Labour broker judgment will 'not affect' cleaners‚ security staff

30 July 2018 - 09:59 By Katharine Child
Multiple companies from the labour broking industry‚ which employs about one million people‚ believe the industry will continue to exist.
Multiple companies from the labour broking industry‚ which employs about one million people‚ believe the industry will continue to exist.
Image: Gallo Images

Outsourced cleaners and security guards’ lives are not about to change dramatically after a Constitutional Court ruling on labour brokers.

The country’s apex court ruled last Thursday that workers earning under R205‚433 a year‚ provided by labour brokers to companies‚ should not be regarded as temporary workers after three months. This means they become permanent employees with job security from month four.

The case‚ brought by union Numsa against a labour broker company‚ made 22 employees permanent at a shelving company. Some unions said the ruling signalled the end of labour broking.

But lawyers and the temporary employment services (TES) industry disagree.

Multiple companies from the labour broking industry‚ which employs about one million people‚ believe the industry will continue to exist.

What the judgment means

Legal firm Cliffe Dekker Hofmeyr said: "Whilst the court does not ban labour broking in its entirety; it aims to ensure that the provision of temporary services is truly temporary. Part of this protection entails that placed employees are fully integrated into the workplace as employees of the client after the three-month period."

Lawyer Craig Kirchmann‚ who was involved the case for the Confederation of Associations in the Private Employment Sector (CAPES) said: "The Constitutional Court ruling changes very little. It merely confirms that after three months employees have labour relation rights against the client (where they work). Ordinarily‚ the labour broker will remain the employer of the placed worker in terms of contract."

Kirchmann said many companies would keep labour brokers to deal with human resources issues.

"If the labour broker‚ by agreement‚ falls out the picture‚ then the client will have to ensure that it has the necessary manpower and skills to deal with the management of the employees‚ all human resources related matters‚ payroll administration‚ up-skilling ability and the like. These are services generally rendered by the labour broker. There is a direct cost to the client/employer to ensure that such skills are available. Even then‚ labour brokers are specialists and generally perform such tasks better."

Kirchmann‚ speaking on the way unions viewed the judgment‚ said: "It is sad and unfortunate that unions are misconstruing the judgment. Labour representatives are suggesting that the judgment takes labour brokers out the picture after three months and hence it will be the end of the labour broking industry. This is clearly incorrect."

"The Constitutional Court has made it clear that labour brokers remain involved in a ‘triangular’ relationship … An objective assessment of the judgment reveals many positives for the industry and accordingly when disinformation is seen for what it is‚ the role of labour brokers will be appreciated."

Why cleaners and security guards are not all about to be insourced

Contrary to popular belief‚ outsourced cleaners and security guards are not seen as temporary employment services or staff provided by labour brokers‚ but are known as independent contractors‚ who are treated differently in the Labour Relations Act.

Kirchmann explained: "Ordinarily‚ cleaning and security staff are not labour broker employees. They are normally employees of outsourced companies which render a service (and do not supply placed workers to work directly for the client). The … judgment does not impact upon independent contractors such as security and/or cleaning companies."

Gavin Mulvenna from Kusile labour brokers said: "Genuine independent contracting arrangements‚ like often the case in the provision of cleaning and security services‚ remain unaffected and are not‚ as some may think‚ now required to be ‘insourced’. An independent contractor and a Temporary Employment Service are not the same thing and are treated differently in law … An independent contractor is specifically excluded from the definition of ‘employee’ per Section 213 of the Labour Relations Act."

Mulvenna explained further: "A temporary employee service procures and supplies labour for a fee. The independent contractor is not under my control as to how the work is done – all I want is the result. Conversely‚ persons supplied by a temporary employment service to the client‚ are under the control of the client – in respect of both what is done and how it is done."

Does the judgment say labour broking will end?

No. It says the "triangular relationship" between brokers‚ their employees and the client continues.

Paragraph 75 in the judgment states that: "This is not a transfer to a new employment relationship but rather a change in the statutory attribution of responsibility as employer within the same triangular employment relationship. The triangular relationship then continues for as long as the commercial contract between the TES and the client remains in force and requires the TES to remunerate the workers."

Adcorp Holdings‚ which provides such services‚ explained what that meant. "This confirms that the temporary employment services companies remain involved after the three-month period and that there is not a transfer of the employment relationship but rather a continuation of the triangular relationship between the TES and the client."

Legal firm Cliffe Dekker Hofmeyr said: "This triangular relationship then continues for as long as the commercial contract between the Temporary Employment Services (TES) and the client remains in force and requires the TES to remunerate the workers." 

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