Unions say the Constitutional Court’s judgment on Thursday could spell the end of labour broking.
The court, in a majority judgment, interpreted the Labour Relations Act (LRA) to mean that labour-broker workers, after a three-month period, become permanent employees of the companies they are contracted to.
The case, which was brought to the court by labour-broking company Assign Services and heard in February, dealt with the 2015 amendment to the LRA, which granted new rights to labour-broker workers.
The 2015 amendment was the result of persistent calls to ban the much-maligned practice of labour broking.
But Assign Services insisted during the court hearing that the unions’ interpretation of this section in fact disadvantages employees of labour brokers.
Section 198 of the LRA limits labour-broking contracts to three months, after which the law considers a worker a permanent employee of the client 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.
This section of the LRA was recently applied in a judgment made by the Commission for Conciliation, Mediation and Arbitration (CCMA), ordering the Passenger Rail Agency of South Africa to pay a total of about R35.5-million in back pay to about 200 Metrorail Western Cape employees.
The workers had been employed on a series of fixed-term contracts before January 2015 but had not received the same benefits as the permanent workers following the section 198 amendment.
On Monday, the CCMA ordered that the company pay the workers the difference between what they were paid and what they would have been paid had they been treated as permanent.
Assign Services first referred a dispute with the National Union of Metalworkers of South Africa (Numsa) on the scope of section 198 to the CCMA in May 2015.
It argued for an interpretation of the section 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 approached the Labour Appeal Court, which ultimately ruled to uphold the sole employer interpretation and overturned Brassey’s judgment.
The Constitutional Court’s judgment rejected Assign Service’s contention that dual employment actually serves the interests of workers. At the hearing, Assign Services’ counsel Wim Trengove SC argued that the sole employer interpretation hurts labour-broker workers — by being considered employees of both, they got the protection and benefits of both.
Instead, acting judge Daniel Dlodlo said this structure perpetuates an uncertainty that “threatens employees’ ability to exercise their LRA rights”. He said he agreed with the Casual Workers’ Advice Office (CWAO), admitted as a friend of the court.
In an affidavit to the court, the CWAO’s Ighsaan Schroeder had said that, in the organisation’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.
In a dissenting judgment, acting judge Azhar Cachalia found that the dual employer interpretation was correct because the language of the LRA did not expressly state that labour-broking companies would cease to be the employer after three months.
But Dlodlo concluded that the language of section 198 is plain and “supports the sole employer interpretation”, thus binding all labour brokers and client companies in South Africa to the sole employer interpretation.
After the judgment was delivered, Numsa spokesperson Phakamile Hlubi-Majola said the union considers the order a major victory for workers.
“This is a nail in the coffin for labour broking in the country,” Hlubi-Majola said. “But ultimately Numsa would like to see a total ban on this exploitative system.”
Schroeder said, in the CWAO’s experience, labour broking is one of the most prominent forms of labour practice in the country. The most recent available statistics, Schroeder said, indicate that 450 000 workers are employed under labour brokers, although this figure is probably closer to two million workers in all sectors.
Schroeder said he does not regard the Constitutional Court’s order an effective ban on the practice. The judgment itself, Schroeder pointed out, contends that the 2015 amendments did not result in a ban on labour broking. In the three years since the amendments to the LRA, there has been no significant decrease in labour broking, Schroeder said.
But this partly comes down to many workers not knowing the rights afforded to them under the LRA — a problem rooted in the fact that many unions have not meaningfully championed anti-labour broking sentiment, he said.
Labour lawyer and former trade unionist Jan Theron agreed with Schroeder’s assessment of the judgment, saying the 2015 amendments were never going to mean a ban on labour broking altogether. But importantly the amendments did seek to define labour broking as temporary in the true sense of the word.
“The obvious problem was the period, as the grossest anomalies of labour broking are allowed to persist so long as this remains undefined,” Theron said.
The Constitutional Court’s judgment ultimately affirms what common sense says the amendments should have been all along, but what creative lawyers have tried to evade, he said.
Theron added that, in this sense, it is “a bit ironic that the judgment is being touted as a great victory for labour”.
“But it will certainly make it more difficult for labour brokers to operate as they have been.”