Whether an individual who is engaged in work is classified as an ‘employee’ or a ‘contractor’ has important legal implications. Labour law legislation such as the Labour Relations Act and the Basic Conditions of Employment Act, designed to protect employees, is only applicable to individuals who are classified as employees (the next article in this series will take a closer look at these Acts and the rights that they afford employees).
An employment relationship can be understood as a contract of service. An employee undertakes to provide services to an employer, typically on an ongoing basis, in return for payment. In contrast, a contract for service is one where the contractor undertakes to perform a specific service or task. Once the task has been completed or the result required has been brought about, the contractor obtains payment and the contract terminates.
It is notoriously difficult to easily and clearly categorise a particular contract as one or the other. In an employment contract, the employee is subject to the control and direction of the employer. It is the employer who determines the work hours of the employee and how and when the employee must perform his or her tasks. It is also expected that the employer will provide the means necessary to perform the required tasks. An employee is required to obey all lawful instructions that relate to their employment. This is very different to an independent contractor who, whilst likely bound by an agreed date for completion of work, can go about achieving the completion as he/she deems fit.
An example will help to illustrate the difference. Imagine that you approach someone, let’s say a gentleman called Joe, to sort out your overgrown garden. You would like it to be attended to in the next week and agree that Joe will finish the job by Friday. It is likely that you would give some broad instructions as to what you would like done (mow all the grass, trim back the hedges, remove the weeds etc). But when it comes to exactly how the task will be achieved, it will be up to Joe. For example, he could carry out the job himself or use a team of his employees. It would also be expected that Joe would have the materials necessary to carry out the task (lawnmower etc). It is also likely that Joe will be providing the same service to many different people.
The above example clearly displays the hallmarks of a contractor relationship. Now imagine that Joe is engaged not just for a once off clean up of the garden, but for a daily attendance to the garden. He is expected to only work for you, and you set the time and task that he is to attend to in your garden. Furthermore, you provide him with the tools required to complete the tasks you set. It is not difficult to see that this starts to resemble an employment relationship.
Other examples can be contrived where the situation is not so clear cut. What if Joe works for you on an ongoing basis, but only once a week? What if he provides some of the gardening tools, but not all? It can be readily seen that classifying the relationship is not always easy.
When the nature of the relationship is contested, a decision-making authority, for example the CCMA or a court, will look at the actual substance of the relationship. It is thus important to note that the nature of the relationship cannot be changed by an employer seeking to avoid labour law legislation simply by stating in the contract that the relationship is an independent contractor one. The factors outlined above will be considered and a decision made on the so called ‘dominant impression’ that can be gleaned from looking at the relationship. As already stated, the nature of the relationship is crucial for determining whether labour law legislation applies. The point to keep in mind is that one cannot ‘change’ an employment relationship into an independent contractor relationship simply by naming it as the latter (e.g. in a contract).
Attorney, Rhodes Law Clinic
Rhodes University Law Clinic helping you
The Rhodes University Law Clinic strives to improve access to justice through the provision of free legal services to indigent people in most areas of law. In addition to its New Street offices, Law Clinic staff are available to clients at the Assumption Development Centre (Konongendi), Nceme Street, Joza, on the first and third Thursday of every month from 9am-12pm.
Law Clinic staff also conduct a talk show on Radio Grahamstown on the second and fourth Friday of every month, and provide workshops on a wide range of topics in order to raise awareness of people’s rights. For more detail, please contact the Rhodes Law Clinic:
Rhodes University Law Clinic
41 New Street, Grahamstown
Telephone 046 603 7656