CSG HOLDINGS LIMITED - Constitutional Court Judgement

Release Date: 01/08/2018 14:00
Code(s): CSG
 
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Constitutional Court Judgement

CSG HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2006/011359/06
Share code: CSG
ISIN code: ZAE000184438
(“CSG” or “the Company”)

CONSTITUTIONAL COURT JUDGEMENT

On 26 July 2018, 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 case was to gain certainty about the interpretation of the Labour Relations Act (“LRA”)
amendments, particularly section 198A(3)(b)(i) commonly known as the “deeming
provision”.

Essentially, the interpretation of what happens to a flexible worker, earning less than the
Basic Conditions of Employment Act (“BCEA”) threshold (currently R205 433 per annum),
who is employed by a Temporary Employment Services (“TES”) and placed at a client,
once the three-month period expires.

KEY FINDINGS OF THE JUDGEMENT

Based on various legal opinions on the implication of the judgement, we summarise the
key findings as set out below.

The Constitutional Court judgement concluded that the client will be the sole employer of
the placed employees for the purposes of the LRA and that no duel employer relationship
exists. This does not mean that placed employees become permanent employees of the
client only, nor does it mean that TES companies are not part of the relationship.

The judgment made it clear that the deeming provision is limited to the LRA only, and
therefore placed employees are still an employee of the TES, as there is several other
legislative elements which impact the employment relationship.

In paragraph 75 of the judgement the judge explain that there is no transfer to a new
employment relationship and that the triangular employment relationship continues.

Paragraph 75 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 our TES companies are not affected in their ability to
operate at law.

According to the Constitutional Court, there will be what is referred to as a triangular relationship.
There is no “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.”

CONCLUSION

CSG is actively engaging with TES clients to discuss the effects of the judgement and to,
where applicable, propose alternative service models. We firmly believe that the TES
industry will continue to play a major part in the success of South Africa in creating jobs
and continue to provide support to our clients in numerous ways, and that the judgement
will have a minimal impact in our business.

Pretoria
1 August 2018

Sponsor
PSG Capital

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