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  Legalwise Wiseup  
     
  June 2016  
     
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What did the judge say?
The labour broker or their client. Who is the employer?

Assign Services (Pty) Ltd v Commissioner for Conciliation, Mediation and Arbitration and Others.

“Labour brokers”, “temporary service”, “clients”, “longer than 3 months”, “deemed employers” are all confusing terms currently in the news. This case clarifies the current uncertainty brought about in the recent changes to the Labour Relations Act.

Facts of the case:

  • The applicant, Assign Services (Pty) Ltd, is a labour broker. The labour broker entered into an agreement with its client, the second respondent, Krost Shelving and Racking (Pty) Ltd, in terms of which the labour broker's employees would work for the client for a determined period of time. Some of these employees were members of the first respondent, National Union of Metal Workers of South Africa (“NUMSA”).
  • After the recent changes to the Labour Relations Act (“LRA”), the labour broker and NUMSA had different opinions about who the employer of these employees was after a period of 3 months had passed. As a result the dispute was referred to the CCMA for interpretation. The opinions were as follow:
    • The labour broker was of the opinion that the employees remained the labour broker's employees, and that the employees were only deemed to also be the employees of the client for the purposes of the LRA.
    • NUMSA was of the opinion that the employees are the client's employees and not the employees of the labour broker. 
  • The CCMA concluded that the client became the only employer of the labour broker's employees after the expiry of 3 months; provided that they are compensated below the legal threshold. The labour broker requested the Labour Court (“LC”) to review the arbitration award of the CCMA.

What the court said:

  • The changes to the LRA provide that a labour broker's employee working for a client for a period longer than 3 months are deemed to be the employee of that client.   
  • This means that after a period of 3 months, a dual employment relationship exists between the labour broker and its employee and between the client and the said employee.
  • The labour broker will be bound by the contract of employment entered into with its employee and the client will be bound by the LRA, which deems the client to be the employer of the employees.

Conclusion:

  • In light of the above, the commissioner committed an error in law in finding that the client is the sole employer of the employees.
  • Due to the fact that the employees had worked for the client longer than 3 months, both the labour broker and the client were considered to be the employers of the employees.
  • This means that employees may proceed against either the labour broker or its client when their legal rights are breached.

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