Labour Law Section 198A: Temporary Services

Temporary Service and Deeming Provision

• A "temporary service" is defined as 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
  • In a category of work and for any period of time determined by a collective agreement, sectoral determination, or notice published by the Minister
• An employee performing a temporary service for the client is the employee of the Temporary Employment Service (TES) - Section 198(2)
• Once an employee is not performing a temporary service for the client, the employee is deemed to be the employee of the client and the client is deemed to be the employer

Deeming Provision and Its Consequences

• The deeming provision gives rise to two possible interpretations:
  • "Sole employer" interpretation: the client becomes the employer of the deemed employee at the end of the three-month period
  • "Dual employer" interpretation: both the TES and client are employers of the deemed employee at the end of the three-month period
• A "justifiable reason" for different treatment includes:
  • Seniority, experience, or length of service
  • Merit
  • Quality or quantity of work performed
  • Any other criteria of a similar nature

Assign Services v CCMA

• Where a placed worker concludes a contract of employment with the TES and commences work with it, it gives rise to LRA protection
• The deeming provision kicks in after three months, and the labour brokering relationship continues, with one meditation - there are now two employment relationships
  • First one: the continuation of the relationship between the TES and the placed worker - contract of employment still in place - LRA protection under the TES endures
  • Second one: a statutory relationship between the client and the TES for the purposes of the LRA

Termination of Employment Contract

• If the employer terminates the contract at the end of the originally agreed term, termination will amount to a dismissal
• The dismissal must comply with procedural fairness requirements of the LRA

Part-Time Employees

• A "part-time employee" is an employee who is remunerated wholly or partly by reference to the time that he or she works and who works less hours than a comparable full-time employee
• Employers must treat a part-time employee on the whole not less favourably than a comparable full-time employee doing the same or similar work, unless there is a justifiable reason for different treatment
• This section does not apply to an employee earning in excess of the set threshold and during the employee's first three months of continuous employment with an employer
• Small employers and businesses in operation for less than two years are also excluded in general
• This section does not apply to employees who work less than 24 hours per month

General Provisions

• The amendments grant the CCMA an bargaining councils jurisdiction to conciliate and arbitrate disputes emanating from interpretation or application of sections 198A, 198B, and 198C
• Such disputes, other than dismissal cases, may be referred in writing within six months after the act or omission concerned
• Disputes remaining unresolved after conciliation may be referred for arbitration within 90 days, although late referrals may be condoned

The Deeming Provision in the Labour Relations Act

• The Labour Relations Act (LRA) deals with the relationship between a Temporary Employment Service (TES) and a client who hires employees through the TES
• The deeming provision clarifies that the TES continues to have control over the placed worker after the worker's employment contract with the client comes into effect
• The TES remains the statutory employer of the worker, but the client is seen as the "deemed employer" once the three-month period expires

Consequences of the Deeming Provision

• Termination: A TES cannot terminate the worker's service simply to avoid the deeming provision because this would be considered a dismissal
• The LAC interpretation: The LAC has ruled that the sole employer interpretation does not ban the operations of a TES, but regulates them by restricting them to genuine temporary employment arrangements, in line with the purpose of amendments to the LRA

Labour Brokering Explained

• Labour broking creates a triangular relationship:
  • Commercial contract: between the TES and the client
  • Employment contract: between the TES and the employee (placed worker)
  • Assignment: the TES assigns the placed worker to the client
• The LRA emphasizes protection for low-income earners, recognizing that employment security is especially important for those vulnerable to exploitation

Key Provisions of the LRA

• Section 198(2) of the LRA states that the TES remains the employer of the employee for the duration of the employment relationship
• The LRA defines a labour broker (TES) as "any person who, for reward, procures for or provides to a client other persons, who perform work for the client and who are remunerated by the TES"

Instances of Joint and Several Liability

• A TES and its client can be jointly and severally liable if the TES contravenes any of the following:
  • Collective Agreement
  • Arbitration Award
  • Basic Conditions of Employment Act (BCEA)
  • Sectoral Determination

Consequences of Contravention

• If the TES or its client contravenes any of the above, the following consequences may arise:
  • Employee proceedings: the employee can initiate proceedings against the TES or client, or both
  • Labour inspector action: a labour inspector acting in terms of the BCEA may secure a compliance order against the TES or client, or both
  • Enforceable orders: any orders or awards made against the TES or client may be enforced against either party

Constitutional Court and Section 198B Fixed-term Contracts

• The Constitutional Court held that for the first three months of employment, the TES is the employer of the placed worker
• After three months, the client becomes the "sole" employer
• The court also held that the section 198A must be contextualized within the right to fair labour practices in section 23 of the Constitution and the purpose of the LRA as a whole

Section 198B Fixed-term Contracts

• A fixed-term contract of employment terminates on:
  • The occurrence of a specified event
  • Completion of a specified task or project
  • A fixed date, other than an employee's normal or agreed retirement age
• This section does not apply to employees earning above the threshold as prescribed by the Minister, according to the BCEA
• It also does not apply to employers that employ less than 10 employees, or employers that employ less than 50 employees but have been in business operation for less than two years
• Finally, this section does not apply to employees employed in terms of a fixed-term contract which is permitted by statute, sectoral determination, or collective agreement

Fixed-term Contracts

• An employer may employ an employee on a fixed-term contract or successive fixed-term contracts for longer than three months only if:
  • The nature of the work for which the employee is employed is of a limited or definite duration
  • The employer can demonstrate any other justifiable reason for fixing the term of the contract
• Justifiable reasons may include:
  • Replacing another employee who is temporarily absent from work
  • Being employed on account of a temporary increase in the volume of work, which is not expected to endure beyond 12 months
  • Being 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
  • Being employed to work exclusively on a specific project that has a limited or defined duration
  • Being a non-citizen who has been granted a work permit for a defined period
  • Performing seasonal work
  • Being employed for the purpose of an official public works scheme or similar public job creation scheme
  • Being employed in a position which is funded by an external source for a limited period