Discipline and Dismissal After Three Months: Temporary Employment Service (TES)

Discipline and Dismissal After Three Months: Temporary Employment Service (TES)

Temporary employment services: what happens after three months, in regard to discipline (which includes dismissal)? Some unions and, it would seem, some CCMA commissioners, see no role for labour brokers in discipline after three months of employment. This is getting Assign wrong.


In the Assign Services judgment the Constitutional Court considered whether the client of the labour broker became the deemed sole employer, for purposes of the Labour Relations Act only, after three months of employment. There is a lot the Concourt said and a lot it did not say.


Commissioners or arbitrators, or some of them, are getting it wrong! In recent awards published in the Industrial Law Journal (ILJ) (volume 40, 2019) it seems that there is an assault on the authority, rights and locus standi (to appear at the CCMA) of labour brokers relevant to the situation post-three months.


It is time for clarity to be provided by senior judges. This would entail matters being taken to the Labour Appeal Court and beyond, by a TES or an association of TESs or clients of TESs. In the meantime, it is suggested that CCMA and bargaining council arbitrators refrain from proclaiming the zero authority of a TES in discipline post three months given that, following Assign, the employment contract between the TES and the employee survives the three-month deeming provision. The existence of an employment contract has to mean that all that is concomitant must also continue including discipline, breach of contract, enforcement or remedies, termination of contract, and other processes or subjects to be found at the interface between an employee and a labour broker.


The reported awards having to do with labour brokers in volume 40 of the ILJ are:

  • Khumalo & Another and Adcorp Blu …. & Another,
  • African Meat Industry & Allied Trade Union obo Members and National Brands Ltd t/a Snackworks & Another (not commented on in this article; the commissioner confirmed that the labour broker was not prohibited from continuing with various HR and other functions after three months, but not in its own right, it would seem),
  • Mini & Others and Workforce Staffing Group & Another,
  • General Industries Workers Union of SA obo Mgedezi & Others and Swissport SA (Pty) Ltd & Another,
  • SA Chemical Workers Union obo Skenjana & Others and Allied Publishing & Another (not commented on in this article; the matter concerned wages and benefits as between labour broker and non-labour workers at the client),
  • African Meat Industry & Allied Trade Union obo Mkhungo & Others and Corruseal Group & Another (KNDB 6642-18). The second award involving the same parties under a different case number is not commented on in this article(it concerned the interpretation of a settlement agreement).

Khumalo & Another and Adcorp Blu, A Division of Adcorp Workforce Solutions (Pty) Ltd & Another (page 1910, ILJ, Vol 40, August 2019):


In this award, referred to as Khumalo v Adcorp for the purposes of this article, the writer deals with difficulties and puzzlements in the commissioner’s award from paragraph [13] of that award onwards (using the paragraph numbering as it appears in the ILJ).


The commissioner states ‘As a general rule and in terms of the Assign Services judgment, the TES is not the employer of the placed employee once the deeming provision of s198A(3)(b)(i) is triggered’.


What is this ‘general rule’ that the commissioner refers to? And if it is ‘general’ it implies that it is not absolute – that there are occasions or circumstances when the rule does not apply. What would those occasions or circumstances be?


Assign does not say the TES ceases to be an employer once the deeming provision kicks in. A proper reading of Assign is that the client of the TES becomes the deemed employer for purposes of the LRA only and the TES does not cease to be an employer.


Assign said in its paragraph 83, at (f), that ‘When ….employees are not performing a temporary service as defined, then s198A(3)(b)(ii) replaces s198(2) as the operative deeming clause for the purposes of determining the identity of the employer’. What would the purposes be for identifying the employer? For deeming purposes – not for replacement of employer purposes.


Then the commissioner states ‘….only the client is the employer. The fact that the triangular relationship still exists cannot, in light of the court’s finding, result in the TES continuing to be the employer’. How the commissioner can say this is perplexing. The sentence is self-destructive: if the triangular relationship continues (triangular employment relationship, as per Assign) then how can the TES cease being an employer? How can an entity be a party to an employment relationship if it is not an employer or an employee?


