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Labour Library/Industrial Law Journal/Articles and Notes/Chronological listing/2008/Contract as a Barrier to 'Dismissal': The Plight of the Labour Broker's Employee
(2008) 29 ILJ 813

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Contract as a Barrier to 'Dismissal': The Plight of the Labour Broker's Employee (2008) 29 ILJ 813
2008 ILJ p813
CRAIG BOSCH*

Introduction
The relationship between the common law and labour legislation when it comes to the termination of employment has generated a great deal of
debate and significant jurisprudence in recent years. 1 The common law may be relied on to the extent that it has not been extinguished by
statute even if statutory remedies exist for the relevant complaint. And, in many instances, the common law informs labour legislation. 2
However, no matter which source of law is relied upon all are informed by, and must comply with, the Constitution. The purpose of this article is
to examine cases dealing with claims for unfair dismissal brought by employees of temporary employment services

2008 ILJ p814

3
(TESs) under the Labour Relations Act (LRA). More particularly, it will assess those cases where the contract of employment contains a clause
to the effect that the contract will come to an end if the client of the TES, for whatever reason, no longer requires the services of the
employee. The issues thrown up in those cases are important given that they highlight the often difficult interplay between the common law and
labour legislation, between freedom and sanctity of contract and the proper protection and realization of employees' rights, and between an
employer's legitimate regulation of its human resources and the prevention of employee exploitation.
A useful example is supplied by the decision of the Commission for Conciliation, Mediation & Arbitration (CCMA) in April and Workforce Group
Holdings (Pty) Ltd t/a The Workforce Group. 4 In that case the applicant was employed by a TES in terms of a 'limited duration contract'. The
contract was to endure for six months, but would terminate earlier should 'the client, for any reason whatsoever, advise the employer that it no
longer wished to make use of the employee's services'. The contract had been explained to the applicant when she commenced her employment
and she had been given an opportunity to ask questions regarding the contract prior to signing it. After about five months the client informed
the respondent that it no longer wanted to make use of the applicant's services. The applicant was then informed that her contract was
terminated. She went to the CCMA claiming that she had been unfairly dismissed. Her application was unsuccessful because the commissioner
found that she had failed to establish that she had been 'dismissed' for the purposes of s 186 of the LRA. Quite remarkably, despite dealing,
inter alia, with the issue whether the relevant contractual terms were contrary to public policy, he made his determination without any
reference to the role and impact of the Constitution.
While the TES is clearly in law 5 the employer of the workers it supplies to its client, in fact the client is the dominant party in the work
relationship. 6 The client will, via its commercial relationship with the TES, determine what the worker gets paid as well as the

2008 ILJ p815

nature of the work that will be performed and the manner in which it will be performed. The client may also be responsible for the supervision of
the worker at the workplace, although certain TESs also supply supervisory personnel to manage their employees at the client's workplace.
While the client is often effectively, but for s 198 of the LRA, an employer of the worker supplied by the TES, it bears little responsibility
towards that worker. The TES and the client are jointly and severally liable for contraventions of collective agreements and arbitration awards
regulating terms and conditions of employment, the Basic Conditions of Employment Act (BCEA) 7 and determinations made in terms of the Wage
Act. 8 There is no joint and several liability for unfair dismissal, which is one of the main reasons it is attractive for a client to use workers
supplied by a TES. 9
Clauses such as that in April have the effect that neither the TES nor the client is responsible where the employee's contract of employment is
terminated. It has been accepted that they are resolutive conditions, freely agreed to, and when triggered by a specified event cause the
contract to end. 1 0 There is thus no termination of the contract by the employer TES. It is submitted, however, that in many cases, April
included, the contract is terminated in circumstances that to all intents and purposes amount to a dismissal and should be regarded as such.
The relevant arguments will be set out in more detail below and will be advanced along two lines. Firstly, it will be argued that contractual
clauses such as that in April are invalid because they are contrary to public policy. Related to that is a discussion of whether the CCMA has the
power to declare offensive contractual terms invalid. Secondly, and more particular to the labour law sphere, it will be argued that such clauses
can be disregarded to the extent that they do not reflect the realities of the situation. That is, the fact that a clause indicates that the
termination of a contract of employment is facilitated by a resolutive condition is not, in our labour law, decisive of whether the termination
constitutes a 'dismissal' for the purposes of the LRA.
The nature of the relationship between TESs and their employees when the employees do not work for the TES gives rise to some interesting
questions that relate to whether an employee has been dismissed. This article will conclude with an analysis of the status of workers vis­à­vis
the TES once their services are no longer required by a TES's client.

2008 ILJ p816

Part 1: The Case for Invalidity

1 The relevant law

It is trite law that our law of contract is underpinned by the recognition of the freedom of individuals to enter into contracts (freedom to
contract) and that they must bear the responsibility for the consequences of their actions (pacta sunt servanda). 1 1 Public policy, it has been
said, requires that contracts that have been freely concluded must be enforced, even if that means harsh consequences for one of the
contracting parties. 1 2 However, the courts have also recognized that extreme unfairness or other policy considerations might mean that an
agreement is found to be contrary to public policy and thus unenforceable.
13
In a constitutional dispensation the Constitution is the touchstone in determining public policy. It has been noted that ­
'[t]he common law supplements the provisions of the written Constitution but derives its force from it. It must be developed to fulfil the purposes of the Constitution
and the legal order that it proclaims ­ thus, the command that law be developed and interpreted by the courts to promote the ''spirit, purport and objects of the
Bill of Rights'. This ensures that the common law will evolve within the framework of the Constitution consistently with the basic norms of the legal order that it
establishes. There is, however, only one system of law and within that system the Constitution is the supreme law with which all other law must comply'. 1 4

The courts and tribunals must therefore develop the common­law notion of public policy to conform to constitutional dictates: '[W]here the
common law deviates from the spirit, purport and objects of the Bill of Rights the courts have an obligation to develop it by removing that
deviation.' 1 5 That is a duty, not a discretion. The common law might be developed by being adapted where it is inconsistent with the
Constitution
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2008 ILJ p817
 establishes. There is, however, only one system of law and within that system the Constitution is the supreme law with which all other law must comply'. 1 4

The courts and tribunals must therefore develop the common­law notion of public policy to conform to constitutional dictates: '[W]here the
common law deviates from the spirit, purport and objects of the Bill of Rights the courts have an obligation to develop it by removing that
deviation.' 1 5 That is a duty, not a discretion. The common law might be developed by being adapted where it is inconsistent with the
Constitution or, if it is not inconsistent with the Constitution, falls 'short of its spirit, purport and objects. Then, the common law must

2008 ILJ p817

16
be adapted so that it grows in harmony with the ''objective normative value system' found in the Constitution'.
In recent decisions the Supreme Court of Appeal (SCA) has acknowledged that 'public policy in its modern guise is now rooted in our
Constitution and the fundamental values it enshrines' and that ­
'[i]t is not difficult to envisage situations in which contracts that offend these fundamentals of our new social compact will be struck down as offensive to public
policy. They will be struck down because the Constitution requires it, and the values it enshrines will guide the courts in doing so. The decisions of this Court that
proclaim that the limits of contractual sanctity lie at the borders of public policy will therefore receive enhanced force and clarity in the light of the Constitution
and the values embodied in the Bill of Rights'. 1 7

However, the court has also demonstrated a marked reticence to interfere in contracts because of the demands of a public policy infused with
constitutional values. It has stated that ­
'the Constitution prizes dignity and autonomy, and in appropriate circumstances these standards find expression in the liberty to regulate one's life by freely
engaged contractual arrangements. Their importance should not be under­estimated.
... [T]he Constitution requires us to employ its values to achieve a balance that strikes down unacceptable excesses of ''freedom of contract', while seeking to
permit individuals the dignity and autonomy of regulating their lives. This is not an implausible contractual nirvana. It is to respect the complexity of the value
system the Constitution creates. It is also to recognise that intruding on apparently voluntarily concluded arrangements is a step that judges should countenance
with care, particularly when it requires them to impose their individual conceptions of fairness and justice on parties' individual arrangements'. 1 8

And ­
'the Constitutional values of dignity and equality and freedom require that the courts approach their task of striking down contracts or declining to enforce them with
perceptive restraint. One of the reasons ... is that contractual autonomy is part of freedom. Shorn of its obscene excesses, contractual autonomy informs also
the constitutional value of dignity.... The Constitution requires that its values be employed to achieve a careful balance between the unacceptable excesses of

2008 ILJ p818

contractual ''freedom', and securing a framework within which the ability to contract enhances rather than diminishes our self­respect and dignity'. 1 9

The approach of the SCA to developing the common law of contract in the light of the Bill of Rights has been roundly criticized. Those criticisms
related primarily to the court's apparent elevation of the freedom of contract to the level of a constitutional value 2 0 either as part of the value
of freedom or of dignity and the court's refusal to recognize that 'abstract ideas' like good faith, reasonableness, fairness and justice could be
used as an independent basis to set aside or refuse to enforce contracts. 2 1 However, the view adopted by the SCA has to some extent 2 2
been upheld by a recent decision of the Constitutional Court (CC).
In Barkhuizen v Napier2 3 the CC pronounced on the approach to be adopted when determining constitutional challenges to contractual terms.
The court was asked to decide whether a clause in an insurance contract which stated that 'if we reject liability for any claim made under this
Policy we will be released from liability unless summons is served ... within 90 days of repudiation' was contrary to public policy. It was held that
contested contractual terms should not be evaluated against a particular constitutional right directly. Rather, they should be assessed through
the filter of the common law and a determination made of whether they are contrary to public policy as informed by constitutional values. 2 4 In
the court's view ­
'[t]his approach leaves space for the doctrine of pacta sunt servanda to operate, but at the same time allows courts to decline to enforce contractual terms that are
in conflict with the constitutional values even though the parties may have consented to them'. 2 5

