While it is true that both independent contractors and employees offer their labour to businesses and / or persons, it is important to note the difference between the two as the legal protection afforded to two types of labourers similarly differs.
Section 213 of the Labour Relations Act 66 of 1995, as amended (“the Act”) specifically excludes Independent Contractors from its definition of the term “employee”. It is commonly understood that Independent Contractors trade or render their services as independent businesses or individuals. In other words, they are external service providers with an autonomous nature: they are not directed or controlled by any business or other person.
An employee, on the other hand, is any individual who meets any one of the defining criteria as listed in Section 200A of the Act. The defining factors which will have someone presumed as an employee are:
- Whether the individual’s work hours are subject to another person’s control or direction (namely the employer);
- Whether the individual is part of the organisation;
- Whether the individual has worked an average of 40 hours monthly for at least 3 consecutive months;
- Whether there is an economic dependency between the individual and the other person (the employer);
- Whether the individual is provided with tools of trade by the other person (the employer); and / or
- Whether the individual exclusively provides services to the other person (the employer).
While a contracts of employment or services is a primary indication of the status of an individual rendering labour to another, it is important to note that courts will also consider the ongoing relationship between the two persons as an indication of the status of the labourer: despite the terms set out in a contract, a court may presume an individual to be an employee of another person if any of the 6 abovementioned criteria are met, in which case the presumed employer bears the onus of proving the contrary. If a labourer earning above the prescribed threshold wants to be presumed an employee, he or she bears the onus of satisfying the court that they have met one of the abovementioned criteria.
Conclusion
While there are perks of operating as an independent contractor (such as being able to manage your own time and have flexibility in respect of selling your labour and / or your tax affairs) there are also risks that independent contractors are exposed to, and which employees are protected from in terms of the Labour Relations Act and the Basic Condition of Employment Act (such as working hours and paid leave to name a few). Independent Contractor’s legal protection are ordinarily derived from their service / labour contracts and the standard practices of their respective fields.
Contact an attorney at SchoemanLaw Inc for your labour law needs by visiting our website at www.schoemanlaw.co.za.
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