Automatic termination clause gets teeth drawn
Labour brokers will face unfair dismissal claims if the provision is enforced
ORGANISED labour has been vocal about the tenuous nature of employment relationships existing within the “temporary employment services” sector, more commonly known as labour broking.
If one were to have reference to the explanatory memorandum to the recent Labour Relations Amendment Bill, 2010, the Department of Labour has gone as far as saying that “the labour brokers manipulated this section and operated under the auspices of this section (section 198 of the Labour Relations Act 66 of 1995)” and have proposed that section 198 be repealed in its entirety.
On a reading of section 198, it becomes clear that while an individual may tender his services and be under the effective control and supervision of a client (who would have concluded a labour supply agreement with the labour broker), the labour broker remains the employer of the employee. The complexities of this tripartite relationship have often been prone to abuse and contractual manipulation that has sought to limit the liability of the labour broker and the client, leaving the employee vulnerable and exposed to abuses that would normally be frowned on in a conventional employment setting.
Section 198 (4) of the Labour Relations Act contemplates only four contraventions in which the client and labour broker can be held jointly and severally liable by the “employee”. These are a contravention of a collective agreement or arbitration award which regulates terms and conditions of employment, the Basic Conditions of Employment Act, as well as a determination made under the Wage Act. It is noteworthy to mention that dismissal is not one of these and the employee is constrained to pursue the labour broker in the event that he alleges dismissal.
Bearing this in mind, the so-called “automatic termination” clauses are usually included in employment contracts. The content and intended consequence of these clauses highlight the vulnerability of these “employees” as regards security of tenure, particularly when the client terminates the service contract with the labour broker.
This was highlighted in the recent case of Mahlamu v CCMA and others (JR1702/09 of 30 November 2010). The applicant was employed as a security officer by Gubevu Security Group (Pty) Ltd, which had contracted with the Bombela Joint Venture to provide various armed escort services at various sites related to the Gautrain project.
In terms of his employment contract, it was to commence on October 23 2008 and automatically terminate on expiry of the contract between Gubevu and Bombela alternatively, “in the event that Bombela did not require the services of Mahlamu for whatsoever reason”.
During January and February of 2009, Bombela cancelled the contract with Gubevu and Gubevu addressed a letter to Mahlamu, advising him that owing to the cancellation of the contract and lack of alternative positions, his services were no longer required. It appears that Mahlamu thereafter referred the matter to the CCMA where his claim was dismissed on the basis that his employment had “automatically terminated” in terms of the provision in his contract and that he had therefore not been dismissed.
The effect and consequence of this was that Mahlamu’s tenure was entirely dependent on the will of Bombela, who was the client and not the employer of Mahlamu.
Furthermore, Bombela could for any reason, irrespective of the arbitrariness of the reason, advise Gubevu that his services were no longer required and this would result in the automatic termination of his employment contract.
The effect of this would leave Mahlamu with no recourse, either against Bombela or Gubevu.
Not to be outdone, Mahlamu then brought a review application challenging the finding, contending that the Commissioner had made a material er-
The complexities of this tripartite relationship have been prone to abuse and contractual manipulation that has sought to limit the liability of the labour broker and the client, leaving the employee vulnerable and exposed to abuse.