Be Careful When Employing Someone In Terms Of A Labour Broker Agreement

The matter of Nape v INTCS Corporate Solutions (Pty) Ltd (Nape) concerned the proper interpretation of Section 198 of the Labour Relations Act (LAR) with regards to employees who have been dismissed at the instance of a Client in terms of a labour broking agreement.   The Labour Court found that the dismissal of the Applicant was substantively unfair but procedurally fair.  The Result of the Hearing was that the Court ordered the Respondent to pay the Applicant a sum of R16 571.98 (Sixteen Thousand Five Hundred and Seventy-One Rands and Ninety-Eight cents) as compensation, together with the Applicant’s costs.

The short facts of the case:

Simon Nape was employed by INTCS Corporate Solutions (a labour broker) and commissioned to their Client Nissan.  While in INTCS employment and working at Nissan, he misconducted himself by sending an e-mail containing offensive content to an individual at the Client’s premises. This email resulted in his dismissal.

The Client, Nissan (Pty) Ltd, invoked its contractual rights and demanded that Nape should be removed from their premises by the Respondent (INTCS), its labour broker. The Respondent, as Nape’s employer, suspended him.  However, after they held a disciplinary hearing, they decided that the appropriate recourse was a final written warning rather than dismissal.

Although Nape and INTCS agreed to the final written warning, Nissan did not agree and refused Nape access to their premises. INTCS proceeded to retrench Nape because they had no alternative employment with any of their other clients.

Nape challenged the fairness of his dismissal in the Labour Court in terms of section 189 of the LRA. The Respondent argued that the dismissal was fair because it complied with the contractual obligation between the Client and the Employer (labour broker) whereby termination could be effected on any ground acceptable under law.

The retrenchment was based on the fact that the labour broker had to pay the Employee’s salary without receiving any value from the Client, since the Client had acted within its contractual rights to terminate the payment.

The Court thus had to decide whether or not the retrenchment of the Applicant from the employ of the Respondent, who is a Labour Broker, was substantively and procedurally unfair.

Substantively and Procedurally Fairness:

Section 198 of the LRA and Section 82 of the Basic Conditions of Employment Act specifically regulate the employment of persons whose services are procured for or provided to a client by a labour broker.  It provides, inter alia, as follows:

“198. Temporary Employment Services —

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

(2)           For the purposes of this Act, a person whose services have been procured for or provided to a client by a temporary employment service is the employee of that temporary employment service, and the temporary employment service is that person’s employer.

It further states that:

(3)           The temporary employment service and the client are jointly and severally liable if the temporary employment service, in respect of any of its employees, contravenes—

(a) a collective agreement concluded in a bargaining council that

regulates terms and conditions of employment;

(b) a binding arbitration award that regulates terms and conditions of

employment;

(c)  the Basic Conditions of Employment Act; or

(d) a determination made in terms of the Wage Act”

Although in some cases (subsection 4) the Act makes the client and Labour Broker jointly and severally liable to the employee, its however not in the case of dismissal. When an employee is dismissed, the employee’s cause of action is only against the Labour Broker and not against the client.  The employee thus has no recourse against the client for unfair dismissal claims.

In NUM & others v Billard Contractors CC & another [ 006] 12 BLLR 91 (LC) at par 79 the Court found:

“Section 198 of the Labour Relations Act applies to arrangements of this kind. Parties are entitled to choose to structure their relationships in this way, and they may do so even if the principal purpose is to make the labour broker (and not its client) the person who is responsible for managing employees and ensuring compliance with the various statutes that regulate employment rights. The provisions of section 198(4) make the client jointly and severally liable in respect of contraventions of specifically identified employment rights. Unfair dismissal rights are not among these. Whether or not this is desirable as a matter of policy is not for me to decide in these proceedings, and I express no view on that question here.”

The facts reveal that both the Applicant and the Respondent were ad idem that the misconduct, justified a final written warning and not dismissal, but that Nissan did not.

There is nothing in the text of section 198 that indicates that a Labour Broker and a client may limit the right of an employee not to be unfairly dismissed.

It must be recalled that this right exists primarily to guarantee security of employment. (See Sidumo & another v Rustenburg Platinum Mines Ltd & others [2007] 12 BLLR 1097 (CC)). If Labour Brokers and clients are given the licence to contract for standards that are less than the fundamentals guaranteed, the right to security of employment of employees involved in this tripartite relationship will be severely undermined.

In applying the right not to be unfairly dismissed, a Court is not bound by contractual limitations created by Parties through an agreement when the agreement conflicts with the fundamental rights of workers.

Accordingly, any clause in a contract between a Labour Broker and a client which allows a client to undermine the right not to be unfairly dismissed, would be against public policy.

An illegal demand can never found the basis to justify a dismissal based on operational requirements just as it cannot form the basis of a lawful strike. (TSI Holdings (Pty) Ltd & others v NUMSA & others [2006] 7 BLLR 631 (LAC)). By the same token section 189 of the Act cannot be used to disguise the true reason for dismissal.

Accordingly, the Court found, that the client’s insistence that the Applicant be removed was unlawful and a breach of the Applicant’s right to fair labour practises. The Applicant did not commit an offence for which dismissal was justified. The client had no right to insist upon the application of its own internal policies concerning offensive emails because if it wanted that to apply, it should have employed the employee.

Furthermore, insofar as the contract between the Respondent and its client allowed the client to arbitrarily require the removal of an employee from its premises, such provision was unlawful and against public policy as it took no account of the right of the employee not to be unfairly dismissed.

The crux of the decision is thus that in order for the dismissal of the employee at the instance of the client to be fair, the employer must prove that the dismissal of the employee was for fair reasons which are consistent with constitutional principles and the objects of the LRA.

The principles expounded in Nape thus also serves as a stern warning to labour brokers and their clients that they should structure their employment policies and agreements in such a way as to conform to the fundamental right of employees to fair labour practices.

Conclusion:

There are still some uncertainties as to the scope of section 198A of the LRA. The decision illustrates the problems encountered by employees providing services to a client in terms of these agreements and the need for the broker’s right of recourse against its client in order to give effect to the employee’s right to fair labour practices. Clearly, the interpretation of this section will cause some serious practical problems which would require some urgent legislative intervention.

Roua Pienaar

Candidate Attorney