By Dr Gerrie Ebersöhn, Gerrie Ebersöhn Attorneys Inc.
From time to time commissioners at the CCMA are called upon to determine whether a person, normally claiming to have been unfairly dismissed, was an independent contractor or an employee.
As a rule of thumb these persons entered into written agreements describing them as independent contractors, yet they work in an office, have work office hours and render services that an employee would normally render.
Section 213 of the Labour Relations Act (LRA) defines an “employee” (for purposes of the LRA) as:
This definition is not really of any assistance in determining whether a person was an employee or an independent contractor. An independent contractor also “works for another person” while receiving “remuneration” from that person.
Traditionally, the Courts used three tests to determine this difficult question:
The control and supervise test
An employer has the right to tell his employees what to do and how to do it. In the case of an independent contractor-agreement, the person who pays for the service or goods is more interested in the outcome (the product/service) and not necessarily in how the contractor does it (provided it is of quality). As such, the test states that if the person (who is alleged to have been the employer) had the right to control and supervise the other person’s performance, an employer-employee relationship existed.
The organisational test
An employee normally forms part of an employer’s organisation. As such, the employee will report to a supervisor and other employees in turn may report to the said employee. Explained differently, the employee’s name will normally appear in an organogram. On the other hand, one does not expect an independent contractor’s name to appear in any organogram.
The dominant impression test
This test simply states that the court must take all the facts into account and the dominant impression left by the facts will inform the court whether an employer-employee relationship existed. The test was frequently criticised as being too vague and of no real assistance.
In 2002, the LRA and the Basic Conditions of Employment Act (BCEA) were amended by the insertion of Sections 200A (in the LRA) and Section 83A (in the BCEA).
Both Sections provide that for purposes of the said legislation, a person earning less than the threshold prescribed by the Minister (presently R205 433.30), who works for any other person is presumed to be an employee (unless the employer proves the contrary), if any one or more of the following factors are present:
Therefore, if any one of these factors are present the person is deemed to be (or to have been) an employee and the employer must then prove that the said person was in fact an independent contractor.
Factors (a) and (b) are distilled from the supervision and control test. Factor (c) is drawn from the organisational test. Factors (e) and (g) deal with the question whether the person (claiming to have been an employee), was economically dependent on one person (his alleged employer) for work and remuneration.
The question then arises: How does the employer prove that the alleged employee was not an employee if one or more of the above factors apply (and therefore the said person is presumed to have been an employee)?
The Labour Appeal Court (LAC) no longer uses the tests listed above. The LAC applies the “reality test”, which test states that the court must look at all the facts (similar to the dominant impression test), and then determine whether the person in reality was an employee. The Court will evaluate each of the factors listed in Section 200A and Section 83A. The Court will also take other “realities” into account, such as that:
In cases where the alleged employee earned more than R205 000 per year, the LAC applies the reality test and has stated that the factors stipulated in Section 200A and Section 83A serve as a guideline to determine whether the person was an employee or an independent contractor.