There will likely be a point in your career where you will take on a contract job. This could be for many reasons. Maybe you have been retrenched, are coming back from being a stay at home parent or are returning from a stint overseas. Whatever the reason, always be sure to know your rights as a contractor.
Don’t be fooled. Having a contract job means you are still an employee. The Basic Conditions of Employment Act does not differentiate between contract employees, independent employees, temporary employees etc. Those classifications of employees are in the heads of the employer giving them a false sense of security, thinking that they have found a loophole in the act – the act is vastly different. The act simply refers to “employees”. In some sections, the words “independent contractor” is mentioned, but we will cover that later.
So what is an Employee?
According to the BCEA, an employee is defined as:
- A 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 an employer.
Section 83A of the BCEA goes on to state that an employee is:
A person who works for, or renders services to, another person, is presumed, until the contrary is proved, to be an employee, regardless of the form of the contract, if any one or more of the following factors are present:
i) The manner in which the person works is subject to the control or direction of another person;
ii) the person’s hours of work are subject to the control or direction of another person;
iii) in the case of a person who works for an organisation, the person is a part of that organisation;
iv) the person has worked for that other person for an average of at least 40 hours per month over the last three months;
v) the person is economically dependent on the other person for whom that person works or renders services;
vi) the person is provided with tools of trade or work equipment by the other person;
vii) or the person only works for or renders services to one person.
For a more in-depth explanation read: Code of Good Practice: Who Is An Employee
It is important to remember those conditions and that only one of those conditions need to apply for you to be considered an employee. All too often we hear of situations where people have said they are independent employees only to inform them that they are actually contracted employees.
What is a Contract Employee?
As stated above, a contract employee is an employee, however, you are on a fixed term contract. The reasons for this could be maternity cover (which contract employees do not have to receive), a specific project or a particularly busy season for the company. The fixed term is the difference between a permanent job and a contract job. What is important to remember as a contractor/temporary employee is that you receive your remuneration less all statutory deductions from your employer (same as for a permanent employee), be it the Temporary Employment Service or company. You are also entitled to accumulate annual leave, sick leave and also entitled to receive public holiday pay. At the end of your contract job, you are paid out for any annual leave accumulated that you have not used.
What is an Independent Contractor?
The best way to explain this is simple, an independent contractor is a person that renders a service to several people and does not meet any of the conditions stated in section 83A of the BCEA. Plumbers and builders that come in to renovate are independent contractors for example. They invoice for services rendered and are totally responsible for paying their own taxes/statutory costs across to the Receiver of Revenue. You are not employed by the company, you do not have set hours and you do not report to a person within the organisation. It is important to know and understand that an independent contractor does not have the same protection under the Labour Law as an employee. Independent contractors are not able to lodge unfair dismissal claims at the CCMA as they are governed by contract law and not labour law.
So when entering into a contract with an employer ensure that the terms of the contract are consistent with the law, be it contract law or labour law and if it is the latter, you are not an independent contractor, you are an employee.
Contract job workers below the Threshold
The threshold has been created in order to protect employees earning below a certain salary, currently at R205 433.30 p/a (R17 119.44 p/m), from being exploited by companies continually renewing contracts and thus not being liable to pay out the benefits enjoyed by the permanent workforce. In July 2017 the Labour Appeal Court handed down judgement providing a more clear understanding of the “Deeming provision” as set out in section 198A or the LRA 1995. The court has found that the “Deeming provision” means that the company employing the contract employee becomes the sole employer of the contract employee after a period of 3 months. This means that either the contract employee becomes a permanent employee or are provided with similar benefits to the permanent employees.
For more on this read Congratulations client, you’re the sole employer of your TES employees
Written by Stuart Welch. Contact him for your Commercial Finance recruitment needs at email@example.com