Apart from the relatively clear directives as to the content of public policy contained in the provisions of the Constitution, the court noted that
­

2008 ILJ p819

'[n]otions of fairness, justice and equity, and reasonableness cannot be separated from public policy. Public policy takes into account the necessity to do simple
justice between individuals. Public policy is informed by the concept of ubuntu'. 2 6

In determining fairness there are two questions to be asked. First, was the clause reasonable? That involves weighing up competing
constitutional values. On the one hand are freedom and dignity that find expression in the pacta sunt servanda rule. It was said that '[s]elf­
autonomy, or the ability to regulate one's own affairs, even to one's own detriment, is the very essence of freedom and a vital part of dignity'.
However, '[t]he extent to which the contract was freely and voluntarily concluded is clearly a vital factor as it will determine the weight that
should be afforded to the values of freedom and dignity'. 2 7 On the other hand, consideration must be given to the constitutional right that has
been infringed or limited by the contested clause.
The second question relates to whether, if the clause is reasonable, it should be enforced in the light of the circumstances that prevented
compliance with it. I would suggest that this enquiry is not relevant in the present context given that we are not considering whether a clause
should have been enforced given a party's ability to comply with it or not and I will not discuss it further.
As far as the first enquiry is concerned the court noted that ­
'it must be directed at the objective terms of the contract. If it is found that the objective terms are not inconsistent with public policy on their face, the further
question will then arise which is whether the terms are contrary to public policy in the light of the relative situation of the contracting parties. In Afrox, the
Supreme Court of Appeal recognised that unequal bargaining power is indeed a factor which together with other factors, plays a role in the consideration of
public policy. This is a recognition of the potential injustice that may be caused by inequality of bargaining power. Although the court found ultimately that on the
facts there was no evidence of an inequality of bargaining power, this does not detract from the principle enunciated in that case, namely, that the relative
situation of the contracting parties is a relevant consideration in determining whether a contractual term is contrary to public policy. I endorse this principle. This
is an important principle in a society as unequal as ours [references omitted]'. 2 8

The decisions of the SCA and the CC referred to above make it clear that deciding whether contractual clauses are contrary to public policy
must be done on a case­by­case basis in the light of the evidence presented in each case. While that may sound trite, the appellants in the
aforementioned cases were in large part unsuccessful because they did not adduce the necessary evidence to demonstrate that the contracts
they had concluded were in fact, as opposed to in principle, contrary to public policy. That brings us to the question of whether

2008 ILJ p820

clauses such as that in April are invalid and unenforceable. That, in turn, necessitates an examination of the factors that might be taken into
account in determining whether such clauses are contrary to public policy.

2 Applying the law

(a) Limiting reliance on a statutory and a fundamental right
An important factor in April was that the resolutive condition had the effect that the employee was prevented from enforcing a statutory right
to claim unfair dismissal in terms of the LRA. 2 9 That also entailed a limitation of the constitutional right to fair labour practices to which the LRA
seeks to give effect and of which the right not to be unfairly dismissed is an important part. 3 0
In April, the commissioner stated that:
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'[A]lthough it is generally accepted that one cannot contract out of the LRA ... [the resolutive condition], despite exploiting loopholes and grey areas in the Act, does
not appear to be in direct contravention of any specific provision in the LRA. Nor does it specifically exclude or contract out of any provisions of the LRA. One
 An important factor in April was that the resolutive condition had the effect that the employee was prevented from enforcing a statutory right
to claim unfair dismissal in terms of the LRA. 2 9 That also entailed a limitation of the constitutional right to fair labour practices to which the LRA
seeks to give effect and of which the right not to be unfairly dismissed is an important part. 3 0
In April, the commissioner stated that:
'[A]lthough it is generally accepted that one cannot contract out of the LRA ... [the resolutive condition], despite exploiting loopholes and grey areas in the Act, does
not appear to be in direct contravention of any specific provision in the LRA. Nor does it specifically exclude or contract out of any provisions of the LRA. One
must in any event be very careful before making any finding that a transaction or agreement is invalid on the mere basis that it is circumventing legislation,
because not every contractual provision which has the effect of circumventing legislation is necessarily invalid.'

It is submitted that it is of no consequence that the contract did not directly contravene, or expressly exclude the application of, the LRA to
the parties' relationship, although that would have made it easier to find that the clause was invalid. What is important is that the effect, the
substance, of the clause was to limit the rights conferred on the applicant by the LRA and the Constitution. It is submitted that the effect of
the relevant clause was the same as if it had specifically stated that 'the parties agree that the provisions of the Labour Relations Act
regulating the fairness of dismissals will not apply if the client no longer wants to utilize the services of the employee'. And if the parties were
not expressly contracting out of the coverage of the LRA the employee was indirectly waiving the protection of the LRA and agreeing to the
limitation of her right to fair labour practices. 3 1
It is debatable whether and when parties to the employment relationship may contract out of the provisions of labour legislation given that the
primary function of that legislation is to provide protection to

2008 ILJ p821

employees in the context of a relationship where there is a power imbalance. The Appellate Division (AD) has noted that it is ­
'a well­established principle of our law that a statutory provision enacted for the special benefit of any individual or body may be waived by that individual or body,
provided that no public interests are involved. It makes no difference that the provision is couched in peremptory terms'. 3 2

However, the SCA has stated that:

'An agreement whereby a party purports to waive the benefits conferred upon him or her by statute will be contra bonos mores, and therefore not enforceable, if it
can be shown that such agreement would deprive the party of protection which the Legislature considered should, as a matter of policy, be afforded by law.' 3 3

The courts have generally taken a rather dim view of clauses, such as that in April I would suggest, that seek to restrict or prevent a person
from vindicating his or her existing rights. 3 4 With reference to labour legislation the Labour Court (LC) 3 5 has stated that ­
'[p]ublic policy norms governing an employment relationship, which cannot be excluded by contract, include provisions that prescribe minimum terms and conditions
of employment and the protection against unfair discrimination, dismissal and labour practices'. 3 6

It has also been said that 'South African employers cannot contract out of [labour legislation] unless the statute allows it'. 3 7 The court will
thus take a dim view of attempts to contract out of the LRA with individual employees. 3 8 The position would be different if the contracting out
was by way of a collective agreement or expressly legislatively endorsed. For example, s 197 of the LRA provides that where a business is
transferred from one employer to another as a going concern various consequences follow, including the automatic transfer of contracts of
employment from the old employer (r) to the new employer (e). The parties are granted permission to vary those consequences, but only by
way of an agreement concluded in terms of s 197(6). In addition, s 64 of the LRA provides that the procedural requirements for a protected
strike may be varied by collective agreement and the right to strike can be limited by collective agreement in terms of s 65(1)(a). Those
provisions, and others like them, indicate that employers and individual employee parties may not contract out of the protections against unfair
dismissal. In addition,

2008 ILJ p822

the protections in the LRA against unfair dismissal are relatively fundamental (giving effect to the right to fair labour practices and South
Africa's obligations as a member state of the International Labour Organization (ILO)) and in the broader public interest. 3 9 They are thus surely
protections that should, as a matter of policy, be afforded to all employees. Depriving them of that protection is apparently contrary to public
policy.
As pointed out above, contracting out of the protection against unfair dismissal amounts to contracting out of the right to fair labour practices.
It is debatable to what extent fundamental rights may be excluded or limited by contract. The decision of the CC in Barkhuizen v Napier4 0 made
it plain that such is permissible and the extent to which it is permissible depends on the circumstances of the particular case. Naturally, in every
case the nature of the constitutional right and extent of the waiver must be taken into account. 4 1
In the circumstances in Barkhuizen v Napier Ngcobo J noted that ­
'the Constitution recognises that the right to seek judicial redress may be limited in certain circumstances where this is sanctioned by a law of general application in
the first place, and where the limitation is reasonable and justifiable in the second. The Constitution thus recognises that there may be circumstances when it
would be reasonable to limit the right to seek judicial redress. This too reflects public policy'. 4 2

Thus, an important part of the enquiry into whether clauses such as that in April are contrary to public policy is to examine whether the
relevant limitation is reasonable and justifiable. That must be done with reference to the objective they seek to achieve. It is to that discussion
that we now turn.
(b) The objective sought to be achieved
Our courts have generally made it clear that they will not enforce agreements where the objective the agreement seeks to achieve is contrary
to public policy. 4 3 In cases involving contractual clauses that

2008 ILJ p823

limit rights, the party seeking to rely on the contract must demonstrate a justifiable reason for the clause. That is classically the situation with
restraint of trade clauses. In order to persuade a court to uphold, and permit reliance on, a restraint of trade clause the former employer must
be able to demonstrate, inter alia, that the restraint of trade clause protects some legally recognizable interest. 4 4 Similarly, it is submitted,
that where there is a clause such as that in April in a contract of employment it would have to be shown that the clause seeks to protect some
interest that is worthy of protection, ie that the employee's rights are limited in the course of the employer realizing some legitimate, probably
operational, objective that is of sufficient significance to justify the limitation. 4 5 It would also probably have to be demonstrated that there is
no other, less restrictive, means of achieving the relevant objective. A central consideration in this context is that the right to fair labour
practices seeks to ensure a proper balance between the interests of employers and employees. 4 6 Thus it might be suggested that it is unfair to
require a TES to go through a retrenchment process in terms of s 189 of the LRA and possibly pay severance pay every time there is no longer
any work for an employee with a client, even though the employee works for the TES on an ongoing basis.
That was the view adopted by the arbitrator in Mavata v Afrox Home Health Care. 4 7 In that case the applicant was one of a group of workers
who could be selected from a list to work on a particular assignment. The assignments involved providing nursing care at the homes of patients
until there was no longer a need for such care. The contract between the applicant and the employer provided that:
'The Home Nurse accepts that employment opportunities are entirely dependent upon the requirements of the Client and that there is no guarantee or undertaking
from Afrox Home Healthcare as to specific employment.'

