How not to dismiss a labour broker’s (or any) employee

09th August 2017


Temporary Employment Services, also known as labour brokers, has been much in the spotlight amidst trade union demands for its abolition. One particular problem is violations of the rights of labour brokers’ employees in terms of contractual arrangements with their clients. In Groenewald / Keystone Projects Recruitment (Pty) Ltd [2014] 6 BALR 538 (MEIBC) it was demonstrated how even an informal request by a client can lead to this result.

Mr Groenewald was employed by a temporary employment agency, Keystone Projects Recruitment (‘Keystone’), as an engineer on a contract that was described as ‘temporary’ but had no expiry date. Instead, it was subject to termination either on ‘project completion’ (making it temporary) or ‘notice of termination’ (making it indefinite) and, for good measure, it was also ‘renewed’ annually over a five-year period.

But, as it turned out, the contract came to an unexpected end following two events: first, Mr Groenewald suffered a stroke (from which he apparently recovered fully) and, secondly, the client with which Keystone placed him, Bateman Projects, allegedly experienced financial difficulties.

On 5 June 2013 Bateman Projects sent Mr Groenewald an e-mail by confirming that he would resume work after his stroke at the rate of 10 hours per week, but also informing him of severe cost-cutting measures due to ‘reduced workload’ that might make it necessary to discuss his ‘utilisation’ with Keystone. Two hours later, however, Bateman Projects sent an e-mail to Keystone informing them of its inability to keep Mr Groenewald on unless ‘new work’ became available and proposing that he be given four weeks’ notice.

‘Dismissal’ took the form of Bateman Projects’ e-mail being forwarded to Mr Groenewald by Keystone. Although Keystone undertook that it would try to find other work for him, this did not happen and so, after four weeks, Mr Groenewald duly found himself out of work.

Strangely, despite Bateman Projects’ ‘reduced workload’ and its need to retrench, Mr Groenewald worked 124 hours during his last month – i.e., about 30 hours per week instead of the 10 hours which had been agreed. This cast doubt on the ostensible reason for his dismissal apparently relied on by Keystone.

Beyond any doubt, however, was the fact that no procedure of any kind was followed by Keystone in dismissing Mr Groenewald other than sending him an e-mail. For Keystone, matters were not helped by the fact that it did not attend the arbitration hearing and did not apply for a postponement as required by the rules, but merely sent a labour consultant (who has no right of appearance at arbitration hearings) on the day itself to ask for postponement.

For the arbitrator to have conceded to such an irregular request would almost certainly have been reviewable. Not surprisingly, the hearing proceeded. Equally unsurprisingly, it was found that the employer had proved neither a fair reason for the dismissal nor having followed a fair procedure. Mr Groenewald was accordingly awarded compensation equal to five months’ remuneration in an amount of R429 016.

Two important lessons for employers appear from this matter. One is that the rules of the CCMA and Bargaining Councils, which are written in fairly straightforward language, should be followed. No system of dispute resolution can function without rules that all parties are expected to abide by. This cannot be considered too onerous for a company which takes on the responsibility of employing people on the rare occasions when it is faced with a dispute. Certainly, it would have been less onerous than the compensation which the employer was ordered to pay (and which, in the circumstances, was relatively modest – had the arbitrator ordered a few months’ more remuneration it is most unlikely that the Labour Court would have interfered).

The second is that labour brokers are bound by the same rules as other employers and cannot allow their arrangements with their clients to override those rules. It is as possible for a labour broker as for any other employer to dismiss employees for operational reasons, which could be a consequence of the termination of a contract with a client. But, if so, they need to follow section 189 of the LRA and any other employer.
The fact that Keystone did not do so is not an argument for the prohibiting this form of employment. Instead, the amendments to section 198 of the LRA and the new section 198A read with the new Employment Services Act (ESA) are designed to regulate labour broking in a way that will eliminate the problems that have so far been identified.
It is true that, in the present matter, no new legislation was needed to protect Mr Groenewald’s rights. It was simply a case of non-compliance with existing labour law. In future, however, all labour brokers will be required to register in terms of the ESA, which will mean complying with regulations that are published. It remains to be seen whether this will assist in promoting greater awareness of the rule of law in accommodating their clients’ wishes.

K. Cowley
(Chairperson – (CEA – LBD)