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Constitutional Court Judgement
Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
Share code: ADR & ISIN: ZAE000000139
(“Adcorp”)
CONSTITUTIONAL COURT JUDGEMENT
Earlier today, the Constitutional Court handed down its judgment in the matter,
CCT 194/17: Assign Services (Pty) Limited v National Union of Metalworkers of South Africa and
Others.
The judgement does not negate the important role that Temporary Employment Services (TES)
will continue to play in workforce management and enabling skills development and
employment in the economy.
At paragraph 75 of the judgment it is importantly confirmed that the TES remains and that
there is not a transfer of the employment relationship but rather a continuation of the
triangular relationship between the TES and the client.
Our preliminary view of the judgement is as follows:
We believe that the interpretation gives more clarity than the Labour Appeal Court judgement
and expands upon issues not dealt with in that judgement. This case is about a limited
interpretation of whether there are two employers or one, for the purposes of the Labour
Relations Act (LRA) only. Affected employees are those who earn below the Basic Conditions of
Employment Act (BCEA) threshold (currently R205 433 per annum) and who are placed for
longer than three-months.
This judgement does not relate to equal treatment on remuneration and benefits as this was
already dealt with in the LRA amendments effective 1 April 2015.
It also does not deal with whether employees are permanent or not after three months as this
would be determined by the type of contract. For the industry the critical paragraph in the
judgement is paragraph 75 which reads:
“Section 198(2) gives rise to a statutory employment contract between the TES and the placed
worker, which is altered in the event that section 198A(3)(b) is triggered. This is not a transfer
to a new employment relationship but rather a change in the statutory attribution of
responsibility as employer within the same triangular employment relationship. The triangular
relationship then continues for as long as the commercial contract between the TES and the
client remains in force and requires the TES to remunerate the workers.”
The judgement clearly indicates that the TES and client relationship continues beyond three
months, and we believe that for legitimate TES providers where the provisions of the LRA
amendments have already been implemented, this judgement doesn’t affect their ability to
operate at law.
Further clarity is gained from paragraph 61 that implies that employees could have a claim on
both the TES and the client. The paragraph reads:
“I am persuaded that the sole employer interpretation is not hampered by section 198(4A). The
section does not purport to determine who an employer may be from time to time. It provides
that, while the client is the deemed employer, the employee may still claim against the TES as
long as there is still a contract between the TES and the employee. This is eminently sensible
considering that the TES may still be remunerating that employee. The view is buttressed by
section 200B, which provides very broad general liability for employers. Section 198(4) and (4A)
seems to carve out specific areas of liability for a TES pre- and post-deeming as opposed to the
general liability applicable in terms of section 200B.”
In terms of paragraph 63 of the judgement, our understanding of the provisions of the LRA
amendments is confirmed. The LRA amendments provide additional protection to those
employees under the threshold (R205 433) who work longer than three months in that, in the
event of a breach of the LRA, they could take action against either the client or the TES.
The rapidly changing economic, social and political environment demands that business is
adaptable and places pressure on individuals to improve their skill sets to meet the 4th
industrial revolutionary changes in the market. The TES industry has been proven to be a
primary driver of skills development and an essential labour market enabler to ensure the long-
term employability of individuals.
We believe that our industry will continue to play a major part in the success of the SA
economy and labour market in managing the demands of globalisation, competitiveness, the
4th industrial revolution and the effective transition of individuals into employment.
Temporary employment services is one of many workplace solutions provided by Adcorp.
Should you have any queries relating to this matter, please contact:
Nomonde Xulu
Investor Relations
Adcorp
011 244 5609
nomonde.xulu@adcorpgroup.com
Bryanston
27 July 2018
Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited
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