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PURPOSE:

The purpose of this submission is to report on the outcome of the long-awaited Constitutional Court judgment in what has been a lengthy litigation between Assign Services (Pty) Ltd and NUMSA, relating to interpretation of the “deeming provision” in section 198A(3) of the Labour Relations Act (LRA).

BACKGROUND:

Members will recall that a dispute arose between Assign Services and NUMSA in 2015 regarding the interpretation and effect of section 198A(3)(b) of the LRA. Assign Services was of the view that the consequences of the deeming provision were that the placed workers remained their employees for all purposes, but were also deemed to be the client’s employees for purposes of the LRA. Assign Services termed this the “dual employer” interpretation of section 198A(3)(b).

NUMSA, on the other hand, disagreed and contended that the client became the only employer of the placed workers when section 198A(3)(b) was triggered. NUMSA termed this the “sole employer” interpretation.

The Labour Court held that the rights of the employees are best protected by the dual employer interpretation. NUMSA applied for leave to appeal the judgment of the Labour Court. The Labour Appel Court granted NUMSA leave to appeal directly to it.

The Labour Appeal Court held that the sole employer interpretation best protected the rights of placed employees and promoted the purpose and objects of the LRA and the 2014 Amendments. It considered the definition of “temporary service” in section 198A(1) and held that only persons performing a temporary service should be employed by a labour broker. A placed employee who has worked for a period in excess of three months is no longer performing a temporary service and the client becomes the sole employer by virtue of section 198A(3)(b).

Assign Services applied for leave to appeal to the Constitutional Court. It contended that the Labour Appeal Court’s decision was “tantamount to a ban on labour broking” and noted the serious implications of this for the whole of the South African labour market. Assign Services further contended that the Labour Appeal Court did not properly consider the language of the deeming provision and focused on the purpose of the provision, to the exclusion of other necessary considerations. It submitted that that the word “deemed” is inherently ambiguous and argued that it must be considered in its statutory context.

NUMSA persisted that sections 198 and 198A create two separate deeming provisions that cannot operate simultaneously. It submitted that this interpretation did not ban labour brokers, but regulated them in respect of only lower-paid employees placed in employment for more than three months. It contended that the deeming provision only altered the contract between the placed worker and the labour broker, but does not affect the contract between the labour broker and the client. The labour broker may continue to perform services relating to the employee to the extent that they do not purport that they employ them.

THE CONSTITUTIONAL COURT JUDGMENT:

The Constitutional Court heard the matter on 22 February 2018 and handed down judgment this morning (Thursday, 26 July 2018).

The Constitutional Court held that the purpose of section 198A must be contexualised within the right to fair labour practices in section 23 of the Constitution and the purpose of the LRA as a whole. The majority found that, on an interpretation of section 198(2) and 198A(3)(b), for the first three months the labour broker is the employer, and then subsequent to that time lapse the client becomes the sole employer. The majority found that the language used by the legislature in section 198A(3)(b) of the LRA is plain and that when the language is interpreted in the context, it supports the sole employer interpretation.

In the result, the Constitutional Court granted leave to appeal, but dismissed the appeal with costs.

RECOMMENDATIONS:

It is recommended that the SEIFSA Council notes the report on the Constitutional Court judgment in the above matter, which is of relevance to the SEIFSA Council, Associations and Member Companies.

 

COMPILED AND SUBMITTED BY:

BRIDGETTE MOKOETLE

INDUSTRIAL RELATONS & LEGAL EXECUTIVE

SEIFSA

Author SEIFSA

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