Recent judgment on the placement of temporary employees by labour brokers

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The Constitutional Court recently delivered a landmark judgment regarding the placement of temporary employees by labour brokers.

It has become common practice for labour brokers to place temporary employees with clients. This often results in a situation where a temporary employee is placed with a client for an indefinite period, with no prospect of permanent employment. It also creates a conundrum for temporary employees, who are not able to bring any labour claims against the client of the labour broker, as the labour broker is regarded as the employer of the temporary employee.

The judgment by the Constitutional Court in Assign Services (Pty) Ltd v National Union of Metalworkers of South Africa and Others concerned an appeal from the Labour Appeal Court and dealt with the interpretation of Section 198A(3)(b) of the Labour Relations Act (the “LRA”).

This section of the LRA provides that, after a period of not less than three months, a temporary employee who earns below the stipulated income threshold is deemed to be the employee of the client of the labour broker.

The interpretation of this provision was brought before the courts, as the section was not clear on whether, after a period of three months, the temporary employee ceased to be an employee of the labour broker and became an employee of only the client, or whether a temporary employee became an employee of both the labour broker and the client.

The CCMA and the Labour Court considered the matter, which was then taken on appeal to the Labour Appeal Court. The Labour Appeal Court found that the client of the labour broker became the sole employer of the employee after a period of three months, and that the employee ceased to be an employee of the labour broker.

The finding of the Labour Appeal Court was upheld by the Constitutional Court. For the first three months of placement by the labour broker, the employee will remain an employee of the labour broker. Thereafter, the employee will become an employee of the client with whom he or she was placed by the labour broker. The Constitutional Court found that this finding is consistent with the spirit of Section 23(1) of the Constitution, which provides that “everyone has the right to fair labour practices”.

This ruling is expected to bring about much-needed change in the labour broker industry. Clients of labour brokers should be aware of the implications of this judgment.

For further information regarding labour matters, please contact:

 

Clint van Aswegen | Partner

E: c.vanaswegen@bissets.com

Areas of Expertise: Commercial Litigation | Civil Litigation | Property Litigation | Employment Law | Insolvency Law

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)