‘It can no longer be debatable that, following this legislative directive, labour brokers may no longer hide behind the shield of commercial contracts to circumvent legislative protections against unfair dismissal. A contractual provision that provides for the automatic termination of the employment contract and undermines the employee’s rights to fair labour practices, or that clad slavery with a mink coat, is now prohibited and statutorily invalid.’
[Mosime AJ in SA Transport & Allied Workers Union on behalf of Dube & others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (2015) 36 ILJ 1923 (LC), commenting on the protection afforded to employees of labour brokers by the SA Labour Relations Amendment Act 6 of 2014].
On January 01, 2015 the introduction of stricter regulation was introduced amongst other as to the regulation of a-typical forms of employment in accordance with the provisions of the South African Labour Relations Act, 66 of 1995 (as amended – Labour Relations Amendment Act, no 6 of 2014) – (LRA) aimed at providing labour broking employees, employees employed on fixed term contracts, and part-time employees greater protection.
The Labour Relations Act came into effect on January 01, 2015 but many of the provisions in the LRA governing Temporary Employment Services (TES’) only came into effect on April 01, 2015 after the expiration of a three-month grace period. The amendments to Section 198 of the LRA provide increased protection to those employed in what was defined as non-standard work.
A-typical forms of employment / non-standard work – Why do these employees need particular protection?
With the passage of time, both employers and employees opted for atypical or new forms of employment. These new forms of employment departed from the standard model of full-time permanent (indefinite) employment, and included fixed-term employment contracts, seasonal employment, working from home and sub-contracting relationships or independent-contractor relationships.
Upon closer scrutiny of the substance and nature of the contractual relationship it in form appeared to be that of an independent contractor relationship, however the employee party de facto became economically dependent on one ‘employer’ or the principal party to the contract.
The employee party may therefore be called ‘dependent contractors’ and they were often vulnerable to the whims of the employer/principal as they were not afforded the minimum statutory employee benefits or fair labour practice protection in terms of Section 23 of the Constitution of the RSA in that contracts could be terminated at will by the ‘employer’ simply by exercising notice provisions, if any contained in the contract.
Clause 36 of the Explanatory Memorandum on the Objects of the Labour Relations Amendment Bill No. 16B of 2012 – Regulation of Non-Standard Employment and General Provisions (Chapter IX) that led to the amendments to the LRA ‘Non-standard’ employment in the Labour Relations Amendment Act of 2013 (LRAA) refers to:
– Part-time work;
– Fixed-term contract work; and
– Employment through labour brokers or rather Temporary Employment Services (TES).
The legislature recognised that permanent employment or employment for an indefinite period remain a major form of employment, however that the South African labour market over the past decade[s] experienced an increase in non-standard employment practices.
As these new forms of work emerged, it became more apparent that the protection afforded to traditional full-time employment does not adequately provide protection for non-standard employees. In theory, said non-standard employees enjoyed protection under the pre-amended statutory regime, but in practice the prevailing circumstances of employment made the enforcement of employment rights extremely difficult if not impossible.
The LRAA under Sections 198A, 198B and 198C extended significant protection to employees earning under the threshold as provided for in Section 6(3) of the SA Basic Conditions of Employment Act, 75 of 1997 (as amended – BCEAA, no 20 of 2013) (BCEA).
Sections 198A, 198B, and 198C protect labour broker employees, fixed-term contract employees and part- time employees (respectively), who earn below the threshold.
The said threshold is currently R205 433.30 per annum, but it is anticipated that it would increase with effect from July 01, 2015.
In an article published in the authoritative publication by Professor J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, (June 2014) the learned author observes, “But a close examination of the amendments discloses a distinct bias towards extending the rights of employees, or some of them, mostly at the expense (literal and figurative) of employers.”
Nowhere is this more apparent than in the new concept of “temporary employment”.
This effectively proscribes using employees provided by labour brokers or employing staff on fixed term contracts for longer than three months, provided they earn below R205 433.30 a year, unless such employment falls within specific exceptions allowed by the Act.
