INDIVIDUAL LABOUR

LAW
The elusive employee and non-
standard employment
Chapter 4
WEEK 2
Introduction
 General 4

• Generally, only ‘employees’ are protected by the scope of labour laws

• Changed nature of employment – no longer 8-5, office bound, up to 65 – male

breadwinner – so this means the court cant use the traditional view of
employment to define whether of not persons can be protected.

• Can the statutory definitions be relevant and can the common law: Contract of
work (independent contractor) (locatio conductio operis) (letting and hiring of
piece of work) – LRA defines “temporary employment , service provides and fixed
vs part-time employment.
The contract of employment:
5
is a voluntary agreement between two parties in terms of which one
party (the employee) places his or her labour potential at the disposal
and under the control of the other party (the employer) in exchange for
some form of remuneration usually an indicator that a person is an
“employee”

State Information Technology Agency (Pty) Ltd CCMA & Others (2008) 7
BLLR 611 (LAC) - the court was less concerned by the employment
contract and gave emphasis to the employee and employer relationship.
ILO (international Labour Organisation) Employment Relations
Recommendation 197 of 2006
6
• Member states must define (in law) which workers are to be
covered/protected by labour laws – these guidelines were made by the ILO to
help them.
• When determining the relationship regard must be had to the performance of
the contract/work rather than how the relationship is termed in any
contractual arrangement
• Member states should consider specifying certain factors to indicate the
existence of an employment relationship
• Special consideration to vulnerable workers (young people, informal
economy, migrant workers)

 SA has incorporated much of this!

Smit v Workmen’s Compensation Commissioner 1979 (1) SA 51 (A)

Contract of employment vs
independent contractor 7
Contract of employment Independent contractor
• Object = render personal services • Object – specified work for specified
result
• Ee performs personally
• Contractor can hire others
• Er chooses when to use ee
• Perform within fixed period
• Ee obliged to carry out lawful
commands of the er • Bound by contract but not under control
of the er
• Contract terminates on ee death
• Contract doesn’t terminate at the
• Terminates at expiry period
contractor’s death

• Terminates at completion of work

 The “employee”
Labour law = so many legislative sources and
governing bodies who all have slightly different and
super wide definitions of an employee.
 The definition of “employee” 9

s 213 of the LRA

• (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.

• The definition is the starting point to find out if this person qualifies for the rights
and protections found in the various acts, i.e. the right to not be unfairly dismissed.

• Part (a) and part (b) must be read together otherwise part (b) is far to wide.
 Common law tests to distinguish between an
employee and an independent contractor 10

1. Control test In State Information Technology

2. Organisation test Agency – court said these are the
3. The economic dependency test main req for an employment
4. Dominant impression test relationship

Smit v Workmen’s Compensation Commissioner –

already gave the list of factors we referred to, but the
court preferred to look at all available facts
1. Control test

The control over the person is NB

11
This is the most basic concept of an employment relationship.

Actual control is not necessary as long as the employer can exercise

control over:
2. the type of work the person does,
3. the manner in which the work must be done and
4. when the work must be done
5. A contract of employment can espouse terms of control.
2. Organisational test

With the traditional workplace no longer essential, this test looks at 12

whether the person is:
• part and parcel of the business
• the person's work is integrated into the business of the employer and
not just an accessory to the business

[ even though an independent contractor does work for the business he or

she is not integrated into the business but an accessory that leaves after
the task is done ]

Problem: it is not always easy to determine the level of integration.

4. Dominant impression test:

This test is favoured by the courts and considers: the employment

relationship as a whole rather than concentrating on one factor. 13
Some factors:

1.Right of supervision employer has over the worker

2.Extent worker depends on employer in performance of duties;

3.Worker is or is not allowed to work for another;

4.Worker required to devote specific time to his work;

5.Worker obliged to perform duties personally;

6.Worker paid according to fixed rate / commission;

7.Worker provides his own tools / equipment;

