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Interpretation 'Deeming Provision' Labour Relations Act

By Johann Scheepers

 

"Certainly no less important than the often repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of this principle.

 

The first is that 'the context' as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limit, its background."

[ Ngcobo J, Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Tourism & others 2004 (4) SA 490 (CC); [also reported at 2004 (7) BCLR 687 (CC) – Ed] at para [89] citing Jaga v Dönges 1950 (4) SA 653 (A)].

 

Ruling [Bargaining Council]- Interpretation Section 198A of the Labour Relations Act

[Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922 - Suria van Wyk, Commissioner; reported [2015] 8 BALR 788 (NBCRFLI)].

 

Introductory Remarks

This constitutes a follow-up article to the one posted July 05, 2015, “Regulation of Non-Standard or A-Typical Employment – South Africa” wherein the award in the matter Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.

 

In the first article the award referred to above was considered and brief commentary made as to the amendments to the South African Labour Relations Amendment Act 6 of 2014 (LRA) especially provisions that afforded protection to employees of labour brokers or rather Temporary Employment Services (TES) and those performing Part-time work as well as Fixed-term contract work.

 

Writer indicated that a follow-up article would be published wherein an analysis of Value Logistics award/ruling supra, handed down by South African Commission for Conciliation, Mediation & Arbitration (CCMA) would be made with referral to the respective submissions and arguments raised by the legal representatives of the parties and the findings and determinations made by the presiding Commissioner.

 

Pursuant to the posting of the first article, South African readers may find of interest the comments, as to the subject matter of the article, made by Professor George J. Gliaudys Jr, Dean at Irvine University College of Law, Los Angeles, USA:

“Dear Colleague in Law,

The broader context of temporary employees is that there is an over-supply of labor in many of the developed countries including your own SA these days. The need for agile management of human resources and fiscal expenditures make temporary employee resourcing and utilization almost a mandatory best business judgement principle for corporate leadership in keeping with their fiduciary responsibilities to the shareholders to increase share values.

It might be a good thing to simply admit to this business reality and not try to make a temporary worker obtained to fill a work need of a short duration into a "quasi" permanent employee through adding benefits by the company that gets them from an employment service company specializing in temporary labor provision to a corporation needing such labor resourcing flexibility.

It's an issue that resonates throughout the world these days. I'm pleased that you are in a position to shape its contours as a Commissioner. 

George” 

 

In an article by Hugo Pienaar et al, ”Ruling on the Deeming Provision – CCMA Ruling on the Interpretation of the Deeming Provision in Section 198A of the Labour Relations Act” Employment Alert (July 1, 2015) DLA Cliffe Dekker Hofmeyr, 1-2, the learned authors submit that the various interpretations afforded to the deeming provision have been hotly debated.

 

The debate was between employment law and human resources practitioners since the amendments to the LRA came into effect on 1 January 2015 and 1 April 2015. The debate centred on what the legislature intended when saying that a labour broker employee is deemed the employee of a client.   

 

Does the employee transfer from the labour broker to the client, with the client becoming the sole employer of the person, or does the provision create a dual employment relationship – with both the client and labour broker being the employers?

 

The Assign Service award is summarised by the authors supra as set out hereunder:

The reasons for the interpretation advanced by the CCMA are, amongst others, the following:

■ Section 198A(3)(b) is to be interpreted in a manner akin to how the law deals with adoption. A legal fiction is created in that the adoptive parent becomes the parent of the adopted child. The biological parent and the adoptive parent are not dual parents.

■ A greater amount of confusion and uncertainty is created by the "dual employment position", for example;

- Which employer is responsible for the discipline of the deemed employees?

- Which employer's disciplinary code applies?

- How does one deal with the issue of reinstatement?

■ Section 198A does not apply in circumstances where the work performed by the TES employees for the client is of a genuinely temporary nature.

■ The joint and several liability provision contained in s198(4A) does not refer to joint and several liability in terms of s198A(3)(b) but rather, only refers to joint and several liability in terms of s198(4).

The mere fact that proceedings may be instituted, or awards enforced, against both the client and the TES does not axiomatically mean that the parties are dual employers. It is simply an issue relating to the parties' liability.

■ Section 198A(3)(b)(ii) provides that TES employees not performing temporary services are, "subject to the provisions of s198B, employed on an indefinite basis by the client".

■ The memorandum of objects to the LRA amendments provides that, if TES employees "are not employed to perform temporary services, they are deemed for the purposes of the LRA to be the employees of the client and not the TES". [Emphasis added].

