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#OUTSOURCINGMUSTFALL

The retention of Labour Brokers, or rather Temporary Employment Services (TES) as they are properly defined in legislation, was a hotly disputed topic at the time of the amendments to the Labour Relations Act (LRA) which came into effect in January 2015. COSATU and its affiliates pursued a total ban on the practice of labour broking. Whilst a total ban was not achieved, the amendments to the LRA significantly strengthens the job security of individuals who are employed through a TES. The exact meaning, scope and extent of the amended provisions remain something of a debate. Who the de facto employers of TES employees are, is the central question thereto. In terms of section 198A(3)(b), TES employees earning below R 205,433.30 are deemed, for the purposes of the LRA, to become the (indefinite) employees of their TES’s client after three months.

Assign Services and NUMSA sought a declaratory award in the CCMA as to what the proper interpretation of the LRA amendments are, and specifically what the meaning of “deemed for the purposes of the Act” means. NUMSA’s contentions were that, after a three month period, all TES employees become the Employees of the TES’s client only, and are no longer the employees of the TES. Assign Services contended that a relationship of so-called “dual employment” is created. The CCMA favoured NUMSA’s view. The Court however on review rejected both contentions. Notwithstanding the fact that onerous duties (which are usually borne by the de facto employer only) are placed on the clients of TES, the court was of the view that TES Employees are employed by the TES only. Subsequent to the amendments and the judgment (which may yet be appealed), a trend is emerging in which unions make concerted efforts to undermine the role of TES in the workplace. This is done by them inter alia not recognising the TES as the employer, but rather the TES’s clients. Particularly in collective bargaining and with mutual interest matters, they simply refuse to deal with the TES.

As the law stands, the TES remains the employer of “outsourced” employees. The clients of the TES however, have overlapping duties and responsibilities in terms of the LRA. Businesses making use of TES should be mindful of their increased responsibilities, and newly legislated liabilities which is contained in section 198A of the LRA.

Author:  Conan O’Dwyer (Senior Associate) 
(Employment & Labour Department) (PMB Office)
E-mail:  conano@tmj.co.za