Public Newsletter


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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which looks at 'Undue influence' by a CCMA Commissioner, leading to a review of the settlement agreement reached at conciliation due to the commissioner's conduct. We also look at four new cases: The first and second cases look at two recent arbitration awards on the controversial 'deeming' provision in the recent LRA amendments. The third case looks at a High Court decision on the legality of aspects of salary attachment orders (loosely called garnishee orders). In the fourth case the LAC considers grounds for constructive dismissal.

This public newsletter is a free edited version of the subscriber newsletter.


'Deemed to be the employer'

The LRA amendments which came into effect on 1 January (with certain rights only kicking in from 1 April) introduced a deeming provision to the effect that an employee of a TES, who earns below the BCEA threshold and does not perform 'temporary services', is deemed to be the employee of the client for purposes of the LRA on an indefinite basis.

Temporary services are defined as work for a client of a TES -

  • that do not exceed 3 months;
  • as a substitute for an employee who is temporarily absent; or
  • in a category of work determined in a bargaining council collective agreement to be a temporary service, or as declared as such by a sectoral determination or by the Minister.
In our June 2014 newsletter we considered the likely interpretation of being 'deemed' to be the employer, the pivotal issue in sections 198A-D of the amendments. It is a sad reflection on the quality of the drafting of the amendments that there is much debate and confusion over the true meaning of the deeming provisions. Two arbitration awards have recently been given that start to give meaning to these provisions, although this will by no means be the last word on the subject.

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 the TES, Assign Services, referred a dispute to the CCMA regarding the interpretation of the deeming provision 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.

In the second award in Mphirime v Value Logistics Ltd and BDM Staffing (Pty) Ltd(2015) FSRFBC34922 NBCRFLI [24 June 2015] the arbitrator was required to determine a similar issue, namely whether the client, Value Logistics Ltd, or the TES, BDM Staffing (Pty) Ltd, would bear the onus to prove at arbitration that Mphirime, the employee, was fairly dismissed. Mphirime, who earned below the statutory threshold, was employed by the TES on a fixed term contract of 12 months and placed at the client until his dismissal after 10 months of employment. As Mphirime was found to not be in a temporary service, the deeming provision was triggered.

The arbitrator held that the correct interpretation of the deeming provisions is that the client is deemed to be the employer and bears the responsibility to ensure that duties and obligations towards the employee in terms of the LRA are met. As a result, any claim brought in terms of the LRA must be brought against the duty bearer, who is the client, including reinstatement and compensation claims resulting from unfair dismissal or unfair labour practice claims. The arbitrator commented that this might affect the commercial relationship between the TES and the client, and the effect of this would have to be negotiated between them in terms of their business arrangement. But the arbitrator held that the TES had no right or obligation to defend the matter.

Although both awards adopt an interpretation that the sole employment relationship in respect of non temporary services work under s198A is effectively with the client for purposes of the LRA, it is clear that this is not the last word on the subject. One can expect the issue to be escalated in due course to the Labour Appeal Court and possibly thereafter to the Constitutional Court for final determination. What however is likely is that, in line with the overall intention of the amendments, the clients of labour brokers will at the end of the day be made primarily responsible for the welfare of employees placed with them and who are found to not be performing temporary services as defined.

Salary attachment orders

A landmark judgment handed down by Judge Siraj Desai in the Western Cape High Court on 8 July 2015 declared 15 salary attachment orders issued by a loans company to workers to be invalid and unlawful. In our December 2014 / January 2015 Subscriber Newsletter we outlined the legal basis of these orders and the problems created.

The individual applicants were a group of low income earners living in Stellenbosch, supporting themselves and their families on salaries of between R1200.00 and R8000.00 per month. The group includes farmworkers, cleaners and security guards. They worked in low paid and vulnerable occupations and their wages are invariably their only asset and means of survival. The case tells a shocking story of the impact of loan sharks on monthly wages.