After the said three months period, all such employees must be treated in substantially the same manner as full time employees.
According to the article authored by Grogan supra this legislative innovation was a response to calls from labour to eradicate labour broking and to prevent cunning employers from evading the provisions of the LRA, in particular by using fixed term contacts and employing “temporary” employees.
The notion of “temporary service”, and the new statutory protection of these vulnerable employees, also reflects judicial distaste expressed in a number of judgments for arrangements by which employers could use and dispense with employees without being called to account for actions that would otherwise constitute unfair labour practices or unfair dismissals. [See, for example, SA Post Office Ltd v Mampeule  10 BLLR 1052 (LAC); Mahlamu v CCMA & others  4 BLLR 381 (LC); Dyokhwe v De Kock NO and others  10 BLLR 1012 (LC); National Union of Metal Workers of South Africa and others v Abancedisi Labour Services CC  11 BLLR 1123 (LAC); Kelly Industrial Ltd v Commission for Conciliation, Mediation and Arbitration and others  6 BLLR 606 (LC)].
In matters that recently served before the SA Labour Court one of the issues in contention was ‘automatic termination clauses’ in fixed term and more specifically incorporated in contracts commonly utilised by temporary employment services. In Kelly Industrial Ltd v Commission for Conciliation, Mediation & Arbitration & others (at 1877), where the employment contracts provided for automatic termination on completion of a particular project and the employees’ contracts were terminated before the completion of the project, the court found that the employees had been dismissed.
In SA Transport & Allied Workers Union on behalf of Dube & others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (at 1923), where the employment contracts provided for automatic termination should the client terminate its contract with the employer, the court found that the clause was invalid in terms of s 5 of the LRA 1995 as it was impermissible for employees to waive the protections against unfair dismissal afforded by the LRA.
In Mahlamu v CCMA & others  4 BLLR 381 (LC) Van Niekerk J, held that an employment contract which stipulated that it would expire automatically on termination of the contract between the employer and its client, or if the client no longer required the applicant’s service “for whatsoever reason” had the effect that the applicant’s security of employment was entirely dependent on the will or whim of the client. The client could at any time, and for any reason, simply state that the applicant’s services were no longer required and, that done, the contract would terminate automatically ex contractu, leaving the applicant with no remedy.
The Court held that employers and employees cannot contract out of the protection against unfair dismissal afforded to the employees whether through the device of “automatic termination” provisions or otherwise: a contractual device that purports to render the termination of a contract of employment as something other than a dismissal, with the result that the employee is denied the right to challenge the fairness thereof in terms of section 188 of the LRA, ‘is the very mischief that section 5 of the Act prohibits’.
The Court noted that, in terms of the recent amendments to the LRA, such clauses are now prohibited and statutorily invalid.
According to the article by Grogan supra while the amendments to the LRA would certainly discourage abuse of “labour broking” and “temporary” employment, it will also drastically reduce the flexibility which employers in many sectors require to meet the needs of cyclical markets or unforeseen contingencies. [Emphasis added].
The amendments insofar as they pertained to Temporary Employment Services (TES) or as they are commonly known as labour brokers were not well received, and caused a flurry of activity amongst labour brokers, their clients and lawyers acting on behalf of labour brokers for reasons set out hereunder.
Following thereon the South African Commission for Conciliation, Mediation & Arbitration (CCMA) published the first edition of a publication entitled, “Non – Standard Employment Newsletter – CCMA” under the editorship of Senior Commissioner Eleanor Hambidge an internationally recognised authority in employment law and amongst other developments in comparative jurisprudence as it pertains to a-typical employment within the South African employment environment and elsewhere.
The said publication is bound to become an authoritative work of reference as to important developments in South Africa especially within the field of the developments of employment law not only insofar as it pertains to how the positive law is interpreted and applied by Commissioners of the CCMA and Judges of the Labour Courts.
