The facts of Chep SA (Pty) Ltd v Shardlow NO and Others (2019) 30 SALLR 169 (LC) are briefly as follows: approximately 201 workers were employed by C-Force to repair wooden pallets for the benefit of Chep. The pallets were then returned or supplied in their refurbished condition to clients of Chep. With reference to s189(2) of the LRA, what is the content of the so-called ‘first fiction’?
In Chep SA, the labour court recently dealt with this issue as follows:
- s189(2) of the LRA creates a legal fiction in that, when the employees provide a service to the TES’s client, they automatically become the TES’s employees. The labour court referred to this as the first fiction created by s198. These employees do not even have to enter into an employment contract as a statutory employer-employee relationship is created once they are placed;
- under both the 1956 LRA and the 1995 LRA (before the 2014 Amendments), the TES was expressly identified as the employer for purposes of the LRA and this first fictional employer-employee relationship thus has a recognised historic context in South African employment law;
- given the aforementioned considerations, the labour court was inclined to favour a textual approach to the interpretation of a TES as it, in a sense, has the effect of providing for an inroad upon the common law and codified understanding of the employment relationship (City Deep Lid v Silicosis Board 1950 (1) SA 696 (A));
- in light of the above, C-Force could not be regarded as a TES if it did not ‘provide or procure’ the individual employees (fourth and further respondents) for reward to the client, who was, in this instance, CHEP. The finding of the commissioner to the contrary constituted a material error of law that could not be correct;
- a consideration of the triangular nature of the relationship between a TES, client and placed employees also supported the above approach. The TES normally remunerates the employees and provides human resources functions, whereas the client conducts the day-to-day management of the employees and determines their working conditions. The TES is merely a third party that delivers the employees to the client; and
- moreover, the employees do not contribute to the business of the TES, except as a commodity. These factors do not appear to apply in casu and seem to support a conclusion that C-Force is not acting as a TES in its engagement with CHEP.
