Labour Broking in South Africa: Who Is the Real Employer?

Temporary Employment Services (TES), more commonly known as labour broking, remain one of the most contested areas of South African labour law. These arrangements provide employers with staffing flexibility but raise serious questions about workers’ rights, employer accountability, and compliance with the Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA).

At the centre of the debate lies a simple but crucial question: who is the real employer, the labour broker or the client?

Constitutional Foundation: Fair Labour Practices for All

South Africa’s Constitution guarantees the right to fair labour practices to “everyone.” This broad formulation ensures that even atypical workers, including those placed via labour brokers – enjoy constitutional protection.

NEHAWU v University of Cape Town (2003): The Constitutional Court ruled that every worker, regardless of contractual form, is entitled to core labour rights such as collective bargaining and striking.
SANDU v Minister of Defence (1999): Even members of the defence force, who fall outside conventional employment categories, were held to enjoy labour-related constitutional rights.

Legal scholars consistently affirm that constitutional guarantees extend to TES employees, placing both government and private actors under a duty to protect these rights.

Statutory Framework: TES under the LRA and BCEA

The Labour Relations Act 66 of 1995 establishes the core rules regulating TES operations:

Section 198: Recognises the TES as the employer of workers it places with a client.
Section 198A: Provides that once a worker has been with the same client for longer than three months (or earns below the earnings threshold), the client is deemed the employer.
Section 200B: Prevents employers from using TES arrangements to sidestep obligations. Both the broker and client may be held jointly and severally liable.

The Basic Conditions of Employment Act 75 of 1997 reinforces these protections. Section 82 mirrors section 198 of the LRA, ensuring TES workers are entitled to non-negotiable basics like overtime pay, rest periods, and annual leave.

Case Law: Clarifying the Employer Question

South African courts have delivered pivotal rulings to clarify employer responsibility in TES relationships:

Assign Services (Pty) Ltd v NUMSA (2018): The Constitutional Court confirmed that after three months at a client’s site, the client becomes the sole employer for purposes of the LRA.
Masoga v Pick ’n Pay Retailers (2019): The Labour Appeal Court applied section 200B, holding both TES and client accountable where the labour-broking arrangement was used as a smokescreen to avoid compliance with employment laws.

These judgments underscore the courts’ willingness to pierce through artificial contractual labels and prioritise substance over form.

Ongoing Challenges in TES Employment

Despite legislative and judicial guidance, unresolved issues remain:

Control versus Contract: Clients often direct day-to-day work while brokers handle payroll and discipline, creating confusion over who truly manages the worker.
Three-Month Rule Loopholes: Employers sometimes rotate TES staff before the threshold is reached, undermining the intent of the LRA.
Benefits and UIF Contributions: Disputes frequently arise over responsibility for medical aid, pensions, and statutory contributions.
Independent Contractor Misclassification: Some TES and clients attempt to disguise employees as “contractors” to evade legal obligations.

Impact on Workers and Employers

For Workers:

Uncertainty about who to bargain with or strike against weakens union activity.
Rotating placements prevent employees from accruing tenure and dismissal protections.
UIF, holiday pay, and medical benefits may fall through the cracks, leaving workers exposed.

For Employers:

Joint liability means clients face significant financial risk if TES arrangements are found unlawful.
Reputational harm follows adverse judgments in labour courts.
Compliance complexity demands constant monitoring of TES contracts and workplace practices.

Recommendations for Reform and Compliance

Legislative clarity: Replace the rigid three-month rule with a continuous service test to stop artificial staff rotation.
Control test: Introduce a statutory test based on who supervises and directs the work, not just contractual definitions.
Guidelines: The Department of Employment and Labour should publish detailed codes of practice for TES arrangements.
Stronger enforcement: Empower the CCMA and inspectors to conduct audits and issue penalties swiftly.

Conclusion: Towards Real Protection for TES Workers

The South African labour law framework recognises the vulnerability of TES employees and has taken major strides through the Assign Services and Masoga rulings. Yet loopholes and evasive practices continue to blur the line of employer accountability.

To achieve real compliance, both labour brokers and client companies must treat TES workers as integral employees with enforceable rights. By tightening the law and ensuring effective enforcement, South Africa can align labour-broking practices with its constitutional promise of fair labour standards for all workers.