Labour Brokers and the Three-Month Rule: When the Client Becomes Your Employer

If you were placed in a job by an agency — a labour broker, a staffing company, a "temporary employment service" — and you have been doing that job for more than three months, the law may already regard the company you actually work for as your employer. Not the agency. The client.

That is not a technicality. It decides who has to follow a fair procedure before you lose the job, whose conditions of service you are entitled to, and who you take to the CCMA.

Most placed workers have never been told any of it, and the reason is straightforward: the arrangement is usually more convenient for everyone except them.

The starting position: the broker is the employer

Section 198 of the Labour Relations Act 66 of 1995 sets up the arrangement. A temporary employment service is:

"any person who, for reward, procures for or provides to a client other persons who perform work for the client and are remunerated by the temporary employment service"

And section 198(2) says a person procured that way is "the employee of that temporary employment service, and the temporary employment service is that person's employer."

So on day one, the agency is your employer. You work at the client's premises, take instructions from the client's supervisors, and are paid by the agency.

Two protections attach immediately, before any three-month clock matters.

Joint and several liability. Under section 198(4), the TES and the client are jointly and severally liable where the TES contravenes a collective agreement, an arbitration award, the Basic Conditions of Employment Act or a sectoral determination. Underpaid overtime, unpaid leave, wages below a sectoral minimum — both are on the hook.

And you can choose who to pursue. Section 198(4A) lets an employee institute proceedings against either the TES or the client or both, lets a labour inspector secure compliance against either, and lets any order be enforced against either. A broker that folds, disappears or simply stops answering does not end the claim, because the client is standing behind it.

That matters more than it sounds. The commonest problem in placed work is not dramatic — it is an agency that shortchanges the payslip and is hard to reach.

Then section 198A changes who your employer is

Section 198A applies a deeming rule, and it has two gates.

Gate one — what you earn. Section 198A(2):

"This section does not apply to employees earning in excess of the threshold prescribed by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act."

That threshold is R269 600,90 a year with effect from 1 May 2026. It is re-determined annually, so if you are reading this later, check the current figure before relying on it. Earn above it and section 198A simply does not apply to you — the ordinary section 198 position continues.

Gate two — whether the work is genuinely temporary. Section 198A(1) defines "temporary service" as work for a client:

• (a) for a period not exceeding three months;
• (b) as a substitute for an employee of the client who is temporarily absent; or
• (c) in a category of work and for a period determined to be temporary by a collective agreement of a bargaining council, a sectoral determination, or a notice by the Minister.

Then section 198A(3) does the work. An employee:

(a) "performing a temporary service as contemplated in subsection (1) for the client is the employee of the temporary employment services in terms of section 198(2)"

(b) "not performing such temporary service for the client is—(i) deemed to be the employee of that client and the client is deemed to be the employer; and (ii) subject to the provisions of section 198B, employed on an indefinite basis by the client"

Read the two together. If the work fits one of the three "temporary service" descriptions, the broker stays your employer. If it does not — most obviously, once you have been there longer than three months doing ordinary work that is not covering someone's absence — you are deemed the employee of the client, and employed on an indefinite basis.

Not on a rolling contract. Indefinitely.

Sole employer, not co-employer

For three years after the 2015 amendments, the industry argued that section 198A(3)(b) created a dual employment relationship: the broker remained your employer and the client became one too.

The Constitutional Court rejected that in Assign Services (Pty) Limited v NUMSA and Others (CCT194/17) [2018] ZACC 22, handed down on 26 July 2018. For the first three months the TES is the sole employer. Once the placement exceeds three months, the client becomes the sole employer.

That single word decides practical things:

• Who must follow a fair procedure before dismissing you. It is the client.
• Who you cite at the CCMA. It is the client.
• Whose workplace rules, disciplinary code and collective agreements apply to you. The client's.
• Who you can be transferred away from. The broker cannot simply move you to another placement as if you were still its employee, because you are not.

The client does not get to escape this by pointing at the contract you signed with the agency. The deeming operates by law, on the facts of how long you have been there and what you have been doing.