The purpose of the first edition of the said Newsletter on the Regulation of Non – Standard Work was to provide an update on current developments, in particular test cases to be heard where conflicting interpretations were attached to the “deeming provision”, as well as all the training interventions undertaken before and after the enactment of the Labour Relations Amendment Act, Act 6 of 2014, (the LRAA) which came into operation on January 01, 2015.
The publication Non – Standard Employment Newsletter – CCMA also contains a statistical comparative analysis of trends in the number of cases submitted to the CCMA for resolution as well as information as to the cause of action, outcome, albeit conciliated/mediated or arbitrated ‘adjudicated’.
In an article published in an authoritative publication by Professor PAK Le Roux,” Amendments to the Labour Relations Act – Part 1: Proposed changes on unfair dismissal, on-standard employment, strikes and lockouts” Contemporary Labour Law (May 2012) Vol 21, 95 – 99, the learned author summarised the statutory provisions as to a TES pre-LRAA and post-LRAA:
“Temporary employment services:
The amendments relating to TES’ envisage that –
- Additional obligations will be placed on the TES as employer.
- The provisions relating to joint and several liability will be strengthened.
- The client of a TES will, in certain circumstances, become the employer of a person assigned by a TES to that client. [Emphasis added].
The current legal position is that –
- In terms of section 198(2) the TES is the employer of the employee assigned to a client.
This means that when a person assigned to a client by a TES is claiming that an unfair labour practice has been inflicted on him, or that he was unfairly dismissed, his/her remedy is against the TES.
- There are circumstances prescribed in both the LRA and the Basic Conditions of Employment Act, 75 of 1997 (BCEA) where the client and the TES are jointly and severally liable for contraventions of a bargaining council agreement, an arbitration award regulating terms and conditions of employment, the BCEA and a sectoral determination
The LRAA amended the above position in three ways:
Additional obligations imposed on a TES:
The first amendment imposed additional obligations on a TES as employer.
These are –
- A TES will have to provide an employee it assigns to a client with written details of the terms and conditions of employment he/she would be entitled to whilst assigned to the client. The details to be provided are those prescribed in s 29 of the BCEA.
- The terms and conditions of employment provided to an employee of a TES would have to comply with any employment law, sectoral determination or bargaining council agreement applicable to a client that the TES employee has been assigned to.
The implication would be that a TES is not necessarily required to grant its employees the same terms and conditions of employment as those provided by a client to its employees, provided that it complies with the above.
In addition, the issue of whether an employee of a TES is covered by a bargaining council agreement or a sectoral determination must be determined by reference to the sector and area in which the client is engaged”.
“The client as employer:
The new s198A stipulates that, in certain circumstances, the client will be regarded as the employer of the person supplied to it by a TES. [Emphasis added].
The underlying principle seems to be that if a client is making use of a TES in what is regarded as an “acceptable” [bona fide/justifiable] manner, the person assigned to the client would be regarded as the employee of the TES.
However, where there is “unacceptable use” the client will be regarded as the employer.
This notwithstanding, the TES may still be held joint and severally liable in certain circumstances even though the client is now the employer.
Acceptable use, which is defined as a “temporary service”, takes place if the person assigned to the client performs work for the client –
- for a period of less than three months;
- as a substitute for an employee of the client who is temporarily absent from work;
- in a category of work and for any period of time which is determined to be a temporary service by a collective agreement entered into by a bargaining council, a sectoral determination, or a notice published by the Minister of Labour in terms of s 189A.
If the use of the services of a TES does not fall within one of the above circumstances, the person assigned to the client by the TES will be regarded as being employed by the client. This means that the client can be held liable for any unfair labour practices committed as well as for an unfair dismissal.
As far as terms and conditions of employment are concerned, the employee “deemed to be the employee of 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 differential treatment.
Section 198D states that a justifiable reason includes the application of a system that takes into account seniority, experience or length of service, merit, the quality or quantity of work performed or any other criteria of a similar nature that is not a discriminatory ground prohibited by the Employment Equity Act, 55 of 1998 (as amended).
