ARTICLES

resources

The controversial “deemed” employee

In a recent CCMA Arbitration conducted, the Commissioner was tasked with determining the correct interpretation of the “deeming provision” as provided for in section 198 A (3) (b) of the Labour Relations Act ( “the Act”).

Section 198A (3) states:

(3) For the purposes of this Act, an employee –

  1. performing a temporary service as contemplated in subsection(1)
    for the client is the employee of the temporary employment services in terms of section 198 (2); or
  2. not performing such temporary services for the client is –
  3. deemed to be the employee of that client and the client is deemed to be the employer; and
  4. subject to the provisions of section 198 B, employed on an indefinite basis by the client

The Applicant was the Temporary Employment Service (”TES”) who supplied the labour to the First Respondent as the First Respondent required its services. The supplied labour was in excess of three months.

According to section 198 of the Labour Relations Act a Temporary Employment Service is:

(1) In this section, "temporary employment service" means any person who, for reward, procures for or provides to a client other persons-

  1. who render services to, or perform work for, the client; and
  2. who are remunerated by the temporary employment service.

Section 198 A defines a Temporary Employment Service as:

(1) In this section, a ‘temporary employment service’ means work for a client by an employee-

  1. for a period not exceeding three months;
  2. as a substitute for an employee of the client who is temporarily absent; or
  3. in a category of work and for any period of time which is determined to be a temporary services by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister, in accordance with the provisions of subsections (6) to (8)

Naturally, this section does not apply to any employee earning in excess of the threshold as is clearly stipulated in Section 198 A (2).

The representatives of the Applicant referred the Commission to the leading judgement of S v Rosenthall 1980 (1) SA 65 A where the meaning of “deemed” was explained:

“The expression “deemed” had no technical or uniform connotation. Its precise meaning and especially its effect, must be ascertained from its context and the ordinary commons of construction.”

The Commission was also referred to the case of R v Haffeejee and another 1945 AD 345 where it was held that the aim, scope and object of the legislative enactment should be considered in order to determine the sense of its provisions.

It was subsequently argued that the word “deemed” does not have a uniform meaning but its meaning should be derived from the context in which it is used.

The representatives of the Respondent also referred to S v Rosenthall 1980 (1) SA 65 A, amongst others, where they indicated that the court held that word “deemed” is very often used loosely and could therefore be substituted with the word “is”.

In the specific matter the representatives of the Applicant argued that the instance referred to was one of “dual employment” having the effect that the placed employees would be deemed to be employees of both the TES and the client of the TES.

The Second Respondent on the other hand was of the view that the placed employees were deemed to be the employees of the Client of the TES by referring to the “sole employment” position.

In the analysis of the Commissioner, reference was made to the interpretation of the word “deemed” and subsequently referred to section 3 (a) of the Act that states as follows:

“Any person applying the Act must interpret its provisions to give effect to its primary objects.”

The Commissioner further referred to the Chirwa v Transnet 2008 (4) SA 367 CC where the Constitutional Court held:

“where a provision of the LRA is capable of more than one plausible interpretation, one which advances the objects of the LRA and the other which does not, a court must prefer the one which will effectuate the primary objects of the LRA”.

The Commissioner rightfully indicated that the explanatory memorandum of the 2014 amendments has to be considered in order to correctly interpret the effect of the deeming provision. The most compelling reason that gave effect to the amendments was the need to protect more vulnerable employees in respect of TES by ensuring that the work is restricted to being genuinely temporary in nature and introducing measures to give protection to those employees.

The reasons advanced by the Applicant in support for the “dual employment” position seems to be that the employee will enjoy more protection than what he/she would have enjoyed if it was a “sole employment” – this giving effect to the amendments of the Act. The Respondent on the other hand argued that the “dual employment” position will only bring about much more uncertainty for the employee.

The Commissioner expressed that it was his opinion that the relevant law should be considered on a similar basis as with adoption. The adoptive parent is regarded as the only parent of the adopted child. The law does not consider the biological and the adoptive parent to be dual parents as that would only create confusion.

After taking into consideration the arguments of both representatives, the Commissioner concluded that the correct interpretation of the “deeming provision” is that the client becomes the Employer of the placed workers, on condition that they earn less than the threshold and that the three month period has lapsed.

Due to the recent uncertainty and controversy surrounding the deemed provision, only time will tell of the approach adopted by the CCMA will be the principle to follow when faced with the interpretation of the deeming provision.

Douw G Breed is a director at Barnard Incorporated Attorneys

Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.

Category: Articles

NEWS

AND ARTICLES

Articles to give more insight into news, laws passed and some resources to assist you in various situations.

We are always on standby to receive your query - 24 Hour Emergency Line - 072 727 2231