8.Employer’s right to discipline worker

 Presumption of employment 14
Section 200A of the LRA reads as follows:
“Until the contrary is proved, a person who works for, or renders services to, any other person
is presumed to be an employee, if any one or more of the following factors are present:
1. manner in which the person works is subject to the control or direction of another person;
2. person's hours of work are subject to the control or direction of another person;
3. the case of a person who works for an organisation, the person forms part of that
organisation
4. person has worked for that person for an average of 40 hours per month over the last three
months;
5. person is economically dependent on the person for whom he or she works or renders
services;
6. person is provided with tools of trade or work equipment by the other person, or
7. person only works for or renders services to one person
The presumption operates
1. as soon as one of the factors listed in section 200A of the LRA is established.
2. The other party then has the opportunity to show, on a balance of
probabilities that no such relationship exists 15
3. The fact that the person fit one of these factors doesn’t mean they are an
“employee” ito the LRA definition – it just switches the onus to the
“employer” proving a lack of employment as opposed to the “employee”
proving there was employment

The presumption will not apply

to any person earning more than the amount determined by the Minister in terms
of the BCEA (R205,433.30 per year)

The fact that a person earns more than the threshold does not render the
guidelines contained in the presumption irrelevant as the factors may be used as a
guide to determine whether a person is, in reality, in an employment relationship
or is self-employed).
The presumption applies regardless of the form of the contract and
gives effect to ILO Recommendation 197.
16
The presumption does not alter the statutory definition of employee.

The fact that the person satisfies one of the seven factors does not
mean that the person is in fact an employee, the presumption is merely
an evidentiary device calculated to switch the onus of proof of
employment in circumstances when one of the factors is established.

The effect of the presumption is that if a party who is alleged to be the

employer is unable to convince the decision maker that the applicant is
not an employee, the decision maker is bound to find that the applicant
is indeed an employee.
Read paragraph 4.4
Page 68 & 69
 Regulating
non-
standard
employment
The background of non-standard employment:

Since the enactment of the LRA, employers have increasingly sought to 19

externalise work arrangements by creating triangular relationships.
Triangular relationships exist where the recruitment, dismissal and
employment functions conventionally performed by the employer are
outsourced to an intermediary [or a temporary employment service
(TES). (Employment agencies)

While the TES recruits, employs and places the workers, the client
issues the instructions and supervises the employees without incurring
the responsibilities of an employer BUT, if a delict arises out of
damage caused in the workplace, the “client” will be liable and not
the TES.
The protection of TES employees in terms of the LRA:

S 198 of the LRA defines a TES as: 20

Any person who, for reward, procures for or provides to a client other persons:
(a) Who perform work for the client; and
(b) Who are remunerated by the TES

e.g. think of a cleaning service, you don’t employ that cleaner who is working for
you, nor do you pay her directly, the service finds a suitable candidate, you pay
the service and they pay the cleaner for their work. This is obviously different to a
”normal” employment relationship where a person would hire a domestic worker
themselves and pay them wages / salary as agreed between them.
e.g. being a private tutor vs working at a tutor centre
The LRA provides that the TES is the employer of such person,
this is despite the fact that the employee may form part of the 21
client’s organisation and works under the client’s
supervision or control.

Furthermore, both the TES and client are, in certain instances,

jointly and severally liable (usually contraventions arising from
bargaining council agreements, arbitration awards pertaining
to conditions of service and the provisions of the BCEA)
How the LRA has improved the position of TES employees:

An employee who earns below the threshold amount (set by the BCEA) 22
and who is not engaged in “temporary services” is regarded as an
employee of the client.

An employee will be considered to be performing temporary services

when:

1. The period of service does not exceed three months

2. The work is rendered as a substitute for an employee who is
temporarily absent
3. The work falls in any category or is for a period of time which is
deemed to be a temporary service by a bargaining council
agreement or sectoral determination
 23
So if you’ve been working for more than 3 months, you’re not
a substitute employee and you aren’t deemed a temporary
employee by any bargaining council agreement, this means
that you are an employee of the “client” and can sue them re
unfair dismissal or unfair labour practices.

It hasn’t been decided if this means the employee becomes an

official employee of the client and not of the TES.
e.g. construction worker, contract ends when the job ends.

