Court victory for workers hired by brokers
Labour Appeal Court settles a protracted battle among unions, employers and labour brokers
Employers who use labour brokers are obliged to take on workers after three months if they fall below a certain earning threshold, putting to rest a long-disputed provision of the Labour Relations Act.
In a landmark judgment this week, the Labour Appeal Court settled a protracted battle among unions, employers and labour brokers — or temporary employment services — over the interpretation of the most recent amendment to the act regulating labour brokers.
The court found that companies that use labour brokers are the sole "employer".
The clarification arose after there was confusion among unions, companies and labour brokers about a "deeming provision" that some parties misinterpreted to mean that labour brokers and their clients were dual employers.
The National Union of Metalworkers of SA approached the court to obtain clarity on who was obliged to hire staff permanently following three-month stints as temporary workers.
The amendment to the act was effected in January 2015 after a protracted campaign against labour brokers by labour formations including Cosatu.
Employees who earn less than R205,433 a year will now qualify for permanent employment if they complete three-month stints on contract.
Most people employed through labour brokers are vulnerable and are yet to reap the benefits of the amendment to the act, which was intended to protect them from exploitation.
Shortly after the amendment was implemented, workers and unions flocked to the Commission for Conciliation, Mediation and Arbitration to seek clarity about section 198a of the act, with many referring cases of unfair dismissal.
The appeal court concluded that the Labour Court had "misdirected itself" in its interpretation of the section.
Lauren Salt, employment and compensation practice senior associate at Baker McKenzie, said although the court found it would "make no sense" for companies to retain labour brokers in the employment equation after three months have lapsed, the transition would not be seamless given that services such as salary payments and other regulatory obligations including the Unemployment Insurance Fund would be handled by employers.
She raised the question of historical liabilities incurred by labour brokers.
Despite the appeal court providing clarity on the "dual employer" issue, brokers were not completely in the clear. Unions including the Communications Workers Union were still challenging cases of unfair dismissal after employees were released as soon as their three-month period ended.
Salt said workers who had found themselves in this situation had the right to "go after" labour brokers and their clients.
"If the dismissal happens between month one and the end of month three before it kicks in, they can lay a dispute with the [labour broker]," she said.
"If it is after three months and the [labour broker] is still deemed as the employer, they [workers] can go after the [labour broker] and clients."