Decisions on 'Deemed employee provisions' in LRA re labour brokers

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Amendments to the LRA came into operation on 1 January 2015. A particularly controversial amendment, which affects the labour broking industry and required clarification, centred around the 'deemed employee provisions' in the new section 198A(3)(b). This section provides that an employee of a labour broker earning below the threshold will be deemed to be the employee of that client if the employee is assigned to that client for more than three months.

The debate which arose regarding section 198A(3)(B) relates to whether the deeming provisions would create a dual employment relationship amongst the labour broker employee, the labour broker and the client, or whether the provisions contemplate a sole employment relationship between the labour broker employee and the client.

Court's decision

Two conferring decisions have recently been handed down by two separate employment forums, pronouncing upon this pertinent issue. These decisions were handed down by the CCMA in the matter of Assign Services Proprietary Limited v Krost Shelving and Racking Proprietary Limited and National Union of Mine Workers of South Africa ECEL 1652-15, and in the National Bargaining Council for the Road Freight and Logistics Industry ("NBCRFLI") in the case of Refilwe Esau Mphirime v Value Logistics Limited / BDM Staffing Proprietary Limited FSRFBC 34922.

In both decisions, the CCMA and the NBCRFLI found in favour of a sole employment relationship and held that if an employee provides services to the client of a labour broker in a manner which falls outside the scope of the definition of temporary services, and earns below the threshold, that employee will be deemed to be the employee of the client. In other words, the employment relationship between the labour broker and the employee would cease to exist.

Importance of this case

The findings of the CCMA and the NBCRFLI are not uncontroversial and it is inevitable that the Labour Court and the Labour Appeal Court in due course, will be called upon to review these findings. Although these decisions have potentially far-reaching consequences for the labour broking industry, its employees and clients, it should be borne in mind that these decisions do not negate the continued use of labour brokers, but seeks to regulate such use.