Fixed term employees 24

What is a fixed-term contract? (Contactors)

S 198B (1) defines a fixed term contract as a contract of employment that

terminates on:

• The occurrence of a specified event

• The completion of a specific task or project

• A fixed date, other than the employee’s normal or agreed retirement age
The categories of workers excluded from the protective
measures of section 198B(1) 25
1. Employees who earn above the threshold determined by the
minister (R205,433.30 per year)
2. Employers with fewer than 10 employees
3. Employers with between 10-50 employees and whose
business has been in operation for less than 2 years
4. Employees whose fixed term contracts are permitted by
statute, collective agreements or sectoral
determination. Have their own remedies – don’t need the
LRA.
How does the LRA seek to protect employees engaged in fixed term
contracts?

26
An employer may not conclude a fixed term agreement with an
employee which exceeds three months unless the employer can
demonstrate a justifiable reason for doing so.

The LRA specifies a number of justifiable reasons:

• The employee (fixed term employee) is replacing another employee

who is temporarily absent from work
• The employer is experiencing a temporary increase in the volume of
work which will not continue beyond 12 months
• The employee is a student or recent graduate who is receiving training
or gaining work experience
• The employee is employed to work specifically on a certain project
that has a defined duration
• The employee is a non-citizen who has been granted a work permit 27
for a specific period
• The employee is performing seasonal work
• The employee’s salary is funded by an external source for a
specific duration
• The employee is working as part of an official public works or job-
creation scheme
• The employee has reached the normal retirement age applicable
in the employer’s business

Its important to establish who is a fixed-term worker because the general rule is
that, when employed for longer than 3 months, an employee is deemed an
indefinite employee who can expect to remain In employment (leads to cases of
unfair dismissals)
If employed for longer than 12 months = entitled to severance pay.
 An employee who is mostly paid in reference to the TIME worked

Part-time employees 28

• Works for an employer only

at certain times of the day,
for examples mornings or
at night-time.
• Works certain days of the
week, mostly limited to
three days per week
• Now regarded as
permanent
Their protection refers to being treated similar to full-time employees – equal
access to training and to apply for open positions.
 Casual work

• Work for a short duration, as and when required.

• An employer might have a wide range of casual workers who he will select from
to work for less than 3 days per week.
• The court decided that this is still an employment relationship (even on the days
that the casual employees aren’t working).
Unlawful contractual terms usually render contracts void / voidable (one of
the 5 requirements of a valid contract) and attract criminal sanction.

Unauthorized and
illegal work
 Prostitutes 31

KYLIE V CCMA and others ; unfair dismissal of a prostitute.

• The Labour Court initially held that a prostitute was not entitled to protection
against unfair dismissal in terms of the LRA as the courts (and the CCMA) would not
sanction or encourage illegal activities.
• However, Labour Appeal Court, which held that the scope of rights under the
Constitution is extremely broad and extends to everyone and S 23 right to fair labour
practices includes sex workers, even if not covered in LRA.
• An employment relationship exists despite the illegality of the type of worked
performed. She qualified for the definition of ”employee” under the LRA
• Due to the fact that there is no valid contract of employment she will not be
protected against her dismissal.
• Her claim will therefore in terms of s23 of the Constitution be a civil claim (she
reached a settlement with her former employer).
Whenever there is more than one available interpretation of a piece
of law, one always goes with the constitutional interpretation.
32
s 23 refers to “everyone” and the Constitution emphasizes freedom
and rights FOR ALL

The Labour Appeal Court also held that the appellant was to be
considered as an employee for the purposes of the LRA and the
Constitution. The Court noted that sex workers could also be entitled
to form and join trade unions although collective agreements
between brothels and sex workers which amount to the commission
of a crime would not be enforceable.
Most of the time, these cases don’t go to court because the ee is scared to be deported.

