Research Portal

Faculty of Law | University of the Western Cape

Research Portal

Faculty of Law | University of the Western Cape

LABOUR LAW IN THE FOURTH INDUSTRIAL REVOLUTION

Can a platform be a temporary employment service?

Published: 26 January 2020 | Written by Paul Benjamin

Internationally, more and more workers obtain work through online platforms such as Uber. In general, they are not treated as employees and are excluded from most labour rights.

This blog explores a question which could point towards protection for many such workers: can an online platform which links workers and clients be a temporary employment service (TES, also known as labour broker) for the purposes of labour law?

Section 198 of the LRA defines a TES as an entity which, for reward, procures or provides any person to work for another person (the client) and remunerates them. If the person then works for the client as an “employee” (i.e., under the client’s control) and not as an “independent contractor”, the TES is deemed to be her or his employer.

In recent years, the issue has been a major source of controversy as employers made increasing use of labour brokers as a means of exploitation by employing permanent workers at lower rates.

But the arrangement can also offer some stability and protection for genuinely temporary workers who take on short assignments with different employers from time to time. If it were not for section 198, each temporary employer would have to register the worker with UIF and other funds and calculate their leave pay separately – which, in practice, may not happen.

The classic TES was typified by the Kelly personnel agency. If a business needed a substitute or an extra worker for a short period, HR would phone Kelly and a temp would be provided. Home-based health-care workers who care for the elderly or the seriously ill are another example.

Such workers are generally better served if the agency that supplies them is regarded as their employer. It means that they remain employees of the agency and, when an assignment ends, the agency will find them another placement. The agency is their employer even though the family of the patient may supervise their work.

Thus, the three parties have an ongoing relationship. The TES makes the worker available to the client who pays the TES who in turn pays part of that to the worker.

This is precisely the flow of work and reward that occurs in platform work.

Platforms are broadly defined as online businesses which create value by enabling members of different groups to interact.

Platforms generally adopt the “Uber” model. It means that workers (service providers) and clients (users) are both regarded as users of the platform’s technology. The platform does not consider itself as the workers’ employer; its function is to connect suppliers and users of a service (be it driving a car or cleaning a house).

In South Africa, the broad definition of a TES may cover a platform. A platform will be a TES if the effect of its operation is to “provide or procure” members of one group (placed workers) to do work for members of another group (clients) and the working relationship is factually one of employment. That will be the case if the workers are under the control of the client while working. If these elements are present, and the platform pay the workers, the platform will be a TES and, therefore, the workers’ employer.

Two of the platforms that provide domestic workers in South Africa, Domestly and Sweepsouth, illustrate this issue. Both make workers available to clients through their web-sites, collect payment from the clients and pay the worker in turn. While both seek to avoid labour law coverage, they use different strategies.

Domestly is keenly aware of the possibility of being classified as a TES. This is evident from its web-site. Its standard terms state that it is a “communication platform” linking people offering a service and people wanting that service. It declares that it is not a temporary employment service provider.

But is this legalistic denial consistent with its business model? Domestly security-checks potential workers, sets the price of services, receive payments from clients, take its cut and pays the worker. One of its key selling points is that it takes care of all administration and payments, including UIF, even though the worker is under the client’s supervision.

These activities go beyond being a mere “communication platform”. The key question is whether Domestly’s services amount to “procuring or providing” persons to work for other persons as contemplated by the definition of a TES in the LRA.

Our view is that they do. The terms “procure or provide” are very wide and the web-site clearly does this. Properly constructed, Domestly’s business model is that of a TES.

Sweepsouth, on the other hand, represents its workers as being independent contractors. The question here is whether this is a realistic portrayal of the nature of their work. It is most unlikely that the client will not issue instructions as to how they like their home cleaned. But, if the cleaner is an independent contractor, the client has no right to oversee the manner in which he or she works. As with a plumber or electrician, they can only point out the work to be done (a clean house) and must then leave them to complete that task unsupervised.

Sweepsouth will therefore be a TES if its portrayal of its workers as ‘independent contractors’ does not truly reflect the relationship between its worker users and its client users.

The emergence of platforms has undoubtedly provided benefits to domestic workers and employers. But the insistence of platforms on operating outside labour law leaves their workers less protected than they should be. If platforms were to assume the responsibilities of a TES, this would change. Our next blog will examine what this would mean for workers and what protections it would extend to them.

Paulbenjamin  

About the author: Over the last four decades, Paul Benjamin has combined an engaged practice in labour law with policy-oriented research and legislative drafting. His current research interests include the design of effective regulatory strategies to achieve compliance with the labour standards and the expansion of labour law to cover unprotected forms of work. Read more