A representative of the patient had requested that the applicant be removed because she had been sleeping on duty and was suspected of
unnecessarily administering medication to the patient. It was common cause that the employee had not been permitted any opportunity to
respond to the allegations against her, nor did the employer rely on any evidence against her other than the hearsay evidence provided by

2008 ILJ p824

48
the client. However, the commissioner 'upheld the termination of the services of the employee'. He found that:
'There is nothing inherently unfair or contra bonos mores about such an arrangement. It is quite apparent that given the unpredictable nature of a patient's
requirements, it could hardly be otherwise. Both the operational requirements of the employer and the operation of the contract in practice demonstrate that a
nurse had no entitlement to future employment beyond the day currently being worked by her.
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The contract does not operate as an unconscionable device to escape legal regulation of a nurse's employment. Indeed, were it not possible for the parties to
contract on this basis, there would in all probability be no prospect of any employment for the nurses employed on a temporary basis by the employer.' 4 9
 2008 ILJ p824
48
the client. However, the commissioner 'upheld the termination of the services of the employee'. He found that:
'There is nothing inherently unfair or contra bonos mores about such an arrangement. It is quite apparent that given the unpredictable nature of a patient's
requirements, it could hardly be otherwise. Both the operational requirements of the employer and the operation of the contract in practice demonstrate that a
nurse had no entitlement to future employment beyond the day currently being worked by her.
The contract does not operate as an unconscionable device to escape legal regulation of a nurse's employment. Indeed, were it not possible for the parties to
contract on this basis, there would in all probability be no prospect of any employment for the nurses employed on a temporary basis by the employer.' 4 9

It is not clear that it is operationally necessary for a TES to have a clause in the contract linking employment with the TES to the time a worker
spends with a client. If the nature of the circumstances is such that the work with the client will in all likelihood only endure for a certain period,
and that that is the only work the TES has for the worker, a fixed­term contract might be appropriate. Such contracts would indicate that the
period of employment with the TES will endure until a specified date. Clauses linking employment with the TES to an indeterminate period spent
working at a particular client appear more difficult to justify on operational grounds given that the period of engagement with the client (and the
TES) is from the outset open­ended. In order to provide an operational basis for them it would have to be shown that it was reasonably certain
that there would be no alternative employment for the employee once her sojourn with the particular client had come to an end. Thus, when
the employee was no longer needed by the client it would be fairer to employers to have the contract terminate by the resolutive condition
instead of the parties having to go through a retrenchment process and pay severance and notice pay. It should be borne in mind, however,
that compliance with the requirements of s 189 is not necessarily onerous and much will depend on the circumstances of the particular case. 5 0
In my view, the objective of clauses such as that in April is often nothing more than to permit the TES and its client to utilize the services of an
employee without having to assume any responsibility

2008 ILJ p825

for the dismissal of that employee. If there is no dismissal there would be no need for an investigation 5 1 into the fairness of the reasons for the
client's dissatisfaction with the employee. Nor would the TES have to demonstrate that the services of the employee are coming to an end due
to one of the acceptable reasons for termination identified in the LRA, ie the employee's misconduct, incapacity or the employer's operational
requirements. If these are the objectives sought to be achieved by clauses such as that in April it is difficult to see on what basis they can be
upheld. 5 2 The clear intention of the LRA is that employment may only be terminated for one of the aforementioned three reasons and such
terminations must meet the requirements of substantive and procedural fairness set out in the LRA. It is also not clear why the TES's and its
client's desire to be relieved of the administrative burden and potential claims arising from the provisions of the LRA dealing with dismissal should
outweigh the employee's right to fair treatment when employment is terminated based on misconduct, incapacity and operational requirements.
It is worth noting that the ILO recently adopted an Employment Relationship Recommendation. 5 3 Its preamble reflects that it aims to address,
inter alia, bringing clarity regarding which workers are employees, situations where contractual relationships have the effect of depriving workers
of the protections they are due and ensuring that protection is available to vulnerable workers. National policy formulated to give effect to the
recommendation is required 'at least' to include measures to:
'(b) combat disguised employment relationships in the context of, for example, other relationships that may include the use of other forms of contractual
arrangements that hide the true legal status, noting that a disguised employment relationship occurs when the employer treats an individual as other than
an employee in a manner that hides his or her true legal status as an employee, and that situations can arise where contractual arrangements have the
effect of depriving workers of the protection they are due;
(c) ensure standards applicable to all forms of contractual arrangements, including those involving multiple parties, so that employed workers have the
protection they are due;
(d) ensure that standards applicable to all forms of contractual arrangements establish who is responsible for the protection contained therein; ...' 5 4

2008 ILJ p826

While the context is different, the clear concern is to prevent reliance on devices that preclude employees from accessing protections that are
otherwise available to them. 5 5 It would thus be in keeping with the sentiments expressed in the recommendation to refuse to give effect to a
contractual arrangement that deprived those employees of the protection against unfair dismissal they are due. It is also worth recalling that
the jurisprudence emerging from the ILO informs our public policy in the sense that it informs the contents of the fundamental rights contained
in the Constitution. 5 6 The desire to avoid employers using devices whose objective is to deprive employees of the protection of labour
legislation is evident in the cases referred to in part 2 of this article. It is also reflected in s 200A of the LRA, s 83A of the BCEA 5 7 and the
recently promulgated Code of Good Practice: Who is an Employee. 5 8
(c) The position of the employee vis­à­vis the employer and the employee's position in society
In Barkhuizen v Napier the CC made repeated reference to the importance of the relative situations of the parties to a contract and the
injustice that might result from unequal bargaining positions. 5 9 Even prior to the advent of the Constitution the courts were prepared to accept
that inequality of bargaining power was relevant to whether they would enforce certain contractual terms. So, for example, when dealing with
the enforceability of a restraint of trade clause the then AD, in Basson v Chilwan & others, 6 0 stated that:
'Where parties to an agreement in restraint of trade contract on a basis of equality of bargaining power, without one party being inhibited by what might be regarded
as a position of inferiority as against the other party, Courts, it has been held, will be less inclined to find that a clause, which may be considered to work
unreasonably inter partes, is contrary to public policy and therefore unenforceable, than in the case where one of the parties may well be considered to have

2008 ILJ p827

contracted from a position of inferiority. Contracts between an employer and an employee may often fall into this latter category.'

The court did not accept that employees always bargain from a position of inferiority and it is now clear that each case must be dealt with on
its own facts and the applicant must adduce evidence that she was in fact 6 1 in a weaker bargaining position when this is raised as an
indication that a clause is contrary to public policy. I would suggest that an inarticulate premise of the decisions is that the courts are
concerned to protect people that are vulnerable to the other contracting party and thus open to abuse or exploitation. That is something, it
has been suggested, that the right to fair labour practices entrenches. 6 2 The vulnerability of an employee when contracting with the employer
must be held to be particularly significant when assessing the enforceability of clauses such as that in April.
Of course there may be cases where the employer and employee determine the terms of the employment relationship on an equal footing.
However, it is not controversial to suggest that most employees are in an inferior or unequal bargaining position vis­à­vis their employers. One of
the primary functions of our array of labour statutes is to provide a framework for the protection of employees against exploitation by their
employers by seeking to ensure that certain basic rights and standards are respected. The Code of Good Practice: Who is an Employee
apparently accepts that all employees are in an unequal bargaining position in relation to their employers. 6 3 In addition, it states that ­
'our courts have frequently noted that the inequality of bargaining power within an employment relationship may lead employees to agree to contractual provisions
that do not accord with the realities of the relationship. This is particularly important in the case of low paid workers who may have agreed to be classified as
independent contractors because of a lack of bargaining power'.