 

According to one of the authors, Kirsten Caddy, the impact of the CCMA's interpretation is that:

- once a client of a TES is deemed to be the sole employer of TES employees, those deemed employees must, for example, be included in any retrenchment procedure that the client may embark upon;

- employees must be provided with terms and conditions of employment, by the client, that is no less favourable to those enjoyed by comparable indefinite employees of the client;

- said employees will remain the employees of the client after the termination of the commercial agreement between the TES and the client and can institute any employment-related disputes against the client without having to join the TES to those proceedings.

 

The author then comments further that the Assign Service award is likely to be taken on review to the Labour Court. Accordingly, this is probably not the end of the "sole" versus "dual" employer debate.

“However, employers should be cognizant of the preliminary stance taken by the CCMA (sic) in dealing with the interpretation of the deeming provision.”

“Whilst CCMA awards do not create legal precedent that must be followed by other commissioners, the ruling provides a glimpse in what may be the view on this issue at the statutory body”.

 

Binding effect of precedents:

At this juncture, it was deemed important to record that insofar as the amendments to Section 198 of the LRA are concerned no legal precedent exists that Commissioners should follow when making findings and determinations/rulings insofar as the interpretation and application of the amendments are concerned.

This notwithstanding, the absence of legal precedent does not absolve the presiding Commissioner from his/her statutory duty to follow, apply and adhere to the letter and spirit of the Constitution of the RSA, 1996.

Therefore, a purposive approach to the interpretation of the LRA is required, having regard to Section 1 “Purpose of this Act”; in compliance with and to give effect to the provisions of Section 23 of the Constitution – “Labour relations – (1) Everyone has the right to fair labour practices…(2)…”  

 

Contextual or purposive approach to interpretation?

- Where the literal approach leads to absurdity, a contextual approach would be applied. [Application of the Interpretation Act 33 of 1957];

- This includes the reading or identification of ‘interpretive material’ contained within the script or wording of the LRA and other authoritative material which could be of ‘interpretive assistance’ such as background information, explanatory memorandum, punctuation and etcetera; and

- Entrenchment or prioritisation of the purpose of the Act versus the intention of the legislature.

 

As to the ‘precedential value’ or binding status of the award of one Commissioner vis-à-vis that of another, in Mustek Ltd v Tsabadi NO and others [2013] 8 BLLR 798 (LC) the Labour Court held that Commissioners are not bound by earlier arbitration awards.

 

The Court held at [13] “It is fatuous to suggest that one Commissioner should complaisantly endorse the findings of another Commissioner where the two matters have their origins in the same incident. The rationale for the first Commissioner’s decision has to be analysed. There can be any number of reasons why that Commissioner arrived at the conclusion he did. To argue that a Commissioner is bound by the findings of another Commissioner is repugnant to the rules of precedent”. [Emphasis added].

 

However, in Gcaba v Minister of Safety & Security & others (2010) 31 ILJ 296 (CC); [2009] 12 BLLR 680 (CC) the Constitutional Court held that CCMA Commissioners are bound to follow the judgments of the Labour Court, the Labour Appeal Court, the Supreme Court of Appeal and the Constitutional Court irrespective of their views as to the correctness of such judgments.

 

Subject to certain exceptions, Commissioners are also bound to follow awards and rulings of their colleagues. Such judgments, awards and rulings are to be followed because it is in the interests of:

  • Legal certainty;
  • Equality before the law; and
  • The satisfaction of legitimate expectations.

 

In Le Roux v CCMA & others [2000] 6 BLLR 680 (LC) at 687-668, the Court held that if divergent views were expressed in judgments of a Court and there is no binding decision of a higher Court, then Commissioners may properly select that view which they regard to be more in accordance with the proper interpretation of the LRA.

 

On a debatable point of law where the Labour Court has expressed its views with diffidence there may be room in some cases for a commissioner, after a careful consideration of the problem in accordance with proper legal principles, to arrive at a different conclusion. [Le Roux v CCMA & others (supra)].

 

Where a Court whose decisions are binding made remarks in passing which remarks had no bearing on the outcome of the case i.e. was not the reason for the decision, Commissioners are not bound to follow such views although it should be regarded as persuasive. They should only deviate from such views if satisfied that it is wrong and in such event, reasons for deviating should be given.

 

Only in exceptional cases may a previous award be deviated from i.e. only

  • If the commissioner is satisfied that the previous award was wrong; or
  • Where the point was not argued; or
  • Where the issue is in some legitimate manner distinguishable.

[Gcaba v Minister of Safety & Security & others (supra) at par 59; see also Daniels v Campbell NO & others 2004 (5) SA 331 (CC)]

 

Writer is of the considered opinion that if there is no binding authority on an issue, Commissioners must interpret the LRA themselves.