The exit that is itself a dismissal

The obvious workaround is to pull the worker off the job at week eleven, wait, and place them again. Parliament saw it coming. Section 198A(4):

"The termination by the temporary employment services of an employee's service with a client, whether at the instance of the temporary employment service or the client, for the purpose of avoiding the operation of subsection (3)(b) or because the employee exercised a right in terms of this Act, is a dismissal."

Two things are caught, and the drafting is deliberately wide.

Ending the placement to dodge the three months is a dismissal — and being a dismissal, it has to be substantively and procedurally fair, or it is unfair and referable. The subsection catches it "whether at the instance of the temporary employment service or the client", so neither can hide behind the other's decision.

Ending it because you exercised a right under the Act is also a dismissal — joining a union, lodging a grievance, referring a dispute.

If you were removed from a placement shortly before the three months were up, that is not simply bad luck. It is a dismissal you can challenge, and the 30-day referral clock runs from the date it took effect. Our guide to how the CCMA works covers the referral itself.

Equal treatment once you are deemed

Section 198A(5):

"An employee deemed to be an employee of the client in terms of subsection (3)(b) must be treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is a justifiable reason for different treatment."

This is where the money usually is. A deemed employee doing the same work as the client's permanent staff is entitled to be treated on the whole not less favourably — pay, benefits, leave, shift allowances, bonuses — unless the client can justify the difference.

Note the two qualifiers, because they are doing real work. "On the whole" means the comparison is of the package, not of each line item. "Justifiable reason" leaves room for genuine distinctions such as seniority, length of service, qualifications or a recognised performance system. What it does not cover is "because they came through an agency".

What to do if this is you

Work out your dates. Write down when you started at this client, and whether you have been continuously placed there. Three months is the hinge.

Check what you earn against the threshold. Below R269 600,90 a year (from 1 May 2026, re-determined annually), section 198A applies to you. Above it, it does not.

Ask what the work actually is. Are you covering someone's temporary absence? Is your category of work declared temporary by a bargaining council agreement, a sectoral determination or a ministerial notice? If none of those, and you are past three months, subsection (3)(b) applies.

Get the comparison. Find out what the client's own employees doing the same or similar work are paid and what benefits they get. That is the section 198A(5) claim and it needs comparators.

Do not resign over it. A placed worker who walks out and then claims they were forced out is taking on the hardest version of this case — see constructive dismissal in South Africa for why the burden falls the wrong way. The deeming provision gives you a position while you are still working.

If you are the client, understand the exposure: past three months, for a worker under the threshold, doing non-temporary work, you are the employer with everything that entails. Our guide to hiring your first employee sets out the registrations that follow, and employment equity for a small business covers whether deemed employees push you over a reporting threshold.

Frequently asked

I have been with the same client for two years through an agency. Who is my employer? If you earn below the BCEA threshold and the work is not one of the three categories of temporary service, the client is — and has been since three months in. Assign Services settled that the client is the sole employer, not a co-employer.

I earn R400,000 a year through a broker. Does this apply to me? No. Section 198A(2) excludes employees earning above the threshold prescribed under section 6(3) of the BCEA. Your relationship stays governed by section 198, including the joint and several liability in section 198(4).

The agency says my contract is with them, so the client cannot be my employer. The deeming in section 198A(3)(b) operates by law on the facts of the placement. A contract cannot contract out of it.

They took me off the job at ten weeks and said they would call me back. If that was done to avoid the deeming, section 198A(4) says it is a dismissal, whoever made the decision. Refer it within 30 days of the date it took effect.

Can I claim the same pay as the client's permanent staff? If you are a deemed employee, section 198A(5) entitles you to treatment on the whole not less favourably than an employee of the client doing the same or similar work, unless there is a justifiable reason for the difference. Gather comparators before you refer.

My agency underpaid me and has now closed down. Section 198(4) makes the TES and the client jointly and severally liable for BCEA, collective agreement, award and sectoral determination contraventions, and section 198(4A) lets you proceed against either or both and enforce against either. The client's solvency is your protection.

Does the three months have to be continuous? The Act speaks of a period not exceeding three months. Deliberately broken placements designed to reset the clock run straight into section 198A(4), which treats termination for the purpose of avoiding the deeming as a dismissal.