By making use of labour brokers or independent contractors, you could inadvertently expose yourself and your company to liability claims.
It is a reality in today’s business world that organisations make use of labour brokers to supply them with personnel or independent sub-contractors to conduct certain work on their behalf.
Companies engage with contractors of labour brokers for any one of a number of reasons: they may require specific expertise, or have a temporary requirement for extra labour over busy periods. Businesses are, however, exposed to the risk of potential liability claims when using this type of labour.
Avoiding such claims does not mean staying away from these services, but rather understanding the attendant risks. That allows for the implementation of appropriate processes and controls to address these risks.
The tax and labour law implications of using employees of labour brokers and contractors are generally known. These are behind two of the lesser recognised dangers that lurk in these situations, which are:
· the action against a client of a labour broker for occupational diseases and injuries suffered or sustained by an employee of the labour broker
· and the liability of an employer for the negligent conduct of an independent contractor.
Occupational diseases and injuries
Section 35(1) of the Compensation for Occupational Injuries and Diseases Act, 130 of 1993 prohibits injured employees (or dependants) from claiming damages or compensation from the employer in a court of law for injuries or diseases sustained in the course of their employment. The employer’s liability is limited to paying assessments (contributions) to the state compensation fund from which compensation is paid to employees. This applies only to the employer of the employee only and not to third parties.
A recently reported decision of the Supreme Court of Appeal, Crown Chickens (Pty) Ltd t/a Rockland Poultry v Rieck 2007 (2) SA 118 (SCA) highlighted the potential liability for occupational injuries and diseases to which employers expose themselves when using employees of labour brokers.
In this case, Crown Chickens used a labour broker to supply the services of a cashier (Ms Rieck) for a shop situated on the farm. Ms Rieck had an employment contract with the labour broker, which paid her salary and handled all other administration related to her employment. Ms Rieck performed her duties under the control of Crown Chickens, which paid the labour broker.
During the course of an armed robbery, Ms Rieck sustained a gunshot wound inflicted accidentally by a Crown Chickens employee. She claimed damages from the company based on the negligent conduct of the security staff. Part of the Crown Chickens’ defence was that Ms Rieck became its employee when her services were hired to them, and that it was therefore protected against actions for damages under section 35(1).
The Court dismissed the appeal and ruled that based on the correct interpretation of the definitions of ‘employer’ and ‘employee’ in the Act, is that an employer is the person with whom the employee had a contractual relationship, even if the employee performs his contractual obligations for someone else. In this instance, Ms Rieck had a contract with the labour broker and not with Crown Chickens, and therefore Crown Chickens as the client of the labour broker was not immune against actions for damages pertaining to occupational injuries and diseases sustained Ms Rieck.
Liability for the negligent conduct of an independent contractor
When potentially dangerous activities, such as construction work, are to be conducted on a business premises, the services of an independent contractor are frequently called upon, especially if the work is of a specialised nature.
An occupier of the premises will usually enter into an agreement with the contractor to indemnify themselves in respect of potential damages resulting from the dangerous activities. However, what happens should a customers or member of the public suffer an injury and sue for damages?
In Crawhall v Minister of Transport and Another 1963 (3) SA 614 (T) the court ruled that
“If work has to be done on premises to which the public has access, and that work can reasonably be expected to cause damage unless proper precautions are taken, the duty of the occupier to see that those precautions are taken and that the premises are safe persists, whether he does the work himself or through his own servants or delegates it to an independent contractor.”
The basic rule is that the occupier of premises has a legal duty to ensure that persons who could be expected to enter the premises are not injured, or damage is not caused to their property, due to a dangerous situation on the premises. This does not mean that an occupier would be liable for damages resulting from a dangerous situation created by the unlawful and unforeseeable conduct of a stranger, unless the occupier obtained knowledge thereof and failed to take reasonable steps to prevent the damage.
It is therefore apparent that an occupier cannot rely on an agreement between himself and a contractor to indemnify himself from claims from persons who suffer damage or injury due to the dangerous activities conducted on the premises which he occupies.
In Langley Fox Building Partnership (Pty) Ltd v de Valence 1991 (1) SA 1 (A), the respondent, Mrs de Valence, suffered an injury when the left side of her forehead struck a wooden beam suspended between two trestles at right angles across the sidewalk on which she was walking.. The beam was erected by a subcontractor employed by Langley Fox Building Partnership, which was employed to refurbish and extend a building. The court ruled that as no steps had been taken by Langley Fox Building Partnership to guard against the danger, it was liable to compensate the respondent for damages.
The duty of an employer of an independent contractor is to take steps to prevent harm to members of the public. The court ruled that this will depend in each case upon the facts; and that it is relevant to consider the following in each case:
· the nature of the danger
· the context in which the danger may arise
· the degree of expertise available to the employer and the independent contractor respectively
· and the means available to the employer to avert the danger.
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