 

[See: CCMA Guidelines: Misconduct Arbitrations (the Guidelines), 3 – 4 ‘Interpretation of the law’[at 5] [A]n arbitrator who adopts a different approach must set out the reasons for doing so in the relevant award…

[At 10]… [A]n arbitrator must make decisions that are fair and reasonable in the light of the specific circumstances of the case. Section 33(1) of the Constitution states that everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Every decision by an arbitrator must comply with these three elements].   

 

It is submitted that although the Guidelines referred to above apply to arbitrations, where the termination was based on the ground of ‘misconduct’ the legal principle as it pertains to the rules of precedent, as referred to and cited above would also be applicable insofar as the interpretation and application of  Section 198 are concerned.

 

This notwithstanding, an award or ruling by a Senior Commissioner of the CCMA has persuasive value especially in the event that an arbitration award/ruling is reported in a recognised authoritative law journal.

 

Having attempted to clarify the binding effect of precedents insofar as awards and rulings of Commissioners are concerned writer deemed it appropriate to make use of the opportunity to clarify a misconception prevalent amongst some users of the CCMA, and in all probability amongst some legal representatives appearing before the Commission.

 

From postings in blogs on LinkedIn and according to hearsay some persons are of the firm belief that Commissioners of the CCMA from time to time ‘act upon instruction or directive’, one would guess by a person[s] in authority to interpret and apply the law in accordance with the dictates of said ‘instruction’ or ‘directive’.

 

Furthermore and so it is believed that Commissioners, ‘so strictly charged, upon pain of punishment’  to desist from any deviation in an award/ruling in accordance with the prescripts of said ‘instruction’ or ‘directive’ and if not, would do so at his/her peril. [Writer’s interpretation].

 

Most readers would find such notion as peculiar and highly improbable, however the same or similar argument was raised by one of the parties in an application for the recusal of the presiding Commissioner, Suria van Wyk in the matter Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd which ruling forms the subject matter of this article.

 

Suffice it to place on record that writer has not come across any such directive or instruction. It simply constitutes a fallacy and may have been designed by a party as a stratagem to create a possible ground for review in the event of a potentially unsuccessful claim or defence.  

 

In the article by Pienaar referred to above the learned author succinctly captured an opinion as to the interpretation of the amendments to the LRA, in particular section 198A(3)(b)(i) ("Deeming Provision").

 

The author observes that two main approaches in the interpretation of the deeming provisions emerged namely; the Sole Employer Approach and the Dual Employment Approach in respect of employees who earn below the threshold stipulated in the Basic Conditions of Employment Act, No 75 of 1997, and who perform work for a period exceeding three months. [Emphasis added].

 

Referral was made to the matter Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd (Value Logistics) wherein the two approaches referred to supra were placed at the forefront of the National Bargaining Council for the Road Freight and Logistics Industry ("NBCRFLI") to establish the identity of ‘the true employer’ of the TES employees.

 

The presiding Commissioner acting under the auspices of the NBCRFLI ruled that employees, who are not performing temporary services for the client of the TES, become the employees of the client only and any claim brought by the employees in terms of the LRA must be brought against the client. The Commissioner in Value Logistics did not prefer the Sole Employer Approach nor the Dual Employer Approach. [The Commissioner's interpretation is set out more fully hereunder].   

 

Of importance is that the Commissioner in the matter Assign Services (Pty) Ltd // Krost Shelving & Racking (Pty) Ltd & National Union of Metal Workers of South Africa (NUMSA) found that Section 198A (3)(b) should be interpreted to mean that “deemed” means that the client becomes the sole employer of the placed workers for the purposes of the LRA, provided that they earn below the threshold and that the three months period referred to supra elapsed.

 

The Commissioner in Assign Services interpreted Section 198A (3)(b)(i) of the LRA in accordance with the term coined by Pienaar supra as the Sole Employer Approach.

 

Of importance is that the Commissioner in Value Logistics'  interpretation of Section 198A(3)(b)(i) of the LRA is confined to the following:  "The correct interpretation in my view of s198A(3)(b)(i) is therefore that the client is awarded the duties and obligations for the purposes of the LRA when the employee is not performing a temporary service and therefore any claim brought in terms of the LRA must be brought against the duty-bearer, which is the client."

 

This notwithstanding, the two approaches as defined by Pienaar was deemed of value and were recorded hereunder:

- In terms of the Sole Employer Approach, TES employees who are not performing temporary services for the client of the TES, become the employees of the client and the client becomes the only employer of the TES employees. This approach suggests that the employees are transferred to the client and that the TES is removed from the employment relationship.

- In terms of the Dual Employment Approach, the Deeming Provision, read together with Section 198(4) and 198(4A) of the LRA, creates a dual employment relationship (for the purposes of instituting legal proceedings and executing same in certain instances only) and the employees therefore have two employers in this regard, the TES and the client.

