COSATU statement on the Constitutional Court ruling on Labour brokers 

26 July 2018

The Congress of South African Trade Unions has noted and welcomes the ruling by the Constitutional Court that forces employers to automatically convert all contracts of workers after three months into permanent employment with all rights and benefits.

The Constitutional Court in the NUMSA v Assign Services has authoritatively ruled that after a period of three months the placed worker becomes the employee of the sole employer that is the actual employer.

We applaud NUMSA for pursuing this case all the way to the Constitutional Court and we view this as a step forward and we feel that the ruling will ultimately lead to the demise of labour brokers.

Since the coming into effect of the 2014 Labour Relations Amendment Act, there has been a deliberate confusion by employers on the question of who becomes the employer of the placed workers, when the period of three months kicks in. The Labour Appeal Court had previously ruled that after a period of three months there is sole employment in the sense that the client or the real employer becomes the only employer and not the labour broker.

COSATU call on all employers including MTN and labour brokers such as ADCORP and CAPES to respect the labour appeal court ruling. ADCORP and CAPES are the biggest bakkie brigades, who stay in a corner, hire workers and place them with a client or the real employer at a fee.

The three months law seeks to protect workers specifically those earning at or below R205 433.30 per annum from abuse by labour brokers, such as ADCORP ,who want to get rich at the expense of workers by employing workers on short term contracts.

The law limits temporary work to three months. The new law emphasises that one must look at the nature of the service or work and not on the person doing the job. Any placed worker who does work for a labour broker for a period of more than 3 months and is not a substitute of an employee of the client is not rendering temporary services, and is not working for a labour broker but for the actual employer.

It is unfortunate that Section 198 of the Labour Relations Act justifies the existence of labour brokers. Labour brokers are trading in workers by placing them with employers at a fee. This fee is deducted from the worker’s salary and reduces the employee’s take home pay. In law, labour brokers are called temporary employment services. Whilst they are required to provide only temporary labour for temporary work, in practice they have ensured that workers work permanently on a temporary or part time basis. Labour brokers are middlemen, who steal from the poor and they contribute nothing to job creation and this has been confirmed by the Constitutional Court judges.  

The use of labour broking is motivated by employers’ greediness and the quest to use cheap labour and increase their profits. The ultimate objective is to eliminate trade unions and workers power.

COSATU call on all employers to convert the contracts of all workers, who are working on temporary contracts into permanent contracts with immediate effect.The conversion of the contract has to occur automatically after a period of three months. COSATU still stands by its campaign for the total banning of labour brokers.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 26 July 2018