It often happens that companies make use of independent contractors to render certain services for the company and although the company never intended such persons to be employees, they may still be regarded as employees.
Companies often enter into “independent contractor” agreements with third parties for the rendering of certain services and are under the impression that such agreements will protect them from a person claiming to be an employee. In certain circumstances, irrespective of whether an agreement has been concluded, such a person may still be regarded as an employee.
The Labour Relations Act defines an “employee” as:
(a) 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 (b) any other person who in any manner assists in carrying on or conducting the business of an employer.
Although “independent contractor’s” are specifically excluded from the definition of an employee, an “independent contractor” may still be regarded as an employee if such a person falls within the scope of Section 200A of the Labour Relations Act.
In the case of Phaka & Others v Brack & Others  5 BLLR 514 (LAC), the court held as follows in determining whether a person was an independent contractor or an employee:
‘At the centre of the dispute is whether a written contract that each of the applicants concluded with the third respondent constituted a contract of an independent contractor or an employee. Allied to this is whether, notwithstanding the express provisions of the contract, the applicant were nevertheless employees by virtue of the presumption included in section 200A of the Labour Relations Act.’
Section 200A of the LRA and section 83A of the BCEA both read as follows:
“(1) 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:
- 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 organisation, the person forms part of that organisation;
- the person has worked out for that 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 works or 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.
Should any person who renders “independent” services to a company meet any one of the above factors, such a person will be regarded as an employee and will enjoy all the rights conferred upon an employee in terms of the labour laws of South Africa, regardless of any agreement to the contrary.
It is therefore of utmost importance that when making use of the services of an independent contractor, the company enters into an independent contractor’s agreement that clearly provides what the rights and duties of such person will be. Apart from this, companies must ensure that such person does not fall within the scope of Section 200A of the Labour Relations Act.
Article by: Etienne Fourie
Dispute Resolution Official – East London