Mzukwa v Commission for Conciliation Mediation and Arbitration and Others (C276/2020) [2024] ZALCCT 4; (2024) 45 ILJ 865 (LC); [2024] 4 BLLR 404 (LC) (25 January 2024)

FLYNOTES: LABOUR – Temporary employment service – Nature of agreement – Employee provided by company – Not remunerated as full-time employee – Considered an employee of service provider – Permanency and equivalent compensation sought – Placed employees are fully integrated into workplace as employees of client after three-month period – Commissioner misconstrued applicable test and nature of agreement – Findings incorrect – Award reviewed and set aside – Labour Relations Act 66 of 1995, s 198(1).

REPUBLIC OF SOUTH AFRICA

IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

JUDGMENT

Case Number:C276/2020

Reportable

In the matter between:

VUYISEKA MZUKWA Applicant

And

COMMISSION FOR CONCILIATION MEDIATION

AND ARBITRATION

First Respondent

COMMISSIONER M VAN ROOYEN N.O.

Second Respondent

NATIONAL PROSECUTING AUTHORITY

Third Respondent

AFMS GROUP (PTY) LTD

Fourth Respondent

Date Heard: 31 August 2023

Date Delivered: 25 January 2024

RABKIN-NAICKER J

[1] This is an opposed review to set aside an arbitration Award under Case number WECT21448-19. The second respondent (the Commissioner) found that:

“The applicant did not prove that AFMS is a TES and she is not entitled to the relief sought.” The relief sought at the arbitration as recorded by the Commissioner and evident from the transcript of the arbitration was:

“COMMISSIONER: The issue really is that the applicant’ s arguing that she is employed by a temporary employment service. She works as a

switchboard operator at, stationed at the National Prosecuting Authority, as far as I understand it, and she is arguing that she has been employed by a labour broker for a very long time I think you said since 2013.

MS MZUKA: yes

COMMISSIONER: And she now is seeking a decision, a ruling that she should be deemed to be an employee of the National Prosecuting Authority, and with that, if that is achieved, then her further goal is to achieve equal remuneration for work of equal value…”

[2] The parties held a pre-arbitration conference and filed pre-arbitration minutes. The Commissioner records that she had to decide the following issues:

“Whether AFMS is a “temporary employment service” (“TES”) in terms of section 198A or whether AFMS is a facilities management company that provides comprehensive facilities management services to the NPA;

Whether the applicant ought to have been permanently employed by the NPA and/or whether she is deemed to be employed by the NPA;

Whether the work the applicant is performing is of a permanent nature.”

[3] There is also an opposed condonation before me in respect of some 31-week delay in launching the review. I deal with the application for condonation first.

Condonation application

[4] In her founding affidavit the applicant averred as follows:

“36. The application is filed outside the time frame hence the condonation application. It is submitted that it is not excessive and the Honourable Court is in a position to condone the lateness. Further considering the reasons below.

THE REASONS FOR THE LATENESS

37. I submit that during arbitration I was represented by the union which promised to assist me in taking the matter to court, as I was not satisfied with the findings of the commissioner.

38. I have made follow up with the union representative and was told that the is a senior person in national level who will deal with such matters and I must not panic. After sometime it transpired that nothing has been.

39. Hence I have applied for Legal-Aid to assist me on the matter, when the arbitration award was received it was during Covid-19 under the strict regulation. I was told that I need to call the call Centre for Legal-Aid which it was impossible to get through to the agent who will assist you.

40. At the time my call was answered I was told my name will be send to the relevant office that will contact me and make an appointment for a consultation. The time went by I tried the call Centre again and struggle to get the agent. Then later was told to wait for the call from the cape town office which were also not operating on full staff because of the pandemic.

41. When I receive the call for an appointment it was months of waiting and it was also of future date when the practitioner will able to consult with me. After the consultation I was advised that they need to assess the merits and a decision will be taken if I get a representation.

