Labour Brokers - Section 198A(3)(b)... dual vs sole employer

Dear Clients 

Today (26 July 2018) the Constitutional Court found that the interpretation of Section 198A(3)(b) is that a SOLE EMPLOYER relationship exists.  

Below please refer to the media summary issued by the Constitutional Court on this specific section.  For more information or to receive the full judgment please do not hesitate to contact /  

Media Summary: 

The following explanatory note is provided to assist media in reporting this case and is not binding on the Constitutional Court or any member of the Court. 

On 26 July 2018 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against an order of the Labour Appeal Court (LAC).  The case concerned the interpretation of Section 198A(3)(b) of the Labour Relations Act 66 of 1995 (LRA) and whether this deeming provision resulted in a sole employment relationship between a placed worker and a client or a dual employment relationship between a Temporary Employment Service (TES), a placed worker who has worked for a period in excess of three months is no longer performing a temporary service and the client, as opposed to the TES, becomes the sole employer of the worker by virtue of Section 198A(3)(b) of the LRA.  

In 2015, Assign Services, a TES, placed 22 workers with Krost Shelving and Racking (Pty) Ltd (Krost), a number of whom were members of the National Union of Metalworkers of South Africa (NUMSA).  The placed workers provided services to Krost for a period exceeding three months on a full time basis.  Assign Services\'  view was that section 198A(3)(b) created a duel employer relationship, while NUMSA contended that a sole employer relationship resulted form this section.  The Commission for Conciliation, Mediation and Arbitration (CCMA) supported NUMSAs sole employer interpretation.  

In the Labour Court it was held that a proper reading of the section could not support the sole employer relationship, in which both the TES and the client have rights and obligations in respect of the workers.  In an appeal, by NUMSA, to the LAC it was found that the sole employer interpretation best protected the rights  of placed workers and promoted the purpose of the LRA.  

Writing for the majority of the Constitutional Court, Dlodlo AJ, held that the purpose of Section 198A must be contextualized within the right to fair labour practices in Section 23 of the Constitution and the purpose of the LRA as a whole.  The majority found that, on an interpretation of Sections 198(2) and 198A(3)(b), for the first three months the TES is the employer and then subsequent to that time lapse the client becomes the sole employer.  The majority found that the language used by the legislature in Section 198A(3)(b) of the LRA is plain and that when the language is interpreted in the context, it supports the sole employer interpretation.  In the result, the Constitutional Court granted leave to appeal but dismissed the appeal with costs.    

For more information please do not hesitate to contact one of our experienced consultants.  

Kusile Consulting Services 
Tel: 011 609 2630

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