Being an employer in the current economic climate can be challenging at the best of times. In an attempt to alleviate the burden of this, employers often engage the services of an individual to tender their services and then render an invoice.

Employers, however, need to be very cautious when doing so as the lines between employee and independent contractor become blurred very easily, potentially leading to the employer having to deal with an unfair dismissal dispute when the services in question are not needed any longer.

Section 213 of the Labour Relations Act excludes an independent contractor from the definition of an employee. Still, it is important to note that despite an individual being called an independent contractor, the CCMA will look at the terms and circumstances surrounding such an agreement.

The CCMA will ascertain whether the relationship that exists between the parties is one of service or whether an employment relationship, in fact, exists.

This is done by means of what is known as the dominant impression test. Section 200A of the Act provides that, until the contrary is proved, 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:
(a) the manner in which the person works is subject to the control or direction of another person.
(b) the person’s hours of work are subject to the control or direction of another person.
(c) in the case of a person who works for an organisation, the person forms part of that organisation.
(d) the person has worked for that other person for an average of at least forty (40) hours per month over the last three months.
(e) the person is economically dependent on the other person for whom they work or render services.
(f) the person is provided with tools of trade or work equipment by the other person; or
(g) the person only works for or renders services to one person.

It is important to note that only one of the listed factors needs to be present to prove that the relationship in question is, in fact, that of an employee and employer.

Retaining the services of an individual under the guise that they are an independent contractor comes with its own risks in that despite the terms of any agreement, the actual relationship will be looked at to determine the true nature of the relationship between the parties.

Should the CCMA find that the relationship is one of an employer and employee, that employee will receive the complete protection afforded to all employees.

Therefore, it is advisable that, if the service of an independent contractor wants to be retained, a detailed agreement setting out the precise terms be drafted and that there be no deviations.

Article by: Ilze Erasmus
Dispute Resolution Official – Gqeberha