Johannesburg - The Labour Court ruled this week that regarding the Temporary Employment Services (TES) industry, the client organisation is a concurrent employer rather than the sole employer.
The court had to interpret the word "deeming" in the newly amended Labour Relations Act and found it must be regarded as an augmentation rather than a substitution.
This first "test" case of the new amended act was brought by Assign Services against the CCMA and others.
The ruling has "brought optimism for stability to businesses, temporary workers and the TES industry, which have witnessed job losses and the folding of businesses during this time of uncertainty," according to the vice president of the Federation of African Professional Staffing Organisations (Apso) KC Makhubele.
“There was uncertainty experienced in the market as to who – the TES organisation or the client employer – is ‘deemed’ to be the employer of TES employees earning less than the earnings threshold (currently R205 433.30 per year) and who has been placed at the client for more than three months.”
The Labour Court ruling sets aside the previous ruling - by the CCMA arbitrator - that the client organisation is the sole employer of TES employees after three months.
Acting Judge Martin Brassey found, among other things, the TES remains the employer of its employees, beyond the three month period.
The extension of the “deeming” provision is sufficient, only as far as extra protection of rights of TES employees in terms of the Labour Relations Act only.
Nothing in the law states that TES is to be substituted by client after the three month period.
The judge found that the client is a concurrent employer for the purposes of the Labour Relations Act as both parties need to ensure compliance with the act and that TES placed employees have an election (only when there’s a dispute relating to rights under the Labour Relations Act) to prosecute against either TES or the client.
“Although the act intended to streamline the country’s labour environment and protect vulnerable workers, the interpretation that TES employees transferred permanently to the client after a three month period, resulted in the opposite occurring,” said Makhubele.
“Many companies, instead of permanently contracting their temporary workers, identified the need to down-scale as they could not afford to permanently employ the temporary workforce they required for a set time or specific project.”
As a knock-on effect, this resulted in the folding of a number of small to medium sized recruitment companies, a number of which were black-owned, he added.
The question is now whether this matter could be regarded as closed.
“The industry certainly believes so, but we recognise the right for the National Union of Metalworkers of South Africa (Numsa) to appeal the ruling should they choose to do so. We, however, believe that their prospects for success are poor,” said Makhubele.
In terms of outstanding CCMA cases, he noted that, as it stands, the question of whether the TES is the employer is no longer in dispute, but matters such as equal treatment can be dealt with.