 

The author then argues that the Ruling in Value Logistics the Ruling is subject to scrutiny due to the fact that it suggests that the TES is removed from the employment relationship, which inter alia infringes the TES’s constitutional right to choose their profession freely.

 

Nothing in the amendments to the LRA suggest a ban on TES. Other impractical implications arising from such an approach includes the fact that the joint and several liability, as well as the equality provisions in the LRA will become superfluous. This goes against the proximate reason for the amendments to the LRA.

 

“In the premises, the said attorneys firm intends to approach the Labour Court to have the Value Logistics Ruling reviewed”. [Hugo Pioneer and Joloudi Badenhorst – Cliffe Dekker Hofmeyr Attorneys at Law].

 

Discussion and Brief Analysis of the Recent Bargaining Council Ruling

[Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922 - Suria van Wyk, Commissioner].

 

In the Value Logistics matter and prior to the commencement of the proceedings the presiding Commissioner had to deal with all sorts of preliminary applications in the form of firstly, a condonation application on for the late filing of an application for recusal (sic).

The ‘Application for Condonation for the late filing of an application for Recusal’, or so it was termed for the sake of clarity by the Commissioner was brought by  BDM Staffing (Pty) Ltd, (BDM Staffing), initially cited as the Respondent party to the dispute that served before the National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI).

 

BDM Staffing participated in conciliation proceedings and upon non-resolution of the matter it was referred for arbitration.

 

Despite the fact that parties at conciliation indicated that they would not object to the Commissioner being the arbitrating commissioner, no proof of service of a notice of objection, in terms of section 136(3)-(4) of the LRA was ever filed with the CCMA, or the Bargaining Council.

 

An objection filed in terms of section 136(3) of the LRA has to be directed to the forum, i.e. the CCMA or the relevant Bargaining Council and is not an application that is brought before a presiding commissioner.

 

The application for recusal filed by BDM Staffing, was not an objection as stipulated in terms of section 136(3) of the LRA, but was an application for recusal and condonation ostensibly in terms of the NBCRFLI Dispute Resolution Rules.

 

An application for recusal does not fall within the ambit of rule 33 of the Bargaining Council rules. There are no time limits set on when an application for recusal must be filed and therefore no condonation was required.

 

Therefore, BDM Staffing as the saying goes ‘got its wires crossed’ in that it from the outset brought an application for condonation in error and in a dual format of byzantine complexity, to wit ‘application for condonation of late filing of application for recusal’.

 

In the Ruling it was confirmed that BDM Staffing (Pty) Ltd indicated during the arbitration held on 25 May 2015 that an application for recusal would be filed in conjunction with its Heads of Argument on the interpretation of section 198A(3)(b)(i) of the LRA.

 

Ruling on the Application for Recusal: 

BDM Staffing in short would have it that the Commissioner should recuse herself and that the matter should be arbitrated based on perceived bias by the Commissioner in favour of the Applicant party.

 

At this juncture it was deemed appropriate to record that the test for determining recusal involves the question whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the presiding officer will not bring an impartial mind to bear on the adjudication of the case. [President of the Republic of South Africa and others v South African Rugby Football Union and others 1999(7) BCLR 725 (CC); SACCAWU and another v Irvin & Johnson Ltd Seafoods Division Fish Processing [2000] JOL 7073 CC; NEHAWU v Department of Health (Free State) 2014 JDR 1541 (LC)]

 

BDM Staffing argued that the Commissioner harboured a preconceived notion as to the interpretation of  section 198A(3)(b)(i) of the LRA based on the under mentioned arguments:

(i) That by joining Value Logistics Ltd as a Respondent party to the matter the Commissioner acted in a manner that showed bias; and

(ii) That the Commissioner showed or harboured a preconceived notion of the interpretation of section 198A(3)(b)(i) of the LRA based on the argument that because of the CCMA Road Shows and training provided to Commissioners;

(iii) That Commissioners accredited to hear section 198 matters have been ‘coached’ to interpreted the amendments ‘in a certain way’.

 

One could only infer that the argument by the Respondent was the same or of a similar nature as referred to in this article supra.

 

Writer made mention of the existence of a notion, or the firm belief that Commissioners of the CCMA from time to time ‘act upon instruction or directive’, one would guess by a person[s] in authority to interpret and apply the law in accordance with the dictates of said ‘instruction’ or ‘directive’.

 

Writer incidentally also attended the CCMA training and therefore is in the position to record that no ‘directive’ or ‘instruction’ as to a favoured interpretation of section 198A was given by the course presenter, or any other person for that matter.

