Is it the end for labour brokers?

“For a few years now I’ve been using cleaning and gardening workers provided by a labour broker. It has worked well for me as the labour broker has been responsible to manage the workers. I’m concerned though about recent media reports that appear to imply that these workers will now be deemed to be my employees. Is this true?”

You are correct in that a recent Constitutional Court judgment has confirmed that any employee earning below R205 433.30 annually and who has been placed by a Labour Broker for a period of more than three months with a client may be deemed to be an employee of such client.
This decision comes after a number of years of widespread calls against labour broking, particularly from trade unions. The history of this debate goes back to 2014 when the Labour Relations Act (“LRA”) was amended to introduce protection for employees in precarious employment positions and earning low wages. A new section 198A was introduced to align the LRA and the right to fair labour practices in section 23 of the Constitution. 

The Constitutional Court held that the labour broker is merely a third party that delivers the employee to a client. The employee does not contribute to the business of the labour broker except as a commodity. The Constitutional Court also concluded that the language used in section 198A supports a ‘sole employer’ interpretation, meaning that employees who have been placed by a labour broker for a period of more than three months and earn below the statutory threshold will be deemed to be permanent employees of the labour broker’s client. 

This judgment will have a dramatic impact on the labour broking business and will also affect many clients that utilise labour broking employees as many of these employees may now be deemed to be employees of the client and entitled to rights as an employee. It would accordingly be prudent to consult with your attorney or a labour specialist to assist you to correctly deal with these labour broker workers in light of this important judgment.

September 10, 2018

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