Labour broking is referred to in both the LRA and BCEA as temporary employment services (TES). Labour broking is an activity involved with the placement of workers by the labour broker at a client’s workplace. Labour broking is distinguished from the activities of placement agencies in that the labour broker remains involved with the worker after the worker has been placed with the client. The labour broker pays the worker for the services rendered at the workplace of the client.
Section 198 of the LRA defines a labour broker as follows:
1) Any person who, for reward, procures for or provides to a client other persons-
- a) Who render services to, or perform work for, the client;
- b) Who are remunerated by the temporary employment service.
In terms of the Employment Equity Act an employee who provides services for an indefinite duration or a period of three months is deemed an employee of that particular client, for the purposes of employment equity. This definition deems the worker that is placed with the client to be an employee of that client, if he or she has been working at the workplace of that client for more than three months. This situation is however only applicable for affirmative action purposes and the TES will still be the employer of the worker in the event of unfair labour practices or breaches. This section creates joint and several liability for the TES and the client in the event of unfair discrimination.
The LRA gives workers important rights and protections, such as protection against unfair dismissals, the possibility of reinstatement, and the right to unionise and take part in collective bargaining. The worker’s direct employer is responsible for these rights, but many companies avoid this by using labour brokers. Outsourcing services allow employers to arbitrarily or unfairly dismiss workers by requesting they be reassigned.
This means that many workers are employed at client companies for lengthy periods of time without becoming part of the client’s work force. These casual workers are among the most vulnerable and are a majority of the work force.
Trade unions have declared war on labour broking because of abuse by some labour brokers, where working hours and wages of temporary workers differ from that of permanent workers and not always do they receive payment for the hours that they work in excess of the ordinary hours of work as they are too happy to have employment and an income and accept these terms as they are afraid that they may lose their jobs. It also contributes to the deterioration of health and safety standards. In the road freight industry for instance, the contracts of drivers stipulate that they are remunerated according the loads and the distance that they have travelled. These drivers take unnecessary risks to drive more kilometres and more loads.
The LRA was amended in 2015 to address this. One of the amendments provided that workers placed by temporary employment service such as labour brokers would be deemed to be employees of the client company, if they had worked there for more than three months. This amendment was intended to allow these workers the same rights as other employees.
These amendments deems workers placed at client companies by temporary employment services for longer than three months to be employees of the client company only, and they are entitled to all the rights that go with that. It is important to note that the deeming provision only applies to employees that earn below the threshold of R205 433.
The changes to section 198 of the LRA is considered as one of the most significant, as this will deal with the issues regarding temporary employment services or labour brokers as they are more commonly known.
Section 198 of the LRA subsection (4) states the temporary employment service and the client are jointly and severally liable, if the temporary employment service contravenes:
- A collective agreement concluded in a bargaining council that regulates terms and conditions of employment;
- A binding arbitration award which regulates terms and conditions;
- The BCEA or a determination made in terms of the Wage Act.
An insertion of subsection 4A* now provide the employee with the right to institute proceedings against either the temporary employment service or the client or both the temporary employment service and the client.Subsection 4C* and 4D* makes provision for an employee to be employed by the temporary employment service, on similar terms and conditions than that of the industry of the client.
Employment by a temporary employment service, under section 198A, will now be restricted to the following, and sets out the circumstances when a TES may be used without risk to the client:
When a TES employee is assigned to a client for a period not exceeding three months;
When a TES employee is assigned to a client as substitute for a temporarily absent from work; or
When a TES employee is assigned to a client, to perform a category of work, and for a period of time which is considered to be a temporary service, as determined by a collective agreement of a bargaining council or sectorial determination or a notice published in the Government Gazette by the Minister of Labour.
In any other situation the employee would be considered an employee of the client and not the temporary employment service. Employees employed directly by an employer through a fixed term contract and earning below the threshold will enjoy protection under Section 198B.
An employer would now be allowed to employ someone on a fixed term contract or a successive fixed term contract for longer than a period of three months if the nature of the workthe person is employed for is of a limited or definite duration or if the employer can demonstrate any other justifiable reason for fixing the term of the contract, Section 198B subsection (4) makes provision for such a term to be justified in the following situations, if the employee:
- Is replacing another employee who is temporarily absent from work;
- Is employed on account of a temporary increase in the volume of work, which is not expected to endure beyond 12 months;
- Is a student or recent graduate who is employed for the purpose of being trained or gaining work experience in order to enter a job profession;
- Is employed to work exclusively on a specific project that has limited or defined duration;
- Is a non-citizen who has been granted a work permit for a defined period;
- Is employed to perform seasonal work;
- Is employed for the purpose of an official public works scheme or similar job creation scheme;
- Is employed in a position which is funded by an external source for a limited period;
- Reached the normal or agreed retirement age applicable in the employers business.
It is important to note that employees, on temporary employment, earning below the threshold, will now receive more protection from legislation in the workplace.
Paragraph 75 of the Constitutional Court judgement confirms that the TES remains and there is not a transfer of the employment relationship but rather a continuation of the triangular or duel relationship between the TES and the client. This triangular relationship continues for as long as the commercial contract between the TES and the client remains in force and requires the TES to remunerate the workers.
The Constitutional Court judgement indicates that the TES and client relationship continues beyond three months and for the legitimate TES providers does not affect their ability to operate at law. Paragraph 61 of the judgement however gives clarity that an employee could have a claim on both the TES and the client or both. Employers must also note that Paragraph 63 provides additional protection to those employees, under the threshold, who work longer than three months in that they can take action against either the client or the TES or both, in the event of a breach of the LRA.
The TES industry has been a primary driver of skills development and ensured the long-term employability of individuals and effective transition of individuals into employment. The TES will continue to play a role in the success of the labour market.