The decision by the Labour Court on the interpretation of the newly amended Labour Relations Act on Tuesday, 8 September 2015 – ‘test’ case: Assign Services v CCMA and others – has brought optimism for stability to businesses, temporary workers and the Temporary Employment Services (TES) industry who have witnessed job losses and the folding of businesses during this time of uncertainty.
This is according to the Vice President of the Federation of African Professional Staffing Organisations (APSO), KC Makhubele who notes that all parties now have hope of ensuring the continuation of business and improving job opportunities moving forward.
He says, “The uncertainty experienced in the market related to who – the TES organisation or the client employer – is ‘deemed’ to be the employer of TES employees earning less than the earnings threshold (currently R205 433.30 per annum) who have been placed at the client for more than 3 months.”
Setting aside the previous ruling – by the CCMA Arbitrator – that the client organisation is the sole employer of TES employees after three months, the Labour Court’s judgement was that “deeming” should be interpreted as an augmentation rather than a substitution, and that the client organisation is a concurrent employer rather than the sole employer.
Acting Judge Martin Brassey found the following, amongst others:
- The TES remains the employer of its employees, beyond the three month period;
- The extension of the “deeming” provision is sufficient, only as far as extra protection of rights of TES employees in terms of the Labour Relations Act only;
- Nothing in the law states that TES is to be substituted by client after the three month period;
- The client is a concurrent employer for the purposes of the Labour Relations Act as both parties need to ensure compliance with the Labour Relations Act;
- The principle of “triangular employment relationship”, as per the original section 198, remains, and so does the substance of the intention of the legislature;
- TES placed employees have an election (only when there’s a dispute relating to rights under the Labour Relations Act) to prosecute such against either TES or client; and
- The CCMA Commissioner made material errors of law, requiring the Labour Court review.
“This means that the TES organisation retains the employment contract after three months and that the client organisation is a co-employer for purposes of the Labour Relations Act in terms of ensuring protection of the rights of TES employees,” Makhubele explains.
“Although the Act intended to streamline the country’s labour environment and protect vulnerable workers, the interpretation that TES employees transferred permanently to the client after a three month period, resulted in the opposite occurring,” he adds.
APSO is a founding member of the Confederation of Associations in the Private Employment Sector (Capes) which, through a survey of its members, found that only a small number of employees were permanently employed by client organisations (20%) in the 12 months following the amendment.
In contrast, just over half (50.9%) either had their employment terminated or were retrenched during this time.
Makhubele says, “Many companies, instead of permanently contracting their temporary workers, identified the need to down-scale as they could not afford to permanently employ the temporary workforce they required for a set time or specific project.”
“A knock-on effect, this resulted in the folding of a number of small to medium sized recruitment companies, a number of which were Black-owned,” he adds.
Moving forward, Makhubele highlights that if equal treatment issues arise, then liability needs to be addressed according to the provisions of law.
So, is this matter closed? Makhubele says, “The industry certainly believes so but we recognise the right for the National Union of Metalworkers of South Africa (NUMSA) to appeal the ruling should they choose to do so. We, however, believe that their prospects for success are poor.”
In terms of outstanding CCMA cases, he notes that, as it stands, the question of whether the TES is the employer is no longer in dispute but matters such as equal treatment can be dealt with.