Are You Considered an Employee in Terms of the Labour Relations Act?

There is often confusion as to whether someone is an independent contractor or an employee, and thus, whether they are protected under the Labour Relations Act. More often than not, independent contractors believe that they have signed employment contracts as employees, when, in reality, they have signed independent contractor agreements and, in laymen’s terms, have signed ‘their rights away’. That is, their rights under the Labour Relations Act (LRA). This article explores the differences between an independent contractor and an employee, and what factors to take into account in determining each, respectively.

The LRA defines an employee as anyone, other than an independent contractor, who works for another person or who assists in conducting the business of an employer. Therefore, a clear distinction is made between an employee and an independent contractor. In brief, independent contractors provide a service and are therefore compensated for doing so. An independent contractor is not under the control or direction of the organisation, corporation, or person known as his, her, or its customer. Essentially, the independent contractor performs the work as part of their own firm. Employees, on the other hand, engage in an employment contract with their employer, resulting in an employment connection rather than a service provider one.

An employer-employee relationship does not depend on the existence of a valid contract of employment. This point has been illustrated in Kylie v CCMA & Others3, where the question was whether a self-proclaimed prostitute could claim protection against unfair dismissal in terms of the LRA. The court concluded that the applicant (prostitute) was an employee as she had set working hours, lived on her employer’s premises, and was subject to workplace rules. As a sex worker, the court held, the applicant did fall within the LRA’s definition of an employee.

It is therefore clear from our court decisions that the nature of the relationship between the two parties is more important in deciding whether a person is an employee than the terms of the employment contract or independent service provider contract. The written contracts are merely one of several important variables to consider.

Other factors that the court will consider include (but not limited to), inter alia:

• The way the person works is subject to the control or direction of another person, organisation, or company.
• The person’s hours of work are subject to the control or direction of another person, organisation, or company.
• In the case of a person who works for an organisation or company, the person forms part of that organisation or company.
• The person is economically dependent on the other person, organisation, or company for whom they render services.
• The person is provided with tools of trade or work equipment by the other person, organisation, or company.
• The person only works for or renders services to one person, organisation, or company.

Employers are therefore encouraged to keep this in mind should they wish to employ an employee or hire the services of an independent contractor. It is also important to note that this section does not apply to any person who earns in excess of the earning threshold as determined in Section 6(3) of the Basic Conditions of Employment Act.

References:

1. Section 213 of the Labour Relations Act
2. Arnold F “Are you an employee or an independent contractor?” (2021)
3. (2008) 29 ILJ 1918 (LC)
4. Item 18 of the Code of Good Practice: Who is an employee?

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.