The latter sentiment finds resonance in the case of April where the employee was a checker in a supermarket. It can probably safely be said
that the applicant in that case, like many employees of TESs, was somebody who was not highly skilled. There was thus, in all likelihood, a
great deal of competition for the positions the TES could offer and those who were in them were fairly easily replaced. That made the
applicant's security of employment more tenuous and entailed that she was in a far weaker bargaining position than a highly skilled employee
with scarce qualifications, experience and abilities would have been. Despite the contract having been explained to her

2008 ILJ p828

by the respondent, the applicant was unfamiliar with, and unable to access proper advice on, the legal consequences of the contract. It is in
any event highly unlikely that the contents of the contract mattered much to a low­skilled employee seeking employment in a country with
remarkably high levels of unemployment when she was faced with the prospect of employment. In the circumstances of the April case the
applicant was in an inferior bargaining position to the employer which should have been taken into consideration in determining whether the
clause in question was contrary to public policy.
Obviously, contracts will not be invalidated on the basis that they are contrary to public policy every time there is a difference in the bargaining
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power between contracting parties. 6 4 In the commercial context, for example, a seller is in a 'stronger' bargaining position because it supplies a
product that is in great demand or is the only supplier of a particular product or service. The advantage that gives a contracting party is not
 any event highly unlikely that the contents of the contract mattered much to a low­skilled employee seeking employment in a country with
remarkably high levels of unemployment when she was faced with the prospect of employment. In the circumstances of the April case the
applicant was in an inferior bargaining position to the employer which should have been taken into consideration in determining whether the
clause in question was contrary to public policy.
Obviously, contracts will not be invalidated on the basis that they are contrary to public policy every time there is a difference in the bargaining
power between contracting parties. 6 4 In the commercial context, for example, a seller is in a 'stronger' bargaining position because it supplies a
product that is in great demand or is the only supplier of a particular product or service. The advantage that gives a contracting party is not
frowned upon, in fact businesses are encouraged to seek some competitive advantage and there is generally no objection when they exploit
that to their financial benefit.
However, while the employment contract is on the face of it commercial in that it regulates the provision of labour in exchange for remuneration,
its significance extends beyond a cold business deal and operates in a particular and different context. It has been recognized that employees'
interests in employment extend beyond the remuneration and benefits they receive from their employer. Employment confers a sense of
contributing to society, a sense of self­worth, purpose and emotional well­being. 6 5 If that is so, the value of the job to the employee increases
and there is a concomitant increase in the power of the employer. In addition, employment is characterized by subordination. Whether a person
works subject to the control of another has long been seen as an indicator of the existence of an employment relationship. It is because of the
generally subordinate and vulnerable position of employees that countries have seen fit to introduce labour legislation. The exploitation of an
employee's inferior bargaining position is something that has been frowned upon and remedied rather than encouraged or rewarded. And, finally,
there is a right to fair labour practice that applies to employment contracts that does not apply in standard commercial relationships and is
directed,

2008 ILJ p829

inter alia, at protecting workers in vulnerable positions. 66 That requires that courts and tribunals should be amenable to doing the same.
Bhana & Pieterse have pointed out that the ­
'classical model of contract envisages consensus on the basis of theoretical arm's length negotiations in trade and industry between parties of roughly equal
standing. In the South African context, this model of contract has become generic in the sense that it is applied indiscriminately, outside of its theoretical context
and irrespective of the prevalent disparities in resources'. 6 7

They further note that in ­

'the classical South African situation, consensus is rarely the end­product of negotiations between parties of more or less equal standing as postulated by classical
liberal theory. Prospective contracting parties often face a stark choice between agreeing to contractual terms as presented or not contracting at all. Terms are
therefore generally imposed upon certain parties (such as employees and consumers) rather than negotiated. This is most often the direct result of an inequality
of bargaining power between the parties and the absence of any real freedom of choice or negotiation when contracting'. 6 8

The result is that the principle of freedom of contract may facilitate abuse of power and social inequality. The authors make various useful
suggestions as to how the law of contract might be developed in order to develop what they call a concept of 'substantive consensus'. 6 9 What
is significant for present purposes, however, is that unequal bargaining power, in the circumstances of a particular case, may be an important
indicator that a provision in an employment contract ought to be regarded contrary to public policy.

3 Does the CCMA have the power to declare contractual terms invalid?
In April the commissioner found that a CCMA commissioner would be acting ultra vires if he found that a clause in a contract is invalid. 7 0 This
was because s 77(3) of the BCEA gives the LC concurrent jurisdiction with the High Court to deal with matters concerning contracts of
employment. That indicates that matters concerning contracts of employment are reserved for the labour or high courts. In addition, the CCMA
does not have any inherent power, nor does the LRA give it the power to deal with such matters.
There is merit in this view. 7 1 However, commissioners clearly have jurisdiction to determine whether an employee has been dismissed for the
purposes of s 186(1). Part of that enquiry might involve determining whether a contractual clause is valid. The employer's defence to

2008 ILJ p830

the unfair dismissal claim in April was that there was no dismissal because of the resolutive condition. I would suggest that in order to determine
whether there was a 'dismissal' the commissioner was required to determine whether that clause prevented a finding that the employee was
'dismissed'. Central to that enquiry was a determination whether the clause was valid.
Similarly, employers might claim that the employee has signed an agreement to the effect that the employment relationship has come to an end
or that the employee accepts a sum of money 'in full and final settlement' of all claims arising out of the employment relationship and can
therefore not claim anything from the CCMA. It is surely within the commissioner's jurisdiction to determine whether those agreements are valid.
In the case of the former agreement there is arguably no 'dismissal', and in the latter case there is no longer a 'dispute' between the parties
that can be subjected to conciliation or arbitration. But the LRA requires that the commissioner determine the existence of such things in the
course of CCMA proceedings. It is also worth noting that commissioners of the CCMA have had no difficulty in finding that a worker is not an
'employee' because the contract that she signed was illegal and thus void. 7 2 If commissioners feel they have the power to pronounce on the
validity of such agreements in that context then surely the same should apply in cases such as April's ?
It might be suggested that the CCMA may determine whether there is a valid contract between the parties in the sense that it may enquire into
whether the requirements for the formation of a valid contract have been met such as a proper offer and acceptance etc, but not into whether
a clause which has properly been consented to is contrary to public policy and thus invalid. However, such a distinction is arbitrary. And it also
ignores the fact that if one accepts that the LC has exclusive jurisdiction to deal with whether a contract is contrary to public policy due to s
77(3) so too must it have exclusive jurisdiction to deal with whether a contract was validly concluded as this is also a matter concerning a
contract of employment for the purposes of that subsection. In addition, determining whether a contract has been properly formed necessarily
entails an enquiry into whether its contents are legal. An agreement can, in principle, not be regarded as a contract if its contents are illegal.
An agreement might be illegal if it is contrary to the common law, which is to a large extent shaped by public policy. 7 3

2008 ILJ p831

Finally, I would suggest that a commissioner's power to decide on the validity of clauses in contracts might be derived from the opening
provisions of the LRA. Section 3 compels any person applying the LRA to interpret its provisions so as to give effect to its primary object and in
compliance with the Constitution. One of the primary objects of the LRA is to give effect to the rights contained in s 23 of the Constitution. 7 4
It is suggested that giving effect to the right to fair labour practices might require a commissioner to refuse to give effect to a resolutive
condition if it is found to be contrary to the aforementioned constitutional right. This is particularly important in the context of unfair dismissal
given that the right not to be unfairly dismissed is 'essential to the constitutional right to fair labour practices'. 7 5

4 The effect of s 186(1)(b)

76
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should have been given to the effect of s 186(1)(b) of the LRA. According to that provision, an employee has been 'dismissed' when the fixed­
 4 The effect of s 186(1)(b)
It might be argued that the resolutive condition in April effectively made the contract a fixed­term contract. 7 6 If that is so, consideration
should have been given to the effect of s 186(1)(b) of the LRA. According to that provision, an employee has been 'dismissed' when the fixed­
term contract in terms of which he was employed comes to an end and he reasonably expected the employer to renew the contract on the
same or similar terms, but the employer does not renew the contract, or renews it but on less favourable terms. There is no reason why the
employee in April could not have argued that she reasonably expected the fixed­term contract to be renewed. Whether such an expectation
existed would have been an objective test and would have depended on the circumstances of that case. There would, of course, only be a
need to resort to s 186(1)(b) if the resolutive condition was found to be valid.

