NUMSA v Assign Services and Others (JA96/15) [2017] ZALAC 44 (10 July 2017)

Principle:

An employee deemed to be the employee of a TES's client in terms of section 198A(3)(b)(i) of the LRA as a result of not providing a 'temporary service', renders the client the sole employer of that employee. The TES ceases to be the employer of the placed employee when the employee is deemed the employee of the client. The dual or parallel employer interpretation is not consonant with the context of s198A and the purpose of the 2014 amendments, and these support the sole employer interpretation.

Facts:

A dispute between a labour broker, Assign Services, and NUMSA in respect of Assign Services' employees placed with its client (Krost Shelving and Racking), was referred to the CCMA. Krost manufactures steel racking, shelving, mezzanine floors and lockers, employing 40 salaried employees and approximately 90 wage staff who work in the factory. Assign supplies additional labour to Krost, with the number of placed workers fluctuating between 22 and 40 at any given time depending on Krost's projects.

At the time of this dispute, 22 placed workers had been supplied by Assign to Krost for a period in excess of three months, and their placement fell within the scope of s198A(3)(b). The placed workers work shoulder to shoulder with Krost's workforce. Krost manages the placed workers on a day-to-day basis, but Assign is responsible for disciplining them. Of Krost's 90 wage staff in the factory, about 80% are NUMSA's members, as are several of the placed workers. Krost's wage staff and the placed workers are paid at the same level.

The CCMA was asked to interpret the 'deeming' provisions contained in sections 198 and 198A in relation to the placed workers. The CCMA arbitration in 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) resulted in a finding that the client was the sole employer of these employees. This award was taken on review in the Labour Court.

The LC in Assign Services (Pty) Ltd v CCMA and Others (JR1230/15) [2015] ZALCJHB 298 (8 September 2015) overturned the award, reasoning that the deeming provisions did not interfere with the employment contracts between the labour broker and the employees, which remained in force even after the employees were deemed the client's employees for statutory purposes under the LRA. In that sense, the LC confirmed that a dual employer relationship involving both the labour broker and the client, continued to exist.

The LAC did not agree with the LC's approach and overturned its decision. The LAC said that once an employee placed by a labour broker with a client no longer fell within the definition of a 'temporary service', the labour broker ceased to be the employer, and the deeming provisions under s198A(3)(b)(i) made the client the sole employer of that employee. The LAC further found that the dual or parallel employer interpretation adopted by the LC is not consonant with the context of s198A and the purpose of the 2014 amendments.

The LAC said it would make no sense to retain the TES in the employment equation for an indefinite period if the client has assumed all the responsibilities that the TES had before the expiration of the three-month period: the TES would be the employer only in theory and an unwarranted "middle-man" adding no value to the employment relationship. The LAC reasoned that the fact that the labour broker may be jointly and severally liable with the client under s198(4A), does not elevate the labour broker to being an employer.

Extract from the judgment:

(Tlaletsi DJP)

[38]   The sole employer interpretation is consonant with the main thrust of the amendments to s198 and 198A outlined in the Explanatory Memorandum accompanying the LRA Amendment Bill as tabled in 2012 in Parliament,......... ...........................

[40]   The protection against unfair dismissal and unfair discrimination in the context of s198A of the LRA should not be interpreted to support the contention that the deemed employees are employed by both the TES and client. The protection is a measure to ensure that these employees are not treated differently from the employees employed directly by the client. The purpose of these protections in the context of s198A is to ensure that the deemed employees are fully integrated into the enterprise as employees of the client. The protection provided for takes into account the fact that the contractual relationship between the client and the placed worker does not come about through a negotiated agreement or through the normal recruitment processes of the client. The employment relationship is created by a statutory deeming clause. Hence the placed workers become employed by the client for an indefinite period and on the same terms and condition to the employees of the client performing the same or similar work. The dual or parallel employer interpretation is therefore not consonant with the context of s198A and the purpose of the amendments.

[41]   The fact that in terms of s198(4A) the deemed employee may institute proceedings against either the TES or the client or both, or that in terms of the BCEA the labour inspector may secure and enforce compliance against the TES or client as if it were the employer or both, and that any order or award made against a TES or client in terms of the subsection may be enforced against either, is a measure to reinforce protection of lower-paid workers and to restrict the TESs to employing employees only for work of a temporary work as defined in s198A of the LRA. The joint and several liability provisions have the potential to discourage the TESs from being further involved in the administrative arrangements regarding employees placed with a client for a period in excess of three months.

[42]   The sole employer interpretation does not, in my view, ban the TESs. It however, regulates the TESs by restricting the TESs to genuine temporary employment arrangements in line with the purpose of the amendments to the LRA. The TES remains the employer of the placed employee until the employee is deemed the employee of the client. The TES will be responsible for its statutory obligations regarding the placed workers for as long as the deeming provision has not kicked in. This interpretation reconciles the perceived conflict between s198(2) and 198A(3)(b) referred to in s198(4A) of the LRA.

[43]   It is correct to observe that there is no provision in the LRA Amendment Act of 2014 to the effect that the contract of employment is transferred from the TES to the client as is the case in instances of s197 transfers. There is also no provision to the effect that the client steps into the shoes of the TES after the three-month period. Provisions to this effect would have contributed to the interpretation that the purpose of the amendment was to have a sole employer relationship on the expiration of the three-month period. However, there is also no provision in the amendments to the LRA that the TES and the client become joint employers on the expiration of the three-month period. Neither do the amendments stipulate that the client is added as an employer. The purpose of the deeming provision is not to transfer the contract of employment between the TES and the placed worker to the client, but to create a statutory employment relationship between the client and the placed worker. Bearing in mind that the purpose of the amendment was to have the temporary employment service restricted to one of "true temporary service" as defined in s198A of the LRA, the intention must have been to upgrade the temporary service to the standard employment and free the vulnerable worker from atypical employment by the TES. It would make no sense to retain the TES in the employment equation for an indefinite period if the client has assumed all the responsibilities that the TES had before the expiration of the three-month period. The TES would be the employer only in theory and an unwarranted "middle-man" adding no value to the employment relationship.

[44]   The TES may continue, for example to be the party paying the salary of the deemed employee for several reasons. Should the TES fail to pay the salary in compliance with the existing practice, the client's employee retains the right to institute proceedings against either the TES or the client or both in terms of s198(4A(a) of the LRA. This, however, does not elevate the TES to being an employer. Similarly, should the TES cease to pay the salary of the employee of the client, the joint liability burden will also cease.

[45]   It is important to appreciate that the employment relationship between the placed worker and the client arises by operation of law, independent of the terms of any contract between the placed worker and the TES. The dismissal of the worker by the TES has no bearing on the employment relationship created by operation of law between the placed worker and the client.

[46]   The plain language of s198A(3)(b) of the LRA, interpreted in context unambiguously supports the sole employer interpretation and is in line with the purpose of the amendment, the primary object of the LRA and protects the rights of placed workers................................