On the 26th of July 2018, the Constitutional Court confirmed the Commission for Conciliation, Mediation and Arbitration’s (“CCMA”) ruling on the interpretation of the sole employment relationship outlined in the amended Section 198A(3)(b) (“the Section”) of the Labour Relations Act (“LRA”).

The National Union of Metalworkers of South Africa (“NUMSA”) and labour broker Assign Services Proprietary Limited (“Assign Services”) have been battling the conflicting interpretations of the Section for 3 (three) years.

On the one hand, Assign Services alleged that the deeming provision in the Section resulted in a “dual employment” relationship between a Labour Broker (“the Broker”), a placed worker and the client of the Broker. On the other hand, NUMSA interpreted the Section to create a “sole employment” relationship between a placed worker and the client of the Broker.

The battle began in the CCMA when Commissioner Abdool Carrim Osman ruled in favour of NUMSA’s interpretation of the amendment.

After Assign Services successfully appealed the CCMA’s ruling in the Labour Court in 2016, broker workers were uncertain as to their status as labour brokers refused to enforce the Section until certainty as to the interpretation, had been obtained.

The matter was further appealed by NUMSA in the Labour Appeal Court, which on the other hand ruled in favour of NUMSA.

Assign Workers appealed to the Constitutional Court against the decision in the Labour Appeal Court. A majority judgement in the Constitutional Court held that the Section should be read in the broader context, within the right to fair labour practices in terms of Section 23 of the Constitution of the Republic of South Africa. The Constitutional Court held that within a broader reading and interpretation of the LRA, Brokers are considered the employer for the first 3 (three) months of placement, thereafter, the labourer is deemed to be the permanent employee of the client of the broker. Therefore, the Constitutional Court confirmed that the wording should be interpreted to support the “sole-employer” definition as contented by NUMSA and confirmed the CCMA’s initial ruling. The Constitutional Court dismissed the appeal with costs against Assign Workers.

The CCMA welcomes the decision by the Constitutional Court. CCMA director, Cameron Sello Morajane, said the victory in the Constitutional Court reaffirms the quality of awards granted in the CCMA and that the decision will “change the lives of vulnerable workers who were exploited, due to lack of clarity about their rightful employers”. A JSE-listed labour broking firm Adcorp’s share price dropped 10% after the Constitutional Court’s ruling and thus labour brokers are apprehensive about their future in the market after the Constitutional Court decision.

07 August 2018