42. I request the court to give me an indulgence as I have always wanted to pursue the dispute further but due to the lack of knowledge and skills on how to deal with the application I was unable to do same on my own, as I needed a legal representation to assist me.

43. Further the fact that the pandemic has taken much of the time because the offices are not fully functional and it has to operate on strict regulations which mostly affected on the practitioner ability to attend on the matter.

44. It is humbly submitted that the Applicant was not in willful default in not complying with the Court rules to file the application within the specific time frame but due to reasons beyond her control as stated above and request the court to grant her an indulgency and hear the case.”

[5] No confirmatory affidavit is filed by the applicant’s legal aid attorney. In answer to the above averments, the fourth respondent (AFMS), submits that that the delay (the length of which is not even identified in the found papers) cannot be referred to as ‘not excessive’. Further it is pointed out that the union representative is not named, and no confirmatory affidavit by him/her is attached. No dates or time are given as to when the applicant communicated with the said official.

[6] Fourth respondent also points out that the date on which the applicant applied for Legal Aid is not indicated by her. No details are provided as to when various attempts were made by the applicant to reach the person in Legal Aid who could assist her. The periods of delay by Legal Aid in reverting to Applicant are also not specified. It is submitted that this cannot be considered a reasonable explanation for what is a substantial delay, and that condonation should be refused.

[7] In an affidavit filed by the third respondent (NPA), emphasis is also placed on the unreasonable explanation for delay, and the Court is asked to refuse condonation for same. In Chetty v Baker McKenzie [1], The Labour Appeal Court stated that:

“Since the delay was excessive it was incumbent upon the appellant to give a full and reasonable explanation for the delay for the entire period of the delay. If that threshold was not met the prospects of success were immaterial, in the absence of issues being raised that would warrant the court’s interference on the basis that is in the interest of justice to do so.”

[8] Do issues arise in the application that require the Court to delve into the prospects of success despite a patent lack of a proper explanation for the delay? It is my view that they do, given the centrality of the issue of whether the parties were engaged in a relationship involving a TES. The Commissioner stated that there is a wider public interest in the dispute when she was considering whether legal representation should be allowed. I too recognise that the dispute gives rise to important issues that the interests of justice require to be examined by this Court. I therefore exercise my discretion to consider the merits of the review.

Evaluation

[9] The relevant provisions of the LRA to the dispute were correctly identified by the Commissioner as the following:

“198 Temporary employment service

(1) In this section, 'temporary employment service' means any person who, for reward, procures for or provides to a client other persons-

(a) who perform work for the client; and

(b) who are remunerated by the temporary employment service.

(2) For the purposes of this Act, a person whose services have been procured for or provided to a client by a temporary employment service is the employee of that temporary employment service, and the temporary employment service is that person's employer……

198A Application of section 198 to employees earning below earnings threshold

(1) In this section, a 'temporary service' means work for a client by an employee-

(a) for a period not exceeding three months;

(b) as a substitute for an employee of the client who is temporarily absent; or

(c) in a category of work and for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister, in accordance with the provisions of subsections (6) to (8).

(2) This section does not apply to employees earning in excess of the threshold prescribed by the Minister in terms of section 6 (3) of the Basic Conditions of Employment Act.

(3) For the purposes of this Act, an employee-

(a) performing a temporary service as contemplated in subsection (1) for the client is the employee of the temporary employment services in terms of section 198 (2); or

(b) not performing such temporary service for the client is-

(i) deemed to be the employee of that client and the client is deemed to be the employer; and

(ii) subject to the provisions of section 198B, employed on an indefinite basis by the client……

(5) An employee deemed to be an employee of the client in terms of subsection (3) (b) 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.” (emphasis mine)

[10] The Constitutional Court has grappled with the interpretation to be given to section 198A(3)(b) in the Assign Services (Pty) Ltd v NUMSA et al[2] stating in the conclusion to the majority judgment that:

“Regard being had to the language employed in section 198A(3)(b) read with sections 198 and 198A, the following is discernible:

(a) Section 198 deals with the general position with regard to TESs, while section 198(2) is a deeming provision creating a statutory employment contract between the TES and a temporarily placed employee.

