Navigating Section 198 of the LRA: why 'do-it-yourself' temporary staffing is a litigation trap

For many South African enterprises, the utilization of temporary labour is viewed as a pragmatic response to seasonal demand or project-based requirements. However, under the stringent scrutiny of the Labour Relations Act (LRA), specifically Section 198, the mismanagement of "Do-It-Yourself" (DIY) temporary contracts is not merely an administrative oversight—it is a significant financial and legal liability.

Issued by IntelliStaff

2 Apr 2026

The Commission for Conciliation, Mediation and Arbitration (CCMA) remains inundated with disputes arising from the "deeming" provision. Without the protective architecture of a professional Temporary Employment Services (TES) provider, businesses frequently find themselves inadvertently granting permanent employment rights to temporary staff, leading to catastrophic shifts in payroll liabilities and industrial relations (IR) stability.

The Anatomy of the Section 198 'Deeming' Provision

The core of the litigation trap lies in Section 198A of the LRA. This section stipulates that any employee earning below the Earnings Threshold (currently R254,371.67 per annum) who is placed with a client for longer than three months is "deemed" to be an employee of that client for the purposes of the LRA, unless the placement is for a "justifiable reason."

The Risks of the 'DIY' Fixed-Term Contract

Many organizations attempt to bypass the complexities of labour law by issuing sequential fixed-term contracts. In a clinical legal sense, this is high-risk behaviour.

The Expectation of Renewal: If an employer repeatedly renews a temporary contract, the employee develops a "reasonable expectation" of permanent employment. At the CCMA, the burden of proof rests on the employer to demonstrate why the contract was terminated rather than renewed.
The Joint and Several Liability Trap: Under DIY models, the client is solely responsible for all IR fallout. There is no external buffer to absorb the shock of unfair dismissal claims or organizational restructuring.
Administrative Friction: Internal HR departments are often ill-equipped to manage the forensic tracking required to ensure that temporary contracts do not trigger "deeming" clauses through administrative inertia.

Comparative Risk Profile: DIY vs. Professional TES Management

The following table outlines the stark variance in risk exposure between internal temporary management and the IntelliStaff TES model.

Risk Factor	'DIY' Internal Management	IntelliStaff TES Management
Legal Employer Status	Client bears 100% of employment risk.	IntelliStaff is the primary employer; risk is mitigated.
Contractual Integrity	Often uses generic, high-risk templates.	Legally vetted, sector-specific contracts.
Deeming Clause Oversight	Manual tracking; high failure rate.	Automated compliance monitoring and rotation.
CCMA Representation	Client pays internal/external legal fees.	IntelliStaff manages IR disputes and representation.
Statutory Compliance	High risk of COIDA/UIF/PAYE errors.	Professional, audited payroll and statutory management.

COIDA: Compensation for Occupational Injuries and Diseases Act.
UIF: Unemployment Insurance Fund.
PAYE: Pay As You Earn (tax).

The Strategic Value of Risk Transfer

Professional TES management is not an administrative cost; it is a Risk Transfer strategy. By utilizing IntelliStaff as your TES partner, your organization implements a defensive perimeter between your operations and the CCMA.

IntelliStaff assumes the primary responsibility for:

Legislative Adherence: Ensuring all staff placements are aligned with Section 198 and the latest DEL (Department of Employment and Labour) directives.
Forensic IR Management: Managing disciplinary procedures, performance management, and retrenchment processes with clinical precision to prevent litigation.
Operational Continuity: Maintaining a fluid, compliant workforce that can scale without triggering the "permanent employment" liabilities that paralyze DIY operations.

Mitigate Your Litigation Exposure: A Strategic Consultation

Relying on internal "DIY" temporary staffing is an exercise in hope over strategy. In the South African labour market, hope is not a risk-mitigation tool.

IntelliStaff provides the structural expertise required to navigate the complexities of Section 198, ensuring your flexible workforce remains an asset rather than a liability.