Employers must respect LAC ruling on labour brokers - COSATU

Federation says ADCORP and CAPES are the biggest bakkie brigades

COSATU commend the Labour Appeals Court’s judges in defending the campaign by workers to ban labour brokers

The Congress of South African Trade Unions commends the Labour Appeals Court’s judges in defending the campaign by workers to ban labour brokers. COSATU support the call by the labour appeal court in NUMSA v Assign for employers to comply with this law,  to automatically convert all contracts of workers working on a temporary basis into permanent contracts with all rights and benefits afforded to permanent workers.

Since the coming into effect of the 2014 Labour Relations Amendment Act, there has been a deliberate confusion by employers on the question of who becomes the employer of the placed workers ,when the period of 3 months kicks in. The Labour Appeal Court has ruled that after a period of 3 months there is sole employment in the sense that the client or the real employer becomes the only employer and not the labour broker. 

COSATU call on all employers including MTN and labour brokers such as ADCORP and CAPES to respect the labour appeal court ruling. ADCORP and CAPES are the biggest bakkie brigades, who stay in a corner, hire workers and place them with a client or the real employer at a fee.

The 3 months law seeks to protect workers specifically those earning at or below R205 433.30 per annum from abuse by labour brokers, such as ADCORP ,who want to get rich at the expense of workers by employing workers on short term contracts. The law limits temporary work to 3 months. Any attempt by the employer in having 3 months contracts and terminating those contracts whilst the

The new law emphasises that one must look at the nature of the service or work and not on the person doing the job. Any placed worker who does work for a labour broker for a period of more than 3 months and is not a substitute of an employee of the client is not rendering temporary services ,and is not working for a labour broker but for the actual employer.

The LAC in the NUMSA v Assign Services has authoritatively ruled that after a period of 3 months the placed worker becomes the employee of the sole employer that is the actual employer ;and that the labour broker is “an unwarranted “middleman” adding no value to the employment relationship after a period of 3 months, even if the labour broker continues to pay the salary of the placed employee. 

Section 198 of the Labour Relations Act justifies the existence of labour brokers. Labour brokers are trading in workers by placing them with employers at a fee. This fee is deducted from the worker’s salary and reduces the employee’s take home pay. In law, labour brokers are called temporary employment services. Whilst they are required to provide only temporary labour for temporary work, in practice they have ensured that workers work permanently on a temporary or part time basis. Labour brokers are middlemen, who steal from the poor and they contribute nothing to job creation and this has been confirmed by the LAC judges.  

The use of labour broking is motivated by employers’ greediness and the quest to use cheap labour and increase their profits. The ultimate objective is to eliminate trade unions and workers power.

COSATU has had a long-standing resolution to ban labour brokers.   In response to COSATU’s demand on banning of labour brokers the ANC 2014 election manifesto committed the ANC to address labour broking and casualisation in order to protect vulnerable workers.

COSATU call on all employers to convert the contracts of all workers, who are working on temporary contracts into permanent contracts with immediate effect. In 2016 the Communication Workers Union (CWU) a COSATU affiliate referred an unfair dismissal case to the CCMA. MTN workers were employed through labour brokers. MTN treated its workers differently, those employed by labour brokers were paid less than those who were directly employed by MTN. whilst one worker directly employed by MTN in its Returns Department Warehouse was paid R16700.00 per month workers employed by labour brokers were paid R5000.00 per month despite the fact that they were doing the same job.

This is illegal under the new law. The agreement to supply labour to MTN came to an end in June 2016. MTN wrote emails to the labour brokers and employees advising them that MTN was not going to renew their contracts. The CWU declared a dispute of unfair dismissal. The CCMA ruled that on the basis of section 198A(3) (i) MTN was the employer as the workers had been employed by MTN for more than 3 months. The CCMA commissioner made an order of compensation in the amount of R1.9 million to 40 workers but did not make an order for reinstatement. The MTN group has applied for the review and paid security and as a result workers are now jobless and they cannot be paid until the review process is completed and the court finds in the favour. We call on MTN as a BEE company to lead by example and to pay the workers what is due to them and to reinstate them with immediate effect.  

The conversion of the contract has to occur automatically after a period of three months. COSATU still stand by its campaign for the total banning of labour broker.

Statement issued by COSATU, 14 July 2017