Labour broker ruling not death of temporary employment services - Adcorp

The Constitutional Court ruling in favour of Numsa over who should be regarded as the employer of workers placed by labour brokers, does not negate the "important role" played by temporary employment services, said global workforce solutions company Adcorp.

Nor does it affect their ability to operate at law, the JSE-listed company added in a statement to shareholders.  

Moreover, Adcorp argues, the judgment does not relate to equal treatment on remuneration and benefits, as this was already dealt with in Labour Relations Act Amendments, effective since 2015.

Shares in Adcorp [JSE: ADR], described as South Africa's largest diversified workplace management and business process outsourcing company, also offers temporary employment services (TES), were trading down 4.79% at R15.10 by 12:17 on the JSE after losing as much as 9.3% in earlier trade.

Triangular relationship

According to Jacques van Wyk, director and labour specialist at Werksmans Attorneys, the judgment effectively means a company or business where a worker is placed by a labour broker becomes the sole employer of that worker upon completion of three months of service, if that employee earns below R205 433.30 a year.

But Adcorp says it confirms that a "triangular relationship" remains.

"The judgment does not negate the important role that Temporary Employment Services (TES) will continue to play in workforce management and enabling skills development and employment in the economy," Adcorp said in the statement on Friday.

The judgment "importantly" confirms that the TES remains and there is not a transfer of the employment relationship, but rather, the "triangular relationship between the TES and the client" continues, the company argued.

'Limited interpretation'

On Thursday, Numsa celebrated the judgment, saying they hoped it would spell the "death knell" for the labour broker industry.

"We WON!! It’s official. Workers who are employed by Labour brokers are PERMANENT after 3 months!!" Numsa tweeted on Thursday.

"This is a victory not just for NUMSA but also for the working class majority. The Constitutional court has confirmed that temporary workers employed through Labour Brokers are permanent employees of the MAIN employer after three months! AMANDLAAA!!!"

Acting Numsa spokesperson Phakamile Hlubi-Majola said: "Our experience with labour brokers is that they are extremely abusive and expose workers to low wages and terrible working conditions."

In Adcorp's view, the judgment does not deal with whether employees are permanent or not after three months. "[T]his would be determined by the type of contract," the company said.

They also argued that the case was about a "limited interpretation" of whether there are two employers or one, for the purposes of the Labour Relations Act only.

"Affected employees are those who earn below the Basic Conditions of Employment Act (BCEA) threshold (currently R205 433 per annum) and who are placed for longer than three months."

According to Adcorp, the judgment gives more clarity than the earlier Labour Appeal Court judgment, which had overturned an earlier Labour Court judgment and restored a CCMA ruling in favour of a sole employment interpretation.

It expands on issues not dealt with in that judgment, Adcorp said.


"[W]e believe that for legitimate TES providers where the provisions of the LRA amendments have already been implemented, this judgment doesn't affect their ability to operate at law," Adcorp said.

"The rapidly changing economic, social and political environment demands that business is adaptable and places pressure on individuals to improve their skill sets to meet the fourth industrial revolutionary changes in the market," Adcorp said.

"The TES industry has been proven to be a primary driver of skills development and an essential labour market enabler to ensure the long-term employability of individuals.

"We believe that our industry will continue to play a major part in the success of the SA economy and labour market in managing the demands of globalisation, competitiveness, the fourth industrial revolution and the effective transition of individuals into employment."

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