The commissioner continues, towards the end of his paragraph [13] ‘The end result is that whether the triangular relationship continues or not, the TES is not the employer once the deeming provision becomes operative’. I again remind the reader that Assign refers to triangular employment relationship [the writer’s emphasis]. This can only mean that there are three parties (not two) involved in this employment relationship and that one of them is an employee and the other two are employers. It is also trite that in our law, as in a number of other countries, an employee can be employed by more than one employer. Furthermore, how can a party cease to be an employer when it has an employment contract with another party and remunerates that party?


The commissioner completes his paragraph [13] by quoting portions of Assign. Some of this warrants some attention. As I said at the outset, there is a lot the Concourt said and a lot it did not say. There are also some aspects of Assign that warrant further and deeper consideration, including by the Concourt itself in some future matter, which will doubtless come to pass.


The quoted paragraph [73] of Assign includes that ‘Importantly, the client has the power to discontinue the employee’s services’. It is not clear how the Concourt could conclude thus. This assumes a very simple business agreement with the TES. Even if so, ‘discontinuing the employee’s services’ is not the same as terminating the employee’s employment. Assign does not use the latter term; perhaps Assign recognises that in reality either the dismissal is carried out by the TES or, if there is no dismissal, the TES continues to employ the employee through other assignments or deployments. If there are no other jobs available then the TES would proceed with a section 189 process with its employee, such as considering selection criteria (including LIFO across all its employees and not merely at that client), alternatives to retrenchment, etc. That client could not be expected to do this. It would be impossible.


At paragraph [14] of the award under consideration another perplexing sentence is put together: ‘Thus, once s198A(3)(b)(i) is triggered, resulting in the client being the deemed employer, the triangular relationship (pre-deeming) cannot and does not operate for, inter alia, unfair dismissal disputes and disputes relating to unfair labour practices’. Since we are talking about post-deeming, Assign says the triangular employment relationship continues. The TES, therefore, does not cease to be an employer. Nothing in Assign takes away the authority of the TES to discipline and dismiss (to terminate its employment contract with the employee, for any number of reasons, with or without the client’s input). All this being so, there is no basis to say that a TES has no locus standi to appear at the CCMA in dismissal matters, nor in disciplinary matters short of dismissal.


Given the definition of “unfair labour practice” in s186(2) of the LRA and the range of subjects covered, it is very conceivable that a TES could be directly involved as a party to an unfair labour practice dispute.


Mini & Others and Workforce Staffing Group & Another (page 1916, ILJ, Vol 40, August 2019):


In this award, abbreviated for the purposes of this article as Mini v Workforce, the matter appears to have been presented to the commissioner by the applicants as being a claim to be permanently employed by the client of the TES or for that to be declared so. However, the commissioner’s conclusions do not directly answer this claim. The respondent’s representative said that the CCMA could not grant the relief that the applicants were seeking, namely that they must become the permanent full-time employees of the client, and that the most the CCMA could do was to make an order that the applicants are deemed to be employed by the second respondent. I do not see in any of the commissioner’s concluding paragraphs from [42] onwards where he directly answers this.


To become permanently employed by the client or to be declared so, would require a transfer of employment. Concomitantly, it would require the issuing of an employment contract by the client and it would require the client to remunerate the employees. The definition of ‘employee’ in section 213 of the LRA includes the question of remuneration.


At [44] the commissioner states ‘….I make an order to the effect that those of the applicants who have been employed for more than three months performing duties for …. (the client) are all deemed to be employees of [the client] and the [the client] is their sole employer’.


At [45] the commissioner says the same for those on fixed-term contracts and adds that they are employed on an indefinite basis.


The commissioner’s conclusion should have included the proviso or limitation that the ‘sole employer’ is for purposes of the LRA only. The TES does not cease to be an employer in all respects. What happens is that in some respects the client becomes a deemed employer.


