ConCourt assigns sole employer role to clients of TES

The Constitutional Court has taken a huge leap towards protection of the Temporary Employment Services (TES) employees (TES – commonly referred to as labour brokers) in the case of Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and Others [2018] ZACC 22.

The Constitutional Court held that section 198 A(3)(b) Labour Relations Act (LRA), when interpreted in context, supports the interpretation that when employees are not performing a temporary service, as defined, they are deemed to be employees of the TES client. The Constitutional Court further held that this is line with the purpose of the 2014 amendments, the primary object of the LRA and the right to fair labour practices as guaranteed in section 23 of the Constitution. This judgment therefore finds that post the three months, the client becomes the sole employer, for the purposes of the LRA, of the placed employees. 

This landmark judgment applies to TES employees who earn below the Basic Conditions of Employment Act (BCEA) threshold of ZAR205 433.30 and prescribes that these employees, who are contracted by TES to client(s) for longer than three months, then become permanent employees of the client. These employees are employed on the same contractual terms as other employees of the client performing the same or similar work, and are afforded the same benefits, as well as the same prospects of growth and job security. 

It must be stressed that to dismiss an employee to avoid the implication of the deeming provisions of the sole employer interpretation will be considered a dismissal and the placed employees will be well within their rights to exercise the remedies afforded by the LRA and the Constitution. 

In handing down judgment, Justice Dlodlo stated that, "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…".  

However, the judgment has resulted in further questions that are likely to be the subject of litigation. The judgment has practical implications on the placed employees, the client employer and the TES. The specific deeming provision specifically finds application within the LRA, however the Constitutional Court was not asked to deliberate on the impact this may have on other legislation such as the Income Tax Act, the BCEA, and Skills and Development Act, as well as the Occupation Health and Safety Act, where issues may arise regarding who the true employer is. 

Another area that needs consideration arising from the sole employer interpretation is in instances where, after the three months period, the placed employee then becomes a permanent employee of the client of the TES on less favourable terms and conditions than the placed employee enjoyed as an employee of the TES. 

Further questions arise from the judgment, such as given that the amendments to the LRA have been in effect since 2015, does this then imply that the placed employees who have now been deemed to be employees of the client will have claims in respect of the remuneration they would have received had they been made permanent in 2015. The question of prescription will also become a burning issue as the LRA amendments have been effective for more than three years now. 

The Constitutional Court has provided clarity as to who placed employees should report to after three months, however there remain grey areas that need to be adjudicated on. Notably, while there are employers who have been proactively implementing the sole employer interpretation, others may now have to re-evaluate their business model, budget constraints and operations, and adjust accordingly. 

Article co-authored by Kylie Slambert, candidate attorney


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