The High Court in University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice And Correctional Services and Others (16703/14) [2015] ZAWCHC 99 (8 July 2015) noted that there is no statutory limit on the amount which may be deducted from the earnings of a debtor in terms of an EAO. Nor is there a limit on the number of EAOs which may be granted against a particular debtor. Section 65A of the Magistrates' Court Act (MCA) provides that following an enquiry by a magistrate into a debtor's financial position, the Court may make such order as it deems "just and equitable". However, in respect of the applicants, the clerk of the court issued EAOs attaching their earnings without any evaluation of their ability to afford the deductions to be made from their salaries and without deciding whether or not the issuing of an EAO itself would be just and equitable. The whole process of obtaining the EAOs was driven by the creditors without any judicial oversight.

Judge Desai saw that the practice of debt collection had constitutional implications. He said that it was firmly established in international law that states have a duty to protect their citizens against the abuse of human rights by business enterprises in their territory. Where such abuses do occur, states have a duty to provide victims with an effective remedy. These duties should be taken into account in the interpretation of the provisions of the MCA and the Constitution. The court declared s 65J(2)(b)(i) and s 65J(2)(b)(ii) of the MCA to be constitutionally invalid to the extent that they allow for EAOs to be issued by a clerk of the court without judicial oversight.

Constructive dismissal: the danger of resigning in haste

The employee, M, was an operator in a bindery where she had worked for about 10 years. The employer fitted an air conditioning system to cool machines which were located adjacent to the workspace where M and others had their work-stations; they were separated by a partition which did not go right up to the ceiling - a gap of some 400 mm existed. M alleged that she was adversely affected by the cold draught from the cooled air pumped into the adjoining workspace. It was accepted by everyone that her complaint of discomfort was genuine.

She talked to the Production Manager about the ill-effects of the air-conditioning on her. M's version was that he promised to seal the gap in the partition. As an interim measure he offered to move her to another spot to evade the effects of the air conditioning but it appears she refused. On another occasion she alleged that she asked that the air conditioner be switched off; her version (which was denied) was that the Production Manager then angrily told her that the machines were expensive and she must choose between her health and her work. The following week when she arrived at work and saw nothing had been done about the partition, she left and went to the CCMA, saying before leaving that she was resigning.

At the CCMA the Arbitrator found that it was clear that the Production Manager knew from October 2008 of the air-conditioning problem, reneged on a promise made in December 2008 to address it and told M to choose between health and work. He held that he must have shouted at M. The arbitrator held the probabilities favoured the version of M. The Labour Court, on review, upheld the finding that the employee had been constructively dismissed.

The LAC in Conti Print CC v CCMA and Others (JA53/2014) [2015] ZALAC 25 (24 June 2015) held that the factual findings in the arbitration award were fatally flawed on the grounds of ignoring evidence, not properly weighing it up, and illogical and irrational reasoning. A reasonable arbitrator could not have reached such a conclusion on the body of evidence adduced.

The LAC found that the employer reacted immediately to ameliorate the adversity alleged to exist. It offered to move her and block off the partition in due course. That response established an empathy and a reasonable set of steps to cure a problem not of its making but arising from a personal vulnerability of the employee. The employee's response was grossly unreasonable. She refused to move. Moreover, she wanted instant or near instant closing of the gap.

The court said that if the working conditions were such that she could not move to another work-station she could have stayed at home for a week until the gap was closed or said she could not carry on until the gap was closed. The rush to resign, fortuitously, at the end of the month was an inappropriate response. The nature of the problem was such that the lodging of a grievance was an obvious appropriate response. Assessing the employer's conduct, the LAC held that it could not be said to have been responsible for creating an intolerability of continuation of the employment relationship.

The LAC confirmed that the following three requirements must be present for constructive dismissal to be established: firstly, the employee must have terminated the contract of employment; secondly, the reason for the termination must be that continued employment has become intolerable for the employee; and thirdly the employer must have made continued employment intolerable.


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Bruce Robertson
July 2015
Copyright: Worklaw