LABOUR ONLY SUBCONTRACTORS ARE LABOUR BROKERS
By Mark Mfikoe, National Director, ECA(SA)
The Labour Appeal Court ruling in Numsa versus Assign Services and Others applies to labour only subcontractors with equal force. Labour only subcontractors and labour brokers both fall cleanly within the definition of ‘Temporary Employment Services’ in the Labour Relations Act. The comfort that we are using labour only subcontractors and are, therefore, not affected by rulings made against labour brokers must disappear very quickly. A temporary employment service is defined in section 198 of the LRA as a “person who, for reward, procures for or provides to a client, other persons – (a) who perform work for the client; and (b) who are remunerated by the temporary employment service”. In terms of the Act, a person whose services have been procured for or provided to a client by a temporary employment service is the employee of the temporary employment service and the temporary employment service is the employer of such a person. This is as clear as daylight.
What is a temporary service, though? This is where the trouble begins, in my assessment. This is the case not because the law is unclear but because this is where, in practice, the temporary employment service and their clients begin to break the law. Section 198A defines a temporary service as, “work for a client by an employee, (a) for a period not exceeding three months; (b) as a substitute for an employee of the client who is temporarily absent; or (c) in a category of employment and for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council”. In the electrical bargaining council, for example, a general worker is in a temporary employment category for up to twelve months. At the expiry of twelve months, he must be upgraded to the level of Electrical Assistant.
The story changes completely after three months. The employees procured for the client by the subcontractor or provided by the subcontractor to the client become employees of the client after three months. As long as you know that these employees are not replacing employees that are temporarily absent and these employees are not doing work that is described by a collective agreement as temporary, please accept this truth if you are the client, (that is if you use employees supplied by a temporary employment service): The employees are yours.
This matter was settled by the Labour Appeal Court of SA in Numsa v Assign Services and Others in a ruling that was issued on 10 July, 2017. The Court made it clear that the employees are no longer employed by the temporary employment service but by the client of the temporary employment service. Such employees are not employed on the basis of the contract of employment that may have existed between them and the temporary employment service. Their conditions of service with the temporary employment service are not transferred to the client. According to the Labour Appeal Court, which ruled in favour of Numsa, “the employment relationship between the placed worker and the client arises by operation of law, independent of the terms of any contract between the placed worker and the temporary employment service”. The deeming provision creates this contract. Even if the subcontractor continues paying the salaries or wages of the affected staff, this does not change the legal fact that a statutory employment relationship has been established between the employee and the client.
It is widespread practice within our industry to use labour-only subcontractors. For the LRA, these are not distinguished from the labour brokers. They provide a temporary service. They are not banned. They can only supply you with labour for a period not exceeding three months. They can only provide a temporary service. The employees that they provide are protected from being permanently temporary workers. I can go into the various angles that the Labour Appeal court dealt with but none of those will change this fact: After three months, those employees who are provided by a temporary employment service to a client, not replacing temporarily absent employees and not doing work described in the Bargaining Council’s Collective Agreement as temporary, are indefinite employees of the client. This submission does not apply to employees earning above the earnings threshold. In this industry, employees employed in this fashion, earn below the earnings threshold.