Using Staffing solutions may get you a R2.5mil fine!

Using Staffing solutions may get you a R2.5mil fine!

Using Staffing solutions may get you a R2.5mil fine!

Staffing solutions are becoming problematic for the Department of Labour and will receive special attention and focus in the coming months. The South African Employment Equity Act (EEA) is a robust piece of legislation that aims to foster equal opportunity and fair treatment in the realm of employment. It is a cornerstone in the battle against workplace discrimination, striving to ensure that all employees, irrespective of their background or personal circumstances, have equal access to opportunities and benefits within the workplace. However, a concerning trend has emerged where some organisations attempt to circumvent this legislation by utilising third-party staffing solutions companies. While seemingly innocuous on the surface, this practice can have profound implications for the employees and the organisations involved.


In terms of Labour legislation, an employee is defined as any person other than an independent contractor who can show that they.

  • Work for another person or the state and who receives, or is entitled to, any remuneration more or equal to the earnings threshold (minimum wage) determined by the minister.

  • In any way assists the employer in carrying on or conducting the business of an employer,

  • And that the terms employed and employment have corresponding meanings in their daily function

  • How the person works is subject to the control or direction of another person.

  • The person’s work hours are subject to another person’s control or direction.

  • In the case of a person who works for an organisation, the person forms or is included as part of that organisation.

  • The person has worked for that other person for an average of at least 40 hours per month over the last three months.

  • The person economically depends on the other person for whom they work or render services.

  • The other provides the person with the tools of trade or work equipment.

  • The person only works for or renders services to one person or organisation.

Emoluments and Remuneration.

The EEA provides a comprehensive definition of an employee, which is crucial to understanding the potential pitfalls of using third-party staffing solutions companies. According to the Act, an employee is any person, excluding an independent contractor, who works for another person or the state and receives, or is entitled to receive, any form of remuneration. This remuneration should be more or equal to the earnings threshold determined by the minister. This definition extends to those who assist the employer in conducting their business. Some organisations may attempt to exploit this aspect of the definition by using third-party staffing solutions companies.

Staff Fronting

When an organisation utilises a third-party staffing solutions company, they effectively create a buffer between themselves and the employee. This buffer can make it challenging for employees to assert their rights under the EEA, as they are technically employed by the third-party company, not the organisation they work for. However, the EEA is clear that the nature of the work performed, not the contractual arrangements, determines the employment relationship. Therefore, if an employee can show that they are working under the control or direction of the organisation, they may be considered an employee under the EEA, regardless of any third-party arrangements.

This is where the potential for prosecution arises. If an employee can demonstrate that they are performing work for an organisation, are subject to the organisation’s control, and are economically dependent on the organisation, they may argue that they are an employee under the EEA. If the organisation has been using a staffing solutions company to circumvent the EEA, they could be found violating the Act and face significant penalties.

Moreover, the EEA also considers the economic dependence of the person on the organisation and whether the person is provided with the tools of trade or work equipment by the organisation. These factors further strengthen the argument that the person is an employee of the organisation, not the staffing solutions company.


In conclusion, organisations that use staffing solutions purely to circumvent the EEA are taking a significant risk. Not only are they potentially violating the rights of their employees, but they are also exposing themselves to the possibility of prosecution.

Is your organisation experiencing any employment equity challenges, received a compliance order or has been subpoenaed? 

Find more information on implementing employment equity in my other articles or visit our website to enrol for the next employment equity training course.


Stephan du Toit

Stephan du Toit

Senior Advisor Employment Equity. Specialist in emergency Employment Equity and Labour compliance for organisations. Find more information on implementing employment equity in my other articles or visit our website to enroll for the next employment equity training course.

Are you having difficulty with employment equity? Please don't hesitate to contact me.

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