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Labour Relations Update

Press Releases

15 March 2016

The amended Labour Relations Act (LRA) was promulgated on 1 January 2015 and s198 pertaining to fixed-term employees and Temporary Employment Services (TES) became of full force and effect three months later on 1 April 2015. The union sentiment around TES and non-permanent labour as well as some of the wording around the rights of use of TES after 3 months was a definite area of concern for many businesses.

The primary questions that begged to be answered included:

• Is the client of the TES the sole employer of the assignee after 3 months?
• Does the employment contract have to be signed again after 3 months?
• Who carries the liability for the LRA after 3 months
• How long can a FTC be for?
• What if the FTC is indefinite?
• Is there a right for an assignee to claim permanent employment?

Fortunately we have answers to these and other relevant questions given that Adcorp is the largest workforce management solutions business in SA and as such has been a thought leader and key litigant in respect of these matters. Now, almost a year on, we can share the points of law that have been established and which reflect that TES have a crucial role to play in driving business and labour market sustainability.

Hereunder are some key answers to the questions raised by many stakeholders around the status of TES and FTC assignees (most of these principles have been confirmed in the Brassey judgement in the Assign Service/ Krost Shelving/NUMSA matter):

Status after 3 months: Judgements are clear that after 3 months, the TES remains the primary employer and the employment contract between the TES and the assignee continues uninterrupted. The client does, however, become a co-employer in the event that the TES breached any provisions of the LRA which in reality means that the client of the TES could be a co-respondent in a CCMA or Labour Court matter. The TES still administers the payroll, attends to labour relations matters and is the registered statutory employer for UIF, COID and SDL.

Duration of a FTC: s198B of the LRA provides examples of what circumstances would comprise a legitimate and defensible FTC and it is clear that the essence of a FTC is that it has a determinable end date or event. In these instances it does not matter how long the FTC is for and as long as there is a defined project, all is good. If, however, a FTC becomes blurred, it will become what is termed an “indefinite” contract and the  implication of this is that the assignee will have the right to fair dismissal such as retrenchment when he/ she is no longer required by the client.

Right to claim permanent employment with a client of a TES: there is no such right as has been confirmed in numerous CCMA judgements to date. The only right the assignee would have is to claim indefinite employment and to initiate litigation against the TES and/ or the client in the event of an unfair dismissal or other unfair labour practice.

Right to equal treatment: after being on a FTC for three months, the assignee (who earns below R205 433 per annum) has the right to equal treatment which in a broad sense means that on a Total Cost to Company basis, they should not be prejudiced when compared to their permanent counterparts performing the same jobs. There are a number of justifiable reasons for having differentials in reality, such as tenure, experience, merit, performance and the like. Adcorp have got tools to address this optimally.

Who goes to the CCMA: since the client and the TES are jointly and severally liable for breaches of the LRA, both parties can be cited by an assignee. However, if just the client is cited, our legal team will apply for the joinder of the TES and our legal team will co-ordinate the preparation and litigation.

In summary, we have a lot more clarity on the interpretation of the amendments and we are very well positioned to support your business strategy.

Kay Vittee
CEO: Quest Staffing Solution