THE BATTLE OVER S198A(3)(b) - WHO'S MY EMPLOYER?

Following the amendments to the Labour Relations Act which came into effect earlier this year, employers, employees and the legal fraternity are keeping a close eye on developments in the CCMA and Labour Courts for guidance on the practical implications thereof. This year has seen one of the most controversial and eagerly anticipated post amendment cases unfold – the battle over S198A(3)(b) which provides that the client of a TES is deemed to be the employer of TES employees who earn less than the earnings threshold (currently R205 433.30 pa) and who have been placed at the client for more than 3 months.

 

The question which appeared to be left unanswered by the express wording of this amendment was "What happens to the employment relationship between the TES and its employees once the latter are deemed to be employed by the TES client?

 

In Assign Services (Pty) Ltd v Krost Shelving & Racking (Pty) Ltd & NUMSA [ECEL1652-15], the CCMA was tasked with determining this very issue.

Assign Services, the TES, held the view that the deeming provision created a "dual employment" relationship meaning that both the TES and client are the employer of the TES employees for the purposes of the LRA. The client, Krost Shelvings, argued that the deeming provision created a "sole employment" situation, meaning that the deemed employees become the employee of only the client.

 

While the arbitrator supported the "sole employment" approach, on review, the Labour Court found that the TES continues to be the employer of the TES employees, even after the deeming provision kicks in. The Court accordingly accepted the "dual employer" approach and overturned the award.

 

The Court found that there is no reason, in principle or practice, why the TES should be relieved of its statutory rights and obligations towards TES employees merely because the client acquires a parallel set of rights and obligations towards the employees.  The deeming provision accordingly does not invalidate the contract of employment between the TES and TES employees but rather adds an extra employer into the mix with an equal set of rights and obligations.

 

This judgment is unlikely to be the final say on the interpretation of S198A(3)(b) as it raises more  questions than it answers.  One such example being “to whom does the employee report?" We are sure to see some interesting cases making sense of the aftermath of this judgment.  Watch this space!

Author:  Qudsiyyah Majam (Employment & Labour Dept)
            (Umhlanga Office)
Tel:       031 – 566 2207
E-mail:  QudsiyyahM@tmj.co.za