The various interpretations afforded to the “Deeming Provision” contained in Section 198A(3)(b) of the Labour Relations Act 66 of 1995 have been shrouded in confusion and uncertainty for a long time. However, the Labour Appeal Court decision handed down on 10 July 2017, reported as NUMSA v Assign Services and Others LAC Case No: JA96/16, has been hailed as the guiding light through its correct interpretation of this contentious provision.

Section 198A (3)(b) of the LRA provides that an employee of Temporary Employment Services not performing a temporary service (as defined) for the client:
“(i) is deemed to be the employee of that client, and the client is deemed to be the employer; and
(ii) subject to the provisions of s198B, employed on an indefinite basis by the client.”

Temporary Employment Services (“TES’s”), better known in the employment spectrum as “Labour Brokers”, are mandated by companies to supply labour at competitive rates. The TES is responsible for placing temporary employees at their clients’ disposal. The controversial question is: Who becomes the employer of the placed workers once the three months referred to in Section 198 A(3)(b) of the LRA kicks in?

Two different interpretations of the scenario have been identified: –
The Sole Employer Approach: Temporary Employment Services (“TES”) employees, who are not performing temporary services for the client of the TES, become the client’s employees, and the client becomes the only employer of the TES employees. This approach suggests that the employees are transferred to the client and that the TES is removed from the employment relationship.

Dual Employment Approach: The Deeming Provision, read together with Section 198(4) and 198(4A) of the LRA, creates a dual employment relationship (for the purposes of instituting legal proceedings and executing the same in certain instances only) and the employees, therefore, have two employers in this regard, the TES and the client.

The Appeal Court Decision can be summarised succinctly as follows:
Section 198A (3)(b) was introduced to protect vulnerable employees from being abused by Temporary Employment Services (“TES”). The protection is a measure to ensure that these employees are not treated differently from those employed directly by the client. The purpose of these protections in the context of Section 198A is to ensure that the deemed employees are fully integrated into the enterprise as employees of the client. Thus, the TES remains the employer of the placed employee until the employee is deemed the employee of the client. Therefore, the sole employer interpretation was unambiguously preferred by the Appeal Court and is in line with the purpose of the amendment, the primary object of the LRA being to protect the rights of placed workers.

On 26 July 2018, the Constitutional Court handed down judgment in an Application for Leave to Appeal against the order of the Labour Appeal Court (LAC), the citation being Assign Services (Pty) Limited v National Union of Metalworkers Union of South Africa and Others 2018 (5) SA 323 (CC). Writing for the majority of the Constitutional Court, Dlodlo AJ held 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.

Article By: Hemanth Haricharan
Dispute Resolution Official – CEO Durban