Labour broker employees are not solely employed by the client

Despite the deeming provisions contained in the amendments to the Labour Relations Act (LRA) an employee of a labour broker placed with a client for three months will not be considered to be transferred to the client and will remain the employee of the labour broker.

In terms of the amendments to the LRA which came into effect in January 2015, an employee of a labour broker is, after three months’ service to a client, “deemed to be the employee of that client and the client is deemed to be the employer.”

On 8 September 2015 the Labour Court in Assign Services (Pty) Ltd v CCMA and 3 others found:

• The client does not become a party to the written contract of employment in place between the labour broker and its employee. The deemed employment relationship between the client and the employee of the labour broker exists solely for the purposes of the LRA and therefore does not constitute a separate agreement in its own right.
• The deemed employment relationship with the client exists only for the purposes of the LRA. This employment relationship is not subject to any other employment legislation. There is therefore, for example, no separate obligation on the client to make contributions to the Unemployment Insurance Fund on behalf of the employee of the labour broker.
• The labour broker continues to be the employer, even when the client is also deemed to be the employer under the LRA.
• The existence of the deemed employment relationship between the employee of the labour broker and the client is dependent on the existence of the employment relationship between the labour broker and the employee.