Who is an employee?

The provisions of section 200A of the LRA provide a rebuttable legislative presumption as to who is an employee which is to be little changed by the amendments. The amendments simply provide that the definition be expanded in order that the presumption applies to all of the employment laws.176

There has been little change to this section and as such it is envisaged that the status quo regarding the establishment of who is an employee and who is not will remain. When establishing whether or not someone is an employee or an independent contractor the courts follow an approach called the “dominant impression” test. This approach necessitates the evaluation of all aspects of the employment contract and the relationship whereafter a classification can be made based on the dominant impression. In terms of this test no single factor decisively indicates the presence or absence of an employment relationship. This approach differs from the approach adopted when applying the presumption, as a presumption is made when one of the listed criteria exists.177

The true relationship between the parties may not always be properly reflected in the employment contract. In cases such as these the courts need to have regard to the realities of the relationship irrespective of the contents of the employment contract. In some cases the legal relationship between the parties may be gleaned from the contents of the

176 _{http://d2zmx6mlqh7g3a.cloudfront.net/cdn/farfuture/dPSmUIItkVRwe8LQC8H44-zc1-}

yGDJKkNm2OgrJjhV0/mtime:1381419710/files/131003anglol.pdf (Accessed on 12 November 2013). 177 _{http://www.worklaw.co.za/SearchDirectory/Codes_Of_Good_Practice/staff.asp (Accessed 14 November}

employment contract. In practice, however, an inspection of the contract of employment and an analysis of its provisions will only definitively determine the true nature of the relationship if the parties expressly state that the provisions are consistent with the realities of the relationship. Where the court finds that the true nature of the employment relationship differs from what is contained in the employment contract, the court must have regard to the realities of the relationship. This becomes particularly important where workers may have agreed at the outset to be classified as independent contractors due to their lack of bargaining power.178

Disguising the employment relationship to resemble that of an independent contractor has been a significant reality in South Africa and has been dealt with by the courts on many occasions. The International Labour Organisation defines a “disguised employment” relationship as occurring when the employer treats an individual as other than an employee when in fact that person is an employee. A contract that designates someone as an independent contractor when in fact that person is an employee remains a contract of service. In order to ascertain who is an employee, the courts have developed a number of tests.179

The first test was formulated in Colonial Mutual Life Assurance Society Ltd v Macdonald180 and was called the control test. This test analyses the degree of control in the hands of the employer. The test requires that for an employment relationship to exist, there must be a large degree of control by the employer over the employee. The test requires that an employer must not only have sufficient control to determine what work needs to be done but must also determine how the work must be done.181

The organisation test is based on an assumption that the test of being a servant does not entirely rest on the degree of submission to instructions. It is more dependent on whether that person is part and parcel of the organisation. The test acknowledges the degree to which someone is accepted in a manner congruent with that of an employee by the organisation despite the fact that an employer many not be able to exercise very much control over the employee. The problem with the test is the difficulties associated with the

178 _Ibid.

179 _Ibid.

180 _{1931 AD 412 at 434-435.}

accurate measurement of inclusion into an organisation. The test is considered by many to be too vague to be of any real value.182

The courts have relied heavily on the multiple or dominant impression test in their efforts to differentiate between employees and independent contractors. This test requires that a number of factors be taken into account, and after having done this the court arrives at what is referred to as a “dominant impression” as regards whether it is felt that the worker is an employee or not. The factors taken into consideration are:

 the right to supervision;

 the extent to which an employee is reliant on the employer when performing work;

 whether the worker is permitted to work for other employers or not;

 if the hours of work are determined by the employer;

 whether the worker must perform work-related duties personally or not;

 whether the worker receives a fixed rate of pay or commission;

 whether the employer provides the means of production or not;

 whether or not the employer has the right to discipline the employee.183

In SABC v McKenzie184 _{the Labour Appeal Court re-visited six crucial differences between a} contract of employment and a contract of work, first identified by the Appellate Division in

Smit v Workmen’s Compensation Commissioner.185 _{These factors are often cited in} judgments and are set out diagrammatically as follows:186

Employee Independent Contractor

Object of the contract is to render personal services.

Object of contract is to perform a specified work or produce a specified result.

Employee must perform services personally. Independent contractor may usually perform through others. Employer may choose when to make use of

services of employee.

Independent contractor must perform work (or produce result) within period fixed by contract.

The employee is subordinate to the employer. The independent contractor is on an equal footing with the employer.

182 _{Basson et al Essential Labour Law 25.} 183 _Ibid.

184 _{(1991) 1 BLLR 1 (LAC).} 185 _{1979 (1) SA 51 (A) at 62D-G.}

186 _{http://www.worklaw.co.za/SearchDirectory/Codes_Of_Good_Practice/staff.asp (Accessed 14 November} 2013).

Contract terminates on death of employee. Contract does not necessarily terminate on death of employee. Contract also terminates on expiry of period of

service in contract.

Contract terminates on completion of work or production of specified result.

In 2002 the LRA was amended to include a presumption of who is an employee. In terms of this provision is that, if one or more of the factors listed are present, then the worker will be considered an employee until proved otherwise. The factors listed in this rebuttable presumption in terms of section 200A of the LRA will not change when the amendments are introduced and are as follows:

 the work performed is subject to the control of another person;

 the person’s working hours are determined by another person;

 in cases where a worker works for an organisation, the person forms part of that organisation;

 the person works for the other person for more than 40 hours over a three-month period;

 the person is economically dependent on the other person;

 the person is provided with the tools of work by the other person;

 the person works only for that person to the exclusion of all others.187

This statutory presumption does not apply to persons earning in excess of the prescribed threshold contained in section 6(3) of the BCEA.188