 

Suffice it to reiterate that writer has not come across any such directive or instruction. It simply constitutes a fallacy and in all probability has been raised by the Respondent party as a stratagem designed to create a possible ground for review in the event of a potentially unsuccessful claim or defence. 

 

Furthermore, the argument raised by the Respondent reminded writer of the matter, Betha & others v BTR Sarmcol (A division of BTR Dunlop Ltd) [1998] 8 BLLR 793 (A), that involved to the dismissal of strikers. At the time of their dismissal most of the appellants were members of the Metal and Allied Workers’ Union (“MAWU”).

 

In July 1986 MAWU, on behalf of the dismissed workers, brought an application for their reinstatement in terms of section 46(9) of the Labour Relations Act 28 of 1956 (“the Act”). The matter came before the Industrial Court (“the IC”) in 1987. After a protracted hearing which lasted 39 days the IC, in September 1987, dismissed MAWU’s application. The judgment of the IC has been reported: Metal and Allied Workers Union v BTR Sarmcol (1987) 8 ILJ 815 (IC).

 

MAWU took the IC’s decision on review to the Natal Provincial Division of the then Supreme Court. During the IC hearing an unsuccessful application was made for the recusal of the presiding officer because of his attendance, while the matter was in progress, at a conference organised and hosted by BTR’s industrial relations adviser [labour consultants].

 

Of interest was that the basis for the review application was that the presiding officer had by his conduct exhibited a degree of bias sufficient to vitiate the IC’s decision. The Natal Provincial Division (Didcott J) granted the application and set aside the IC’s decision. Its judgment is also reported: Metal and Allied Workers’ Union and another v BTR Industries SA (Pty) Ltd and others (1989) 10 ILJ 615 (N).

 

The ensuing appeal to this Court was dismissed – see BTR Industries South Africa (Pty) Ltd and others v Metal and Allied Workers’ Union and another 1992 (3) SA 673 (A) – and the matter was consequently remitted for hearing de novo before a newly constituted Industrial Court.

 

However, the Commissioner in her Ruling as to the second submission in support of recusal, namely based on the notion of a ‘fixed predetermined interpretation” of Section 198A(3)(b)(i) of the LRA due to training and exposure to ‘CCMA Road shows’ made short thrift of the argument, in a decisive and fearless manner as is quoted hereunder:

“It is a condition of accreditation of all Councils that only Commissioners and panelists who have been trained on section 198 may hear these matters. If the above was regarded to be a valid ground for recusal the resultant effect would be that all Commissioners accredited to hear section 198 matters would have to recuse themselves. The legislator have given the CCMA and the accredited Bargaining Councils the power to preside over these matters and therefore I will execute my duties as Commissioner accredited to hear the section 198 matters, independently and fairly.”

 

As to the first submission in support of recusal, namely that by joining Value Logistics Ltd the presiding Commissioner in a similar manner swiftly and decisively disposed of the nonsensical argument as is quoted hereunder:

“I had a duty to join Value Logistics Ltd as a second respondent to the dispute as they have an interest in the outcome of the dispute. Joining a party to a dispute creates no liability; it only ensures that the party joined will have an opportunity to state their case at the proceedings. The CCMA Rules, rule 26(2) and 26(3) give the power to a Commissioner to make an order, on own accord, to join any person as a party in the proceedings if the party to be joined had a substantial interest in the subject matter of the proceedings. It can therefore not be argued that by joining Value Logistics Ltd I acted in a manner that showed bias.”

 

So much then for the preliminary points where after the Commissioner proceeded by handing down a Ruling as to the interpretation of Section 198 and Section 198A of the LRA.

 

Ruling on the Interpretation ff Section 198 And Section 198a Of The Labour Relations Act, 66 Of 1995 (As Amended)

The Commissioner opined by addressing the rules of interpretation as pronounced upon by the Courts and thereafter by reference to contemporary judgments as to the positive law pertaining to the interpretation of statute.

 

In the Ruling reference was made to the judgment Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] 2 BPLR 135 (SCA) wherein the Court held that interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence.

 

Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production.

 

Referral was found that Section 3 of the LRA states that any person applying the LRA must interpret the provisions-

(a) to give effect to its primary objects;

(b) in compliance with the Constitution; and

(c) in compliance with the public international law obligations of the Republic.

 

Section 198 of the Labour Relations Act, 66 of 1995 (as amended)

Section 198 of the LRA applies to all employees irrespective of their income. Section 198(1) of the LRA defines a TES to mean any person who for reward, procures for or provides to a client other persons who performs work for the client and is remunerated by the temporary employment service.