(b) Section 198A deals with the application of section 198 to a specific category of workers, being marginal employees employed below the BCEA threshold.

(c) Section 198A(3)(a) provides that, when vulnerable employees are performing a temporary service as defined, they are deemed to be employees of the TES as contemplated in section 198(2).

(d) Section 198A(3)(b)(i) provides that when vulnerable employees are not performing a temporary service as defined, they are deemed to be the employees of the client.

(e) The deeming provisions in sections 198(2) and 198A(3)(b)(i) cannot operate at the same time.

(f) When marginal employees are not performing a temporary service as defined, then section 198A(3)(b)(ii) replaces section 198(2) as the operative deeming clause for the purposes of determining the identity of the employer.”[3]

[11] In her Award, the Commissioner relied on a passage from Chep South Africa (Pty) Ltd V Shardlow NO & Others[4] (Chep a quo) and noted that the respondents before her directly compared that case to the dispute. She records that it was stated in Chep that:

“Furthermore, the requirement of providing persons to “perform work for” a client, means that these persons become part of the client’s organisation to pursue the client’s purposes for business. The TES employees, who are placed by it with a client, are not involved or associated in common purpose with the TES in the conduct of its own business activities. This element must be present in order for the person providing or procuring the employees to fall within the definition of a temporary employment service.”

[12] In Victor & others v Chep SA (Pty) Ltd & others [5], the decision in Chep a quo was set aside by the LAC, and the Court had this to say:

“[37] The first question in deciding if a company is a TES in terms of s 198(1) of the LRA is whether it has provided other persons to a client for reward. Where workers are brought to the client by a third party to perform work at its premises, such normally will be at least an indication that the workers were procured to work for the client, especially if the client retains

overarching control over the work process and can determine whether a worker continues to perform his or her work at all…… (emphasis added)

[40] The requisite element that the persons procured for reward and provided to a client ‘perform work for the client’ entails an examination of the substance of the relationship between the client and the workers. The commissioner understood this to oblige him to consider (i) the nature of the SLA; (ii) the degree of control exercised over C-Force and the workers by Chep; and (iii) the degree that the workforce is integrated into Chep’s workplace and organisation. These are legitimate and relevant factors, the consideration of which is essential to determining the substance of the relationship and whether (in fact and in law) work is performed for the client rather than the TES. They relate directly to the preconditions of s 198(1) of the LRA and the Labour Court erred in holding otherwise. (emphasis added)

[41] Questions of control and integration, including the manner in which the workers work; the authority to which they are subjected; the degree they are integrated into the functioning of the organisation; and the provision of the tools of the trade and work equipment are relevant (possibly the only) factors in deciding if procured persons ‘perform work for the client’. Where a client contractually controls the overall work process of persons who work at its premises, as well as their conduct and behaviour, such persons ordinarily will be deemed to work for the client. While the SLA requires C-Force to attend to the staffing and management of the plant and the workforce, as mentioned earlier, other provisions of the SLA give Chep an overriding oversight, supervisory and disciplinary authority.”

[13] In argument before me, Counsel for the NPA submitted that there are no provisions in the SLA in casu, which grant the NPA any overriding authority to direct and control the manner in which the services are to be performed. Emphasis was placed on the fact that the SLA obliges ATMS to deal with any labour disputes. However, in terms of Part II and Part 111 of the SLA, I note the following Clauses, bearing in mind that applicant was performing the function of a switchboard operator:

“1.1 The Service Provider shall for as long as this Agreement remains in force, provide the Services to the NPA in accordance with:

1.1.1 the relevant Department Policies and Directives;

1.1.2 this Agreement;

1.1.3 the PFMA and

1.1.4 the Generally Acceptable Standards in the Industry”

“5.1 The Service Provider’s employees deployed to the NPA shall comply with all relevant NPA Policies and Procedures as documented in the NPA Policy Manuals and the NPA Intranet.”

