1 July 2022
An employment relationship is based on a contract of service, whereby the individual renders his services to the employer on an indefinite basis in return for remuneration. An independent contractor relationship is based on a contract for service whereby the contractor will complete a specific task and will be paid on completion thereof (The South African Labour Guide). The right to not be unfairly dismissed is applicable to employees only, as Independent Contractors are not entitled to the protection of our Labour Legislation.
To determine whether a person is an employee or an independent contractor, one must look at section 213 of the Labour Relations Act (LRA) which defines an “Employee” as any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration and any other person who, in any manner, assists in carrying on or conducting the business of an employer.
To determine whether a person is an employee or an independent contractor, one must look at section 213 of the Labour Relations Act (LRA) which defines an “Employee” as any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration and any other person who, in any manner, assists in carrying on or conducting the business of an employer.
(a)The manner in which the person works is subject to the control or direction of another.
This will be present if the ‘person’ is required to obey lawful and reasonable commands, orders or instructions from the ‘employer’ in relation to the manner the ‘person’ must work. It is not present if the ‘person’ is hired to perform a particular task or produce a particular product and the ‘person’ determines the manner in which the work is done. Our courts have held that there can, in certain circumstances, be an employment relationship even where there is a relatively low degree of control (Parliament of the RSA v Charlton (2010)).
(b)The person's hours of work are subject to the control or direction of another.
Item 18(b) of the Code of Good practice provides that factors relating to hours of work are present if the “alleged employer” set the times during which the “alleged employee” should work. It has been accepted that flexible working hours are not incompatible with an employment relationship.
(c)In the case of a person who works for an organisation, the person forms part of that organisation.
This will be present if the ‘person’s’ services form an integral part of the ‘employer’s’ organisation or operations. A ‘person’ rendering services as part of conducting his or her own business will not form part of the ‘employer’s’ organisation.
(d)The person has worked for that other person for an average of at least 40 hours per month over the last three months.
The courts have held that a ‘person’ who works only when the ‘employer’ has a need for him or her do fall within the ambit of an employee.
(e)the person is economically dependent on the other person for whom he or she works or renders services;
It has been accepted that the ‘employer’ is generally the sole source for the supply of work and the ‘persons’ sole source of income. An independent contractor is free to contract with other companies or persons to do work or render services to them. Item 18(d) and (e) of the Code envisages that an independent contractor will mostly bear the element of risk of acquiring his or her own work.
(f)The person is provided with the tools of trade or work equipment by the other person.
The Code indicates that tools of trade should not be approached in a narrow sense, e.g., telephones, hammers, spades etc. It is irrelevant whether the tools or equipment are provided to the ‘person’ free of charge or whether the ‘person’ must pay for it.
(g) The person only works for or renders services to one person.
This factor will not be present of an independent contractor as they are free to contract with whoever they want.
Section 200A only applies to persons earning below the threshold, currently being R224 080.48 per annum. The ‘person’ must demonstrate that one or more factors as set out above exists which creates a rebuttable presumption that the ‘person’ is an employee. Once this is done, the onus shifts to the ‘employer’ to prove on a balance of probability that the ‘person’ is an independent contractor and not an employee in terms of the definition of an employee as set out in section 213 of the LRA.
In addition to the above, regard must be given to the guidelines set out in the ‘Code of Good Practice: Who is an Employee’ and to the dominant impression test which was accepted by the Labour Appeal Court in SABC v McKenzie (1998) wherein it finds that a person is an employee if:
“(a) she or he renders personal services;
(b)she or he performs these services personally;
(c)these services are used at the behest of the employer;
(d)lawful commands and instructions of the employer must be followed; and
(e)the contract will terminate on the death of the employee or expiration.”
The true nature of the intended relationship between the parties and not necessarily what the parties called the contract must be determine (Grogan Employment Rights (3rd ed) 27). If the ‘employer’ fails to lead evidence to rebut the presumption, the ‘person’ must be held to be an employee.
The CCMA will have jurisdiction to conciliate and arbitrate the matter if it is found that an employment relationship exists. If no employment relationship exists, the CCMA lacks jurisdiction and the ‘person’ will have to take the matter further civilly.
Should you need assistance with any queries relating to employment law, please contact Invictus Group on 0861 737 263.
