The Labour Relations Act defines an employee as:
- 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
- any other person who in any manner assists in carrying on or conducting the business of the employer.
In terms of the Labour Relations Act and the Basic Conditions of Employment Act a person who earns below the threshold is presumed to be an employee where one of the seven factors is established. Where the individual earns above the threshold the factors are used as a guideline in determining whether the person is an employee or not.
The seven factors are as follows:
- The manner in which the person works is subject to the control or direction of another person;
- The person’s hours of work are subject to the control or direction of another person;
- In the case of a person who works for an organisation, the person forms part of the organisation;
- The person has worked for the other person for an average of at least 40 hours per month over the last 3 months;
- The person is economically dependent on the other person for whom he / she works or renders services;
- The person is provided with the tools of the trade or work equipment by the other person;
- The person only works for or renders services to one person.
In cases where the presumption is applicable the person disputing the employment may lead evidence to rebut this presumption. The exclusion of an employment relationship in an agreement is therefore not an overriding factor. The courts follow an approach known as the dominant impression test. In terms of this approach all aspects of the relationship are considered.
It is therefore advisable that you consult with your attorney prior to concluding independent contractor agreements.