Who is the employer? The labour broker or the client?

At the onset of an employment dispute it is essential to ascertain who the employer and employee are. If an employment relationship is not established, the legal proceedings will be dismissed on that ground alone.

The 2014 amendments to the Labour Relations Act 66 of 1995 (“the LRA”) changed the law pertaining to the relationship between labour brokers (referred to in the LRA as Temporary Employment Services “TES”), the placed worker and the client.

Section 198 A (1) of the LRA defines a “temporary service” as a period not exceeding three months; a substitute for an employee of the client who is temporarily absent; or for any period of time determined in a collective agreement, or a sectoral determination or notice published by the Minister of Labour.

Section 198A(3)(b)(i) of the LRA provides that a person placed by a labour broker to work for a client who is not performing a temporary service as defined by the LRA is deemed to be an employee of the client and the client is deemed to be the employer. The controversial issue surrounding this section is that it appears to conflict with section 198 (2) of the LRA, which provides that a person placed by a labour broker is the employee of the labour broker.

What creates more confusion is that sections 198(4) and 198 (4A) of the LRA state that a labour broker, a client, or a client who is deemed to be an employer, are jointly and severally liable for the labour broker contravening a collective agreement, sectoral determination, arbitration award or the Basic Conditions of Employment Act 75 of 1997.  

Which raises the question, “Who is the employer?”.

In NUMSA v Assign Services & Others (Labour Appeal Court )(“LAC”) the labour appeal court was tasked with clarifying whether the labour broker remains the employer of the placed worker, alternatively whether both the labour broker and the client are the placed worker’s employer, when section 198A(3)(b)(i) of the LRA is triggered.

The effect of the LAC judgment is that a placed worker whilst performing a temporary service is an employee of the labour broker. However, where the placed worker is not, or is no longer, performing a temporary service the worker is the employee of the client.

You can contact Hlengiwe Skosana, an associate in our Labour Law and Civil Litigation Department, for assistance with labour law disputes. Her e-mail address is [email protected], and her telephone number is 031 536 7500.