature.

Individuals and businesses who make use of a TES should also note section 198A(5) of the Act, which states that placed employees who are deemed to be employed by the client: “must be treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is a justifiable reason for different treatment.”

A further section which should be noted is section 198A(4) of the Act. This section states that if an employee’s services are terminated to avoid the client being deemed to be the employer, or as a result of the employee exercising a right in terms of the Labour Relations Act, the termination will be considered to be a dismissal.

 

                                                            Imraan Chohan                                                                                       Carlo Torino 

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                                                    Email: Imraan@venns.co.za                                                                    Email: Carlo@venns.co.za