There is one important limitation to the principle that the client would be regarded as the employer in certain circumstances; it would not apply in respect of employees who earn more than the amount specified in a notice published in terms of s 6(3) of the BCEA, namely R205 433.30 per annum.
Finally, section 198(4F) stipulates that the registration of a TES as a precondition for conducting the business of a TES.
JURISDICTION TO ENFORCE STATUTORY PROVISIONS?
Section 198D of the LRA provides for Commissioners of the Commission for Conciliation, Mediation and Arbitration (CCMA) jurisdiction to interpret and apply sections 198A-C and is also applicable to bargaining council panellists when hearing matters under the auspices of councils.
These empowering provisions imply a number of new issues that may form the subject matter of disputes:
– The power of Commissioners to enquire into contracts and conditions of employment;
– The power of Commissioners to override certain contractual provisions to inter alia allow for fixed-term contract employees to be considered indefinite employees in their workplaces;
– The power of Commissioners to evaluate the reasons for fixing the term of fixed-term contracts;
– The power of Commissioners to identify comparable full–time time or standard employees and ensure that non-standard employees receive the same treatment and benefits.
New powers and duties for Commissioners arising from Section 198A:
– S 198A(3)(b) Treat the client as the true employer if the worker is not engaged in a Temporary Service;
– S 198A(4) Determine whether the purpose of a termination was to avoid deeming;
– S 198A(5) Identify a comparable employee of the client and award conditions that are on the whole not less favourable (unless there are justifiable reasons for different treatment under s 198D(2).
The statutory amendments insofar as TES’s and their clients were concerned had not been well received by some. In an article published in Business Day Life, by Karl Gernetzky,”Labour brokers to tackle amended act in court” (April 20, 2015) it was reported that, “Umbrella bodies representing labour brokers…The African Professional Staffing Organisation (Apso) and industry body the Confederation of Associations in the Private Employment Sector (Capes) may go to court within a month to seek a declaratory order on how to interpret aspects of the act they say is unclear. [See explanatory notes hereunder].
The problem was the act’s [LRA] stipulation that temporary employees automatically become permanent employers after being employed for just three months…
This created uncertainty and was open to misinterpretation…However, Apso and Capes maintain that an employment relationship is a legal relationship under the purposes of the LRA, and that the provisions in the LRA cannot simply mean that an employee should be transferred into the books of the client”.
In the authoritative publication by Professor John Grogan, “Labour Litigation and Dispute Resolution” 2nd ed (2014) 307-308, the learned author observes “A declaratory order is an order in which a court settles a dispute over the existence or otherwise of some legal right or entitlement”.
Since the ‘Courts do not act as legal advisors’, applicants for declaratory orders must prove that they have an, ‘existing, future or contingent right or obligation’ that needs to be determined, that there is another interested party on which the order would be binding, and that the issue is not abstract or merely intellectual. [Emphasis added]. [See also: NAPTOSA & Another v Minister of Education, Western Cape & Others (2002) 22 ILJ 889)].
If importance to those intending to seek declaratory orders is that such orders will not be made if they permit the applicant to bypass the procedures laid down by the LRA. [See: Grogan p308].
At the time of drafting the article writer was unaware of whether the parties referred to above launched an application for a declaratory order in terms of Section 158(1)(iv) of the LRA.
Of importance is that the CCMA handed down two important arbitration awards/rulings concerning the interpretation of the ‘deeming provision’ provided for in Section 198 A (3) (b) of the LRA.
A summary of the provisions of Section 198 A (3) (b) of the LRA is recorded hereunder:
Section 198A (3) (a) and (b) provide:
“For the purposes of this Act, an employee:
(a) performing a temporary service for the client, is the employee of the TES terms of s 198(2); or
(b) not performing such temporary service for the client is-
(i) deemed to be the employee of that client and the client is deemed to be the employer; and
(ii) subject to the provisions of s198B, employed on an indefinite basis by the client”. [Emphasis added].
