The Rise of the Temporary Employment Service (TES) / Labour Broker
Due to the stricter legal framework, there came a sudden change to the way many employers hired their temporary workers. Laws governing the length of time casual workers could be hired disrupted the market and many businesses were unable or unwilling to employ these workers on a permanent basis. This was often due to the nature of the temporary or seasonal requirements of their business.
This resulted in the rise of the Temporary Employment Service, also colloquially known as a labour broker who would take on the contracts for the management of temporary workers on a massive scale.
The key drivers of this large-scale outsourcing included decreased legal risk, cost reduction, efficiency and the expertise, knowledge and support gained from the specialist provider.
With the previous lack of government regulation, the TES industry began to help formalise a large part of the South African workforce. There were of course some companies who did not comply who were eventually brought to book. One of the key drivers of this formalisation was that it made commercial sense simply to keep good, vetted and well-trained workers available for peak fluctuations.
This formalisation saw temporary workers receiving benefits such as leave pay, sick leave, PPH, workmen’s compensation and UIF under the BCEA. In instances where they fell under wage determinations such as Road Freight, Motor Industries or Industrial Council’s, they now accumulated advanced benefits such as pension, sick fund and 13th cheques.
The Triangular Relationship Continues
On 26 July 2018, the Constitutional Court handed down its landmark judgement.
The sole employer interpretation, which applied to employees earning under the above-mentioned threshold and working past a three-month period, would be seen to operate for the purposes of the Labour Relations Act only. However, the triangular employment relationship between the employer and the TES would continue to exist as below:
Paragraph 75 of the judgment explains.
The judgement confirmed that there would be no transfer of employment past this time even though the worker would be ‘deemed’ to be an employee of the client.
To clarify, the legal term ‘deemed’ can be better translated as ‘treated as’. And again, employees would be ‘treated as’ an employee for the purposes of the Labour Relations Act.
The TES and Client would be jointly and severally liable under this Act for issues such as unfair dismissal, unfair labour practices, organizational rights, bargaining councils etc. This was nothing new to the TES industry as reputable agencies already indemnified their clients from the agencies actions and prevailing CCMA decisions already had them affecting the employment relationship between the client, the temp and themselves in-line with the Con. Court decision dating back historically.
In terms of all the other important key legislations beyond the LRA, namely the Basic Conditions of Employment, Skills Development Levy, UIF, Employment Equity etc. – the TES would continue to take all the responsibility for these as usual, pay staff and provide services to clients and workers after this period.
It is important to note that this popularized issue did not concern the status of employees on legitimate fixed term contracts or defined projects such as seasonal work (fruit harvesting season), peak/ troughing etc. as well as those of service providers who offer services on an outsourced basis.
The triangular relationship would therefore continue between the employer, worker and the TES while offering employers the agility they needed to run their business and more protection for workers.