Interpretation ‘Deeming Provision’ Labour Relations Act

labour-guideBy Johann Scheepers

“Certainly no less important than the often repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of this principle.

 The first is that ‘the context’ as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limit, its background.

[ Ngcobo J, Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Tourism & others 2004 (4) SA 490 (CC); [also reported at 2004 (7) BCLR 687 (CC) – Ed] at para [89] citing Jaga v Dönges 1950 (4) SA 653 (A)].

Ruling [Bargaining Council]- Interpretation Section 198A of the SA Labour Relations Act

[Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922 – Suria van Wyk, Commissioner; reported [2015] 8 BALR 788 (NBCRFLI)].

Follow the link to read the complete interpretation (20 pages)

Introductory Remarks

This constitutes a follow-up article to the one posted July 05, 2015, “Regulation of Non-Standard or A-Typical Employment – South Africa” wherein the award in the matter Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.

In the first article the award referred to above was considered and brief commentary made as to the amendments to the South African Labour Relations Amendment Act 6 of 2014 (LRA) especially provisions that afforded protection to employees of labour brokers or rather Temporary Employment Services (TES) and those performing Part-time work as well as Fixed-term contract work.

Writer indicated that a follow-up article would be published wherein an analysis of Value Logistics award/ruling supra, handed down by South African Commission for Conciliation, Mediation & Arbitration (CCMA) would be made with referral to the respective submissions and arguments raised by the legal representatives of the parties and the findings and determinations made by the presiding Commissioner.

Pursuant to the posting of the first article, South African readers may find of interest the comments, as to the subject matter of the article, made by Professor George J. Gliaudys Jr, Dean at Irvine University College of Law, Los Angeles, USA:

“Dear Colleague in Law,

The broader context of temporary employees is that there is an over-supply of labor in many of the developed countries including your own SA these days. The need for agile management of human resources and fiscal expenditures make temporary employee resourcing and utilization almost a mandatory best business judgement principle for corporate leadership in keeping with their fiduciary responsibilities to the shareholders to increase share values.

It might be a good thing to simply admit to this business reality and not try to make a temporary worker obtained to fill a work need of a short duration into a “quasi” permanent employee through adding benefits by the company that gets them from an employment service company specializing in temporary labor provision to a corporation needing such labor resourcing flexibility.

It’s an issue that resonates throughout the world these days. I’m pleased that you are in a position to shape its contours as a Commissioner.


In an article by Hugo Pienaar et al, ”Ruling on the Deeming Provision – CCMA Ruling on the Interpretation of the Deeming Provision in Section 198A of the Labour Relations Act” Employment Alert (July 1, 2015) DLA Cliffe Dekker Hofmeyr, 1-2, the learned authors submit that the various interpretations afforded to the deeming provision have been hotly debated.

The debate was between employment law and human resources practitioners since the amendments to the LRA came into effect on 1 January 2015 and 1 April 2015. The debate centred on what the legislature intended when saying that a labour broker employee is deemed the employee of a client.   

Does the employee transfer from the labour broker to the client, with the client becoming the sole employer of the person, or does the provision create a dual employment relationship – with both the client and labour broker being the employers?

The Assign Service award is summarised by the authors supra as set out hereunder:

The reasons for the interpretation advanced by the CCMA are, amongst others, the following:

Section 198A(3)(b) is to be interpreted in a manner akin to how the law deals with adoption. A legal fiction is created in that the adoptive parent becomes the parent of the adopted child. The biological parent and the adoptive parent are not dual parents.

A greater amount of confusion and uncertainty is created by the “dual employment position”, for example;

Which employer is responsible for the discipline of the deemed employees?

– Which employer’s disciplinary code applies?

– How does one deal with the issue of reinstatement?

Section 198A does not apply in circumstances where the work performed by the TES employees for the client is of a genuinely temporary nature.

The joint and several liability provision contained in s198(4A) does not refer to joint and several liability in terms of s198A(3)(b) but rather, only refers to joint and several liability in terms of s198(4).

The mere fact that proceedings may be instituted, or awards enforced, against both the client and the TES does not axiomatically mean that the parties are dual employers. It is simply an issue relating to the parties’ liability.

Section 198A(3)(b)(ii) provides that TES employees not performing temporary services are, “subject to the provisions of s198B, employed on an indefinite basis by the client.

The memorandum of objects to the LRA amendments provides that, if TES employees “are not employed to perform temporary services, they are deemed for the purposes of the LRA to be the employees of the client and not the TES”. [Emphasis added].

According to one of the authors, Kirsten Caddy, the impact of the CCMA’s interpretation is that:

– once a client of a TES is deemed to be the sole employer of TES employees, those deemed employees must, for example, be included in any retrenchment procedure that the client may embark upon;

– employees must be provided with terms and conditions of employment, by the client, that is no less favourable to those enjoyed by comparable indefinite employees of the client;

– said employees will remain the employees of the client after the termination of the commercial agreement between the TES and the client and can institute any employment-related disputes against the client without having to join the TES to those proceedings.

The author then comments further that the Assign Service award is likely to be taken on review to the Labour Court. Accordingly, this is probably not the end of the “sole” versus “dual” employer debate.

“However, employers should be cognizant of the preliminary stance taken by the CCMA (sic) in dealing with the interpretation of the deeming provision.”

“Whilst CCMA awards do not create legal precedent that must be followed by other commissioners, the ruling provides a glimpse in what may be the view on this issue at the statutory body”.

Binding effect of precedents:

At this juncture, it was deemed important to record that insofar as the amendments to Section 198 of the LRA are concerned no legal precedent exists that Commissioners should follow when making findings and determinations/rulings insofar as the interpretation and application of the amendments are concerned.

This notwithstanding, the absence of legal precedent does not absolve the presiding Commissioner from his/her statutory duty to follow, apply and adhere to the letter and spirit of the Constitution of the RSA, 1996.

Therefore, a purposive approach to the interpretation of the LRA is required, having regard to Section 1 “Purpose of this Act”; in compliance with and to give effect to the provisions of Section 23 of the Constitution – “Labour relations – (1) Everyone has the right to fair labour practices…(2)…”  

Contextual or purposive approach to interpretation?

Follow the link to read the complete interpretation (20 pages)

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