The interpretation of Section 198A(3)(b) of the Labour Relations Act 66 of 1995 (“the Act”) is an issue that has found itself before the South African courts on a frequent basis over the last couple of years.
In 2015, Assign Services (Pty) Ltd (“Assign”) which is a temporary employment service (“TES”), or labour broker, placed workers at Krost Shelving and Packaging (Pty) Ltd (“Krost”), where they rendered services to Krost for a period exceeding the three-month period and continued employment on a full time basis.
A dispute arose relating to the interpretation of Section 198A(3)(b) of the Act and whether the TES or the client, or both, were the employer of the employees.
Section 198A(3)(b) of the Act stipulated that if an employee earns below the threshold and renders TES to a client for more than a three-month period, the employee will be deemed to be employed by the client.
In 2015, the CCMA held that the word “deemed” meant that the client becomes the sole employer of the employee. Assign brought an application in the Labour Court to have the CCMA award set aside.
Labour Court (“LC”)
The LC reviewed and set aside the award by the CCMA and took the approach that a dual employment relationship exists between the TES, the client and the employee, and that this approach provides the employee with the most protection.
NUMSA applied for leave to appeal to the Labour Appeal Court, which was refused by the LC.
Labour Appeal Court (“LAC”)
In March 2016, the LAC granted leave to appeal and the Confederation of Association in the Private Employment Sector (CAPES) and CWAO were admitted amici curiae.
The LAC held that the sole employer interpretation of Section 198A(3)(b) of the Act protects the rights of the employees the most.
In this regard, after the deeming provision kicks in, the client becomes the sole employer of the employee.
Assign applied to the Constitutional Court for leave to appeal the LAC’s ruling.
Constitutional Court (“CC”)
The CC held, on an interpretation of Section 198(2) and 198A(3)(b) of the Act, during the first three months of the employment relationship, the TES is the sole employer and once the employee works for a period exceeding the three months, the client becomes the sole employer of the employee.
The CC further held that based on a plain interpretation of the wording of Section 198A(3)(b) of the Act, this section supports the approach of the “sole employer”.
If an employee is employed to render temporary services to a client, during the first three months, the TES is the sole employer of the employee and after the expiry of the three-month period the client becomes the sole employer of the employee.
Written by Simone Jansen van Rensburg and supervised by Pierre van der Merwe, 30 July 2018