If the client has been deemed to be the employer, additional protections are applicable:
– The employee is employed indefinitely (unless a valid Fixed-term contract exists-see S198B);
– The employee must be treated like the client’s other comparable workers (unless justifiable reasons for the different treatment exist (s198D (2))
If the employee has become an employee of the client as a result of the deeming provision, alleged unfair dismissal proceedings must be instituted against the client.
PURPOSE OF THE ARTICLE
As was referred to above the CCMA and a CCMA Commissioner acting under the auspices of a bargaining council handed down two important arbitration awards/rulings concerning the interpretation and application of the ‘deeming provision’ provided for in Section 198 A (3) (b) of the LRA.
The first: Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.
The second: Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922.
In the first instance a brief analysis of the conflicting views as to the interpretation of the controversial deeming provisions would be recorded and assessed.
For the sake of brevity and convenience a follow up article would be published, Regulation of ‘Non-Standard’ or ‘A-Typical Employment’ in South – Africa [Part Two] wherein an analysis of the Value Logistics award/ruling handed down by the CCMA would be made with referral to the respective submissions and arguments raised by the legal representatives of the parties and the findings and determinations made by the presiding Commissioner.
At the outset it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.
DEEMED EMPLOYMENT – ‘A LEGAL FICTION’
In the article referred to supra by Professor J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, the new section 198A (3)(b) provides that, after three months, employees who had been rendering “temporary service” for broker’s clients are “deemed to be the employee of the client and the client is deemed to be the employer”. Furthermore, the employee is also “deemed” to be employed on a permanent basis by the client.
The key problem would be what the lawmakers meant by the word “deemed”.
According to Grogan one view held, is to the effect that the employees are deemed by law to be employees of the client, which means that they become the client’s employees de facto and de jure. On the strength of that view, the labour broker simply drops out of the picture after three months and the employee’s contract transfers (a la Section 197 of the LRA) to the client.
However based on another possible view, the word “deemed” carries a different meaning; It means that, while the broker remains the actual employer, the client is simply assumed to be the employer in the sense that the client now assumes the obligations and acquires the rights of an employer vis-à-vis the TES employee, but that the TES remains the employer in a suspended sense.
This would mean that the TES could lawfully continue to pay the employee, and perform other administrative functions for the client in respect of the employee.
‘Deeming’ a legal fiction?
In Black’s Law Dictionary ‘deem’ – ‘Deem: to hold, consider, adjudge, condemn …’ When by statute certain acts are deemed to be a crime, they are such a crime, and not a semblance of it, nor a mere fanciful approximation to or designation of the offence. [See: Com v Pratt 132 Mass 247].
A legal fiction is a status in law based on hypothetical or non-existent facts for example, in the event of adoption and corporate legal persona. A legal fiction has real, valid legal effect and should not be confused with the concept of a ‘rebuttable presumption’ which is valid only until disproven.
According to Du Toit et al “Labour Relations Law – A Comprehensive Guide” (2015) 6th ed, concerns have been raised about the term ‘deemed’ employer, which may be interpreted to mean that the TES remains the actual employer and the client becomes the ‘nominal’ employer in respect of statutory obligations: Grogan ‘The New Dispensation’ 3; Van Eck ‘Regulated flexibility and the Labour Relations Amendment Bill of 2012’ (2013) 46 De Jure 600 606. ‘Whether this will be the case remains to be seen’.
Questions arising from the ‘deeming provision’
When the TES employee is deemed to be the employee of the client:
- Does the contract of employment transfer to the client? Does this terminate the employment relationship with the TES?
- Is the client the employer only for the purposes of the LRA, but not for other employment laws?
- Are there two employers? AND IF SO:
– Is there a dual employer for LRA organisational rights, strikes, dismissals and etcetera?
– Who must pay UIF; tax, skills development levies, etcetera?
– Who must administer leave?
– Must the client consult the TES employee (or the TES) under s189?
– Who must pay severance pay?
– How is section 197 to apply?
DISCUSSION AND BRIEF ANALYSIS OF THE RECENT CCMA AWARD / RULING
Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.
