Assign Services (Pty) Ltd v Krost Shelving and Racking (Pty) Ltd and National Union of Metal Workers of South Africa (NUMSA) (2015) ECEL 1652-15 (Unreported)
The correct interpretation of s198A(3)(b)(i) of the LRA is that after three months have elapsed, the client becomes the sole employer of placed workers who are earning below the BCEA threshold.
The TES, Assign Services, referred a dispute to the CCMA regarding the interpretation of the deeming provision under s198A of the LRA to non temporary service employees it placed at its client, Krost Shelving and Racking. The TES argued that the deeming provisions should be interpreted in a manner that effectively created a dual employment relationship in terms of which both the TES and the client were regarded as the employer. NUMSA on the other hand argued that once the employees were found not to be in a temporary service, the client should be regarded as the sole employer.
Recognising that the statute could be interpreted in favour of both positions, the CCMA Commissioner relied on the Explanatory Memorandum that accompanied the amendments when they were first published and sought an interpretation that would provide greater protection for the affected employees. For these reasons the Commissioner rejected the argument of the TES that the deeming provision created a dual employment relationship and held that once the employees were not providing temporary services, the client becomes the sole employer of the placed workers earning below the BCEA threshold, for the purposes of the LRA. Whilst the Commissioner held that the commercial relationship between the TES and the client continues, the award did not clarify how this will work if the client is deemed to be the sole employer.
Extract from the award:
CCMA Commissioner: Abdool Carrim Osman
3.1. I am required to determine the correct interpretation of Section 198A(3)(b) of the LRA ("the deeming provision")
3.2. The applicant is of the view that the consequences of the deeming provision are that the placed workers remain employees of the applicant, for all purposes and are deemed to also be employees of the first respondent for purposes of the LRA. This position is referred to herein as the "dual employment position".
3.3. The second respondent is of the view that the placed workers with effect from 1 April 2015, are deemed to be employees of the first respondent only, for purposes of the LRA. This position is referred to herein as the "sole employment" position.
5.12. In my opinion the deeming provision in Sec 198A(3)(b) should be interpreted akin to how the law deals with the concept of "adoption". In the case of "adoption" a legal fiction is also created, in that for purposes of the law, the adoptive parent is regarded as the parent of the adopted child. In this regard the best interest of the child is considered to be in the scenario where the adoptive parent is afforded full rights in terms of guardianship and/or all obligations in terms of parenting and upbringing of the adopted child. The law does not regard a biological parent and the adoptive parent as dual parents, as doing so would lead to uncertainty and confusion.
5.13. Equally, in the case at hand there are a number of problems that could arise in the "dual employment" interpretation, for example, who would be responsible for disciplining of the placed workers and who's disciplinary code would be applicable, that of the TES or that of the client? Furthermore how would "re-instatement" occur if there is dual employment? Clearly this would lead to greater uncertainty and confusion for the vulnerable employees the Act is seeking to afford greater protection to.
5.14. The very nature of a TES is that it places workers with a client for a temporary period. Hence Sec 198A does not apply in cases where the nature of the work is of a genuinely temporary nature (sec 198A(1)).
5.15. I am in agreement with counsel for the second respondent that Sec 198(4A) does not make reference to joint and several liability in terms of Sec 198A(3)(b)(i), but that the joint and several liability only refers to Sec 198(4) and the reading of the above mentioned sections cannot therefore support the arguments for dual employment.
5.16. Furthermore, the fact that the employee may institute proceedings against either the TES or the client or both the TES and the client in terms of Sec 198(4A) and that any order or award made against a TES or client in terms of this subsection may be enforced against either, does not on its plain reading make the TES a dual employer. The purpose for instituting proceedings is to determine liability and the fact that one may institute proceedings against either the TES or the client, or both and enforce an order or award against either, does not necessarily create dual employment. In the amended LRA, in sections relating to organisational rights and picketing, the sections allow for the citing of a third party controlling access to the workplace eg. (landlord), and the enforcing of awards against such third parties. This however does not render the third party concerned to be a dual employer of the employees of the actual employer.
............................. 5.21. Based on the above considerations and having considered all the submissions and arguments made by the parties, I find that the correct interpretation of Sec 198A(3)(b) of the LRA is that after the three months have elapsed, the client becomes the sole employer of the placed workers who are earning below the BCEA threshold.
6. AWARD RULING
6.1. Sec 198A (3)(b) is interpreted to mean that "deemed" means that the client becomes the sole employer of the placed workers for purposes of the LRA, provided that they earn below the threshold and that the three months period has elapsed.
6.2. Accordingly in the case at hand, with effect from 1 April 2015 the placed workers supplied by Assign Services (Pty) Ltd (Applicant) to Krost Shelving & Racking (Pty) Ltd (First Respondent) who earn below the threshold in terms of Sec 6(3) of BCEA and who have been placed for a period in excess of three months on a full time basis, are deemed to be the employees of the first respondent on an indefinite basis for purposes of the LRA and the first respondent is deemed to be their sole employer for purposes of the LRA. Furthermore parity between the deemed employees and other indefinite employees of the client should apply as per Sec 189(A)(5) of the LRA as amended.