Part 2: The Case for Substance Over Form

It is a fundamental principle that, in the interests of giving effect to the purpose of the LRA and the Constitution, those involved in interpreting
and applying the LRA should have regard to substance and not form. This has been evident in judgments in various contexts. 7 7 For example,
the Constitutional Court has stated that in determining whether a business is transferred as a going concern for the purposes of s 197 regard
must be had to the substance and not the form of the

2008 ILJ p832

transaction. What is important is that the effect of the transferring transaction is to shift the business to the new employer so that after the
transfer the business is the same but in different hands. 7 8
In SA Mutual Life Assurance Society v Insurance & Banking Staff Association & others7 9 an employer had retrenched employees in the course of
allegedly restructuring its business. The Labour Appeal Court (LAC) held that when ­
'the evidence is evaluated holistically, a clear picture emerges of [the employer] being dissatisfied with the performance of certain members within the department,
and choosing not to initiate proper disciplinary enquiries in relation to performance and incapacity. Rather [the employer] sought to restructure the department
as a means of dismissing those employees with whom it was dissatisfied ...'. 8 0

The courts will thus have regard to the real reason for a dismissal in determining its fairness rather than the reason proffered by the employer.
81

One of the areas where the desire to give effect to the realities of a situation rather than its formal appearance has manifested strongly is in
determining whether a worker is an 'employee' for the purposes of the LRA. In Denel (Pty) Ltd v Gerber the respondent established a company
(Multicare) that contracted with Denel to provide certain services. The respondent provided the relevant services on behalf of Multicare. When
Denel terminated the contract with Multicare the respondent had claimed that she was unfairly dismissed. Denel argued that the respondent
could not claim to have been unfairly dismissed because she was not its employee. In the course of its judgment the LAC considered whether
the parol evidence rule precluded it from considering evidence other than the terms of the agreement between the parties in coming to its
decision on the respondent's employment status. In concluding that the rule did not prevent the court from having regard to such evidence the
court remarked that:
'[N]ot to allow such evidence may lead to the decision of the court being based on form rather than substance ­ something that for decades the courts not only in
this country but in many other jurisdictions as well have striven to avoid. In fact this court has previously approved a statement by the old Labour Appeal Court
to the effect that the parties' own perception of their relationship and the manner in

2008 ILJ p833

which the contract is carried out in practice may, in areas not covered by the strict terms of the contract, assist in determining the
relationship.' 8 2
In addition:
'Irrespective of, and quite apart from, what has been said above, it is, furthermore, clear from the authorities not only in this country but also in England and
elsewhere that the law is that whether or not a person is or was an employee of another is a question that must be decided on the basis of the realities ­ on the
basis of substance and not form or labels ­ at least not form or labels alone. In this regard it is important to bear in mind that an agreement between any two
persons may represent form and not substance or may not reflect the realities of a relationship. Any oral or other evidence which may assist the court to
conclude what the reality of the relationship is or was between such two persons is admissible and is not precluded by the parol evidence rule. In this regard it is
noteworthy that in almost all reported cases that I have come across which relate to this question, oral evidence was led which related to how the parties
interacted with each other and how they handled their relationship in practice.' 8 3

After a comprehensive survey of South African and English authorities Zondo JP concluded that:
'In the light of the above authorities I am of the view that, even where, as in this case, there is an agreement between one legal entity such as a company or a
close corporation and the alleged employer for the provision of certain services, it is in law possible that it can be found that a person who is effectively the
owner of such company or close corporation is an employee of the other company (ie the alleged employer) with which his or her company has such an
agreement. In other words, the mere fact that use has been made of a legal entity such as a company or close corporation to provide services is no bar to a
conclusion that someone who is part of the company or close corporation or who owns the company or close corporation contractually obligated to provide such
services to the alleged employer is an employee of the company contractually entitled to receive such services. In such a case it seems to me that the court
must have regard, not to labels but to the realities of the relationship between the three parties. In other words substance rather than form must determine the
relationship.' 8 4

There has been a number of other decisions where decision makers have refused to give effect to provisions purporting to render work
relationships something that they were not. In Building Bargaining Council (Southern & Eastern Cape) v Melmons Cabinets CC & another8 5 an
employee entered into a sophisticated independent contract that purported to convert him from an employee into an independent contractor. In
the court's view:
'Melmons, with the assistance of its employers' organization, COFESA ... perpetrated a cruel hoax on Mr Mawa. He believes that he is a self­employed entrepreneur,
earning more than he did as an employee. He is blissfully ignorant of his newly acquired obligations and the loss of rights and privileges which

2008 ILJ p834

Melmons has persuaded him to forego. He has no job security, he has no claim for unfair termination of his services, he is prohibited from relying on the benefits of
a collectivity such as a trade union. It is fanciful to believe that he would be welcome in any employers' organization. He has no protection against accident or
illness at work. He has no safety net in the event that he cannot find work to do. He has no minimum terms and conditions such as paid holidays, paid sick leave
or severance benefits. The agreement which purports to be an independent contractor/principal relationship is a sham and it remains a sham even though Mr
Mawa has consented to it. In truth Mr Mawa is an employee and Melmons is his employer.' 8 6

In Madlanya and Forster & another8 7 the arbitrator found that the agreement in question was 'not a genuine contract taking the complainant
outside the ambit of the protection of the relevant [bargaining council] collective agreement'. 8 8 The agreement in question was described as
'unsuitable' given the nature of the work done by the employee and the arbitrator concluded that the 'independent contractor agreement' was,
like that in the Melmons case, 'a subterfuge to avoid the responsibilities that flow from the effect of the collective agreement, and an attempt
by Forster Freight CC to avoid its obligations and responsibilities as employer' and refused to give effect to it. 8 9
Apart from what the courts have had to say, the ILO and the South African legislature have made it clear, in the instruments referred to above,
that those tasked with applying labour legislation should refrain from giving substance to what is in fact a mirage.
The contract of employment is a point of reference in determining the parties' rights and obligations in the employment relationship. However, it
will only be given effect to if it is not being used as a device to avoid an employer's obligations under our labour legislation. As I have mentioned
above, in April the resolutive condition was apparently being used to circumvent the protections in the LRA against unfair dismissal. If that is so
the arbitrator, adopting the approach mandated by the authorities referred to above, could have refused to give effect to it, preferring instead
the realities of what was happening. That would not have involved declaring the relevant clause invalid, but rather simply endorsing substance
over form in cases where an employee has in effect been dismissed.
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 will only be given effect to if it is not being used as a device to avoid an employer's obligations under our labour legislation. As I have mentioned
above, in April the resolutive condition was apparently being used to circumvent the protections in the LRA against unfair dismissal. If that is so
the arbitrator, adopting the approach mandated by the authorities referred to above, could have refused to give effect to it, preferring instead
the realities of what was happening. That would not have involved declaring the relevant clause invalid, but rather simply endorsing substance
over form in cases where an employee has in effect been dismissed.

Part 3: What Happens When the Employee is No Longer Working for a Client?
An issue that relates to whether TES employees have been dismissed is the status of those employees after their assignment to a particular

2008 ILJ p835

client of the TES. The employment contract might provide that when an assignment with a client comes to an end the employee is required to
report to the employer's offices to be reassigned. Or the employee may be told that he or she will fall into the 'standby pool' from which the
employer will draw workers as and when required. That makes commercial sense in that the revenue generated by TESs is related to the number
of employees they are able to place with clients. However, this arrangement might also become a means to avoid any liability for unfair dismissal
and thus the obligations to comply with the requirements for a fair dismissal imposed by the LRA. For example, in Smith and Staffing Logistics9 0
the applicant was employed by a TES on a limited duration contract to work at a client for the duration of a particular project. The contract
provided that it would terminate at the end of the assignment or if the client no longer wished to make use of the employee. The applicant's
contract terminated at the end of the assignment and he was placed on standby where he remained until he referred his dispute to the
bargaining council. The applicant alleged that there was still work to be done when he was removed from the client's premises and that he had
been removed because of an argument with the client's supervisor. The TES argued, inter alia, that there had been no dismissal because the
applicant remained on standby. The arbitrator was of the view that ­
'the respondent cannot extend an employment agreement (as clause 11.2.3 purports to do) to cover the period during which an employee is enrolled in a ''stand­by
pool', due to the fact that during this time none of the characteristics of an employment relationship are present. In these circumstances, the applicant's skills are
not being utilised by the employer in exchange for remuneration and the applicant is deriving none of the benefits of employment ­ statutory or otherwise'. 9 1

As in the case of Mavata referred to above, the assumption is that a worker cannot be employed if he is not actually working and reflects a
fairly conventional view of employment, one that was perhaps out of place in circumstances such as those before the arbitrator. It might be
somewhat unusual, but there is no reason why an employee should not still be seen as an employee despite not being required to work. As one
arbitrator has pointed out ­
'someone who accepts employment with a ''temporary employment service' does so, as a general proposition, on the basis that he or she is willing to render
services to a client if and when such services are required. It is therefore inherent in this form of employment that there will be periods when there is no work
available, during which the employee's services are not required. He or she nevertheless remains an employee, and is accordingly protected by the [LRA]'. 9 2

2008 ILJ p836

The arbitrator found support for his view in NUCCAWU v Transnet Ltd t/a Portnet. 9 3 In that case workers had entered into a framework 'casual
employment agreement' that would govern the work relationship when the workers were selected from a large pool (of around 2,000 workers) to
supply their labour on a particular day. In determining that the workers were employees the court reasoned as follows:
'The right that applicant's members have in terms of the agreement they concluded with the respondent is that they be considered for work that may be available
on a day­to­day basis. The fact that they would be considered for day­to­day employment is as a result of their being part of a pool of people, a pool created by
the respondent, and being part of the pool they were thus entitled to be considered for the day­to­day employment. In effect what we have is that applicant's
members constituted a special class of employees; a class of employees who were not guaranteed that they would be employed but had the right to be
considered for employment on a day­to­day basis, if respondent had a need for them. The fact that the respondent records in its affidavit that when there is a
need to employ extra staff for its day­to­day requirements, it would employ from the pool it created, satisfies me that the applicant's members do fall within the
definition of employee as provided for in the Act. I come to the conclusion because I believe that the definition of ''employee' in the Act is wide enough to include
persons who are retained on the books of an employer to render services, albeit on an ad hoc basis.' 9 4

In Ngubane v Spray Fishing (Pty) Ltd9 5 the applicant served as an engineer on the respondent's fishing vessels. To that end he would be signed
on for a voyage at a time. The applicant's letter of appointment provided that:
'The company may at its sole discretion continue monthly payments to you on a casual basis when you are not signed on. Such payments may be in the nature of
compensatory salary or an advance. However, this does not constitute monthly employment and the company is entitled to give you notice at any time of its
election that your employment will cease forthwith.
Please note that you are required to sign the articles 9 6 and additional clauses applicable, and should you break such articles your commission immediately falls
away solely at the discretion of the company.
All personnel can, in addition, apply to join the company's medical aid, pension and group life schemes.'

