LABOUR LAW in a Nutshell
EMPLOYEE VS TES EMPLOYEE: How do you tell the difference between a standard employee and a TES employee who works in the same workplace?
The Labour Appeal Court provided some useful guidelines to help answer this question in the recent case involving Chep South Africa. You’ll see that it took a very practical or “purposive” approach to find out who actually controls the working relationship.
Chep makes, repairs, and hires wooden pallets to customers. They use them mainly for storing and transporting their products. David Victor and 200 others were employed by a labour broker or TES called C-Force to repair pallets for Chep. They had been doing this work long before section 198 of the LRA was amended in 2015. The amendment limited the scope of labour broker practices to help reduce abuse and exploitation of vulnerable workers.
In anticipation of the amendment, Chep and C-Force concluded a new service level agreement (SLA). It was similar to the existing workforce hire agreement, except it now referred to C-Force as a “service provider” instead of a labour broker or TES. C-Force employees carried on their work repairing pallets at Chep as before.
Victor and his fellow employees claimed they were really Chep employees in terms of the amended section 198. They referred a dispute to the CCMA who agreed with them. On review, the Labour Court overruled the CCMA award. Victor and the 200 then took the decision on appeal to the LAC.
The LAC agreed with the CCMA and overruled the Labour Court judgement. It found on the facts that Chep contractually controls the pallet repair work which Victor and his 200 fellow employees do. It, therefore, concluded that they were employees of Chep and not employees of C-Force. In other words – the SLA did not create a genuine independent service provider relationship between Chep and C-Force.
David Victor & 200 Others v Chep South Africa (Pty) Ltd & Others (2020) JA55/2019 (LAC)
Source: Worklaw Newsletter January 2021
Edited by Sarah Christie
The court applied a ‘purposive interpretation’ to give effect to the aims of the protective provisions in the legislation. In so doing, it did not rely only on the wording of the SLA. It instead examined the practical details of the working relationship between the Chep and the employees. The purpose was to determine who actually controls the working relationship – Chep or C-Force?
These are the practical details which the LAC examined –
- The required raw materials, plant, and equipment were supplied and maintained by Chep;
- Pallet conditioning formed an integral part of Chep’s business;
- C-Force had no discretion as to how the work was to be performed;
- The SLA prescribed the results to be achieved during hours prescribed by Chep and in accordance with Chep’s policies and instructions;
- Chep exercised overall control over the employees’ activities, setting production targets and providing detailed rules of conduct;
- Chep reserved the right to request that any C-Force employee be removed from the site;
- Chep had the right to instigate disciplinary proceedings against the employees.
The LAC found this evidence pointed overwhelmingly to the existence of an employment relationship between Chep and the C-Force employees.
TIP: Many temporary employment service providers have attempted to re-position themselves as independent service providers instead of labour brokers. The Chep case makes it clear that the courts will scrutinise the practical details of how the service is provided. Its purpose will be to determine if it’s a genuine “service” or if it’s a labour hire arrangement in disguise. They’ll do this regardless of what the contract between the client and the TES says.
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