The LRA Amendments:
Challenges for arbitrators
Alan Rycroft
Tokiso workshop
24 July 2014
TES employees
Section 198A(9) provides that 3 months after the
Amendment Act commences –
• TES employees are deemed to be the client’s
indefinite employees, if not performing a
temporary service;
• TES employees’ rights to ‘not less favourable’
treatment from the client, commence (if deemed
to be the client’s employees);
• The termination by the TES of an employee’s
‘service’ to avoid the employee being deemed to
be the client’s employee, constitutes a dismissal
for the purposes of the LRA.
Questions, questions, questions
• If an employee of a TES is deemed to be the employee
of the client, is it possible for there to be 2 employers?
• After 3 months as a TES employee, who is responsible
to pay the employee – the TES or the client?
• Once a TES employee is deemed to be the employee of
the client, which terms and conditions apply,
particularly where they might have been better with
the TES?
• How does a deemed employee formalise her/his new
status?
• Is the ‘deeming’ provision only triggered when the TES
treats its employee ‘not less favourably’?
The dismissal of TES employees
Section 198A(4), provides that the termination of a
TES employee’s service to avoid being deemed to
be the client’s employee constitutes a dismissal.
• It does not provide that it automatically
constitutes an ‘unfair dismissal’. (The unfairness
of the dismissal would then have to be
determined by the facts of each case).
• Note that these rights only kick in 3 months after
the Amendment Act commences – which means
it can be argued that such action prior to that
date would not constitute a dismissal.
Arbitrator’s dilemma # 1
Because the termination of a TES employee’s
‘service’ is constituted as a dismissal, does this
prevent schemes by a TES to ‘roll’ employees
amongst clients every 3 months, in an attempt
to prevent them from being deemed to be a
particular client’s employees?
Meaning One
Deeming
• In its general sense deeming means 'considered' or
'regarded' (“The football match was deemed to be
excellent”).
Meaning Two
• In some legislation ‘deem’ means that something must be
accepted as correct unless the contrary is proved.
• Eg s 83A of the BCEA and s 200A of the LRA: ‘A person who
works for, or renders services to, any other person is
presumed, until the contrary is proved, to be an employee’.
• Here the deeming provision is expressed as a rebuttable
presumption
Meaning Three
• In the legal context ‘deeming’ can create a legal fiction. Deeming
provisions allow things which are not true to be treated as if they
were.
‘When you talk of a thing being deemed to be something, you
do not mean to say that it is that which it is deemed to be.
It is rather an admission that it is not what it is deemed to be,
and that, although it is not that particular thing, nevertheless,
for the purposes of the legislation in question, it is to be
deemed to be that thing’ (1891 case).
• It is a device to artificially include in a definition those who by
normal tests fall outside of that definition. Something is declared a
fact regardless of the objective truth of the matter. Once deemed,
there is an irrebuttable presumption.
Arbitrator’s dilemma # 2
What does ‘deem’ mean in the LRA
amendments?
S 198A(3)(i) in the Bill: says: “deemed to be the employee of
that client and the client is deemed to be the employer”
• There is NO rebuttable presumption – the
client is given no opportunity to prove that
the employee of the TES is not, in contract,
the employee of the client.
Is being deemed an employee the
same as being an employee?
ANSWER ONE:
A TES employee will remain an employee of that TES but must be treated on
the whole not less favourably than an employee of the client performing the
same or similar work, unless there is a justifiable reason for different
treatment.
The TES remains legally liable to remunerate the employee but must do so at
the same rate as paid to the client’s employees doing similar work. The TES
must also include benefits enjoyed by the client’s employees
If s/he is dismissed, that employee can refer a dispute for unfair dismissal,
citing either the TES or the client as the employer.
ANSWER TWO:
After the deeming provision takes effect, the TES is replaced by the client,
who becomes the sole employer in law and in contract.
The TES drops out of the picture completely.
