Introduction to the Conflict Plaguing the Outsourced Worker’s Relationship
Labour laws stand in prima facie conflict with the established triangular employment relationship between an employee and their two employers in relation to Temporary Employment Services.[1]
This has therefore resulted in utilising
As a consequence of this triangular relationship, the utilisation of a TES has caused vast uncertainty in the employment sphere, with the enquiry therefore becoming with whom TES employees can raise disputes concerning their contracts of employment. By virtue of this very uncertainty, what follows is a consideration of whether the actions taken by the TES employees working for the University of the Witwatersrand, the client, by going on strike, was an appropriate action or whether there were more appropriate avenues available to them?
- A Critical analysis of Section 198 of the Labour Relations Act
Temporary Employment Services are regulated through section 198 of the Labour Relations Act 66 of 1995, henceforth referred to as ‘the Act’, and are defined as someone who obtains another to render temporary services for a client, which client is in turn responsible for the payment of such procured persons together with the provision of a reward by the client to the temporary employment services for such a procurement.[2] Temporary services are subsequently defined as work for a client not lasting longer than three months; as a substitution for temporarily absent employees of the client or work falling within a category stated to be a temporary service through a collective agreement.[3]
In relation to liability arising out of such a contract, section 198(4) of the Act creates joint and severable liability for both the TES and the client on specified grounds.[4] Furthermore, section 198(4A)(a) of the Act provides the employee with a choice on whom to institute action against, either the client or the TES, on those gounds listed in section 198(4) together with those instances where the client is ‘deemed’ to be the employer of the TES employee in terms of section 198A(3)(b).
Section 198A of the Act provides this ‘deeming provision’, as clients who have temporary services rendered to them by TES employees in excess of three months, are ‘deemed’ to be the employer of such employees.[5] It is this very deeming provision which has created the uncertain triangular employment relationship of TES employees and which has been the subject of much litigation.[6] The concept of the term ‘deemed’ which challenged in two similar cases, namely Assign Services(Pty) Ltd v Krost Shelving and Racking (Pty) Ltd[7] and Mphirime v Value Logistics Ltd/BDM Staffing (Pty) Ltd.[8]
- A critical analysis of Assign Services v CCMA
Assign Services v Krost Shelving and Racking (Pty) Ltd,[9] involved workers who had been placed at the Respondent’s workplace for a period which exceeded 3 months and for the purposes of the Act, were ‘deemed’ to be employees of the Respondent.[10] The arbitration award stipulates the occurrence of some form of disciplinary action and stated that the Respondent (the client) was responsible for disciplining its permanent employees whilst the Applicant was responsible for disciplining the placed employees.[11] The issue before the court therefore became, on application of the deeming provision as contained in section 198A, who the employer was?[12] The CCMA in interpreting this provision held that in those instances where the employee has provided temporary services to the client for longer than three months, the client was considered to be the sole employer.[13]
It would later transpire that the decision handed down in Assign Services was taken on review in the case of Assign Services (Pty) Ltd v CCMA,[14] where the Labour Court rejected the notion of the CCMA by stating that nothing in section 198A of the Act should be interpreted as invalidating the contract of employment between the TES and the employee.[15] Instead of the client being the sole employer, section 198A creates a dual relationship similar to that of section 198(4A)(b).[16]
The court confirmed that even though “No man can serve two masters”, the TES in enacting the contract of employment retains the source of power of the employment contract and therefore placed employees are employed dually for the purposes of the Act.[17]
This may well have the implication of creating an undue burden on the employee as, in principle, they are tasked with receiving orders from two masters. Constitutionally, is it permissible for an employee to be at the mercy of two masters simultaneously? If this is the interpretation of the Assign Services ruling to be favoured, it is submitted that this may be cured by both the TES and the client remunerating the employee.
However, a more favourable and sound interpretation of the decision in Assign Services is that, similar to section 198(4A)(b) of the Act, the deeming provision of section 198A is utilised for the purposes of liability. It is submitted that in these instances, a legal fiction is created which ‘deems’ the client an employer merely for the purposes of liability, even though strictly speaking the TES remains the main employer and sole master of the employment contract. In this way, it allows a TES employee to elect against whom to institute action against. It is in this light which the decision of Assign Services may be seen as providing protection to these vulnerable types of employees in society.
