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

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Patrick Deale

I disagree with the notion that the labour broker continues to be an “employer” in any capacity after its employee is deemed to be an employee of its client after three months of employment. If this were the case, the labour broker would effectively continue to be a “co-employer” or “dual employer” with the client after deeming.This would perpetuate the traditional triangular relationship, albeit in a more limited way, after deeming. It was precisely this relationship which the ConCourt rejected in the Assign judgement in so far as it applies to employees below the threshold.

In doing so, it cut the broker out of the triangular relationship which exists between the broker, the employee and the client after deeming. In my opinion, the supposed retention of the dual employer relationship despite the “sole employer” ruling after deeming on the basis of the court’s reference “for the purposes of the LRA” is unsustainable.

The labour courts have a well established tradition of interpreting and applying the labour laws in a “purposive” way. The idea is to cut through the technical legal arguments and the range of possible interpretations to identify and apply the real purpose for which the particular the law was intended.

In the Assign judgement, the court identified the real purpose of the deeming provision is to provide a measure of job security for vulnerable employees below the BCEA minimum threshold. It applied this purpose by ruling that the client becomes the “sole employer” after deeming.

If it had intended to limit the scope of the deemed employment relationship only to the LRA and to thus retain the broker in the triangle for the purposes other than for the LRA – for the BCEA etc – it would have said so. The fact that it did not, does not sustain the argument that the dual employment relationship continues alongside the sole employment relationship which the court ruled is the real purpose of the deeming provision.

Apart from the legal considerations, the retention of the employee’s “limited dual relationship” with the broker simultaneously with his or her “full sole employer” relationship with the deemed employer would be impractical to manage and would inevitably lead to a range of new disputes.

The deemed employer could retain a relationship with the broker after deeming – not as a dual employer – but as an outsourced contractor to provide payroll and other admin services for the deemed employees. In this sense, although the Assign judgement cuts the broker out as an employer of deemed employees below the threshold, brokers are free to adapt their relationships from employer to service providers.

In this way, they can continue their relationships with their clients in commercial relationships. They can also continue as labour brokers for employees below the threshold if the jobs are genuinely temporary – and if the employees earn more than the threshold. To this extent, I agree that the Assign ruling certainly does not “ban” labour brokers – but it does exclude their continued role as an employer in the triangular relationship where vulnerable employees below the threshold are concerned.