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Just because you are deemed to be an employee does not mean you need to be employed by the client of the labour broker - The next case in the labour broker debate

Reading Time 4 minute read

Labour, Employment and Human Rights Bulletin

Last year the Constitutional Court handed down judgment in the Assign Services case which dealt with who the employer of the labour broker employee was where the employee was deemed to be the employee of the client. Earlier this month the CCMA issued an arbitration award in GIWUSA obo Mgedezi and others v Swissport SA (Pty) Ltd and The Workforce Group (Pty) Ltd.

The case is interesting for two reasons. It deals with the demand to be employed by the client (in this case Swissport) which was not a question directly before the Constitutional Court, and it deals with the demand to be treated on the whole no less favourably.

GIWUSA brought a claim on behalf of three employees, two forklift drivers and one acceptance clerk. The employees were employed by The Workforce Group and they rendered services to Swissport. It was agreed that they were deemed to be employed by Swissport in terms of section 198A(3) of the Labour Relations Act.

The employees employed as forklift drivers claimed that they were being treated less favourably than the cargo controllers employed by Swissport who received additional benefits such as pension fund contributions, medical insurance, a discretionary bonus, and a shift allowance. The employees claimed that the forklift drivers and the cargo controllers performed the same or similar work.

It was not disputed by Swissport or The Workforce Group that the employees did not receive these benefits. The defence was that Swissport did not employ any forklift drivers and that the cargo controllers did not do the same or similar work to the forklift drivers and so they were not an appropriate comparator to determine whether the employees were being treated less favourably. In respect of the acceptance clerk, the argument was that Swissport employed no acceptance clerks and there was no other comparator in Swissport’s employ.

On the facts presented before the Commissioner, the Commissioner accepted this argument and held that

– “On an assessment of the evidence, I find that the two positions are not the same or sufficiently similar to warrant a conclusion that the applicants must be treated on the whole not less favourably than cargo controllers by the client. The work of cargo controllers is not sufficiently similar to invoke the provisions of section 198A(5). In respect of Nogenge, an acceptance clerk, no comparator was placed before me. It was established as common cause that Swissport does not employ any other acceptance clerks. A deemed employee must be treated on the whole no less favourably than an employee of the client performing the same or similar work. In the circumstances, as there were no comparators employed by the client, the applicants cannot succeed in this claim.”

It is important to remember that the obligation to treat the deemed employees no less favourably only arises in respect of employees doing the same or similar work. It is not a blanket comparison of the terms and conditions of the entire workforce of the client.

In respect of the demand to be employed by Swissport, the Commissioner referred to the judgment of the Constitutional Court in Assign Services and that

– “This does not imply that the applicants must be “on the books” of Swissport. The constitutional court decision makes it clear that it is not required to transfer the applicants to the new employment relationship. Swissport is required to take responsibility for the applicants in terms of the ‘deeming’ provision of the LRA. This means that the applicants are deemed to be indefinitely employed by Swissport for the purposes of the LRA.”

The Commissioner then held that the relief sought, namely that the employees be employed in terms of permanent employment contracts with Swissport cannot be granted.

The award confirms that our interpretation of section 198A(3) and the Constitutional Court’s decision in respect thereof, namely that the employees of the labour broker do not become the employees of the client in all circumstances such that they need to be offered employment contracts with the client. Rather, the client, for the purposes of the Labour Relations Act, is deemed to be their employer and is in those instances liable or responsible for the employees. These instances are in respect of unfair dismissals, unfair labour practices, collective bargaining, and unfair discrimination claims in relation to union membership and union activities

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