What is a temporary employment service?
A temporary employment service (TES), often called a labour broker, is a business that provides workers to a client and pays them while they work for that client. Under section 198 of South Africa’s Labour Relations Act (LRA), the TES is the workers’ employer.
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Section 198 sets the rules for this three-way relationship. The TES must be registered under the applicable legislation and must give each worker written particulars of employment when they start. It cannot employ them on terms below those required by law, or by a bargaining council agreement or sectoral determination that applies to the client.
The TES and the client are jointly and severally liable if the TES breaches the Basic Conditions of Employment Act (BCEA), a sectoral determination, a binding collective agreement or an arbitration award. The worker can take action against the TES, the client or both.
The three-month rule below the earnings threshold
Since 1 January 2015, section 198A has protected placed workers who earn at or below the BCEA earnings threshold, currently R269,600.90 a year. Their placement counts as a temporary service only if it lasts three months or less, covers a client employee who is temporarily absent, or falls in a category approved by a bargaining council agreement, sectoral determination or ministerial notice.
Beyond that, the worker is deemed to be the client’s employee, employed indefinitely, and must be treated on the whole no less favourably than the client’s own staff doing the same or similar work. The Constitutional Court confirmed this in Assign Services v NUMSA in 2018. Ending a placement to avoid the rule counts as a dismissal.
What it means for EOR in South Africa
Hiring in South Africa without a local entity usually means using an Employer of Record, and South African law treats that arrangement as a temporary employment service. With TopSource as your Employer of Record in South Africa, we employ and pay your hire, who works for you. We check each role against the earnings threshold before the start, because below it an assignment longer than three months makes you the employer under the LRA.
Frequently asked questions
Is an Employer of Record a temporary employment service in South Africa?
South African law treats an EOR arrangement as a temporary employment service under section 198 of the LRA. The EOR is the employer, and the client shares liability for breaches of the BCEA and of bargaining council agreements.
What is the three-month rule under section 198A?
For employees earning at or below the BCEA threshold, a placement longer than three months, other than as a substitute for an absent employee or in an approved category, makes the client their employer on an indefinite basis.
Does section 198A apply to higher earners?
No. Employees earning more than the threshold, R269,600.90 a year from 1 May 2026, fall outside section 198A.
Related terms in South Africa
- Section 198B Fixed-Term Rule (South Africa)
- BCEA Earnings Threshold (South Africa)
- Retrenchment (South Africa)
- Restraint of Trade (South Africa)
- Family Responsibility Leave (South Africa)
- Sick Leave Cycle (South Africa)
- Employment Equity Act Reporting (South Africa)
- B-BBEE Scorecard (South Africa)
- Critical Skills Work Visa (South Africa)
- POPIA and Employee Data (South Africa)
- EMP201 Monthly Return (South Africa)