Treating deemed employees ‘not less
favourably’
‘Justifiable reasons’ for treating deemed
employees ‘not less favourably’ than
comparable employees doing similar work,
include –
(a) seniority, experience or length of service;
(b) merit;
(c) the quality or quantity of work performed; or
(d) other criteria of a similar nature.
‘Equal pay for equal work’ disputes
can now arise in 2 ways:
• ‘Non standard’ employment disputes;
• The unfair discrimination provisions of the Employment
Equity Act. The new s 6(4) of the EEA provides that
differences in the terms and conditions of employment
between employees doing substantially the same work or
‘work of equal value’, due to arbitrary grounds, constitutes
unfair discrimination.
• Consideration will have to be given to not just basic pay
rates, but also to other aspects forming part of the
remuneration package such as pension or medical aid
contributions.
• Where similar benefits are not provided, a monetary
equivalent may have to be incorporated.
Arbitrator’s dilemma # 3
Is the client treating a deemed employee less
favourably if:
• The TES’s pension scheme is less favourable?
• A more experienced employee doing the same
job as the deemed employee is paid more?
• The client says the ‘comparable’ employee is
more meritorious?
Fixed-term contracts
Fixed term contracts (FTCs) should not be longer
than 3 months, unless the
• work is of limited or definite duration,
• or a ‘justifiable reason’ exists;
failing this, the employee may be deemed to be
employed on an indefinite basis.
• In any event, employees on fixed term contracts
of longer than 3 months must be treated ‘not less
favourably’ than permanent employees
performing similar work, unless ‘justifiable
reasons’ exist.
‘Justifiable reasons’ for having fixed
term contracts longer than 3 months
These include being employed –
(a) to replace a temporarily absent employee;
(b) due to a temporary work increase, not expected to last beyond 12
months;
(c) as a student/ recent graduate, to get training or work experience;
(d) to work exclusively on a specific project of limited / defined
duration;
(e) as a non-citizen in terms of a work permit for a defined period;
(f) to perform seasonal work;
(g) on an official public works or job creation scheme;
(h) in a position funded by an external source for a limited period; or
(i) past the normal or agreed retirement age.
Arbitrator’s dilemma # 4
• Cases have held that, unless agreed, an
employer may not retrench during a fixedterm contract.
• If a fixed-term contract employee is deemed
to be an indefinite employee, does s/he lose
the protection that the fixed-term contract
gave against retrenchment?
Part-time employees
3 months after the Amendment Act
commences, the following rights will apply:
• The right to ‘not less favourable’ treatment;
• Equal access to training and skills
development opportunities;
• Equal opportunities to apply for vacancies.
Disputes are likely to arise in one of
two circumstances:
1.
2.
Allegations by employees (eg a group of TES employees, FTC
workers or part time employees) that they are receiving less
favourable treatment than similar permanent employees;
Attempts by an employer to terminate the employment or
services of one or more employees.
• Section 198D(3) to (5) : interpretation or application disputes
arising from s 198A to 198C may be referred to the CCMA or
applicable bargaining council for conciliation, within 6 months after
the cause of action arising.
• Alleged unfair dismissal disputes: this seems to vary the standard
30 day referral time limit in terms of section 191(1)(b).
• If the dispute is not resolved after conciliation, it may be referred to
arbitration within 90 days.
Arbitrator’s dilemma # 5
Section 187: dismissal automatically unfair if the
reason for the dismissal is:
(c) to compel the employee to accept a demand in
respect of any matter of mutual interest between
the employer and employee.
NEW
(c) a refusal by employees to accept a demand in
respect of any matter of mutual interest between
them and their employer.
Does this amendment apply to retrenchment
consultations?
Arbitrator’s dilemma # 6
If a dismissal is found to be unfair, is an
arbitrator obliged to make an order of either
reinstatement, or re-employment, or
compensation?
Numsa & another v GFD Motors (Pty) Ltd &
others (LCCT 24/7/2013)
S 193 : if the dismissal is unfair the arbitrator
may…