And for the commissioner to use the words ‘employed on an indefinite basis by the client’ rather than ‘permanently employed by the client’, is satisfactory, and is the wording found in s198A(3)(b)(ii), but he could have been more explicit about this – that Assign does not say there is a transfer of employment or that there must be a transfer ‘onto the books’ of the client. In fact, the commissioner could have said that the first respondent’s representative was completely correct in averring that ‘the CCMA could not grant the relief that the applicants were seeking, namely that they must become the permanent full-time employees of the client, and that the most that the CCMA could do was to make an order that the applicants are deemed to be employed by the second respondent’ (at paragraph [23] as it appears on page 1922 in the ILJ, vol 40).


General Industries Workers Union of SA obo Mgedzi & Others and Swissport SA (Pty) Ltd & Another (page 1903, ILJ, vol 40, August 2019):


In this award, referred to as Swissport in this article, the matter concerned, inter alia, a claim by the union for employees of a TES to be transferred ‘onto the books’ of the client. The award in Swissport by commissioner Mofsowitz succinctly concludes thus: ‘[21] The applicants are deemed to be employed on an indefinite basis ….by Swissport ….which is their employer for the purposes of the LRA. [22] The relief the applicants seek in terms of permanent employment contracts with Swissport cannot be granted’. This matter did not involve the rights, authority or locus standi of a TES post three months (and the TES participated in the proceedings).


African Meat Industry & Allied Trade Union obo Mkhungo & Others and Corruseal Group & Another (page 911, ILJ, Vol 40, April 2019):


This award, referred to as AMITU v Corruseal in this article, appeared in the April issue of the 2019 ILJ (volume 40). The awards above appeared in the August issue. The interpretation and conclusions of those in August 2019 appear to follow, in most respects, this one appearing in April 2019. One wonders whether there will be divergent interpretations and conclusions in other or later awards.


The writer has tremendous respect for the sterling work done by this commissioner over the years; not least her ability to get parties to see the wisdom of settling unfair dismissal disputes. It is thus with great respect that I cannot agree with all the contents of this award, such as the interpretation and conclusions reflected in paragraphs [22] to [28] (page 915/916 of the ILJ, 2019).


In particular, the pronouncement ‘Once the client becomes the sole employer, the TES may not continue to play an employment role in respect of its erstwhile employees, nor may it be a party to the employment relationship….’ represents, at best, a tenuous and debateable nexus with the Assign conclusions and the LRA itself.


Neither Assign nor the LRA expunges the TES from the (or an) employment relationship with the employees. Assign refers to a triangular employment relationship continuing.


AMITU v Corruseal was a matter referred under the Employment Equity Act. Whilst there is a deeming provision in the latter statute, the sole employer judgment in Assign under the LRA does not extend to any other statute. Thus, whether or not the TES worker has continued rendering services beyond three months, the TES remains the employer. For reporting purposes (such as the rendering of demographic information in the document EEA2) and for affirmative action purposes (Chapter 3 only – see s57) the Employment Equity Act has a deeming provision but the client does not become the sole employer. The TES is also required to render a demographic return, as an employer, containing all those on its payroll including those placed at clients for longer than three months.


Under the Employment Equity Act, then, if not also under the LRA, in AMITU v Corruseal, the TES should have been considered a valid party to the proceedings, since it continued to be a valid party to the employment relationship.


Observable Trends in Recent CCMA Applications in Relation to the TES Actioning Discipline (including dismissal) Post-deeming:


There are other cases currently at the CCMA, or on their way there, brought mainly by unions, in a quest to oust or nullify the authority of labour brokers in discipline and dismissal post three months employment, alleging that the TES has ‘no jurisdiction to dismiss’ because the TES is ‘not the rightful and bona fide employer’ – and hence the dismissals are ‘unlawful’.


There is no statute or court judgment, as far as the writer is aware, that prohibits a TES taking disciplinary action (which includes dismissal), whether or not three months has lapsed, and to dismiss in its own right and not merely as a representative or a provider of HR services.


Paragraph 45 of the Concourt majority judgment in Assign states ‘under both the 1956 LRA and the 1995 LRA (before the 2014 amendments), the TES was expressly designated as employer for purposes of the LRA. Section 198A(3)(b) does not proclaim that an employee “is” the client’s employee. Rather, the employee is “deemed to be” the client’s employee’. That paragraph goes on to say ‘This disjunction does not in itself mean that “deemed to be” is lesser than “is” and both … are, in their true senses, “deeming provisions” ‘. Not lesser than does not mean they are not different. The one would take the TES out of the picture; the other does not. “deemed” is not “is”. In any event, nothing in this paragraph of Assign or anywhere else in Assign effectively nullifies or prevents disciplinary action being taken by the TES itself after three months.