- An example at the University of the Witwatersrand
On 26 October 2015, TES employees at the University of the Witwatersrand embarked on a stike in an attempt to end outsourcing at the institution which began in 2000, which lead to the retrenchment of 613 workers, less than half of whom were re-employed by the private outsourcing company. Outsourced workers’ wages were dramatically reduced and lost many benefits including medical aid and pensions. The demands of the outsourced workers were to be employed by the institution directly and in doing so, claimed the same benefits provided to those employed directly by the institution. If provided with such benefits, this will in principle have the same effect as being employed directly by the institution. The consideration therefore becomes, were the outsourced workers pursuing the most appropriate avenue by going on strike in order to obtain such benefits?
In answering such a question, a distinction needs to be drawn between those claims of rights and claims of interest. Such a distinction was laid out in the case of Hospersa & Another v Northern Cape Provincial Administration[18] and subsequently confirmed in Protekon (Pty) Ltd v CCMA & Others[19] and Apollo Tyres SA (Pty) Ltd v CCMA.[20] In terms of such decisions, claims of right are those claims which arise out of operation of the law (ex lege) or out of a contract between the parties (ex contractu) or as the court held, those practices or policies of the employer which they have a discretion over.[21] If however the claim incorporates terms beyond the contract or operation of the law, such are referred to as claims of interest.[22]
Claims of interest are required, through section 65(1)(c) of the Labour Relations Act, to be adjudicated by a court and cannot be taken on strike. However claims of interest are unable to be adjudicated by a court as of right and need to be resolved through industrial strike action.
If the outsourced workers were to claim such benefits from the TES, no law nor contract entitles the employees to such benefits from the TES, therefore creating a claim of interest. In such an instance the only avenue available to the employees would be an industrial strike action. However, if claimed from the client, in this instance the University of the Witwatersrand, section 198A(5) of the Act provides that where the employee is ‘deemed’ to be the employee of the client, the client may not treat such employees less favourably than employees of the cleint performing the same or similar work. In this instance, such raises terms ex lege, i.e. through the operation of the Labour Relations Act, and in this instance constitutes a claim of right and must be adjudicated by a court in terms of section 65(1)(c).
Therefore since the TES employees were in fact claiming such benefits from the University of the Witwatersrand, the most appropriate avenue available to them was to have the matter adjudicated by a court and not through an industrial strike action.
- Conclusion
Although it is evident that the uncertainty created by the decision of the Labour Court in Assign Services is yet to be resolved and in all likelihood shall be taken on appeal, it is vital that at all times the protection of such vulnerable groups of employees in society remain a priority. It is therefore submitted that by interpreting section 198A as creating a legal fiction which treats the client as an employer merely for the purposes of liability shall provide such needed protection to TES employees.
[1] Benjamin ‘Decent work and Non-Standard Employees: Options for legislative reform in South Africa: A Discussion Document’ (2010) 31 ILJ 845 at 847.
[2] Labour Relations Act 66 of 1995 at section 198(1).
[3] Ibid at section 198A(b) and (c). According to this provision, such a collective agreement may be concluded in terms of a bargaining council, a sectoral determination or a notice published by the minister
[4] Supra note 2 at section 198(4)(a) to (d). These grounds include the contravention of a collective agreement, a binding arbitration award, the BCEA or a determiantion made in relation to the BCEA.
[5] Supra note 2 at section 198A.
[6] A Van Niekerk and N Smit (eds) Law@Work 3 ed (2015) 57 at 68-74.
[7] (2015) ECEL 1652-15 (unreported).
[8] [2015] 8 BALR 788 (NBCRFLI).
[9] Supra note 7.
[10] Supra note 7 at paras 2.1-2.8.
[11] Supra note 7 at para 2.2.
[12] Supra note 7 paras 3.1-3.3.
[13] This decision seeems to echoe that of Mphirime v Value Logistics Ltd/BDM Staffing (Pty) Ltd, a case decided in the same week, where on interpretation of the term ‘deemed’ as contained in section 198A, the CCMA found that the duties and obligations of employment are only afforded to the TES whilst the employee provides temporary services, and it is only when the employee no longer provides these temporary services, is the client deemed to be the sole employer and duty-bearer for the purposes of the Act.
[14] (2015) 36 ILJ 2853 (LC).
[15] Ibid at paras 11 and 12.
[16] Ibid.
[17] Supra note 14 at para 17.
[18] (2000) 21 ILJ 1066 (LAC) at para 12.
[19] [2005] 7 BLLR 623 (LC).
[20] (2013) 34 ILJ 1120 (LAC).
[21] Ibid at paras 24-35.
[22] Ibid.
I.Gazette 