[14] In relation to the switchboard services in particular, the following obligation of the switchboard operator is included:

“To seek management approval prior to making any international calls”

[15] The SLA also provides for the appointment of a Project Manager and Representative:

“3.1 The NPA appoints Mr Mtutuzeli Mkbubukeli, for purposes of control, who shall act as a communication channel between the Parties and give ad hoc instructions, to be complied with ensuring compliance and execution with the terms and conditions of this Agreement.

3.2 The Service Provider shall appoint a representative to act as a communication channel between the parties and shall be regarded to be authorized to bind the Service Provider in matters relating to the execution of this Agreement.”

[16] In addition to the above, and in terms of the SLA, all persons provided by ATMS to work for the NPA must be subject to security vetting undertaken by the NPA.

[17] In deciding whether the Commissioner was correct in her Award (the parties agree that in casu this is the standard of review), it is necessary to be cognizant of the facts and circumstances that led the applicant to refer the dispute. The case before the Commissioner was not whether all persons performing work at the NPA in terms of the SLA (many of them cleaners) should be deemed to be permanent employees. There was no evidence before her about these other persons.

[18] It was not disputed by the parties before the Commissioner that the applicant had been provided by AFMS in mid-2013 as a Switchboard Operator to the NPA. In about mid-2014, she was transferred to a different provider now providing services to the NPA, referred to as SJR, and she continued working in the same position. After about three years, she was again transferred to AFMS, and she continued to work in the same position as a switchboard operator. She testified that it was only in the Cape Town office of the NPA that the switchboard operator was not remunerated as an employee of the NPA but was considered an employee of the service provider. In her evidence in chief she described her tasks:

“……I am doing, I am transferring, I am (indistinct) to the NPA cases from the whole of South Africa [indistinct] to the advocates of NPA, to the staff of NPA, senior advocates……

Taking all the cases that are coming from outside. Then that is an NPA job, that is not an AFMS job…….

My duties is to take the …, some case numbers, and all that stuff from the, they want to complain, then I refer the calls to the advocates that, ja I refer calls where they belong to, to the NPA, to the advocates Some they are coming from Cape Town, to Judge ….[indistinct] office…”

[19] The applicant read out a NPA job advert for a telephonist and confirmed she performed all the duties reflected there. Under cross examination, the AFMS representative was referred to the applicant’s contract of employment with AFMS which included the phrase that: “This permanent contract is subject to the service level agreement duration with the client”. However, Mr Nothnagel insisted that ‘our contract of employment has no end date”. He explained:

“MR NOTHNAGEL: When we employ people, we employ them on a basis of a link to a contract at the time, because you have to assign them to where they need to work at the time, they get permanent employment, and their basis of where they work, and what they are assigned to, unless we change it before the contract ends, which also happens, we had had people move in our business before our contract with the client comes to an end, because we reassign them somewhere else, and we move them somewhere else, to different contracts Okay…….That does not constitute a temporary contract with the employee. Definitely not.”

[20] Mr Nothnagel explained further as follows under cross-examination:

“MR NOTHNAGEL: ……..So when NPA stops this contract, they would have tendered to work again, and appointed somebody new to actually continue that work. That is why she has had, our lady on the right here, on my right, had had continual employment through three generations of contracts, because the client contracts the work out through a tender. The service is proven to be needed throughout three different contractors, now over nine years. If you think three years, three years, three years, and she has been working for us three years back, then worked for another company, then working for us again. So, she has had nine years of continuous employment, but through different contracts, because the service is continued at all times.”

[21] I note that while Mr Nothnagel emphasised that persons such as the applicant were on ‘permanent’ contracts, albeit tied to an SLA duration, his evidence before the Commissioner was also to the effect that ADMS also can deploy such an employee to another client at any time should it find it necessary. It is further evident from the SLA that ADMS does provide employees to perform short-term services i.e. when one of the employees deployed to a client is not available for a short period. In terms of section 1.26 of the SLA it is obliged to:

“Ensure that the NPA is informed of any removal and replacement of staff. For security reasons, the NPA reserves the right to vet all persons working under this contract. Should a staff member not be present at work, a replacement by a security screened employee is required by 09h00 on that day.”