 

In terms of section 198(4) the TES and the client are jointly and severally liable if the TES, in respect of any of its employees, contravenes-

(a) a collective agreement concluded in a bargaining council that regulates terms and conditions of employment;

(b) a binding arbitration award that regulates terms and conditions of employment;

(c) the Basic Conditions of Employment Act 75 of 1997 (hereinafter referred to as the BCEA);

(d) a Sectoral determination made in terms of BCEA.

 

Section 198(4) speaks to the duties and obligations of the TES for purposes of the BCEA and non compliance with sectoral determinations, collective agreements and awards that relate to terms and conditions of employment.

 

The legislator set very specific boundaries to the joint and several liability, it is not universal but it is limited to the issues stipulated in section 198(4)(a) - (d) listed supra..

 

The Labour Relations Amendment Act, 6 of 2014 introduced section 198(4A) - (4E) into to the legislation. It should be reiterated that one section cannot be interpreted in isolation.

 

Section 198(4A) stipulates that if the client of a temporary employment service is jointly and severally liable in terms of section 198(4) or is deemed to be the employer of an employee in terms of section 198A(3)(b)-

(a) the employee may institute proceedings against either the temporary employment service or the client or both the temporary employment service and the client;

(b) a labour inspector acting in terms of the Basic Conditions of Employment Act may secure and enforce compliance against the temporary employment service or the client as if it were the employer, or both; and

(c) any order or award made against a temporary employment service or client in terms of this subsection may be enforced against either.

 

The Commissioner’s interpreted the client’s liability in terms of section 198(4) and section 198A(3)(b)   as two fold  and applicable within two eventualities or factual situations:

 

The liability of the client created in section 198(4) which amounts to the joint and several liability:

The interpretation of this section 'is clear in that section 198(4A)(a) - (c) unpacks the consequences and recourse of joint and several liability' in the instance where there is:

-  a contravention by the TES of the BCEA;

- a contravention by the TES of sectoral determinations, collective agreements and awards that regulate terms and conditions of employment.

 

The liability created in section 198A(3)(b) where the client is deemed to be the employer of the employee for purposes of the LRA:

The provisions of this section may be lead to confusion because:

- one automatically wants to assume that the employee can now institute a claim jointly and severally for his/her dismissal;

- however the joint and several liability in section 198(4) is not extended to a claim for unfair dismissal under the LRA.

 

In the Ruling the Commissioner and correctly so sought ‘interpretive’ guidance from the Memorandum of Objects, Labour Relations Bill 2012 [the Memorandum].

The Memorandum states that: “Section 198 continues to apply to all employees. It retains the general provisions that a TES is the employer of persons whom it employs and pays to work for a client, and that a TES and its client are jointly and severally liable for specified contraventions of employment laws.” [See: p22 of the Memorandum].

 

The Commissioner found that the joint and several liability of the TES and the client is limited to the specified grounds in section 198(4) only.

 

This joint and several liability is also mirrored in section 82(3) of the BCEA which states that the client and the TES is jointly and severally liable in the event that the TES contravenes any provisions of the the BCEA or a sectoral determination.

 

The Memorandum makes no provision for enforcing all kinds of awards against either the TES or the client. It is limited to claims for joint and several liability. This is confirmed in the wording of section 198(4A)(c) which states: “any order or award made against a temporary employment service or client in terms of this subsection may be enforced against either”.

 

Therefore and so it was found that when considered holistically the entire subsection 4 deals with issues related to the BCEA and terms and conditions of service.

 

The Commissioner found that the interpretation of section 198(4A)(a) should be that despite the fact that the client at some point may become the deemed employer for purposes of the LRA, that the triggering of the deeming provision would not exempt the TES or the client from the joint and several liability created in terms of section 198(4).

 

Therefore, the joint and several liability created in terms of section 198(4) stays intact.

 

Writer respectfully agrees with the learned Commissioner that  joint and several liability in itself is not indicative of dual employment, for example in terms of the provisions of section 197(8)-(9) of the LRA  that deals with ‘Transfer of contract of employment’.

 

In terms of section 197(8)-(9) the old employer and the new employer is held jointly and severally liable where the old employer is clearly not the employer anymore. [Emphasis added].

 

 Section 198A of the Labour Relations Act, 66 of 1995 (as amended)

 

Insofar as the interpretation of section 198A is concerned the Commissioner in her Ruling referred to the Memorandum of Objects, Labour Relations Bill 2012 [the Memorandum] and found that in section 198A the legislator still acknowledges the unique triangular relationship between the TES, the client and the employee.

 

The focus however shifted to provide additional protection for vulnerable workers. To edify the reader especially as to the problems and abusive practices associated with TES’s and how vulnerable employees’ Constitutional rights have been infringed as a result of the misuse of the triangular relationship, a number of reported judgments were cited and analysed as examples of infringements of the Constitutional rights of vulnerable employees.