Foreign workers 33

Discovery Health Limited v CCMA and others

• Similar to the Kylie case the court held that illegal foreigners do not receive any
protection under labour legislation but under section 10 and 23 of the
constitution.
• The court had to decide whether an employee with a valid contract of employment
but without a valid work permit could claim unfair dismissal.
• The court looked at the Immigration Act, which prohibits employment of an illegal
foreigner (or foreigner whose status does not authorise him/her to be employed in
South Africa).
• Any employer who knowingly employs an illegal foreigner or foreigner in
contravention of the Act commits an offence.
• Employer is obligated to pay such employee.
An employee who is employed without a valid work permit is
entitled to enforce any claim that the employee may have in terms
of any statute or employment relationship against his or her
employer or any person who is liable in terms of the law
34
The reason being that the Immigration act isn’t trying to render the
contracts void and the definition of “employee” is wide enough to
mean a foreign national  thus the rights acquired by the ee
through the employment contract are protected but the contract
itself is void / voidable.
Who is the employer?
Not defined in any south African legislation.

Accepted that an “employer” should be defined in relation to the

definition of an “employee” 36
s 213 of the LRA
(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.

For present purposes an “employer” may be defined as:

1.Any person or body which employs any person in exchange for

remuneration, and

2.Any person who permits any person to assist him/her in

conducting his/her business

Thus labour broker or TES is deemed to be the “employer” of a person

whose services have been obtained for, provided to, a client for
reward.
Liability of labour brokers:

An employee employed by the labour broker may hold the TES and its client jointly
and severally liable if the TES contravenes :
37
1. A collective agreement concluded in bargaining council regulates terms and
conditions of employment ;
2. A binding arbitration award regulates terms and conditions of employment ;
3. BCEA;
4. Determination made in terms of BCEA.
Employment tax incentive act
38
This Act encourages companies to employ young people between the
ages of 18 and 29 by granting them tax incentives.

It is hoped that such young employees (mostly graduates) will gain the
necessary skills and practical experience that will increase their
employability and enable them to take up employment elsewhere
later
 Case law
Please look at your prescribed case list, I am only making
available some summaries and case points, you still need
to give regard to THE FULL LIST OF CASES!
Another case dealing with the difference between an employee and a
contractor/freelancer

SABC v McKenzie 1991 (1) BLLR 1 (LAC) 40

• an employee is paid a salary whereas a freelancer is paid a fee for performing a specific task;
• an employee is obliged to contribute to a group life insurance scheme, a pension fund and a medical aid,
whereas a freelancer is not – it follows that a freelancer does not receive a pension, life insurance, medical
aid, or a housing subsidy from the SABC;·
• an employee is entitled to annual leave whereas a freelancer is not;
• an employee usually receives an annual bonus in the form of a thirteenth cheque, whereas a freelancer does
not;·
• an employee receives an annual increase in salary which is negotiated between the SABC and the union
representing the employee, whereas a freelancer receives an increase in fees, fixed by the SABC, which is
usually an increase of about ten percent;
• an employee is entitled to sick leave, whereas a freelancer is not;·
• an employee is subject to the discipline of the SABC, whereas a freelancer is not
• unlike an employee, a freelancer is entitled to take other work, without obtaining the permission of the
SABC, unless there is a potential for conflict;
• an employee has tax deducted from his salary each month, depending on the applicable tax rate, whereas a
freelancer, by arrangement with the Receiver of Revenue, has a flat rate of 25% per month deducted from his
The Court held that some important characteristics of the contract of employment and
the contract of work are:

1. The object of the contract of employment is the rendering of personal services by

the employee to the employer. The object of the contract of work is the performance
of specified work or the production of a result.
41
2. In the contract of employment the employee will be at the beck and call of the
employer to render personal services at the employer’s behest. The independent
contractor is not obliged to perform work personally, unless specifically agreed upon.
3. The services to be rendered in a contract of employment are at the disposal of the
employer who, subject to repudiation, may or may not decide to have them
rendered. The independent contractor is bound to perform specific work or to
produce a specified result.
4. The employee is subordinate to the will of the employer. The independent
contractor is on the same footing as the employer. The independent contractor is
bound to produce in terms of the contract of work not by the orders of the employer.
The independent contractor is his or her own master.
5. The contract of employment is terminated by the death of the employee. The
death of the independent contractor does not necessarily terminate the contract of
work.
6. A contract of employment terminates on expiration of the period of service. The
contract of work terminates when the work is completed.