The applicant (Adcorp Workforce Solutions) provided temporary employment services to the fourth respondent (Sacks Packaging). Among the employees working at the fourth respondent were 41 individual employees represented by NUMSA (the third respondent). In 2019, NUMSA invoked section 198A(3)(i) of the LRA, seeking that the individual employees be declared employees of the fourth respondent (the client). The applicant and third respondent agreed that the deeming provision operated and concluded a settlement agreement declaring the employees to be deemed indefinite employees of the fourth respondent. The parties agreed that the issue of whether the employees should wear the overalls of the applicant (their former employer) would be determined by an arbitrator. On 29 August 2019, the arbitrator issued a directive in favor of the third respondent that the employees should not be required to wear the uniforms of the labour broker.
1. The CCMA lacked jurisdiction to arbitrate the dispute. 2. The ruling regarding the uniforms is reviewed and set aside. 3. No order as to costs.
Once a settlement agreement has been concluded pursuant to section 198A(3)(i) of the LRA deeming employees to be indefinite employees of the client, section 198D of the LRA no longer provides jurisdiction for the CCMA to arbitrate ancillary disputes between the parties. Section 198D is concerned with disputes arising from the interpretation or application of sections 198A, 198B and 198C, and is not concerned with the problems of already permanent employees. Once employees are deemed permanent employees of the client, any further disputes must be channeled through the ordinary dispute resolution processes available to employees of that employer. An arbitrator who wrongly assumes jurisdiction over a matter commits a reviewable irregularity.
The court made an obiter observation that although section 198D may well only be fit for declarations, theoretically speaking, a prospective new employer's stated refusal, ahead of time, to provide appropriate 'integration' of new employees into the business by way of uniforms could be raised as a dispute of interpretation and application of section 198A(3)(i) of the LRA. However, such a dispute would need to be raised in the absence of a settlement agreement recording that the employees are now permanent employees of the new employer. The court also noted in passing (citing Passenger Rail Agency of South Africa v CCMA) that section 198D may only be fit for declarations rather than substantive relief, though this was not the basis of the decision.
This case clarifies the scope and limits of section 198D of the LRA, particularly in relation to disputes about temporary employment services. It establishes that section 198D jurisdiction is confined to disputes arising from the interpretation or application of the deeming provisions before or during the transition to permanent employment, and does not extend to ancillary matters affecting employees who have already been deemed permanent employees through settlement. The case emphasizes that once the deeming process under section 198A is complete (whether by arbitration or settlement), employees are fully integrated into the client's workforce and their disputes must be resolved through ordinary employment dispute resolution mechanisms, not through the specialized section 198D process. It reinforces the principle that administrative bodies like the CCMA cannot assume jurisdiction beyond their statutory mandate, and that wrongly assuming jurisdiction is a reviewable irregularity.
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