Temporary employment services in contemporary South Africa

Abstract

Temporary Employment Services (TES), which is commonly referred to as a labour broking arrangement, is recognised in the Labour Relations Act (LRA). Section 198 (1) of the LRA defines a TES as “any person who, for reward, procures for or provides to a client other persons who render services to, or perform work for the client, and who are remunerated by the temporary employment services.’’ This is a controversial employment relationship because it involves three parties, whereas a conventional employment relationship involves two parties, namely the employer and the employee. A TES can be characterised as an arrangement where a client provides work for the TES employee, but is not accountable for the conditions in which the employee works. This happens when a labour broker provides employees to outside clients who delegate tasks to them and oversee how they are carried out, but do not bear the responsibility of being regarded as the employer. The labour broker typically signs an employment contract with the employee, handles payroll for those who have been placed with the clients, and takes on the duty of withholding employees' taxes from the employee’s pay. Employment contracts are frequently made with the stipulation that they will remain in effect for as long as the client needs the employee’s services. The client and the labour broker enter into a commercial agreement whereby the client receives an invoice for the services rendered, the labour broker pays the worker’s wages, and the client and the employee do not have a contractual relationship. The lack of regulation in the TES industry led to employees being exploited by the client or the TES. Employees did not enjoy many of the employment rights that standard-type employees were entitled to, such as the right to security of employment. The other challenge was that employees of the TES could not effectively exercise their right to join a trade union, which led to the client and the labour broker being able to avoid their obligation towards the employees. The LRA Amendment was drafted to balance the need for flexibility in the labour market and social protection. However, one of the shortcomings of the LRA was the limited protection it provided to non-standard forms of employment. The designation of the TES as the employer in section 198(2) of the LRA of 1995 has aided the ability of the TES and its clients to obscure the employer's identity within a triangular relationship. For instance, if the client terminated the employee, the employee could not seek recourse against the client since the client was not considered the employer, even though the instruction to dismiss would have come from the client. Furthermore, the LRA of 1995, before the amendment, did not offer a timeline for how long an employee could be employed through a TES. The absence of a timeline suggested that this tripartite relationship could continue indefinitely. Therefore, employees could be assigned to the client's workplace for an indefinite duration, lacking the benefits that permanent employees directly hired by the client received. This arrangement enabled the TES and its client to exploit vulnerable TES employees. The LRA of 1995 was amended in January 2015, resulting in the inclusion of section 198A. These amendments changed how the TES relationship operates to ensure that vulnerable employees, such as those in TES arrangements, receive adequate protection. Section 198A (3) (b) of the LRA states that employees hired through a TES to work for a client for over three months, and whose earnings fall below the annual earnings threshold, are considered to be employed by the client. With effect from 1 April 2025, the threshold amount has been raised from R254,371.67 to R261,748.45 annually. Section 198A was introduced to deal effectively with the abusive practices and exploitation relating to labour broking or temporary employment services. This study seeks to determine whether the amendment provides adequate protection to vulnerable employees employed by TES’s. Furthermore, the study will examine whether the sole employer relationship, pronounced by the constitutional court in Assign Services, is sustainable.