An upcoming court case is the latest skirmish in this ongoing battle. Next week, 201 workers at pallet-hire company Chep South Africa will be in the labour appeal court, asking it to overturn an order saying they should not be made permanent under section 198 of the Labour Relations Act (LRA).
Section 198 limits labour-broking contracts to three months. After three months, the law considers a worker a permanent employee of the client company that contracted the worker through a labour-broking company. The section was introduced to address exploitative labour practices by these companies.
In 2009, Chep appointed C-Force to provide it with workers to repair pallets. On its website, C-Force describes itself as a staffing-solutions company.
A year later, the workers referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), in which they asked that section 198 of the Labour Relations Act be applied and they be made permanent employees of Chep.
Section 198 came into effect in January 2015. Labour broker Assign Services fought a three-year court battle to challenge the interpretation of the law, which deems labour broker workers permanent after three months. In 2018, Assign Services lost its case in the Constitutional Court. Some people believed the ruling was the nail in the coffin for labour brokers in South Africa.
During the 2015 CCMA case, Chep argued that C-Force was not a labour broker, but a service provider. The latter company provided it with repaired pallets and not the workers to repair them, Chep said.
The commissioner in the case disagreed, concluding that the workers were an integral part of Chep’s business and that the company exercised control over how they worked. When workers fell behind on production, for example, Chep supervisors would discipline them, which they would not be allowed to do if C-Force were an independent service provider.
The commissioner also concluded that a service provider may also still be a labour broker.
In 2018 Chep challenged the CCMA ruling at the labour court and won.
The labour court set aside the CCMA ruling and concluded that, based on the contracts between the two companies, C-Force did not provide workers to CHEP to perform work for Chep and, therefore, was not a labour broker. In the court’s estimation, a labour broker merely delivers workers to a client company and provides no other service.
At the appellate court, counsel for the workers will argue that the labour court made a too narrow and literal interpretation of a labour broker, as defined by the Labour Relations Act.
In her heads of argument, advocate Kathleen Hardy contends that the labour court’s definition of a labour broker “stems from an incorrect, archetypal” idea of this type of company as selling only labour.
She further argues that the lower court failed to consider how workers’ rights are infringed on when the labour-broking relationship is allowed to persist.
The court’s “failure to interpret the section purposively perpetuates the harm the [Labour Relations] Act and section 198 aim to protect against”, Hardy argues. “These rights are aimed at protecting more vulnerable, lower paid workers, employed by a TES [temporary employment service, or labour broker] to situations of genuine and relevant temporary work, and to introduce further measures to protect workers employed in this way.”
The labour court’s interpretation of section 198 empowers companies like Chep to exercise control over the workers’ employment conditions while evading labour regulations, Hardy adds.
Chep’s counsel, Linda Erasmus, notes that the workers did not present evidence to indicate that the company and C-Force have “defeated the purposes of the LRA or any other employment law”.
In her heads of argument, Erasmus contends it is common cause that the 201 workers are employees of C-Force and enjoy the right to fair labour practices through the company.
According to Erasmus, the workers are subject to the control and supervision of C-Force. And, as per its contracts with Chep, the company pays them “for services rendered to C-Force, irrespective of whether C-Force gets paid by Chep”.
But Hardy argues that the labour court ignored evidence that workers are contractually controlled by Chep because they were under its supervision. “The right to supervision and control is one of the most important indications that a contract is in all probability an employment contract.”
Hardy contends that the contract alone is not enough to show the true employment relationship between the workers and Chep. If the court is blocked from looking outside the contract, “there would be a serious danger that it could be precluded from determining the true position or true relationship”, she says.
Labour broker or service provider?
Last year the CCMA ruled that Assign Services — the company that lost the 2018 Constitutional Court case on labour broking — is not a labour broker.
The CCMA case dealt with a group of Avon workers asking to be made permanent employees of the cosmetics company. The workers were initially employed at Avon through Assign Services.
But the CCMA commissioner found that Assign was employed by Avon to provide a number of services, including training and uniforms.
“The applicants perform work for Assign, which allows Assign to meet its obligations to Avon as per the SLA [service-level agreement]. It, therefore, cannot be said that the applicants ‘perform work for the client [Avon]’.”
In the CCMA award, the commissioner concluded: “Having considered the evidence before me, I find that Assign is not a TES [temporary employment service, or labour broker] as defined in the [Labour Relations] Act and, therefore, the applicants cannot be deemed permanent employees of Avon.” — Sarah Smit