Legal Articles

The existence of an employment relationship is usually evidenced by an employment contract, which sets out the terms and conditions of such employment relationship. This is encouraged as it makes things easier for the parties to refer thereto, should a need arise in future. However, there are instances where parties are supposedly in an employee-employer relationship, albeit without a contract of employment signed between them. In subsequent disputes, how do adjudication forums deal with such situations?

In an instance where a party registers a dispute for unfair dismissal, the foremost fact that must be established and proven is that such party is an employee. Usually this is done by producing an employment contract signed between the parties (employee and employer). This is critical in important respects because, the Labour Relations Act 66 of 1995 (LRA) and the Basic Conditions of Employment Act 75 of 1997 (BCEA) protect employees and not independent contractors. The lawful termination of an employment relationship is done as per the LRA, while the termination of an independent contractual relationship is done as per the terms of the contract between the parties.

The resolution of labour disputes where it is common cause that the other party is an employee, is somewhat without any problems. However, where there is disagreement on whether the other party is an employee or not, it usually presents difficulties. In such a situation the adjudication forum will have to employ theory to fact, to ascertain whether the other party is indeed an employee, before going into the crux of the dispute.

There are three theories to determine whether a party is an employee or not, where an employment contract is not available.

The Control Test

This test concentrates on the element of control, by the employer on how the “employee” discharges their duties and responsibilities. An important distinction should be emphasised here; An independent contractor is mostly not controlled in how they will work on a project, the customer is more concerned about the end-result or product. An Independent Contractor Agreement usually sets the terms of the required product/project, the quality as well as the time frame within which it must be delivered. The independent contractor will work around their own modalities and logistics to deliver the product/project.

On the other hand, an employer has the privilege to prescribe not only what the duties of an employee are, but at what time they must clock in and out of the workplace.

The Control Test however, has shortcomings in that some professions are classified as high skill, such that the employer’s extent of control is minimal and therefore the use of the Control Test as the sole determinant of an employment status, may not be helpful.

Organisation Test

This test puts emphasis on the extent to which the “employee” formed part and parcel of the organisation/company i.e. how integrated the “employee” is within the company. As an example, an employer who is disputing that a certain party is their employee might find it difficult to argue against claims that the “employee” was invited to attend Year End staff functions, benefitted from office stationery orders and wore a staff uniform, despite the fact that there is no employment contract. However, this theory is a bit vague and the Courts have not favoured to approach it.

Dominant Impression Test

This test is more preferred by our Courts, as it centres its approach on all the relevant factors as a whole and not only on individual elements such as control or integration. The below are some of the factors that the Courts look at:

• Employer’s right to decide who will do the work;
• The authority to discipline and dismiss;
• Obligation of the employee to work for certain hours;
• Whether remuneration is paid for days/hours worked or only for a certain project upon completion;
• Whether remuneration is on commission basis ;
• Whether the employer provides equipment/tools and the workspace ( e.g. office) for the discharge of the duties;
• Whether the employer may utilise the labour potential of the employee as he/she sees fit;
• etc

The above are but some of the factors that the Courts and labour adjudication forums look at in their determination of whether a party is an employee or not. The Dominant Impression test is more extensive and inclusive of the relevant factors such that it is preferred over the other tests.

At the end of the day, we encourage parties to conclude valid employment contracts so that disputes may be resolved with clear precision as there is a record for reference purposes.  At Van Deventer and Van Deventer Incorporated we assist with labour and employment law adjudication at various fora. We also assist in family law matters such as maintenance, divorces, protection orders, Rule 43 applications, Rule 58 applications, general litigation, civil matters, criminal, personal injury, company law, deceased estates amidst a wide array of others.

Contact us for comprehensive assistance.

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