Introduction
According to the Commission for Conciliation, Mediation and Arbitration (hereinafter referred to as "the CCMA") as well as the Labour Relations Act 66 of 1995 (hereinafter referred to as "the LRA") an Independent Contractor is paid to render a particular result or service and is not subject to the control or direction of the client. What is more, the Independent Contractor may appoint someone else, a sub-contractor for example, to do some of the work and finally is not part of the client's organization in that he or she is not an Employee. In essence, the Independent Contractor is doing the work as part of his or her own business. The Employer and Independent Contractor would enter into an Independent Contracting Agreement and not an Employment Contract. Furthermore, the Independent Contractor would invoice the Client for services rendered whereas an Employee is paid a salary by his or her Employer.
In practice however, there are frequent disputes as to whether an individual is an Employee or an Independent Contractor. The Labour Courts have indicated that the focus in determining whether a person is an Employee or not, will be evaluated on the nature of the relationship rather than the wording of a contract. The written contract (independent or employment) is one of the factors to consider and has more significance for those who earn above the threshold as set out in the Basic Conditions of Employment Act 75 of 1997 (hereinafter referred to as "the BCEA").
Casual, Part-Time and Temporary Workers
Not all Employees are the same. For example, an employment relationship may be on a casual, temporary or permanent basis. According to the CCMA these terms mean very little when it comes to determining whether a person is an Employee for the purposes of labour legislation, but rather illustrate that employment comes in many different forms. A fixed-term contract Employee is someone who is employed for a fixed term period or for a specific task or project only and once that task or project is completed, the employment relationship ends. Such contracts must be in writing and are subject to certain conditions set out in the LRA. A part-time employee is an Employee who is remunerated wholly or partly by reference to the time that the Employee works and who works fewer hours than a comparable full-time employee A full-time permanent Employee is someone who is employed with the intention of there being an ongoing employment relationship, or in other words, for an indefinite period. This permanent, ongoing relationship may be full-time or part-time. Some full-time employees do not work the same number of hours as their colleagues (e.g. half-day contracts) and are remunerated wholly or partly by reference to the hours that they work.
Section 200A of the LRA
Section 200A of the LRA (and section 83A of the BCEA) includes a rebuttable presumption relating to the existence of an employment relationship for Employees earning below the BCEA threshold. The LRA, as amended, states until the contrary is proved, for the purposes of this Act, any employment law and section 98A of the Insolvency Act, 1936 (Act No. 24 of 1936), a person who works for, or renders services to, any other person is presumed, regardless of the form of the contract, to be an Employee, if any one or more of the following factors are present:
- the manner in which the person works is subject to the control or direction of another person;
- the person's hours of work are subject to the control or direction of another person;
- in the case of a person who works for an organization, the person forms part of that organization;
- 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 is economically dependent on the other person for whom he or she renders services;
- the person is provided with tools of trade or work equipment by the other person; or;
- the person only works for or renders services to one person.
It is important to remember that the presence of the above-mentioned criteria means that employment is presumed, unless the contrary is proved. The obligation to prove that the relationship was not one of employment then falls on the Employer. Persons earning above the threshold will need to prove that there is an employment relationship. Regardless of who has to prove whether there is or is not an employment relationship, will have to do so with reference to the criteria set out in the presumption in section 200A of the LRA or any other relevant factors. The Courts have recently indicated that the most important factors are whether the person forms part of the organization where he or she renders services that would be indicated by aspects such as whether the person has an office or uses the organization's resources or is a member of the pension or provident fund or wears the organization's uniform, etc.
Whether the person is economically dependent on the other person that would be indicated by the extent to which the person does work for other people or is allowed to do work for other people. Whether the person is subject to the direction and control of the other person, that would be indicated by the other person having the right (whether they actually do so or not) to dictate to the person how, when, where and the hours of work.
Conclusion
Employers must ensure that they are specific contracts and agreements in place when appointing Employees and when appointing Independent Contractors and should seek professional legal advice in ensuring that the contracts and agreements are clear and distinguishable from one another so an Independent Contractor cannot later claim to be an Employee and be covered by legislation which protects Employees and not Independent Contractors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.