The arbitration in this matter concerned the interpretation of the deeming provision provided for in Section 198A (3) (b) (LRA). The Applicant, Assign Services (PTY) Ltd, (Assign), a Temporary Employment Service as defined in section 213 of the LRA was present and represented by Senior Counsel.
The First Respondent, Krost Shelving and Racking (PTY) Ltd, (Krost), was not present at the hearing, however prior to the hearing signed a formal notice in terms of which it waived its right to participate in the proceedings and committed to abide by the CCMA ruling/award.
The Second Respondent, NUMSA, a registered union was represented by Senior Counsel as well.
Issues to be determined:
- To determine the correct interpretation of Section 198 A (3) (b) of the LRA (“the deeming provision”).
- The Applicant was of the view that the consequences of the deeming provision were that the placed workers remained employees of the Applicant, for all purposes and are deemed to also be employees of the First Respondent for purposes of the LRA. This position was referred to as the “dual employment position”.
- The Second Respondent was of the view that, the placed workers with effect from April 01 2015, were deemed to be employees of the First Respondent only, for purposes of the LRA. This was referred to in the award as the “sole employment” position.
The Applicant’s (Assign) arguments:
The Applicant (Assign) argued in favour of the ‘dual employment’. Counsel for the Applicant referred to S v Rosenthall (1) SA 65 A, and argued that the word “deemed” does not have a uniform meaning, It’s meaning and especially it’s effect depends on the context in which It is used In a statute and the purpose of the statutory provision, for purposes of the matter, it being Sections t98 and 198 A of the LRA.
Counsel further referred to the case of R v Haffeejee and another 1945 AD 345, where the court held that in determining the meaning of “deemed”, the court must examine “the aim, scope and object of the legislative enactment In order to determine the sense of its provisions.”
It was argued that the deeming provision did not serve to terminate the contractual relationship between the TES and the client, nor did it serve to terminate the contractual relationship between the TES and the placed workers, it in fact created greater protection for the placed workers by making both the TES and the client dual employers.
The Second Respondent (NUMSA) arguments:
Counsel also referred to Rosenthall and to R v County Council of Norfolk 65 (1891) QB division, and submitted that the Court indicated that the word “deem” is often used in legislation in a “very loose sense”, and thus could easily be equated or replaced with the word ‘is’.
Thus he argued that, the use of the word deemed In Section 198 (3) (b) (i) creates a legal fiction, in other words a legal rule that in the circumstances specified In Section 198 (3) (b) (i) the client [is] the employer of the placed workers, irrespective of what the situation would have been If the legal rule had not been enacted by the legislative provisions.
Section 198 (4A) did not create any new liabilities for the parties concerned, in that the section merely provided for an opportunity for an employee to institute proceedings against a party that is liable. The said section applied to all employees placed by a TES and not only ‘deemed employees’.
It was argued that Section 198 A (3) (b) (i) does not expressly mention that the client becomes the employer, the wording of Section 198 A (3) (b) (ii), supports the sole employment argument, when it reads “subject to the provision of Section 198 B, employed on an indefinite basis by the client”.
In terms of Section 198 A (5), the legislature actually intended to create better employment conditions for the placed workers than those enjoyed by them under the TES. Therefore a simple transfer of employment In terms of Section 197 of the LRA would not suffice.
THE CCMA AWARD – A BRIEF ANALYSIS AND COMMENTARY
At the outset the Commissioner recorded that in terms of Section 3 (a) of the LRA as amended: “Any person applying the Act must interpret its provisions to give effect to its primary objects”.
In order to correctly interpret the effect and application of the deeming provision in terms of Section 198 A (3) (b) (i) of the LRA as amended, ‘one needs to consider the explanatory memorandum (memorandum of objects) of the 2014 LRA Amendments.
The Commissioner therefore adopted what is commonly known as a purposive approach to the interpretation of the LRA and having due regard to Section 23 of the Constitution of the RSA.
