South African labour brokers, the local terms for temporary staffing firms, intend to go to court in the coming weeks to challenge the recently amended Labour Relations Act, reports bdlive.co.za.

Labour brokers were reportedly surprised by the scale of job losses caused by regulatory changes to their sector. The changes to the Act, which came into effect at the beginning of this month, have already been blamed for the closure of some labour broking companies.

The African Professional Staffing Organisation (APSO) and industry body the Confederation of Associations in the Private Employment Sector (Capes) may go to court within a month to seek a declaratory order on how to interpret aspects of the Act they say are unclear.

The two organisations have begun compiling data on the effects of the changes on its members. They had been taken aback by the level of retrenchments, Apso president Jacqui Ford said last week.

The act limits the use of labour broker workers to genuinely temporary needs.

The problem, Ms Ford said, was the Act’s stipulation that temporary employees automatically become permanent employers after being employed for just three months, creating uncertainty and the risk of misinterpretation.

APSO, which represents half of the employees in the sector, has received information about 4,546 job contracts since the beginning of this month.

Ms Ford said 47% of these contracts had been terminated, 30% of employees were retained on longer contracts, and the remaining 23% had become permanent employees.

The Labour Relations Act came into effect on 1 January 2015, but many of the provisions in the act governing temporary employment services only came into effect on 1 April, after the expiration of a three-month grace period.

The changes, among other things, aim to give additional protection to vulnerable temporary employees — especially those who earn below a ZAR 205,000 (USD 16,960) per annum earnings threshold.

The provisions also stipulate that after a certain period, employees should no longer have a relationship solely with their labour broker.

After three months of work, if the nature of a position cannot be justified to be purely of a temporary nature, the employee is "deemed" to be a permanent employee of the client of the labour broker.

However, APSO and Capes maintain that an employment relationship is a legal relationship under the purposes of the Act, and it cannot simply mean that an employee’s contract should be transferred to the end user.

Capes Chief Operating Officer Johnny Goldberg said last week that the challenge might take place in the next two to three weeks: "We need to be ready for a possible contrary interpretation [of the Act] and then to tackle that legally."

Labour law expert Tony Healy said on Friday that the expected challenge on the deemed provision would provide welcome clarity but would have fewer implications for those companies that were hiring temporary workers directly.

There were still certain legal questions surrounding the employment relationship under the labour brokers, Mr Healey said.