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2018-07-26 Concourt Judgement Announcement

Last modified on 7/27/2018 2:43 PM
Johannesburg, 26 July, 2018 ‐ Adcorp acknowledges the decision of The Constitutional Court which handed down its judgment in the matter, CCT 194/17: Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and Others. 

We respect the legal process that led to the ruling and will provide further comment after analysing the court’s comprehensive judgment. 

Temporary Employment Services (TES) will continue to have an important role to play in workforce management by enabling skills development and contributing to employment in the economy. Driving skills development ensures the long-term employability of individuals.

For many unemployed South Africans, TES has provided opportunities for first‐time employment, skills development, training and career growth. 
“TES is only one of the many workplace solutions provided by Adcorp through our Industrial and Support Services divisions which provide temporary employment to over 62,000 workers,” says Adcorp Chief Executive Officer, Innocent Dutiro. The rapidly changing economic, social and political environment demands that business is adaptable and places pressure on individuals to improve their skills to meet the changes in the market as a result of the Fourth Industrial Revolution. 

Today’s fast‐paced world is shifting towards flexible digital‐based employment solutions including automation and away from traditional, permanent employment models. As the world adapts to new workplace realities, more is required to help workers and employers understand the labour dynamics and skills demand of the 21st century. 

“Adcorp is committed to ensuring fair labour practices in accordance with section 23 of the Constitution and the LRA as a whole,” says Dutiro Preliminary view of the judgement:  This case is about a limited interpretation of whether there are two employers or one related to the “affected employee” only for the purposes of the Labour Relations Act. The only TES “affected employees” are those who earn below the BCEA threshold (currently R205 433 per annum) and who are placed for longer than three-months. 

This judgment does not relate to equal treatment on remuneration and benefits as this was already dealt with in the LRA amendments effective 1 April 2015.   For the industry, the critical paragraph in the judgment is paragraph 75 which reads:   “Section 198(2) gives rise to a statutory employment contract between the TES and the placed worker, which is altered in the event that section 198A(3)(b) is triggered. 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.”  This confirms that the TES remains 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. However, the TES and the client can terminate their relationship. We believe that legitimate TES providers can still operate in this relationship under the law. Further clarity is gained from paragraph 61 that implies that employees could have a claim against both the TES and the client.  The paragraph reads:  “I am persuaded that the sole employer interpretation is not hampered by section 198(4A).

The section does not purport to determine who an employer may be from time to time. It provides that, while the client is the deemed employer, the employee may still claim against the TES as long as there is still a contract between the TES and the employee. This is eminently sensible considering that the TES may still be remunerating that employee. The view is buttressed by section 200B, which provides very broad general liability for employers. Section 198(4) and (4A) seems to carve out specific areas of liability for a TES pre‐ and post‐deeming as opposed to the  general liability applicable in terms of section 200B.”  Furthermore, our understanding of paragraph 63 relating to the provisions of the LRA amendments is confirmed. The LRA amendments provide additional protection to those employees under the threshold who work longer than three months in that, in the event of a breach of the LRA, they could take action against either the client or the TES.
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