DEEMING CLAUSE ARBITRATION AWARD
1. On 29 June 2015, the CCMA handed down the award in the test case in respect of the consequence of section 189A(3)(b) of the LRA (the deeming clause). The issue was whether or not the consequence of deeming was exclusive employment by the client or dual employment (i.e. both the client and the TES being employers).
2. In summary, the CCMA has interpreted the clause to mean that the client becomes the sole employer of placed workers for the purposes of the LRA.
3. Despite CAPES having being optimistic of a positive result following the hearing of oral argument, it is apparent that rather than focus on the argument presented during the hearing (with both parties being represented by senior counsel) the arbitrator has defaulted back to the CCMA training.
4. CAPES has been concerned about the training that CCMA Commissioners were receiving resulting in this ruling.
5. Having taken legal advice, we are, with respect to the arbitrator, satisfied that the ruling is wrong.
6. Quite apart from the ruling being wrong, we are advised that the arbitrator’s award is, with respect to him, largely unhelpful. He has not grappled with the arguments presented to him.
7. For example, the arbitrator fails to deal with the practical examples of deeming resulting in the TES no longer being the employer. This includes rights acquired against the TES such as stop order facilities. The arbitrator has failed to deal with the fact that, on his finding, TES’s could simply stop paying over union dues (because these are rights that flow from the LRA).
8. In response to the argument that, if the TES was meant to fall out of the picture, the Legislature would have said so (along the lines that it did in respect of section 197 – transfer as a going concern) the arbitrator bluntly dismisses this argument by saying if the Legislature had wanted dual employment it could have said so. The arbitrator’s comment overlooks two critical issues. The first is that our law readily accepts dual employment. Secondly it is a rule of interpretation is that a statute will not be lightly interpreted to change the common law (i.e. if the statute intends something different to common law, it should state that in clear and unequivocal terms).
9. The arbitrator then goes on a frolic of his own and compares the deeming clause to “adoption” in South African law. He argues that adoption results in the former parent falling out the picture. While this is so, this is because section 242 of the Children’s Act expressly records that the biological parent loses parental rights. Accordingly, it follows that the arbitrator’s adoption example, if anything, supports the dual employment argument – because the LRA does not expressly state that the TES falls away (as the Children’s Act states in respect of the biological parent).
10. Perhaps the best example of the arbitrator relying on old training rather than argument presented to him, is his reference to the memorandum of objects (which accompanied the various drafts of the Amendment Bill) recording that once deeming takes place, the employees “are deemed for the purpose of the LRA to be employees of the client and not the TES”. While this appears persuasive, it is wrong. The later versions of the memorandum of objects removed those words. There is a reason for removing those words. The reason being that it did not reflect the intention of the Legislature.
The way forward
11. The legal team has already been briefed to draft urgent review papers. Review papers will be filed by Friday 3 July 2015.
12. Arrangements are being made for this matter to be heard on an urgent basis. We plan on having it heard before the end of July 2015.
13. In the interim, it is intended to approach the CCMA and bargaining councils with a view to putting similar cases on hold pending the Labour Court ruling.
14. It has always been known that this issue will not end at the CCMA. Accordingly, CAPES urges all to recognise that there is every chance of the Labour Court setting aside this ruling and therefore planning and strategy should take this into account.