Reply To: The Meaning of the Con Court's TES Sole Employer Ruling

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Michael Bagraim


The Constitutional Court in the Assign Services (Pty) Ltd case has given its final and binding ruling on the widely known deeming provision. The Labour Court did rule a situation of sole employment when an employee of a labour broker is placed at a client for more than three months and that employee earns less than the threshold as set by the BCEA. The Constitutional Court has preferred the sole employer interpretation and there are certain implications to this, which implications will be discussed hereunder.

It must be noted up front that the Constitutional Court made this ruling “For the purposes of the LRA”. This means that the labour broker remains the employer for the purposes of all the other pieces of labour legislation including The Basic Conditions of Employment Act, BEE, Workmen’s Compensation, UIF etc. The Court has confined itself only in so far as the LRA is concerned. This means that for claims under The Labour Relations Act the client after the three month period would be deemed to be the employer. There was certainly no ruling with regard to the possibility of banning labour broking. The Court said, “The employee may still claim against the temporary employment service as long as there is still a contract between the temporary employment service and the employee. This is imminently sensible considering that the temporary employment service may still be remunerating that employee”. In other words, the Court is supporting the structure as it stands for the entire employment relationship between the labour broker and the employee. In other words, the labour broker is still generally liable as the employer. This is very much in line with the way in which the labour brokers have structured themselves.

One should look at Section 198(4) of The Labour Relations Act where a labour inspector acting in terms of the BCEA may secure and enforce compliance against the labour broker if it were the employer. The clients’ liability is that the client is deemed to be the employer of the placed worker and can thus be sued directly in the CCMA or the Labour Court in situations of an unfair labour practice, unfair dismissal or a retrenchment.

The indemnity granted to clients means that they will step in to the breach whenever there is a labour legal claim against the client. It is fundamentally important for the client to ensure that its legal advisors would be brought on board as soon as action needs to be taken under The Labour Relations Act.

There is no transfer of new employment but there is a deeming provision in our law that grants statutory attribution of responsibility as employer to the client. This responsibility has to be managed carefully and properly so as to ensure that the action taken in terms of The Labour Relations Act is done in accordance with the requirements of the legislation.

There is no change in the statutory attribution of responsibility or liability in relation to claims under all the labour legal statutes.

Temporary employment services will continue to play a role in workforce management and in fact a much greater role as they involve themselves with skills development and employment in the economy. This judgment in the Constitutional Court is the final statement on the matter and it is now important for business to be bedded down and for the relationship to be built as strongly as possible. What this judgment does do is to ensure that the structured relationship between the labour broker and the client must be very carefully handled