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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter focuses on labour brokers and outsourcing. The newsletter covers recent cases on this topical issue and contains an article entitled 'Tangled relationships: Temporary employment services, the client and the employee'. In this article, we discuss a recent case that signals a tough new approach to the client that demands the removal of a labour broker's employee from its premises.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
Can a client refuse to 'reinstate' a labour broker's employee?
One of the perceived benefits to a client in outsourcing labour is the ability to require the Temporary Employment Service (labour broker) to immediately remove a particular employee who it believes is guilty of poor performance or misconduct or surplus to its requirements. The disciplinary function is transferred to the TES and, in theory, the client is freed from 'wasting time' at the CCMA or bargaining council.
As the track record of labour brokers in the CCMA has shown, they find it difficult to achieve a fair dismissal, often because the client will not (or is reluctant to) come to give evidence at the disciplinary hearing to prove the misconduct or poor performance. And because that evidence is crucial in establishing a fair reason for termination, arbitrators frequently find there has been unfair dismissal.
The recent case of Nape v INTCS Corporate Solutions (Pty) Ltd  8 BLLR 852 (LC) has thrown the proverbial cat amongst the pigeons. A sales consultant who was the employee of a labour broker, sent an offensive e-mail to a colleague. The client insisted that he be removed from its premises. The broker convened a disciplinary hearing and issued the employee with a final written warning, which the employee agreed to accept. However, the client refused to permit the employee to return to its premises. The broker then consulted the employee, and retrenched him. Although the employee immediately found alternative work at a higher salary, he claimed that he had been unfairly dismissed and sought compensation. The broker argued that it had no alternative but to dismiss the employee.
The Court considered the broker's argument: (i) that the client had acted lawfully because it exercised an option permitted by the contract between itself and the broker; (ii) that the broker was powerless and could do nothing other than retrench the employee because it had no alternative post for him. The Court accepted that the relationship between the broker and its client was lawful. However, it did not follow that all the terms of the contract which governed that relationship were also lawful. Public policy imports a requirement of fairness into all contracts. Contracting parties cannot structure their relationship in such a manner as to undermine the fundamental guarantees afforded by the LRA. The Court concluded that any provision in a contract between a broker and its client in violation of the LRA rights not to be unfairly dismissed would be against public policy, and unenforceable.
The court was of the view that brokers are not powerless when forced by their clients to treat their employees unfairly - brokers may in such situations approach a competent court to order the client to refrain from such conduct. Similarly, the Court could order the client to reinstate an unfairly dismissed employee, if reinstatement were considered appropriate.
The employee was granted compensation equivalent to one month's salary.
This case goes against a trend of cases that have generally upheld the right of a client to demand the removal of an employee and the right of a labour broker to retrench that employee if there is no other assignment available. Our view is that the decision is questionable, not because it misunderstands public policy, but because it misunderstands the flexibility or influence a labour broker has if a client is adamant that it no longer wants a particular employee. It is unrealistic to think a labour broker will ever take a client to court to force an employee on an unwilling client. In the circumstances of this case, we think that the labour broker may have had little option but to go the retrenchment route.
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