Summary of section 198 of the Labour Relations Amendment Act

Following a long period of “pending” status, on the 18^th of August 2014, the Labour Relations Amendment Act No.6 of 2014 was published under Notice 629 in Government Gazette 37921. It was finally signed into legislation by the President on September 2014 and came into effect on the 1^st of January 2015 (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

The Amendment Act includes substantive amendments with the aim to regulate and protect three categories of non-standard employees: employees placed by temporary employment services (a), employees engaged on fixed term contracts (b), and part time employees (c). The Amendment Act further regulates and

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protects employees earning below the earnings threshold of R 205 433.30 per annum, outlined in section 6(3)of the BCEA, in all three the above categories (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

a) Section 198A of the Labour Relations Amendment Act defines “temporary service” as 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 Ministerial notice.

(Department of Higher Education and Training, 2014)

The aim of this section is to end the abuse of TES (labour brokers) by the client in an attempt to evade labour legislation. Only when an employee of a TES is employed to perform genuine temporary work, will the employee be considered as an employee of the TES. If the client is unable to justify that the employee is in fact performing temporary work, the employee will be deemed to be the employee of the client and not the TES (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

If an employee performs a temporary service in line with the conditions defined in section 198A of the LRA Act above, the employee will remain the employee of the TES. Once an employee has been working for the client for a period exceeding three months, the employee will be “deemed” to be an employee of the client, employed on a permanent basis, unless any of the conditions outlined above apply. Termination of the employees employment to evade the “deemed”

employment provision, will constitute a dismissal and may be challenged in terms of the fairness of the termination under the LRA (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

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Following the expiry of the three month period an employee that is “deemed” to be the employee of the client may not be treated less favourable than any other employee performing the same or similar work, and are thus entitled to the same benefits and remuneration as other employees performing the same or similar work, unless there is a justifiable reason for such differentiation (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

b) Section 198B of the Labour Relations Amendment Act defines a “fixed term contract” as a contract of employment that terminates on –

a) the occurrence of a specified event;

b) the completion of a specified task or project; or

c) a fixed date, other than an employee’s normal or agreed retirement date.

(Department of Higher Education and Training, 2014)

This section is not applicable to employees employed in terms of a statute, sectoral determination or collective agreement where the conclusion of a fixed term contract is permitted. It further accommodates new and small businesses in that it does not apply to employers employing less than ten employees, or less than fifty employees if the employer has been in business for less than two years.

It does however apply to employers who conduct more than one business or if the business was formed by the division or dissolution of an existing business (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

An employee can be employed on a fixed term contract if the duration of the contract is for a limited or defined duration, or if the employer has a justifiable reason that is in line with the provisions defined in section 198B, subsection (4). In cases where the employment extends beyond the three months and are in contravention with the provision outlined in subsection (4), the employee will be

“deemed” to be an employee of the employer for an indefinite period (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

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An employer may not treat an employee who is employed on a fixed term contract for a period longer than three months on the whole less favourable than any other employee performing the same or similar work, unless there is a justifiable reason.

An employer must thus provide the employee employed on a fixed term contract with equal access to opportunities to apply for vacancies as an employee employed on a permanent basis (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

The employer may not convert the employment of an employee whose services were provided through a labour broker into a fixed term contact to avoid the employee being considered it’s “deemed’ employee. Once the employment goes beyond the three month period, the employer has to treat the employee the same as its current permanent employees (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

c) Section 198C of the Labour Relations Amendment Act defines a “part-time employee” as an employee who is remunerated wholly or partly by reference to the time that the employee works and who works less than a comparable full-time employee.

Similar to the provisions dealing with fixed term contracts, this section does not apply to employers employing less than ten employees, or less than fifty employees if the employer has been in business for less than two years. It does however apply to employers who conduct more than one business or if the business was formed by the division or dissolution of an existing business (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015). In addition to this it also does not apply to an employee, who ordinarily works less than twenty four hours a month for an employer, employees earning in excess of the earnings threshold of R 205 433.30 per annum outlined in section 6(3) of the BCEA, and during an employee’s first three months of continuous employment with an employer (Department of Higher Education and Training, 2014).

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The employer is required to treat part-time employees on the whole not less favourable than full-time employees doing the same or similar work, unless there is a justifiable reason for the differentiation. In addition to this, part time employees must be provided with similar training and skills development as being provided to comparable full-time employees, as well as similar access to opportunities to apply for vacancies as full-time employees. It thus seems as if there is little differentiation being made between part-time employees and full-time employees (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).

The employer will not be able to make use of labour brokers, fixed term contracts, nor part time employment in an attempt to avoid the consequences of labour legislation. An employee assigned by a labour broker who is employed for a period longer than three months will be “deemed” to be an employee of the client, and the provisions of the LRA will become applicable to that relationship. Similarly, an employee employed on a fixed term contract for a period longer than three months, will also be deemed to be an employee of the employer. As a part-time employee is to be treated similarly to full-time employees, the employee will for all intent and purposes be recognised the same as a full-time employee. As a result of this employers will have to carefully reconsider their current labour practices (Summary of the Labour Relations Amendment Act 6 of 2014 | ELRC, 2015).