Labour Brokering/Temporary Employment Services – Section 198 Of The Labour Relations Act
The Labour Court has in the case of Mandla v LAD Brokers (Pty) Ltd confirmed that the contract between a temporary employment service and an employee creates a unique and sui generis tripartite relationship where the employee renders personal services to not to the employer but to the employer’s client.
Currently the future existence of labour brokers are not certain as the Minister of Labour has indicated to NEDLAC (National, Economic Development and Labour Council) late last year ,that the Ministry is actively looking into banning or imposing regulations on labour brokers.
Nonetheless until repealed by the Minister of Labour, Section 198 of the Labour Relations Act stands. Section 198 of the Labour Relations Act and Section 83 of the Basic Conditions of Employment Act regulates the procurement and providing of employment by Temporary Employment Services to companies.
In terms of section 198 the definition of temporary employment service is:
“ any person who, for reward, procures for or provides to a client other persons –
(a) Who render services to, or perform work for, the client; and
(b) Who are remunerated by the temporary employment service.
Both of these elements must be present in order to qualify as a temporary employment service. Section 198 will be applicable if it can be satisfied that the relationship between the client and the temporary employment service is a genuine arrangement and not a subterfuge entered into for the purpose of avoiding any aspect of labour legislation.
The question arises who‘s employee the person is who has been procured or provided to a company by a temporary employment service. Is that individual the employee of the temporary employment service or of the company where he /she is placed. The answer to this is to be found in section 198(2) and also in the Code of Good Practice: Who is an employee, issued in terms of the Labour Relations Act.
If you are placed at a company by a temporary employment service, you will be regarded as the employee of the temporary employment service and the temporary employment service will be regarded as your employer. In terms of the Code of Good Practice if it is found that the individual has an employment relationship with the client, then for the purposes of the Labour Relations Act and the Basic Conditions of Employment Act the individual would be an employee of the temporary employment service and the temporary employment service will be the individual’s employer.
How do you determine whether an individual placed at a client is actually an employee of the client or an independent contractor? In terms of part 4 (56) of the Code of Good Practice, whether or not an individual supplied to a client by a temporary employment service is an employee of the client or an independent contractor:
• must be determined by reference to the actual working relationship between the worker and the client for whom the worker provides services or works. This principal was taken from LAD Brokers v Mandla ;
• the relationship between the worker and the temporary employment service is relevant to the extent that it may give some indication of the relationship between the worker and the client
• the relationship between the worker and the client must be assessed in the light of the normal criteria used to determine the existence of an employment relationship;
• the presumption of employment contained in section 200A is applicable in cases where the persons who was placed by the temporary employment service earned less than R149 763.00 per year.
We will be tracking any changes that might be implemented with regards to Temporary employment services / labour brokering and bring you all the details of such changes.
Me. L Bouwer
(LLB, LLM (labour law)
General Manager: Legal Assistance