A NEW VIEW ON THE “DEEMED” EMPLOYEE

In the previous issue, an article which related the interpretation of the “deeming employment principle” as provided for in section 198 A (3) (b) of the Labour Relations Act (“the Act”) was published which, as believed at the time of publishing, was meant to shed light on this controversial topic. However, yet again the position has changed as the Labour Court has subsequently reviewed and set aside the award made by the Commission for Conciliation, Mediation and Arbitration (“ CCMA”) which served as the basis for clarity notionally brought therewith.

Section 145 (2) of the Labour Relations Act sets out the grounds on which an award may be reviewed:

(2) A defect referred to in subsection (1), means-

(a) that the commissioner-

(i) committed misconduct in relation to the duties of the commissioner as an arbitrator;

(ii) committed a gross irregularity in the conduct of the arbitration proceedings; or

(iii) exceeded the commissioner’s powers; or

(b) that an award has been improperly obtained.

For ease of reference, Section 198 A 9(3) (b) is repeated:

(3) For the purposes of this Act, an employee –

(a) 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); or

(b) not performing such temporary services 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 198 B, employed on an indefinite basis by the client

It is also prudent to refer to Section 198 of the Act once more, which provides as follows:

(1) In this section, “temporary employment service” means 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.

Section 198 A defines a Temporary Employment Service as:

(1) In this section, a ‘temporary employment service’ means work for a client by an employee-

(a) for a period not exceeding three months;

(b)as a substitute for an employee of the client who is temporarily absent; or

(c)in a category of work and for any period of time which is determined to be a temporary services by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister, in accordance with the provisions of subsections (6) to (8)

The Commission in the arbitration award held that that the correct interpretation of the “deeming provision” is that the client becomes the Employer of the placed workers if they earn less than the threshold and the three month period has lapsed.

More specifically, in the aforesaid award, as mentioned in the previous article, it was noted that the representatives of the Applicant argued for “dual employment” which has the effect that the placed employees would be deemed to be employees of both the TES and the client of the TES.

The Second Respondent during the arbitration argued that the placed employees were deemed to be the employees of the client of the TES by referring to the “sole employment” position.

The party which took the award on review prayed in its notice of motion that the Court orders that the placed employees are employed dually – by both the TES and the client.

Acting Judge Brassey (“Brassey AJ”) stated in his judgment that the principle of the “sole employment” as well as the principle of “dual employment” was misleading and went further and referred to the sole- and dual employment arguments respectively.

Sole Employment Argument:

“In its heads of argument the union conceded that the contractual relationship between worker and TES remains in force and, when pressed, it accepted that there is nothing in the innovations that deprives them of rights and obligations embodied in their contract. Since the contractual bond is indubitably one of employment, its continuance must mean that, following the placement, two employment relationships are discernible that operate in tandem.”

Dual Employment Argument:

“It simply contends that, once a placement occurs, the client becomes invested with the rights and obligations that, by operation of the LRA, cleave to an employer and, since the TES has in no sense been deprived of its status as employer, the two relationships now operate in parallel. In the words of Assign’s counsel, ‘where placed workers are deemed to be the employees of “the client”, their contracts of employment with the TES, nevertheless, remain in force.’

Crucially, one has to be reminded that the TES also has duties and responsibilities as well as rights and obligations acquired by the Act towards employees. Brassey AJ also stated that there was no reason why the TES should be relieved of its duties and responsibilities just because the client acquired the same set of duties and responsibilities towards the worker.

The Acting Judge stated that the Act ensures that no worker’s services may be terminated without such a termination being for a fair reason and in accordance with a fair procedure. The client is obliged in terms of section 198 A (3) (b) to terminate services of the worker by adhering to the requirements. The same applies to the TES as the TES cannot terminate the services of the worker without following the very same statutory requirements.

It was once again referred to S v Rosenthal 1980 (1) SA 65 (A) at 75G-76A to establish the meaning of the word “deemed”. Brassey AJ held that the word serves to create an augmentation rather than a substitution putting an end to the controversy surrounding the meaning of the word “deemed”.

Although the Acting Judge pointed out various reasons why the arguments of both parties were flawed, he held in his judgment that the client is viewed as a concurrent employer rather than the sole employer, naturally implying that the employment relationship runs parallel to each other – the client is therefore a coexistent employer.

The aforesaid judgement brought new clarity desperately required in the interpretation of the deeming provision. It remains uncertain, however, whether this is the end of this controversial battle.

Douw G Breed is a director at Barnard Incorporated Attorneys

Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.

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