How does the Constitutional court case affect clients and labour brokers?

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The Constitutional Court’s decision in handed down in August 2018 has put labour brokers and other Temporary Employment Services (TES) in a very tough situation. In Assign Services (Pty) Ltd v National Union of Metalworkers of South Africa and others the Court said that employees of a TES who earn below the threshold (i.e R205 433.30), will automatically, at the expiry of a period of 3 months, be fully integrated into the workplace of the TES’s client on the same terms and conditions of similar employees of the client

Many businesses use labour brokers in order to shift their labour law liabilities on to the labour broker. This is much more difficult now that the LRA has been amended, making the broker’s client liable in most cases for unfair practices perpetrated against broker employees. The above case clarifies the above mentioned change in the law and means that many employers now see no reason to employ lower level workers via labour brokers.

The business uses the TES staff to do the work that company employees would normally do. Temp. employment agencies and labour brokers often pay a very high price for taking over the labour law risks involved because:

  •  Becoming an employer in South Africa is fraught with legal dangers whether you are a TES or not;
  •  Agencies and brokers are often at the mercy of their business clients who may mistreat the TES staff and thus incur legal liabilities for the TES;
  •  Many employment agencies and brokers neither understand our labour law pertaining to TESes nor understand how to protect themselves from the legal liabilities imposed on them due to their client’s actions.

In the case of Jonas vs Quest Staffing Solutions (2003 7 BALR 811) Jonas was employed on a fixed-term contract by Quest, a labour broker, to render services as an insurance agent to Quest’s client. Jonas was charged with misconduct and given a final warning. However, although he did not repeat the misconduct, he was fired because the client “no longer required his services”. The broker pointed out to the arbitrator that Jonas’s contract permitted a dismissal if the client no longer required his services.

 The arbitrator found that, despite this contractual clause the broker had no right to dismiss the employee without first following the legal procedures laid down in the LRA. The broker was therefore forced to pay the employee for the balance of the fixed-term contract.

 In another case (Sibiya & others vs HBL Services cc 2003 7 BALR 796) the employees were employed by a labour broker to provide work to a client. The employees refused to change to a new shift system introduced by the client. When the employees arrived for work the next day to render services under the old shift system the broker’s client locked them out and they referred an unfair dismissal dispute.

 The arbitrator found that the employees had been dismissed for refusing to work under the new shift system. As the employees were entitled to refuse the change and as no proper dismissal procedures had been implemented the arbitrator ordered the broker to reinstate the employees with full back pay. If the broker was not able to persuade the client to allow the workers back on to the work site the broker would have been stuck with a number of employees reinstated on to its payroll but with no work to do.

However, the 2015 amendments to the laws on the use of labour brokers together with the above Assign case decision effectively render the client legally liable, in most cases, for legal non-compliance by the labour broker. Thus, where labour broker employees who are earning below the BCEA threshold are dismissed after three months’ employment, they have the right to take the client to the CCMA or bargaining council.

As a result of this development the value of labour brokers to employers wanting to evade liability at the CCMA is substantially reduced, and this puts the viability of labour brokers under strain.

 Labour brokers and employment agencies can avoid these legal pitfalls by using labour law experts. Reputable experts can advise on how brokers can be used legitimately and effectively. They can also draw up TES contracts with clients and with workers and ensure that employees are hired, disciplined and/or dismissed via legally sound and effective strategies and procedures.

BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or via e-mail address: [email protected]labourlawadvice.co.za. Website: www.labourlawadvice.co.za.

To attend our 27 July seminar in Johannesburg on  DEFEATING THE DANGERS OF DISMISSALS please contact Ronni via [email protected] or 0845217492.

 

 

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