 

Some of the case law was cited and discussed by the writer in the article posted July 05, 2015, “Regulation of Non-Standard or A-Typical Employment – South Africa” wherein the following judgments were referred to and briefly discussed, SA Post Office Ltd v Mampeule [2010] 10 BLLR 1052 (LAC); Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC); Dyokhwe v De Kock NO and others [2012] 10 BLLR 1012 (LC); National Union of Metal Workers of South Africa and others v Abancedisi Labour Services CC [2012] 11 BLLR 1123 (LAC); Kelly Industrial Ltd v Commission for Conciliation, Mediation and Arbitration and others [2015] 6 BLLR 606 (LC)].

 

The Commissioner found that upon proper reading of the Memorandum the purpose of the amendments which was to address more effectively certain problems and abusive practices associated with a TES, the interpretation of the Act in the manner as recorded hereunder effectively stops the  said abusive practices identified and pronounced upon by the Courts in the judgments cited above.

 

When considered objectively the abusive practices emanated from the triangular relationship in which the client is exempted from all the responsibility in terms of the LRA.

 

The Memorandum of Objectives clearly stipulate that: “Employees in this category are employees of the TES for the purposes of the LRA only if they are employed to perform genuinely temporary work, defined in the new section as “temporary services”.

 

The above is effectively mirrored in section 198A(3)(a) which states: “For the purposes of this Act, an employee performing a temporary service as contemplated in subsection (1) for the client is the employee of the temporary employment services in terms of section 198(2)”.

 

Therefore, as long as the employee is performing genuinely temporary work the duties and obligations as described in section 198(2) and (4) will apply i.e. the TES is the employer for the purposes of the LRA.

 

The issue of joint and several liability for the TES and client would arise in the event of any contravention by the TES of the BCEA, sectoral determinations, collective agreements and awards that regulate terms and conditions of employment.

 

The Memorandum of Objectives further stipulate that: “If they are not employed to perform temporary services, they are deemed for the purposes of the LRA to be employees of the client and not the TES.”

 

The footnote in the Memorandum of Objectives indicate that for ‘purposes of the LRA’ includes for purposes of freedom of association, organisational rights, collective bargaining, strikes and lock-outs, workplace forums, trade unions and employers’ organisations, dispute resolution, unfair dismissals and unfair labour practices.

 

Section 198A(3)(b) states that for the purposes of the LRA an employee-

(b) not performing such temporary service for the client is-

(i) deemed to be the employee of that client and the client is deemed to be the employer; and

(ii) subject to the provisions of section 198B, employed on an indefinite basis by the client.

 

Therefore and in accordance with an interpretation of section 198B of the LRA when words are given their normal grammatical meaning, this means that even in the absence of evidence thereto that an employer-employee relationship between the client and the employee exists (i.e. no evidence exists of a transfer of the employee), the client is now regarded as the employer for purposes of the LRA.

 

The wording of the Act does however not imply that the employee has been transferred to the client, nor does it indicate that the triangular relationship now automatically dissolved.

 

The key question that was posed by the Commissioner to be answered had little to do with the status of the triangular relationship and whether or not there was a transfer of an employee as stipulated in section 197 of the LRA.

 

The crux of the interpretation of section 198A lies in the question as to who is responsible for the duties and obligations in terms of the LRA. The wording in the LRA in this regard is clear and unambiguous.

 

Once the TES employee was not performing a bona fide temporary service, the client would then be deemed to be the employer in terms of the LRA. The client therefore bears the responsibility to ensure that duties and obligations towards the employee in terms of the LRA are met.

 

It therefore follows that should the amendments be interpreted to mean joint and several liability for the purposes of the LRA, the abusive practices referred to in the cited case law and discussed by the Commissioner in the Ruling, would not be addressed.

 

The Commissioner found that by awarding the client the duties and obligations as employer for purposes of the LRA also ensures that the Constitutional rights of the employees as well as their rights in terms of the LRA are protected and enforced.

 

An interesting and elucidative exercise followed wherein the Commissioner applied her finding as to the interpretation of the section 198A of the LRA by applying it to the cited case law as if the amendments were in effect at the time of conception of the disputes that eventually found their way to the Labour Courts.

 

The said exercise made for interesting reading and showed that it could not be said that the interpretation of the law, as recorded by the Commissioner in the Ruling would have absurd consequences.

 

Writer respectfully agrees with the Commissioner’s comparative analysis as recorded in the Ruling and dare to say that he would be loathe to submit that the interpretation would have led to absurdities and all sorts of ghastly consequences or ‘Babylonian confusion’.

