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Temporary Employment Services - new ruling

12 July 2017

South Africa

The Labour Appeal Court has set aside the judgment of Brassey AJ in the matter of Assign Services and NUMSA on 10 July 2017. 

The case dealt with the relationship that has been created by the amendments to the LRA in respect of Temporary Employment Service (TES) providers and their clients. Brassey AJ set aside Commissioner Osman's arbitration award in which he found that the client of Assign was deemed to be the “sole employer” of the placed employees, on the basis that Commissioner Osman had committed a material error of law.

On appeal to the LAC, the full bench specifically dealt with the interpretation of section 198A(3)(b)(i) and the deeming provision. The LAC has now held that the Labour Court had misdirected itself in its interpretation of section 198A(3)(b) and dismissed Assign's review application. 

The LAC holds the view that a placed worker for the purposes of the LRA is deemed to be the employee of the client and the client deemed to be the employer of the worker. Furthermore, a worker in this situation is, subject to the provisions of section 198B, employed by the client of the TES on an indefinite basis. Accordingly the sole employer interpretation is in agreement with the main thrust of the amendments to section 198 and section 198A. The dual or parallel employer interpretation is therefore not in line with the context of section 198A and the purpose of the amendments. 

The sole employer interpretation does not in the court's view ban TESs, but merely regulates the TESs by restricting the TESs to “genuine temporary employment arrangements in line with the purpose of the amendments to the LRA”. Accordingly the TES remains the employer of the placed employee until the employee is deemed to be the employee of the client. The TES will further be responsible for its statutory obligations regarding the placed workers for as long as the deeming provision has not taken effect. 

In conclusion, the court has held that there is no provision in the amendments to the LRA that the TES and the client become joint employers on the expiration of the three month period. Ultimately the purpose of the deeming provision is not to transfer the contract of employment between the TES and the placed worker to the client, but to create a statutory employment relationship between the client and the placed worker.

Considering the impact of this case, there is no doubt that this matter will be referred to the Constitutional Court.

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