Labour brokers, secondment and employer-of-record

Who is the employer when a broker supplies the worker?

The Labour Relations Act does not use the phrase “labour broker”. It talks about a temporary employment service, or TES, and it defines one by what it does, not by what it calls itself: anyone who, for a fee, finds or supplies people to work for a client and pays those people. If that describes the arrangement, the Act applies whatever the invoice says — “staffing solution”, “outsourced team”, “employer-of-record”.

The starting rule is that the person placed with you is the broker’s employee, not yours. The broker signs the employment contract, runs payroll, registers for UIF and the Compensation Fund, disciplines and dismisses. A true independent contractor is left out of the picture altogether: a broker cannot turn an independent contractor into an employee by placing them, and you cannot engage one through a broker to gain the protection of section 198.

Two further duties sit with the broker. It must give the placed worker the written particulars that section 29 of the Basic Conditions of Employment Act requires of every employer, when the placement starts (s 198(4B)). And it may not employ the worker on terms that would not be allowed in your own sector — if a bargaining-council agreement or sectoral determination binds you, the placed worker’s terms must fit inside it (s 198(4C)).

Joint liability: you answer for the broker’s breaches

Even while the broker is the employer, you are not insulated. The broker and the client are jointly and severally liable where the broker breaks a bargaining-council agreement, an arbitration award on terms and conditions, the Basic Conditions of Employment Act, or a sectoral determination. “Jointly and severally” means the worker, or a labour inspector, can pursue either of you for the whole amount and leave you to sort out who ultimately pays.

Section 198(4A) spells out the mechanics: the worker may sue the broker, you, or both; an inspector may enforce against either as if it were the employer; and an award made against one can be enforced against the other. In practice this is where an underpaid overtime claim or a missed leave payment lands on the client months after the broker has been paid in full.

Your protection is the commercial contract with the broker: a warranty of compliance, an indemnity, the right to audit payslips, and the right to see UIF and Compensation Fund registration. None of that removes the statutory liability to the worker; it only gives you someone to recover from. That is why the broker’s solvency matters as much as its price.

The three-month rule: when you become the sole employer

This is the rule that changed the industry in 2015. It applies only to placed workers earning up to R269 600,90 a year (from 1 May 2026); above that line section 198A does not apply at all, and the broker remains the employer for as long as the placement runs. Below it, the Act asks whether the worker is performing a “temporary service”, and it defines that narrowly. The earnings threshold guide explains what counts as earnings.

So a placement is temporary only if it lasts three months or less, or the worker is standing in for a named absentee, or the work falls into a category that a bargaining council, sectoral determination or Ministerial notice has declared temporary. Nothing else counts. “Peak season”, “project work” and “we are still deciding on headcount” are not on the list.

Once a below-threshold worker has been with you for more than three months and is not a substitute, the Act deems the worker your employee, and deems you the employer, on an indefinite basis.

The words “subject to the provisions of section 198B” matter. They mean the deemed employment is indefinite unless you could justify a fixed term under the fixed-term rules — and those rules require a written, justifiable reason. A deemed employee must also be treated, on the whole, no less favourably than your own staff doing the same or similar work, unless there is a justifiable reason for the difference.

Figures last reviewed 9 September 2026.

Assign Services: the client is the sole employer

For three years after the 2015 amendments, brokers and clients argued about what “deemed” meant. One reading was that the client became an employer alongside the broker, so two employers shared the worker. The other was that the client became the only employer for the purposes of the Act. The Constitutional Court settled it in 2018: the sole-employer reading is correct.

The Court also explained what does not change. The commercial contract between you and the broker keeps running, the broker keeps paying the worker, and the triangle stays in place. What moves is the statutory responsibility for the worker as employer — from the broker to you.

What this means in practice: after three months the placed worker can bring an unfair-dismissal or unfair-labour-practice claim against you; you must count them for employment-equity and other headcount thresholds; and the cheapest way to run a long-term placement is usually to employ the person directly, on your own terms, with the broker’s margin gone. The getting it wrong guide covers what a deeming looks like once it is disputed.

Is the broker registered?

The Employment Services Act requires anyone who provides employment services for gain — placing people, or supplying them as a temporary employment service — to register as a private employment agency. The registration certificate states whether the agency may act as a temporary employment service. Ask to see it before you sign. An unregistered broker is operating unlawfully, and a broker registered as a recruitment agency only is not permitted to supply you with its own employees.

The Labour Relations Act has its own provision making registration a precondition for performing TES functions (s 198(4F)), but that subsection has not been brought into force. The Employment Services Act duty stands on its own and applies now.

Secondment and employer-of-record arrangements

No statute defines “secondment” or “employer of record”. The law looks at the substance and asks the section 198 question: is someone, for reward, supplying you with a person it pays? If yes, that someone is a temporary employment service and everything above applies — the three-month deeming for below-threshold workers, joint liability for basic-conditions breaches, and the registration duty. It does not matter that the supplier calls itself an EOR platform, a professional employer organisation or a group services company.

Two variants need their own thought.

Intra-group secondment

A holding company that seconds its own employee to a subsidiary, without charging a fee, is not supplying labour “for reward” and sits outside section 198. That does not make the arrangement invisible. Section 200B treats associated companies as one employer where the intent or effect of the structure is to defeat the purposes of the Act, and makes them jointly and severally liable. And the courts have long looked through interposed entities to find the real employer.

Write the secondment agreement so that it says who directs the work day to day, who disciplines, who pays and who carries the employment risk, and keep the secondee’s terms the same or better than in the home company. See the secondment agreement explainer for the clauses.

Foreign employer-of-record

A foreign EOR that employs staff on your behalf in South Africa is usually supplying you with people it pays, for a fee: a temporary employment service. The three-month deeming will make you the employer of below-threshold staff regardless of the EOR’s contract, and the Immigration Act’s duties fall on whoever actually employs a foreign national — see employing foreign nationals. An EOR that cannot show South African registration under the Employment Services Act, a UIF reference and a Compensation Fund registration should be treated as a risk, not a shortcut.

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