 

In conclusion it was found that the correct interpretation of section 198A(3)(b)(i) is therefore that the client is awarded the duties and obligations for the purposes of the LRA when the employee is not performing a temporary service and therefore any claim brought in terms of the LRA must be brought against the duty-bearer, which is the client.

 

Conclusion

The celebrated author, Professor J Grogan in the authoritative publication Employment Law Journal,  in an article published  “Deemed Employer” Employment Law Journal (August 2015) - Volume 31 Part 4, analysed and made observations in edification as to Value Logistics as quoted hereunder.

 

It has been deemed of importance to include the observations and comments by the learned author for the purpose of this article.

 

Mphirime / Value Logistics & BDM Staffing (Pty) Ltd [2015] 8 BALR 788 (NBCRFLI) also broke new ground. This case concerned the meaning of the new section 198A of the LRA.

 

Mr Mphirime was employed on a fixed-term contract by BDM Staffing, a temporary employment service. He was assigned to work at Value Logistics as a checker. Mphirime’s contract was terminated in April 2015. He referred an unfair dismissal dispute to the National Bargaining Council for the Road Freight and Logistics Industry.

 

After the commissioner had joined Value Logistics, BDM Staffing asked her to recuse herself. The basis of the recusal application was that she was one of the CCMA commissioners who had been trained to interpret the new section 198A to deal with the matter. BDM Staffing thought that the trainers had inculcated a fixed view of section 198A in the minds of trainees.

 

The commissioner held that if her training had given her a preconceived notion of how section 198A should be interpreted, BDM Staffing’s objection would apply to any commissioner who had undergone training in the new provision.

 

The application for recusal was dismissed.

 

The commissioner held that the amended sections 198 and 198A had to be interpreted holistically, starting with the words used. Section 198 recognises the triangular relationship between the parties to a TES arrangement by providing that the TES remains employer of its employees.

 

Section 198(4) has not been amended to include dismissal among the acts that vest a TES and its client with joint and several liability for breaches of obligations to the TES’s employees. As far as employees earning below the applicable threshold were concerned, the new section 198A(3)(b) creates the impression that both the TES and its client are jointly and severally liable for unfair dismissals as well.

 

Thus, in spite of the fact that employees are deemed to be the employees of the client after three months, the joint and several liability created by section 198(4) remains intact. However, section 198A is aimed at countering abuses in the labour-broking industry.

 

That provision still recognises the triangular relationship. But the new provisions prevent brokers from sheltering behind contracts with their clients to protect themselves against unfair dismissal claims. Section 198A(1) defines “temporary service” as, inter alia, work for a client by an employee for a period not exceeding three months.

 

As long as this provision applies, the TES and its client are jointly and severally liable only for the matters set out in sections 198(2) and (4). Employees earning below the threshold (like Mphirime) are deemed to be employees of the client after three months and become employed on an indefinite basis by the client.

 

Having regard to the ordinary meaning of the word “deemed”, this means that the employee becomes employed by the client. The client now assumes the responsibility of ensuring that the employees’ rights under the LRA are protected.

 

Any claim by employees must be brought against the bearer of the duty, which is the client. It was clear that the legislature did not envisage dual employment by the TES and its client when temporary employment ceased.

 

The commissioner, accordingly, rejected the argument that Value Logistics should not have been joined, and declared that that company was Mphirime’s employer and had to prove the dismissal fair.

 

Finally, writer furthermore shamelessly borrowed from the Commissioner’s Ruling and the conclusions reached.

 

However, as was said by Alexander Pope, ‘To err is human and to forgive is divine’.

 

Nothing in the wording of the amendments to the LRA suggests that a transfer akin to section 197 of the LRA occurs. The wording in the LRA cannot be interpreted as if  the deeming provision has the effect that the triangular relationship between the TES and the client dissolves and that the commercial relationship comes to an end.

 

In the absence of wording that would suggest that the triangular relationship comes to an end or that a transfer takes place, such a consequence cannot be assumed.

 

The legislator created neither joint and several liability nor dual employment for purposes of the LRA. The issue of dual employment was argued around joint and several liability, however joint and several liability in itself is not indicative of a dual employment relationship.

 

It is however clear from the case law that the legislator would no further  tolerate attempts of a client to circumvent its legal duties and obligations by making use of employees provided by a TES. In the amendments there is a definite shift when it comes to the duties and obligations in terms of the LRA and this is driven by the legislator through the legislation.

 

What happens to the commercial relationship between the TES and the client after the shift in liability will ultimately have to be negotiated between the relevant parties in terms of their business agreement. What is however clear from the recent case law and the amended LRA is that if the terms of the new agreement infringes upon the rights of employees, it will not be binding and the Courts will reject such agreements.

 

For more information, please contact Johann Scheepers at This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

 

 

 

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