Employee or independent contractor?

The question whether someone is an employee or an independent contractor is one which the courts and CCMA have had to consider time and again over many years.

The issue continues to crop up in legal disputes, because an independent contractor does not have the rights and protections of an employee.

The point is usually raised as a “jurisdictional” issue, which means that a decision-maker handling a dispute must decide the issue before they are entitled to consider the main dispute. This can be decisive in an unfair dismissal or similar dispute. If a person who claims unfair dismissal is not an employee but an independent contractor, then there is no question of unfair dismissal, and the legal dispute will not be considered further in that form. An independent contractor must instead rely upon the terms of the contract, in much the same way that businesses enforce contracts between them.

The Labour Court examined the question again recently, when a radio DJ approached the CCMA with an unfair dismissal dispute. The CCMA found that he had not shown that he was an employee, and refused to consider his claim of unfair dismissal. He approached the Labour Court and argued that the CCMA’s ruling was wrong, asking the Court to compel the CCMA to consider his unfair dismissal claim.

The Labour Court ultimately agreed with the CCMA that the facts showed that the DJ was not an employee.

Various aspects of the matter did suggest that the DJ might possibly have been an employee. His contract referred to a monthly salary, and salary reviews, for example.

However, the radio station for which the DJ had presented a show, had referred to him in all documentation as an independent contractor rather than an employee, and he had failed to challenge this. This suggested that he had been under no illusion that he was an employee.

He furthermore delivered invoices to the radio station for his “salary”, via a close corporation, which had other employees whom he paid to assist him with his radio show.

The Court indicated that the most important decisive factors to consider were whether the DJ was economically dependent on the radio station, whether he was subject to the radio station’s supervision and control, and whether he formed an integrated part of the radio station’s organisation.

The Court found that, although the DJ did not pursue other commercial activities outside of his work for the radio station, this was because he chose not to, and he was not truly economically dependent on the radio station. He was contractually entitled to pursue other work for non-competitors of the radio station, although he did not pursue it.

The Court found further that the DJ enjoyed extensive control over the number of hours he spent preparing his radio show, and also over show content, and was not truly under the supervision and control of the radio station as an employee would be.

Finally, although the DJ was issued with business cards and branded clothing by the radio station, this was not indicative that he was an employee, but was merely to facilitate marketing of the radio show.

Anyone approaching the CCMA should be prepared to lead evidence to show that they are an employee, in case this point is challenged. Employees should be alive to the impact that decisions about the wording of contracts and arrangements for payment may have on their status and rights. Someone who is truly an employee should not lightly agree to a scheme whereby they invoice for fees via a company, for tax or other reasons, as they may unwittingly affect the nature of their relationship and the protections they enjoy. The courts seldom assist persons in “having their cake and eating it too”.

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