Picture: 123RF/3DRENDERINGS

A Constitutional Court ruling that a labour broker is no longer legally the employer of the staff it places once that employee has become permanent, could be a boon for the temporary services industry.

This is the view of Ronny Katz, CEO of labour services group Workforce Holdings, who said he had been waiting years for confusion to be removed from the industry on how labour brokers, their clients and workers were defined in terms of labour law. There had also been a lack of clarity about the legal relationship between the three groups, he said.

Katz, who spoke following the release of financial results for the six months to June, said Workforce would be able to grow more aggressively and structure deals more easily following the ruling.

The court ruled in July that labour brokers ceased to be co-employers once the temporary workers they place with clients become permanent after three months with the client company. This applied only for the purposes of the Labour Relations Act. Brokers could still operate and provide services.

"We are happy with this ruling. Labour brokers have not been banned in SA and the court has recognised we have a function in the economy," he said.

More clients would seek to do business with Workforce because brokers’ legal position was clarified, Katz said.

Workforce, which has been valued at close to R300m, provides training and skills development, business process outsourcing, contractor on-boarding, permanent placement recruitment, health care and other services to employers.

The company’s net profit rose 11% to R46m during the reporting period, while its revenue grew a more modest 4.2%, to R1.4bn, which the company put down to weak economic growth.

Headline earnings per share rose 8.1% to 20.2c. Katz said headline earnings per share were set to grow more than this in the second half of 2018.

andersona@businesslive.co.za

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