Because s198A(3)(b) does not proclaim that an employee “is” the client’s employee (the court’s words in Assign) the TES remains lawfully in the picture and any of its activities in relation to human resources and/or industrial relations cannot, as a matter of stated law, be considered null and void, as some unions would have it, post the three months.


Paragraph 61 of Assign states ‘….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’. Thus the TES cannot be completely out of the employment picture, as some would have it.


Paragraph 75 of Assign states ‘….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’ (writer’s emphasis). Thus an employment relationship continues between the TES and the employee and nothing precludes (obviously, one might say), discipline being part of that relationship. Therefore, a TES would automatically be a party to a dispute in proceedings about discipline, including at the CCMA.


In an article entitled ‘TES Beyond the Con Court: It’s Not That Complicated’ (www.capes.org.za 13 August 2018) that writer comments: ‘….The case….was not about whether or not deeming means that the assigned employee becomes permanent and/or [obtains] rights to equal pay. These issues are not contentious and addressed by other sections of the LRA, not s198A(3)(b) – which was the subject matter of the case. This is an important point that seems to be missed by many commentators. Does this mean that employees transfer to the client? The Constitutional Court ….[said that this] does not mean that TES employees employed for longer than 3 months now transfer as permanent employees of the client….’.


This being the case, the employee remains with the TES, in terms of the employment contract between them, amongst other reasons. Thus the authority of the TES is not affected and such must include the legal power to terminate employment, whether under section 37 of the Basic Conditions of Employment Act or otherwise. Section 37 of that statute seems to have passed some commissioners by, as well as what section 37 of that statute means for this debate, not least subsection (6)(a) and (b).


Returning to the LRA, if the TES continues as one of the parties to the triangular employment relationship, then it can terminate employment in its own right and thus must have locus standi in dismissal disputes.


Termination of employment by the TES (post deeming), the writer argues, is permissible in any of the following scenarios:

  • Misconduct committed against the TES itself by the employee;
  • Misconduct committed at the site assigned to the employee (‘at the client’) – because the employment relationship continues, be it triangular;
  • Retrenchment (in the case of assignment at a client coming to an end or redeployment from client A to client B followed by unavailability of any further redeployment)


What also seems to have passed many by (not just CCMA commissioners) is that employees of a TES are often moved from client to client, before or after three months at each. In terms of the writer’s personal knowledge an employee ‘no longer required by a client’ seldom ends up being dismissed. That employee is usually redeployed to another client, either immediately or very soon, to an extent that even UIF need not kick in. How would a ‘dismissal’ by a client find application here? Legal provisions need to be in harmony with the practicalities – one such ‘real-life’ situation could be this (and the writer has personal knowledge of very similar scenarios): an employee has been rendering services at client A for many months (or years) and then, for whatever reason, client A no longer requires the employee and so the TES deploys him/her at client B, which might be a deployment of one month or three or six or any amount of time. Then the employee moves to client C. There has been no dismissal anywhere along the route by the TES but would there have been a dismissal by the client (client ‘A’ or otherwise!)?


Since Assign applies to the LRA and since Employer Organisations are regulated under the LRA, what, may we ask, is Assign’s effect here (or as some commissioners may view the effect)? Will a TES, whose assigned workers are all beyond the three month mark, not be able to apply for membership of an employers’ organisation? Or will it, assuming it has such staff, only be an employer insofar as it has employees at its office (e.g. its head office, with a receptionist, a couple of payroll clerks, etc.) and even if it has hundreds of assigned workers all those would have to be excluded from its application credentials?


Then there is collective bargaining, collective agreements, bargaining councils, industrial action and other areas requiring consideration as a result of Assign and its interpretation or application, relative to a TES and , rights, requirements, proceedings and litigation. That for another day.

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