A major Labour Court ruling in Fempower Personnel v CCMA & Others (8 January 2025) has redefined the legal obligations of labour brokers and host employers. This case addresses who ultimately bears employment responsibilities—a question that has long been contested in temporary employment services (TES) arrangements. With growing scrutiny on labour broking, this ruling could have major financial and legal consequences for businesses that rely on outsourced staffing solutions.
The case: who is responsible for temporary workers?
Fempower, a labour broking company, supplied temporary workers to a client company. When disputes arose over dismissal and employment benefits, the workers:
- Filed a claim against both the labour broker and the host employer
- Argued that they were effectively employees of the host employer under Section 198A of the Labour Relations Act (LRA)
- Claimed that their employment rights had been violated
The Labour Court had to determine:
- Is the host employer responsible for labour broker employees after a certain period?
- When does a temporary employee become a permanent employee of the client?
Key takeaways from the ruling
Labour brokers and host employers share liability
The court ruled that:
- If a temporary employee works for more than three months in the same role, they must be treated as a permanent employee of the host company
- Both the labour broker and the host employer can be jointly liable for unfair dismissals and other labour law violations
- Labour brokers cannot use temporary placements to sidestep labour law protections
Risk alert: Companies that regularly renew contracts for the same temp workers must be cautious—those workers may now qualify as permanent employees.
TES arrangements must be reviewed
Employers must not assume that workers provided by a labour broker are exclusively the broker’s responsibility. The ruling confirms that:
- Labour brokers cannot absolve client companies from employment obligations
- Host employers must ensure temporary workers receive fair treatment
- TES agreements must be structured carefully to avoid unexpected liabilities
Implications for employers and labour brokers
This ruling has serious consequences for businesses that frequently use temporary staff:
- Review labour broking contracts to ensure compliance with Section 198A of the LRA
- Monitor contract durations—if a worker stays longer than three months, they may become a permanent employee
- Ensure temp workers receive fair pay and benefits to avoid unfair dismissal claims
Failure to comply could result in joint liability for unfair dismissals, wage disputes, and other legal challenges.
Final thoughts: labour broking just became riskier
The Fempower ruling is a major turning point—labour broking is no longer a legal loophole to avoid employer responsibilities. Companies must urgently review their TES contracts to ensure they are not exposed to unexpected legal risks. Need guidance on labour broking compliance? (SA)UEO and its organisers are here to help.