[22] In the Constitutional Court’s Assign Judgment, the purpose of the 2014 amendments to section 198 were considered by the majority per Dlodlo AJ:

“[65] As I have already mentioned, the 2014 Amendments were effected in the wake of persistent, widespread protests against labour broking. In negotiations leading to the amendment, one trade union conglomerate famously insisted that the then six-month limit on temporary employment should be reduced to zero months. The amendment that materialised did not ban labour broking. Instead, it aimed ‘to provide greater protection for workers placed in temporary employment services’. There appear to be two offshoots of this purpose: the first is to protect marginal workers in temporary employment; and the second is for temporary services to be truly temporary.

[66] We have some insight to the purpose of the legislation through the explanatory memorandum to the 2012 Bill. This does not speak to the Act in its final form and should be treated with caution, but it gives some credence to the two-fold purpose described above. It describes the ‘main thrust’ of the new provisions introduced in ss 198 and 198A as aiming to ‘restrict the employment of more vulnerable, lower paid workers by a [TES] to situations of genuine and relevant “temporary work”; and to introduce various further measures to protect workers employed in this way’.

[67] The restriction of TES employment to genuine temporary work affords the clarity and precision needed by the LRA to realise the constitutional rights to fair labour practices and meaningfully to participate in trade union activity.

[68] The restrictions are sufficiently circumscribed in the language of the LRA to give effect to this purpose. By adding ss 198A and 198D, the legislature identified the parameters of ‘temporary services’ and detailed the protection afforded to placed employees.

[69] Part of this protection entails that placed employees are fully integrated into the workplace as employees of the client after the three-month period. The contractual relationship between the client and the placed employee does not come into existence through negotiated agreement or through the normal recruitment processes used by the client. The employee automatically becomes employed on the same terms and conditions of similar employees, with the same employment benefits, the same prospects of internal growth and the same job security that follows.

[70] The purpose of the s 198A amendments is clear. It exists to fill a gap in accountability between client companies and employees who are placed with them.”

[23] In paragraph 41 of her award the Commissioner records the argument made on behalf of the applicant:

“It was argued on behalf of the applicant that AFMS was a TES. The applicant had been working as a Switchboard Operator at the NPA under different staff suppliers for many years. AFMS claimed an amount of R15342.87 per month for the services rendered by the applicant to the NPA and paid her a wage of R5550 per month. The position of Switchboard Operator was a graded position in the Public Service at level 4 with a salary from R145 000 per annum, excluding benefits such as a thirteenth cheque and contributions towards pension benefits and medical aid. Mr Makwetu estimated that the applicant would have earned more than R200 000 per annum had she been employed by the NPA. The applicant falls within the vulnerable group of employees that section 198A of the LRA aims to protect. The aim of the legislation is to restrict the services of labour brokers who are not rendering temporary services. The applicant had been working at the NPA for more than three months, was not performing a temporary service as defined and therefore she must be deemed to be an employee of the NPA and employed on an indefinite basis.”

[24] Despite the factual matrix specific to the applicant, the common cause fact that she fell to be considered a marginal employee given her remuneration, and that she was not providing a temporary service, the Commissioner was minded to find that the applicant could not be deemed an employee of the NPA organisation. Without any explicit reference or interpretation of the terms of the SLA, she records that:

“47. In the present matter the applicant’s services as an employee were involved or associated in common purpose with the business

activities of AFMS, which were to provide a bouquet of services to the NPA in terms of the SLA. The applicant agreed that she reported

to and her work was supervised by employees of AFMS and not the NPA. Mr Nothnagls’s testimony that the client, the NPA, did not become involved with the services that were rendered by AFMS, save to complain to AFMS if the services were not up to standard, was not disputed. Having considered the totality of the evidence I am satisfied that AFMS is not a TES “in disguise”. No evidence was presented to indicate that the SLA was a sham to provide labour to the NPA in circumvention of the provisions of the LRA.”