In the court's view the 'fact that the respondent could give ''notice at any time of its election that his employment will cease', confirms that the
employment relationship continued even when the applicant was ''not signed on' a voyage, that is after the expiry of the articles'. 9 7 But the
particular contract of employment was such that different terms applied when the employee was on a voyage and when he

2008 ILJ p837

was not. In the circumstances of this case it was found that there was a reciprocal commitment between the parties ­ on the employer to call
the employee to work when there was work and on the employee to report for duty when required to do so. If the employer had any obligations
in terms of any benefits schemes it would have to fulfil those subject to the rules of the relevant scheme. While the employee was being paid a
discretionary salary he was not permitted to work for anyone else, but could do so if no such salary was being paid. In the light of all of this the
judge concluded that the applicant was employed indefinitely but when he was not signed on for a voyage 'the full terms and conditions of the
contract are suspended until they are revived or terminated'. 9 8
There is thus authority for parties to a work relationship being in an employment relationship even though the employee is not working and it is
uncertain when he or she will work again. The cases referred to above did not all deal with the position of workers supplied by a TES. However, I
would suggest that there is a stronger case to be made that TES workers (as opposed to other types of employees) remain employees when
not working given that they remain under the auspices of an institution that is (notionally at least) making efforts to find them other
engagements. The situation might be different in cases where the periods of engagement are shorter and more sporadic and the worker is not
as clearly connected with or 'part' of the employer's organization. This raises essential questions around what characteristics a relationship must
have in order for it properly to be called employment, despite the worker not actually being engaged to perform work.
The cases referred to above could be read as suggesting that there must at least be a contractual relationship between the parties. That could
be in the form of express provisions dealing with 'lay­off' periods or it may be that it is a tacit term of the contract that the contract will endure
through periods where there is no work for the employee, ie that certain parts of the contract are 'suspended' until there is once again work for
the employee to do. Thus, the contract does not end when the client no longer wants the employee, or because a particular assignment has
come to an end. Rather, the worker remains an 'employee' and is entitled to the relevant statutory benefits thereof, but will not be paid unless
he is actually working. Accepting that that is possible seems fair to both the employer TES and the employee. It means that the TES will not
have to retrench the employee because there is no work for the employee when the work at a client dries up and will perhaps then not have to
attempt to hide behind the façade of clauses such as those in April in order to avoid having to comply with the LRA's dictates regarding
dismissal. But there must be some residual contractual relationship between the parties while the employee is

2008 ILJ p838

in the standby pool. If the contract has been terminated the employee must be seen as having been 'dismissed', unless the termination was by
way of a legitimate fixed­term contract. And that dismissal will be the responsibility of the TES.
As the arbitrator in Smith v Staffing Logistics pointed out, 9 9 the TES cannot have it both ways ­ the contract cannot have terminated by
virtue of the resolutive condition and the employee still not have been dismissed because she is in the standby pool. The difficulties with that
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jurisprudential limbo. Certain portions of the contract will be suspended while the employee is in the pool or 'on the books'. But if the contract is
 in the standby pool. If the contract has been terminated the employee must be seen as having been 'dismissed', unless the termination was by
way of a legitimate fixed­term contract. And that dismissal will be the responsibility of the TES.
As the arbitrator in Smith v Staffing Logistics pointed out, 9 9 the TES cannot have it both ways ­ the contract cannot have terminated by
virtue of the resolutive condition and the employee still not have been dismissed because she is in the standby pool. The difficulties with that
are possibly overcome by requiring a residual contractual relationship. That would also preclude the employee being consigned to a kind of
jurisprudential limbo. Certain portions of the contract will be suspended while the employee is in the pool or 'on the books'. But if the contract is
terminated by the TES the employee may claim to have been dismissed.
It has been suggested 100 that the wording of s 198 of the LRA indicates that a worker is only the employee of the TES for as long as that
worker remains a person whose services are procured for or provided to a client by the TES. After that the worker is no longer the employee of
the TES. The arguments put forward in support of this proposition are inviting, but do not explain why the TES worker should completely cease
to be seen as the employee of the TES once work with the client ceases as opposed to no longer being deemed to be an employee of the TES
which is arguably what s 198 does. During the worker's tenure with the client he or she will be regarded as the employee of the TES even if he
or she is in an independent contractor relationship vis­à­vis the TES, provided he or she is in an employment relationship with the client. 101
That is by virtue of the operation of s 198. However, the employee's no longer being statutorily deemed to be the employee of the TES does not
mean that the employee is in fact no longer employed by the TES. In every case if, on an application of the appropriate test, the relationship
remains one that can be regarded as employment, albeit that the worker is only 'on the books' of the TES, then the worker is an employee of
the TES.
If it is accepted that a worker can be regarded as an employee despite not working for a client, the question then arises how long the TES can
be permitted to let the employee languish in the standby pool or on the pages of the TES's books. I would suggest that fairness (determined in
the light of the constitutional right to fair labour practices) dictates that there must come a point where there is an obligation on the TES to
dismiss the employee for whom it has been unable to

2008 ILJ p839

find work. 102 What that point is will depend on the circumstances of each case. Factors that might be relevant to the determination of what
can be expected of employers could include how much work the TES has available, or seems likely to have available in the near future, the
efforts made by the TES to place the employee with clients, any system that the TES has in place to allocate employees to clients, whether
the employee has been able to do other work while waiting in the pool, etc. I would suggest that should the TES not dismiss the employee when
the relevant threshold has been reached, the employee may terminate the contract of employment and claim constructive dismissal. By that
point it could in all probability be said that continued employment (in the sense indicated above) had become intolerable. 103

Conclusion
This article has attempted to highlight some of the difficulties arising from the resolutive conditions often resorted to by TESs in their contracts
with the employees they supply to clients. I have suggested that there are cogent arguments to be made that such clauses should in many
cases be regarded as contrary to public policy (as informed and shaped by the Constitution). However, there is no basis for arguing that they
will be found wanting in every case and the relevant determination must be made with reference to the particular circumstances of each
situation bearing in mind the interests of employers and employees and the dictates of the Constitution. In that regard I have suggested that
the CCMA has the jurisdiction to make a finding that particular clauses are contrary to public policy and to refuse to give effect to them on the
basis that they are invalid.
It has also been suggested that even if the CCMA lacks the jurisdiction to declare contractual terms contrary to public policy and invalid, it may
refuse to give effect to clauses on the basis of upholding substance over form. Where an employer effectively brings an employee's employment
to an end due to his or her misconduct or incapacity or the employer's operational requirements that should be regarded as a dismissal despite
the terms of the employment contract. Our courts have a long tradition of refusing to allow employers to rely on contractual terms that are to
all intents and purposes devices to escape their obligations under labour legislation. That should be continued in the context where contractual
clauses allow employers to claim that an employee has not been dismissed when in reality that is what has occurred.

2008 ILJ p840

I have suggested that there may be sound commercial reasons for TESs wanting to retain employees once work with a client has come to an
end. To that end it should be possible to regard the parties as being in an employment relationship while the employee is awaiting reassignment.
But that is only possible if there remains some contractual relationship between the parties. If there is not, the employee has likely been
dismissed and may bring a claim for unfair dismissal. If one accepts that a worker in the standby pool is an 'employee' the question arises how
long that employee can be retained in the standby pool. There must come a point when employers must be required to dismiss the affected
employee. If the employee is not dismissed by the employer she may resign when the threshold date is met and claim that he or she has been
constructively dismissed because the employer made continued employment intolerable.
Finally, I wish to add that many of the problems relating to the relationships between a TES and its employees and those employees and the
client of the TES arise because of the legislative instruction that the TES is the employer of the employees concerned. 104 In many cases the
client is the real wielder of power in the triangular relationship established by labour broking and should rightly be regarded as the employer, or
an employer of the workers supplied by a TES. 105 Until that changes we will continue to be confronted with difficulties such as those alluded to
above and need to ensure that we respond to them appropriately in order to ensure the full and proper protection of fundamental rights.

