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E-Alert – Labour Relations Act

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The Labour Court has made a finding on amendments introduced by sections 37 and 38 of the Labour Relations Amendment Act, 2014. These sections amend sections 198 and 198A-D of the main LRA and deal with the relationship between a labour broker or Temporary Employment Service (TES), the workers it appoints and the client with whom those workers are placed. The judgment, in Assign Services (Pty) Ltd v CCMA & Others (Case no. JR1230), was marked reportable and delivered by Brassey JA on 8 September 2015. The matter was referred to the court as a review of a CCMA decision.

The amendments include a provision deeming that a worker will become an employee of the client three months after placement. The question arises as to whether a TES continues to have an employment relationship with the worker for the purposes of the LRA, or whether the employment relationship will lie solely between the worker and the client.

In its judgment the court accepted that the deemed employment relationship created between the worker and the client will operate only for the purposes of the LRA and that the contractual rights and obligations between the worker and the TES remain in force.

The only issue left to be determined by the court was whether a TES will continue to be an employer of the worker in terms of the Labour Relations Act. The court found no reason to say that the amendment was intended to replace the TES with the client as employer of the worker, but rather to “augment the actual with the deemed”, so that both are employers of the worker in terms of the LRA and the relationship that each party has with the worker will be governed by the LRA. The CCMA had found, incorrectly according to the court, that the employment relationship lay solely between the client and the workers.

In making its finding as above, the court noted that there is likely to be much litigation on the issue due to unintended consequences that could arise from the interpretation. In its order the court set aside the order of the commissioner but did not substitute it with a substantive order of its own. Nevertheless, the judgment offers important insight into the interpretation of the amended sections.