[25] In the Courts view, and taking the principles set out in the Victor v Chep Judgment, it cannot be gainsaid that AFMS provides persons to work for the NPA for reward. The SLA is clear that employees such

as applicant are bound to follow NPA policies and procedures in their duties. Any failure to do so would be raised by the NPA with ATMS. This amounts to overall control by the NPA of such persons. The evidence that ATMS has a site manager on the premises and deals with HR related matters is neither here nor there.

[26] The Commissioner’s apparent view that part of the test to establish whether the relationship between ATMS and NPA was one of a TES and client, was to show the SLA in question was a ‘sham’, cannot be correct. The SLA sets out the agreement between the service provider and the NPA. No intention to deceive is discernible. The Commissioner was tasked with evaluating whether as a matter of law, and in view of the substance of the relationship between the parties before her, the applicant was entitled to the protection of section 198 A (3) of the LRA. This she failed to do.

[27] On the issue of whether the service provided by the applicant was temporary in nature, the Commissioner had this to say:

“Switchboard services are not of a temporary nature, as was conceded by Mr Nothnagel. He presented comprehensive testimony about how facilities management companies operate and that it was the prerogative of the client to identify which services, usually non-core in nature, they wished to outsource. This commercial arrangement does not find application only in services that are temporary of nature. Having found that ATMS is not a TES, its operations are not limited to the rendering of “temporary services” as defined in section 198(A)(1) of the LRA.” (Emphasis added)

[28] The above paragraph reflects a mistake of law by the Commissioner. It is as well to record again the provision of the LRA she relies on above, which is:

“198A Application of section 198 to employees earning below earnings threshold

(c) in a category of work and for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister, in accordance with the provisions of subsections (6) to (8).”

[29] The Commissioner was conflating the above provision which deals with the nature of the service for a client by an employee (the applicant clearly does not fall into the category of providing a temporary service) with whether ATMS is a TES. The definition in question that had to be interrogated to answer this, is that provided in section 198(1) which deals with what a TES means:

“(1) In this section, 'temporary employment service' means any person who, for reward, procures for or provides to a client other persons-

(b) who are remunerated by the temporary employment service.”

[30] In conclusion, I find that the Commissioner did not consider the nature of the SLA; (ii) the degree of control exercised by the NPA over ATMS and its workers in terms of the SLA and (iii) the degree that the applicant was integrated into the NPA’s workplace and organisation. As the LAC stated in the Victor v Chep matter, these are legitimate and relevant factors, the consideration of which is essential to determining the substance of the relationship and whether (in fact and in law) work is performed for the client rather than the TES. Her finding that ATMS does not provide services as provided for in section 198(1) of the LRA is incorrect. Applicant falls into the category of workers which the LRA seeks to protect. In all the circumstances, I make the following order:

Order

1. Condonation is granted for the late filing of the review is granted.

2. The Award under WECT21448-19 is reviewed and set aside.

3. It is declared that:

3.1 AFMS is a “temporary employment service” (“TES”) in terms of section 198A of the Labour Relations Act.

4. The applicant is to be compensated in an amount equivalent to the difference between the remuneration (including benefits), that the NPA paid to its switchboard operators and the remuneration that she was paid by AFMS over this period.

5. There is no order as to costs.

________________

H.Rabkin-Naicker

Judge of the Labour Court

Appearances:

Applicant: Legal Aid South Africa

Third Respondent: Rudi Abrahams instructed by the State Attorney

Fourth Respondent: C. De Kock instructed by Carelse Kahn Inc

[1] (2022) 43 ILJ 1599 (LAC) (para 29)

[2] (2018) 39 ILJ 1911 (CC)

[3] At paragraph 83

[4] [2019] 5 BLLR 450 (LC)

[5] (2020) 41 ILJ 2802 (LAC)