* Senior Lecturer, Faculty of Law, University of the Western Cape, Associate of the Institute of Development & Labour Law, University of Cape Town. I would like to
thank my colleague Professor Darcy du Toit for his very helpful comments on an earlier draft of this article.
1 See, for example, the decisions in Fedlife Ltd v Wolfaardt (2001) 22 ILJ 2407 (SCA); Denel v Vorster (2004) 25 ILJ 659 (SCA); and Buthelezi v Municipal
Demarcation Board (2004) 25 ILJ 2317 (LAC). For commentary see Garbers 'The Battle of the Courts' 2002 6(1) Law, Democracy and Development 97 and Du
Toit 'Oil on Troubled Waters? The Slippery Interface between the Contract of Employment and Statutory Labour Law' (2008) 125 SALJ (forthcoming) and Pretorius
& Myburgh 'A Dual System of Dismissal Law: Comment on Boxer Superstores Mthatha & another v Mbenya (2007) 28 ILJ 2209 (SCA)' (2007) 28 ILJ 2172.
2 Wallis 'The LRA and the Common Law' 2005 (2) Law, Democracy and Development 181 at 187 et seq. This was evident in the decision of the Labour Appeal
Court in Buthelezi v Municipal Demarcation Board where the court, somewhat controversially, held that a purported dismissal for operational requirements was
substantively unfair because it was unlawful at common law. For criticism, see Du Toit at 12 and Grogan 'Premature Dismissal: Termination of Fixed­term
Contracts' (2005) February Employment Law.
3 66 of 1995.
4 (2005) 26 ILJ 2224 (CCMA).
5 Section 198(2) of the LRA provides that a 'person whose services have been procured for or provided to a client by a temporary employment service is the
employee of that temporary employment service, and the temporary employment service is that person's employer'. The exception is where the worker is an
'independent contractor' (s 198(3)). The Labour Appeal Court (in LAD Brokers (Pty) Ltd v Mandla (2001) 22 ILJ 1813 (LAC)) has held that in order for the
exception in s 198(3) to be triggered the worker must be an independent contractor in relation to both the TES and the client, ie if, on an application of the
dominant impression test, the workers relationship with the client is one of employment, the worker is not an independent contractor and thus (because s 198(3)
is not activated) an employee of the TES.
6 Theron 'Intermediary or Employer? Labour Brokers and the Triangular Employment Relationship' (2005) 26 ILJ 618 at 627­30.
7 75 of 1997.
8 s 198(4) LRA and s 82(3) BCEA.
9 Theron at 630.
10 Hattingh / AMT Placement Services (Pty) Ltd [2005] 6 BALR 595 (CCMA); April & Workforce Group Holdings (Pty) Ltd t/a The Workforce Group; Mavata v Afrox
Home Health Care (1998) 19 ILJ 931 (CCMA); [1998] 5 BALR 569 (CCMA).
11 Van der Merwe et al Contract: General Principles (2 ed) at 10; Lubbe & Murray Farlam & Hathaway: Contract Cases, Materials, Commentary (3 ed) at 20­1.
12 See Wells v South African Alumenite Co 1927 AD 69 at 73 where the court stated: 'No doubt the condition is hard and onerous; but if people sign such
conditions they must, in the absence of fraud, be held to them. Public policy so demands. ''If there is one thing which, more than another, public policy requires,
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voluntarily, shall be held sacred and shall be enforced by courts of justice.'' (Per JESSEL, M.R. in Printing Registering Co. v Sampson, L.R. 19 Eq at p. 465.)'
 9 Theron at 630.
10 Hattingh / AMT Placement Services (Pty) Ltd [2005] 6 BALR 595 (CCMA); April & Workforce Group Holdings (Pty) Ltd t/a The Workforce Group; Mavata v Afrox
Home Health Care (1998) 19 ILJ 931 (CCMA); [1998] 5 BALR 569 (CCMA).
11 Van der Merwe et al Contract: General Principles (2 ed) at 10; Lubbe & Murray Farlam & Hathaway: Contract Cases, Materials, Commentary (3 ed) at 20­1.
12 See Wells v South African Alumenite Co 1927 AD 69 at 73 where the court stated: 'No doubt the condition is hard and onerous; but if people sign such
conditions they must, in the absence of fraud, be held to them. Public policy so demands. ''If there is one thing which, more than another, public policy requires,
it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when entered into freely and
voluntarily, shall be held sacred and shall be enforced by courts of justice.'' (Per JESSEL, M.R. in Printing Registering Co. v Sampson, L.R. 19 Eq at p. 465.)'
13 s 39(2) of the Constitution requires that: 'When . . . developing the common law . . . every court, tribunal or forum must promote the spirit, purport and
objects of the Bill of Rights.'
14 Pharmaceutical Manufacturers Association of SA & another: In re Ex parte of President of the RSA & others 2000 (2) SA 674 (CC); [2000] 3 BCLR 241 (CC) at
262. See also the discussion by Christie in Bill of Rights Compendium (updated as of October 2006) at 3H6.
15 Carmichele v Minister of Safety & Security & another (Centre for Applied Legal Studies intervening) 2001 (4) SA 938 (CC) at 954 and 955.
16 S v Thebus & another 2003 (6) SA 505 (CC) at 525. I would add that it is not always necessary to develop the common law in order to give effect to
fundamental rights. It may be that there is legislation in place that gives effect to the right in question, such as the LRA. In that case it is not necessary to
develop the common law in the light of the right to fair labour practices. See in this regard s 8(3) of the Constitution and Cheadle 'Labour Law and the
Constitution', unpublished paper presented at the Annual SASLAW Conference, October 2007. To the extent that the approach adopted by the SCA in Old Mutual
Life Assurance Co SA Ltd v Gumbi (2007) 28 ILJ 1499 (SCA); [2007] 8 BLLR 699 (SCA) and Boxer Superstores Mthatha & another v Mbenya (2007) 28 ILJ 2209
(SCA); [2007] 8 BLLR 693 (SCA) is not consistent with that suggested by Cheadle, it is respectfully suggested that it is incorrect.
17 per Cameron JA in Brisley v Drotsky 2002 (4) SA 1 (SCA); [2002] 12 BCLR 1229 (SCA) at 1256.
18 Napier v Barkhuizen 2006 (4) SA 1 (SCA); [2006] 9 BCLR 1011 (SCA) at 1016 and see Brisley v Drotsky at 1257. See also Martin v Murray (1995) 16 ILJ 589
(C) at 605.
19 Brisley v Drotsky at para 7.
20 ibid and Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) at paras 17­24.
21 See Bhana & Pieterse 'Towards a Reconciliation of Contract Law and Constitutional Values: Brisley and Afrox Revisited' (2005) 122 SALJ 865; Lubbe 'Taking
Fundamental Rights Seriously: The Bill of Rights and Its Implications for the Development of the Common Law' (2004) 121 SALJ 395; Tladi 'One Step Forward,
Two Steps Back for Constitutionalising the Common Law: Afrox Health Care v Strydom' (2002) 17(2) SAPL 273.
22 In Barkhuizen v Napier, case no CCT72/05, the Constitutional Court endorsed the view that freedom and dignity find expression in the principle of pacta sunt
servanda. However, the court appeared more open to a significant role for notions of reasonableness, fairness, justice and equity in the law of contract.
23 ibid.
24 at para 30.
25 ibid.
26 at paras 51 and 73.
27 at para 57.
28 Barkhuizen v Napier (CC) at paras 64 et seq.
29 The commissioner in Monakali and Peaceforce Security Cape CC, WE14117­07, 10 December 2007 attached a great deal of significance to this factor in finding
that the relevant clause was invalid.
30 NEHAWU v University of Cape Town & others (2003) 24 ILJ 95 (CC) at 114.
31 A similar suggestion was made in Buthelezi v Labour for Africa (Pty) Ltd (1991) 12 ILJ 588 (IC) at 595.
32 SA Eagle Insurance Co Ltd v Bavuma 1985 (3) SA 42 (A) at 49GH.
33 Bafana Finance Mabopane v Makwakwa 2006 (4) SA 581 (SCA) at 586 para 10.
34 See Bafana Finance Mabopane v Makwakwa & another at 588 and the authorities referred to there. See also Barkhuizen v Napier (CC) at para 34.
35 Parry v Astral Operations Ltd (2005) 26 ILJ 1479 (LC); [2005] 10 BLLR 989 (LC).
36 at para 58 (footnotes omitted).
37 at para 63.
38 See also Brassey Employment and Labour Law Vol III Commentary on the Labour Relations Act at A9:7.
39 This is a factor that the court, in Bafana Finance Mabopane v Makwakwa & another at 587­8, considered relevant in assessing whether a clause in a money­
lending contract providing that a debtor would not apply for an administration order in terms of s 74(1) of the Magistrates' Courts Act 32 of 1944 and that the
loan debt would not form part of any administration order for which the debtor might apply was contrary to public policy.
40 See n 22.
41 Christie at 3H7. See also S v Shaba & another 1998 (2) BCLR 220 (T) and De Waal et al The Bill of Rights Handbook (4 ed) at 42­3 who suggest that certain of
the fundamental rights may be waived (the freedom rights), but not others such as life, human dignity and equality.
42 Barkhuizen v Napier (CC) at para 48. This does not mean that determining whether a clause is contrary to public policy involves embarking on a limitations
analysis applying s 36 of the Constitution. The majority of the Constitutional Court held that this would not be appropriate because a contractual clause is not a
law of general application nor would such an approach sit comfortably with the remedies for unconstitutionality contained in s 172 of the Constitution (see paras
23 et seq of the Constitutional Court's judgment).
43 Bafana Finance Mabopane v Makwakwa & another at 586.
44 See Automotive Tooling Systems (Pty) Ltd v Wilkens & others (2007) 28 ILJ 145 (SCA) at paras 8 et seq.
