A make-or-break case for the labour-broking sector reaches top court

The 2015 amendment to the Labour Relations Act was the result of persistent calls — led by trade union federation Cosatu — to ban the much-maligned practice of labour broking. (Madelene Cronje/M&G)

The 2015 amendment to the Labour Relations Act was the result of persistent calls — led by trade union federation Cosatu — to ban the much-maligned practice of labour broking. (Madelene Cronje/M&G)

A dispute over the new law on labour-broking will be heard this week Thursday in the Constitutional Court.

The appeal, which has been brought to the court by labour-broking company Assign Services, deals with the 2015 amendment to the Labour Relations Act (LRA), which granted new rights to labour-broker workers.

The 2015 amendment was the result of persistent calls – led by trade union federation Cosatu – to ban the much-maligned practice of labour broking. But Assign Services insists that the interpretation given to the section by the Labour Appeal Court in fact disadvantages employees of labour brokers.

Section 198(a) of the LRA limits labour-broking contracts to three months, after which the law considers a worker a permanent employee of the client company – the company that has contracted the worker through a labour-broking company. These workers are also supposed to be treated “not less favourably” than the client company’s long-standing permanent workers.
They should earn the same wages and get the same benefits.

Read more: Heineken issue ferments: Labour-broking shows few signs of disappearing

Assign Services first referred a dispute on this against the National Union of Metalworkers of South Africa (Numsa) to the Commission for Conciliation, Mediation and Arbitration (CCMA). It argued for an interpretation of Section 198 that would – after the three month-period – make a worker an employee of both the labour-broking company and the client company. The CCMA rejected what became known as the “dual employer” interpretation.

On September 8 2015 the labour broker took the case to the Labour Court and acting Judge Martin Brassey ruled that the brokered workers were employees of both the labour broker and the client.

Numsa appealed to the LAC, which ultimately ruled to uphold the sole employer interpretation and overturn Judge Brassey’s judgment. The Constitutional Court is the last stop for the dispute and will determine whether all labour brokers and client companies in South Africa are bound to the sole employer interpretation.

In a founding affidavit, managing director of Assign Services Sean Kramer says that the sole employer interpretation is “tantamount to a ban on labour broking after the elapse of the three-month period under the LRA”.

In his heads of argument, advocate Wim Trengove SC, counsel for Assign Services, contends that the sole employer interpretation hurts labour-broker workers – suggesting that under the dual employer interpretation, workers enjoy the protection and benefits of being employed by the labour broker.

Trengove argues that the transferral of employment leaves workers even more vulnerable because there is no provision for what happens to a worker’s accrued leave, annual bonus, pension and so on once they become the permanent employees of the client. The worker, he says, is also not necessarily given a contract by the client.

Under the dual employer interpretation Trengove says: “The vulnerable employees retain all the protection they have always had. Once they pass the three-month mark with the same client, however, they are given additional protection in that they are now also deemed to be employees of the client.”

Hans van der Riet SC, counsel for Numsa, argues that it is unlikely that workers are likely to face worse conditions – as Trengove suggests – under the employ of the client company. In heads of argument, Van der Riet contends that the section only applies if a labour-broker worker’s employment conditions are already “less favourable” than those of a permanent worker.

As a friend of the court, Ighsaan Schroeder of the Casual Workers Advice Office (CWAO) in an affidavit says that – in CWAO’s experience of working with “thousands of labour-broker workers placed in hundreds of workplaces, who have struggled to access their new rights to employment security” – the dual employment structure only “produces uncertainty and employment insecurity” for workers, undermining their rights to collective bargaining.

On Assign Service’s contention that a dual employment structure serves the interests of workers, Schroeder says that “the suggestion that they are motivated by a desire to strive for an outcome that enhances protection for workers is disingenuous”.

Sarah Smit

Sarah Smit

Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law. Read more from Sarah Smit

    Client Media Releases

    NWU specialist receives innovation management award
    Reduce packaging waste: Ipsos poll
    What is transactional SMS?
    MTN on data pricing
    Teraco appoints new CEO, asserts position as Africa's leading data centre