1
SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA STATEMENT – PRIVATE SECURITY INDUSTRY v ASSOCIATION OF INDEPENDENT CONTRACTORS
FROM:The Registrar, Supreme Court of Appeal
Date:
Status:Immediate
The Supreme Court of Appeal has just handed down judgment in an appeal concerning the private security industry.
In the last decade private security has become a huge industry in South Africa. It now provides work for more people than the police and defence force combined. Private security guards protect individuals, homes and a whole range of commercial properties and sports arenas. For this purpose they have the privilege of special access. They also have the trappings of authority and law enforcement – they wear uniforms and carry weapons. It is not surprising that Parliament decided some years ago that to ensure the honesty, reliability and proficiency of those providing security services the industry had to be regulated. At first it enacted the Security Officers Act 1987 aimed at the activities of security officers (guards) who were employees of security service operators. But the Act had a substantial loophole. With a very large available work force some operators did not want all the restrictions of the employment and minimum wage laws. They wanted to hire and fire as it suited them. They therefore devised a scheme to provide security guards that were not their employees but independent contractors. This meant that guards would contract to do piece work for a client of the operator. When the contract work was over so was their job. Neither the operator nor the client was in control of them or the way they worked.
Parliament’s answer was to pass the Private Security Industry Regulation Act 2001 which came into force in February 2002. It created a regulatory authority which sees to the registration and monitoring of what the Act calls security service providers. These include security businesses and security officers (guards).
The respondents in the appeal were a voluntary association and its director. They are involved with the industry. Citing the regulatory authority and its acting director as the opposing parties they applied in the High Court in Durban for an order declaring that they did not have to register under the new Act. The authority asked for a counter order that obliged them to register. The High Court found in favour of the association. The authority and its acting director appealed to the SCA.
The association was formed just before the Act came into force. It provides membership for independent contractors and finds work for them. 2200 members are security guards. The association has agreements with security businesses that they will give preference to members. When security service work becomes available the association and the member contract with the security business for the work. The security business then makes the member available to its client.
The case for the association was that the relationship created by the contract left the member free of any control by the association, the security business or its client. In return for membership services a member owed the association a membership fee. That was its sole income. Payment for the members’ service was made to the member via the association. It deducted the membership fee and passed the balance to the member.
A security service provider in terms of the Act not only includes security businesses and security guards. It also includes someone who, for a fee, makes security services available either directly or indirectly, or who controls the provision of such services.
The High Court decided the Act meant that the fee had to come from the security business or its client. As the association received nothing from them the Act did not apply to it.
The Supreme Court of Appeal disagreed. It held that the fee could come from any source. The fee could include the member’s subscription fee. It went on to decide that proper analysis of the association’s constitution, code of conduct and standard contract form revealed that the association not only got security service work for the members. It also acted on their behalf till their contracts were over. Most importantly, if their work was not properly done it could terminate their membership and if that happened their contracts with the security business also came to an end. The Court concluded that on these facts the association was making security services available and also controlling their provision. Even if members were independent contractors the scheme devised by the association failed to avoid the reach of the Act. The association and its director were therefore liable to register.