Labour brokers and temporary employment services: what are they?

Introduction

It has long been common practice for employers to make use of so-called employment agencies or temporary employment services (“TES”). Typically,Labour law false allegations this is where an employer would approach a third party to supply temporary or short-term employees for a specific period or project. This article will explore the relationships between the various parties in this regard and how it has developed.

The pros and cons for employees and employees

Both employers and employees can have various reasons for making use of such agencies.

On the part of the employee, it is often easier to find work by approaching an agency who will notify them of work availability as and when it becomes available. On the other hand, these employees face uncertainty in terms of working hours and job security, as they must essentially be available on call.

On the part of the employer, the use of labour brokers or temporary employment services offers many potential benefits. Employers can reduce costs by only using employees on a basis as needed, and often do not offer employees the same benefits or terms as fixed term employees.

Recent developments & applicable legislation

Section 198 of the LRA is the primary legislation which makes provision labour brokers and temporary employment services. Section 198 has set out strict requirements as to when TES may be used:

  • the employee earns less than the threshold, currently R205 433,30;
  • A TES employee is assigned to a client for a period of less than three months;
  • A TES employee is assigned to a client as a substitute for an employee who is temporarily absent from work;
  • A TES employee is assigned to a client to perform a category of work which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published in the Government Gazette by the Minister of Labour.

Amendments to the Labour Relations Act, 66 of 1995 (LRA), have however had a significant impact on labour brokers and temporary employment services.

Of particular significance is the amendment of section 198A(3)(b)(i) of the LRA. Section 198A(3)(b)(i) essentially holds that under certain circumstances a TES employee is deemed to be an employee of the client or third party.

More specifically, there is now a presumption that any employee working for a period of longer than three months is deemed to be an employee of the client. The implications hereof is that a client utilising an employee via a labour broker may not treat that employee less favourably than, and must remunerate them on the same terms as their won employees. The Labour appeal court confirmed this approach in the case NUMSA v Assign Services and Others [2017] ZALAC 44. Specifically, the Labour Appeal Court rejected the so called dual or parallel interpretation which would imply that both the TES and the employer were the employers of the employee and rather, held that employees became or were “deemed” to be fully integrated in terms of section 198A(3)(b)(i) once the provision was triggered. The Constitutional Court later upheld the Labour Appeal Court’s decision in Assign Services Pty Ltd v NUMSA and Others [2018] ZACC 22, and rejected the dual approach.

Conclusion

In conclusion, TES and labour brokers should be cautious, insofar as TES is only intended to regulate those employees who are truly temporary in nature, such as standing in for another employee. In light of the Assign case, Employers should be careful not to treat TES employees any differently or less favourably within the three month threshold, as this may essentially be seen as abuse of the TES system.

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