45 In Barkhuizen v Napier (CC) at paras 47­48 the court recognized that the important role played by time limitation clauses was a factor to be considered in
determining whether they can be tolerated by public policy.
46 In NEHAWU v University of Cape Town & others the court noted (at 113) that: '[T]he focus of s 23(1) is, broadly speaking, the relationship between the worker
and the employer and the continuation of that relationship on terms that are fair to both. In giving content to that right, it is important to bear in mind the tension
between the interests of the workers and the interests of the employers which is inherent in labour relations. Care must therefore be taken to accommodate,
where possible, these interests so as to arrive at the balance required by the concept of fair labour practices.'
47 (1998) 19 ILJ 931 (CCMA).
48 I assume by that the commissioner meant that he accepted that the contract had come to an end, not by way of a dismissal, but because the resolutive
condition in the contract had been triggered.
49 Mavata v Afrox Home Health Care at 571.
50 Hutchinson ('Are the Provisions of Section 189 of the LRA Applicable to Temporary Employment Services?' (2007) 28 ILJ 90) with reference to one, fairly
unique, example seeks to demonstrate the commercial necessity of finding that clauses linking the duration of the contract of employment to whether the client
desires the services of the employee. The argument, with respect, loses sight of the fact that whether a clause should be upheld will depend on the particular
facts of a case. What is tenable in one case might not be acceptable in another.
51 It is worth noting that the pre­dismissal procedures required by the LRA are in fact not as complex and onerous as many employers are led to believe. See in
this regard the views expressed in Avril Elizabeth Home for the Mentally Handicapped v Commission for Conciliation, Mediation & Arbitration & others (2006) 27
ILJ 1644 (LC); National Union of Mineworkers & others v Billard Contractors CC & another (2006) 27 ILJ 1686 (LC); Media Workers Association of SA on behalf of
Ngqula and Vodacom (Pty) Ltd (2006) 27 ILJ 1764 (CCMA).
52 In Buthelezi v Labour for Africa (Pty) Ltd (1991) 12 ILJ 588 (IC) (at 594 et seq) the court held that a clause similar to that in April was void because it was
being used by the employer as an attempt to evade its obligations under the LRA and render its employees remediless and it frustrated the provisions of the LRA
dealing with the termination of employment.
53 Recommendation 198, adopted on 15 June 2006.
54 article 4.
55 The recommendation acknowledges that '[n]ational policy for protection of workers in an employment relationship should not interfere with true civil and
commercial relationships, while at the same time ensuring that individuals in an employment relationship have the protection they are due'.
56 See s 39(1). The Constitutional Court has repeatedly referred to ILO instruments in reaching its decisions on labour matters. See, for example, NUMSA &
others v Bader Bop (Pty) Ltd & another (2003) 24 ILJ 305 (CC); [2003] 2 BLLR 103 (CC). See also Rubin 'International Labour Law and the Law of the New
South Africa', inaugural lecture March 1998, University of Cape Town, for a more detailed discussion of the role of international law in shaping labour law in South
Africa.
57 Act 75 of 1997. Section 200A and s 83A provide that a worker will be presumed to be an employee regardless of the form of the contract if any one of a
number of factors is present in the work relationship.
58 Government Gazette 29445 of 1 December 2006 at item 31.
59 para 48. See also Napier v Barkhuizen (SCA) at para 8 and Afrox Healthcare Bpk v Strydom at para 12.
60 1993 (3) SA 742 (A) at 762­3.
61 In both Napier v Barkhuizen (SCA) and Afrox Healthcare Bpk v Strydom it was considered a significant weakness in the cases of the appellants that they had
not produced sufficient evidence that that they had in fact been in an inferior bargaining position vis­à­vis the other contracting parties.
62 See Cheadle in Cheadle et al SA Constitutional Law: The Bill of Rights at 366­9.
63 item 2(d).
64 Afrox Healthcare Bpk v Strydom at para 12.
65 In Reference Re Public Service Employee Relations Act (Alta) (1987) 1 SCR 313 Dickson CJ stated at 368 that: 'Work is one of the most fundamental aspects in
a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an
essential component of his or her sense of identity, self­worth and emotional well­being.' Those sentiments were subsequently approved by the court in
Machtinger v HOJ Industries Ltd (1992) 1 SCR 986 at 1002. In the South African context in North Safety Products (Africa) (Pty) Ltd v Nicolay (2007) 28 ILJ 350
(C) Davis J recently made repeated references (at 354 and 361) to work being significant to a person's dignity.
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67 Bhana & Pieterse at 883.
 64 Afrox Healthcare Bpk v Strydom at para 12.
65 In Reference Re Public Service Employee Relations Act (Alta) (1987) 1 SCR 313 Dickson CJ stated at 368 that: 'Work is one of the most fundamental aspects in
a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an
essential component of his or her sense of identity, self­worth and emotional well­being.' Those sentiments were subsequently approved by the court in
Machtinger v HOJ Industries Ltd (1992) 1 SCR 986 at 1002. In the South African context in North Safety Products (Africa) (Pty) Ltd v Nicolay (2007) 28 ILJ 350
(C) Davis J recently made repeated references (at 354 and 361) to work being significant to a person's dignity.
66 Cheadle at 366­9.
67 Bhana & Pieterse at 883.
68 at 884.
69 at 887­8.
70 at 2234.
71 For a contrary view see SACTWU obo Valentine / Foschini [2004] 1 BALR 107 (CCMA).
72 Mthethwa v Vorna Valley Spar (1996) 7 (11) SALLR 83 (CCMA); Moses v Safika Holdings (Pty) Ltd (2001) 22 ILJ 1261 (CCMA); Chambers / Process Consulting
Logistics (Pty) Ltd [2003] 4 BALR 405 (CCMA) and Georgieva­Deyanova / Craighall Spar [2004] 9 BALR 1143 (CCMA).
73 See the discussion in Van der Merwe et al at 175 et seq.
74 s 1.
75 NEHAWU v University of Cape Town & others at 114.
76 A fixed­term contract has been defined (by Grogan Dismissal, Discrimination and Unfair Labour Practices at 149) as one 'the duration of which is determined in
advance by agreement between the parties. The period for which the contract will remain in force can be determined either by reference to a specific date, or by
the occurrence of a specific event ­ eg the completion of a project for which the employees services were engaged'.
77 Walters & others v Goldfields Ltd (Libanon Mine) & another (2001) 22 ILJ 1208 (LC) at 1210.
78 NEHAWU v University of Cape Town & others at 120­1. See also Schutte & others v Powerplus Performance (Pty) Ltd & another (1999) 20 ILJ 655 (LC) at 672.
79 [2001] 9 BLLR 1045 (LAC).
80 at 1050. See also Makgoba & others v Premier Food Industries Ltd (2000) 21 ILJ 2667 (LC) where the court (at 2675) stated that an 'employer should . . . not
be allowed to abuse a retrenchment process to penalize its employees for misconduct or substitute same for discipline, unless that in itself becomes an
operational issue'.
81 The same applies to the reason offered by an employee when pursuing a claim for unfair dismissal. See Wardlaw v Supreme Mouldings (Pty) Ltd (2007) 28 ILJ
1042 (LAC) where the LAC rejected what it termed the 'formalistic school of thought' in favour of a 'substantive school of thought' when determining the proper
approach to deciding when the LC has jurisdiction over a particular dismissal dispute.
82 Denel (Pty) Ltd v Gerber (2005) 26 ILJ 1256 (LAC) at 1265.
83 at 1265­6.
84 at 1296 (emphasis added).
85 (2001) 22 ILJ 120 (LC); [2001] 3 BLLR 329 (LC).
86 at 335­6.
87 (1999) 20 ILJ 2188 (ARB).
88 at 2196.
89 at 2195. See also the sentiments expressed in Motor Industry Bargaining Council v Mac­Rites Panel Beaters & Spray Painters (Pty) Ltd 2001 (2) SA 1161 (N) at
1175; (2001) 22 ILJ 1077 (N) and Rumbles v Kwa Bat Marketing (Pty) Ltd (2003) 24 ILJ 1587 (LC) at 1592.
90 (2005) 26 ILJ 2097 (BCA); [2005] 10 BALR 1078 (MEIBC).
91 at 1081. See also Dick v Cozens Recruitment Services (2001) 22 ILJ 276 (CCMA).
92 Commissioner Theron in WFCAWU obo Tities & others and Jingou CC t/a Heksarbeidsburo, case no WE38225, 4 May 2001 at para 14.
93 (2000) 21 ILJ 2288 (LC)
94 at 2292.
95 (2002) 23 ILJ 2104 (LC); (2002) 11 LC 8.34.7, accessed via www.irnetwork.co.za
96 The articles regulated the commencement and termination dates of voyages and the conditions of employment that would prevail while the applicant was on a
voyage.
97 at para 13.
98 at para 17
99 at 1081
100 Brassey at A9: 3­4. See also Jordaan 'Brokering an Early Departure: Temporary Employment Services and Dismissal', unpublished paper presented at the
Annual SASLAW Conference, 6 October 2007.
101 LAD Brokers (Pty) Ltd v Mandla (2001) 22 ILJ 1813 (LAC).
102 Support for this view is to be found in the decision in Fourie and JD Bester Brokers CC (2003) 24 ILJ 1625 (BCA).
103 See s 186(1)(e) of the LRA.
104 s 198(2) and (3) read in the light of the decision of the LAC in LAD Brokers (Pty) Ltd v Mandla.
105 See in general Theron op cit.

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