Misuse of the ‘Deeming Provision’ of Section 198A(3)(B) of the Labour Relations Act 66 of 1995 in the Triangular Employment Relationship

Abstract

Previously, numerous companies were considered to exploit Temporary Employment Services (TES) employees. To tackle this issue, in 2014, the South African Minister of Labour suggested changes to the Labour Relations Act (LRA) to manage the novel trends. The proposed revisions led to section 198A being included in the LRA, which primarily focuses on the ‘temporary service.’ The Labour Relation Act Amendment (LRAA) acknowledged temporary service as an employment agreement for three months or less. This inclusion was designed to protect TES employees from exploitation and illuminate section 198(A)(3)(b) (commonly known as the ‘deeming provision’), which differentiates if there is a tripartite employment or sole employer agreement. One of the historical cases that managed the deeming provision is Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and Others (2018) 39 ILJ 1911 (CC). The current research report adopted a doctrinal legal research methodology to investigate various approaches in which the deeming provision has been understood and applied by the clients, the TESs, and the TES employees. Furthermore, the research explored the applicability of the provision by the independent contractors and provided a distinction between its application and that of the TES employees. The typical sector with considerable labour cases enlightening the misuse of the deeming provision is the Fast-Moving Consumer Goods (FMCG). This research revealed that the deeming provision has made progress in shielding irregular employees from ill-treatment. However, unresolved issues remain, specifically among TES employees and independent contractors, as they are of the view that the requirement binds them to permanent employment by the clients. As a result of this expectation, the business often experiences labour unrest. The study also highlighted the misuse and abuse of the deeming provision by both the client(s) and the TES in different ways, such as, among others, through contract manipulation, reassigning employees to multiple clients, or rehiring them under new contracts to circumvent the three-month limit. Hence, the following recommendations were put forward to strengthen the application of the deeming provision: (a) amending section 198A to broaden its applicability and ensure that protections are extended to all workers, regardless of classification, and (b) enforcing the principles of fairness, transparency and equality in the workplace to reduce exploitation. These measures will also promote a more stable and equitable labour market, supporting the long-term sustainability of employment relationships.