Many of our Clients and industries still refer to companies such as ours as ‘labour brokers’, whilst others as TES (Temporary Employment Services).
FYI we deem it important that you understand the difference between the two from a SARS and LRA point of view, the below explains the same in easy terms.
The following refers:
Within the context of the below, of the attached (1st) (SARS) we are not classified as a ‘labour broker’ although there is a commonality in reference in the industry to ‘labour brokers’ (as indicated in ײַyellow below) being TES (Temporary Employment Services).
Ref_ ACT : Income TAX Act 58 of 1962:
Within the definition of TES, the following refers:
TEMPORARY EMPLOYMENT SERVICES AND THE LAW
- Temporary employment services (TES) are ײַcommonly referred to as labour brokers, in South Africa. TES are regulated mainly by the Labour Relations Act 66 of 1995 (LRA) and the Basic Conditions of Employment Act 75 of 1997 (BCEA).
- Amendments to the LRA, which came into effect in January 2015, affect sections 198 and 198A of the act, and brought about changes to the way a relationship between a TES, its employees and its clients is regulated. Some of the amendments and their interpretations have been tested in the courts and the outcomes of the interpretations have significant consequences on employers in South Africa.
WHAT IS A TEMPORARY EMPLOYMENT SERVICE:
- The LRA defines a TES as:
“ … any person who, for reward, procures for or provides to a client other persons who render services to, or perform work for, the client and who are remunerated by the temporary employment service.”
MUST A TES REGISTER:
- A TES must register to conduct business (through the DOL, which we as a fully compliant TES comply with annually), but the fact that it is not registered is not a defense to any claim instituted in terms of section 198A of the LRA, which is discussed below. The effective date of this requirement is yet to be proclaimed
DOES THE LRA DIFFERENTIATE BETWEEN TES EMPLOYEES:
- The LRA contains general provisions that apply to a TES and all of its employees and specific provisions that apply to the TES and its employees earning below the prescribed BCEA threshold. With effect from 1 March 2021, the Minister of Employment and Labour has increased the annual earnings threshold to R211,596.30 per annum. This represents an increase of R6,163 from the previous amount of R205,433.30, which had been in effect since 1 July 2014.
Section 198A of the LRA applies only to employees earning below the threshold. These employees are often considered to be vulnerable employees and are afforded additional protections in terms of section 198A.
WHAT ARE TEMPORARY SERVICES:
- The term “temporary services” is defined in the LRA as:
- Where the employee is a substitute for a temporarily absent employee of another employer (i.e., the client of the TES).
- Where a collective agreement or sectoral determination designated a particular work category as a temporary service or designated the maximum temporary period.