In terms of the explanatory memorandum of objects Section 198 has been amended in order to address more effectively certain problems and abusive practices associated with temporary employment services (TES) or what are more commonly referred to as “labour brokers”. The main thrust of the amendments is to restrict the employment of more vulnerable, lower paid workers by a TES to situations of genuine and relevant temporary work and to introduce various further measures to protect workers employed in this way. [At 5.8].
The Memorandum of objects further goes on to explain the additional protections afforded to vulnerable employees by Section 198 A in relation to “termination to avoid deeming” and “pay parity” of deemed employees to comparable employees of the client. [At 5.7].
“Having considered the Memorandum of Objects it is clear to me that while I accept that determining the correct Interpretation of the deeming clause is not an easy task…I am convinced that the correct interpretation is the one that will provide greater protection for the vulnerable class of employees identified by Section 198A of the LRA.
The Second Responded on the other hand argues that a “dual employer” interpretation will create confusion, uncertainty and prejudice for the vulnerable employees envisioned by Section 198A of the LRA. In this regard Professor Paul Benjamin in his article “to regulate or to ban” indicates that there is evidence from studies of arbitration awards and sociological research, that employees are often not aware whether they are employed by an agency or by the business where they work.
According to Professor Benjamin the triangular relationship, namely between the client, the TES and the employee becomes somewhat convoluted where it in substance is no longer temporary and the employee has ‘a closer relationship with the client than the agency’.
This artificial construction and (one that gives rise to immense scope for abuse), to make the agency the employer of an employee working on an ongoing indefinite basis for a client merely because the employee’s pay is routed through the agency.
The Commissioner found that the deeming provision in Section 198A (3)(b) should be Interpreted akin to how the law deals with the concept of “adoption”. In the case of “adoption” a legal fiction is also created, in that, for purposes of the law, the adoptive parent is regarded as the parent of the adopted child.
In this regard the best interest of the chid is considered to be in the scenario where the adoptive parent is afforded full rights in terms of guardianship and/all obligations in terms of parenting and upbringing of the adopted child. The law does not regard a biological parent and the adoptive parent as dual parents, as doing so would lead to uncertainty and confusion. [At 5.12].
Equally in the case at hand there are a number of problems that could arise in the “dual employment” interpretation, for example, who would be responsible for the disciplining of the placed workers and who’s disciplinary code would be applicable, that of the TES or that of the client?
The following questions and propositions were posed in the award:
– How would “re-instatement” occur if there is dual employment?
– Clearly this would lead to greater uncertainly and confusion for the vulnerable employees the Act is seeking to afford greater protection too.
Having dealt with and interpreted the wording of Sections 198A (3) (b) (i) and 198A (3) (b) (ii) of the LRA; as well as the relevant clause in the memorandum of understanding, it was found ‘that the correct interpretation of Section 198A (3) (b) of the LRA Is that after the three months have elapsed, the client becomes the sole employer of the placed workers who are earning below the BCEA threshold’.
Therefore, and so it was found, Section 198A (3)(b) should be interpreted to mean that “deemed” means that the client becomes the sole employer of the placed workers for the purposes of the LRA, provided that they earn below the threshold and that the three months period referred to supra elapsed.
Having been privy to reports published in various South African news papers shortly after delivery of the award and the opinions expressed therein by spokespersons of various organisations that represent agencies that provide temporary employment services, it became very much apparent that an application for the review of the award in the South African Labour Court may be forthcoming.
In the light of the aforementioned possibility writer deemed it appropriate and possibly in his best interest to give notice of reservation of the right to comment at an appropriate time and on a date to be determined.
However and shortly after the posting of this article the opportunity presented itself to read commentary and observations made by all and sundry in the form of fierce criticism directed against the CCMA as well as the presiding Commissioner based on the grounds of disagreement and discontent with the interpretation of the LRA insofar as the amendments to Section 198A are concerned.
To those a comment was deemed necessary by referral to and for edification to the authors thereof, to wit the legal maxim “iudicis est ius dicere non dare”, which means “it is the province of a judge [including the odd CCMA Commissioner] to expound (interpret) the law not to make it”.
July 05, 2015
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