THE IMPACT OF AMENDMENTS TO SECTION 198 OF THE LABOUR RELATIONS ACT
The amendments to section 198 of the Labour Relations Act has left temporary services employment agencies or better known as ‘labour brokers’ no other choice but to reconsider the placement of employees.
Section 198(1) of the Labour Relations Act defines ‘temporary employment service’ as follows:
- Any person who, for reward, procures for or provides to a client other persons-
- Who [render services to, or] perform work for the client; and
- Who are remunerated by the temporary employment service.
Section 198A of the Labour Relations Act defines ‘temporary services’ as follows:
- In this section, a ‘temporary service’ means work for a client by an employee –
- For a period not exceeding three months;
- As a substitute for an employee of the client who is temporarily absent; or
- In a category of work and for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the minister, in accordance with the provisions of subsections (6) to (8).
The crux of Section 198(1) read with Section 198A dictates that the services to be rendered to a client should be temporary of nature.
The legislator, by way of regulating fixed term contracts to this extent, impacted temporary services providers in such a manner that labour brokers would find it difficult to keep their clients out of the CCMA when cases are referred by disgruntled employees.
Section 198A (3)(a) of the Labour Relations Act stipulates that if an employee performs a temporary service, as contemplated in Section 198A (1), for the client the employee is the employee of the temporary employment services.
On the contrary, Section 198A (3)(b) of the Labour Relations Act stipulates that an employee not performing such temporary service for the client is –
- deemed to be the employee of that client and the client is deemed to be the employer; and
- subject to the provisions of section 198B, employed on an indefinite basis by the client.
What this section implies is that if a labour broker places an employee at a client’s premises and the labour broker does not comply with the rules as set out in section 198(1) and section 198A of the Labour Relations Act, the client is deemed to be the employer and the employee has a permanent status of employment at said client.
If this realizes, the need for labour brokers becomes null and void as the client of the labour broker becomes the permanent employer of the placed employee.
The amendments to the Labour Relations Act stipulate that the client of the temporary employment service could be joined as respondent in cases where an employee alleges that his dismissal was unfair.
The employee may then institute proceedings against either the temporary employment service or the client or both the employment service and the client.
Taking the abovementioned into account, one must look at the rules pertaining to fixed term contracts and in which circumstances they will still be acceptable even though they exceed the three month mark.
Section 198B(1) defines a fixed term contract as follows:
“a fixed term contract means a contract of employment that terminates on –
- The occurrence of a specified event;
- The completion of a specified task or project; or
- A fixed date, other than an employee’s normal or agreed retirement age, subject to subsection (3). “
The Act does provide for a fixed term contract or successive fixed term contract to exceed three months of employment only if –
- The nature of the work for which the employee is employed is of a limited or definite duration; or
- The employer can demonstrate any other justifiable reason for fixing the term of the contract.
Furthermore, the Labour Relations Act stipulates that, the conclusion of a fixed term contract will be justified if the employee whom receives a fixed term contract –
- 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 or profession;
- is employed to work exclusively on a specific project that has a 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 public job creation scheme;
- is employed in a position which is funded by an external source for a limited period; or
- has reached the normal or agreed retirement age applicable in the employer’s business.
As such, it is very important to ensure that the nature of the work to be performed is temporary and that the contract that is concluded clearly stipulates that the services will be temporary.
If both labour brokers and clients do not adhere to the rules in providing or procuring temporary services as set out in the amendments to the Labour Relations Act one or both of the parties may find themselves in a sticky situation regarding liability at the CCMA.
Meghan Laubscher | LLM (UFS)
CEO Dispute Resolution Official