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Employment status and contracts of employment

It is important that the status of an employee be established from the beginning of the employment relationship – permanent, fixed term, temporary, and so on.

 

The Basic Conditions of Employment Act, in section 29, provides for certain written particulars of employment to be provided as a minimum, and every employer is legally obliged to provide all employees with these minimum particulars in writing not later than the first day of employment.

 

This minimum requirement, however, is not sufficient. Employers are well advised to enter into a written contract of employment with every employee. But what is the contract of employment, and what type of contracts can be used?

1.1      Definition: contract of employment

“A contract of employment is a reciprocal contract in terms of which an employee places his services at the disposal of another person or organisation, as employer, at a determined or determinable remuneration in such a way that the employer is clothed with authority over the employee and exercises supervision regarding the rendering of the employee’s services[1]

1.2      Definition: letting and hiring of piece work

The independent contractor contract is another method used by that certain class of employers to escape their legal obligations and to defraud the employee of his/her legal entitlement. The true independent contractor’s contract is not a contract of employment at all – it is a contract of work. This contract can be defined as follows:

 

“The letting/hiring of piece work is a reciprocal contract between an employer and an independent contractor in terms of which the latter undertakes to build, manufacture, repair or alter a corporeal thing within a certain period and the employer undertakes to pay the contractor a reward in return therefore[2].”

 

An example of a true independent contractor is the plumber you call in when your hot water geyser bursts – he comes in, quotes you for the job – you accept his quote (thus enter into a contract of work) he replaces your old geyser, you pay his invoice and the Contract is ended.

 

A true independent contractor:

 

  • will be a registered provisional taxpayer
  • will work his own hours
  • runs his own business
  • will be free to carry out work for more than one employer at the same time
  • will invoice the employer each month for his/her services and be paid accordingly
  • will not be subject to usual “employment” matters such as the deduction of PAYE or UIF from his invoice, will not receive a car allowance, annual leave, sick leave, 13th Cheque and so on.

 

Employers who outsource their labour requirements to a Labour Broker are not in contravention of the Act, but they must realize that they are not hiring “Independent Contractors.” The benefits provided for in the BCEA must be provided to these workers by the Labour Broker. More and more employers are going the route of outsourcing labour requirements. It solves a lot of problems, and in many cases can prove to be far more economical than employing labour. For example, the employer does not have to provide pension or medical aid, can easily reduce staff requirements during “valley” periods, increase staff during peak periods and level out staff requirements for the plateau periods. The increasing or decreasing of staff can be done without the employer becoming involved in any expensive retrenchment exercises or subsequent visits to the CCMA.

 

What is the status of your employees? Are they employees, fixed term contractors, independent contractors, temporary employees, or indeed, even probationers in disguise?

 

The dilemma continues – what category do you place your employees under?  And what is more, is the status of your employees fair and legal? Or are you “bucking the system?”

 

The employer says the working relationship is that of an independent contractor, and such persons don’t qualify for annual leave or sick leave, no 13th cheque and no pension or medical aid.

 

Or he says the relationship is that the employee is a ‘temp.’  The employer is the agency from whom the employee is hired and they must provide annual leave etc. Firstly, it must be understood that this dilemma applies only to those persons who earn below the threshold income of R172 000.00per annum (BCEA section 83A (2). There is as yet no definition of an employee or no presumption as to who is an employee in the Basic Conditions of Employment Act or the Labour Relations Act applicable to persons earning more than the threshold amount. There are, however, other tests such as the dominant impression test and other methods that can be applied to determine whether a person of that category is an employee or not.

 

Persons earning below the threshold amount may, if necessary, approach the CCMA for an advisory award as to whether that person is an employee or not. (see section 148 LRA) In other words, to establish whether the relationship is a contract of employment or a contract of work. (BCEA section 83A (3))

1.3      Definition: employee

Since only persons defined as “employees” are protected by legislation and have recourse to the dispute resolution provisions of the LRA, it is necessary to establish whether a person is an employee or not. The practice to describe an employee as an independent contractor was found by the courts to be not conclusive. The real “test” is whether the true relationship between the parties is that of an independent contractor or employee.

 

The LRA defines an employee as;

(a) 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

(b) any other person who in any manner assists in carrying on or conducting the business of an employer.

Paragraph (b) of the definition was intended to prevent employers from evading the provisions of labour legislation by concluding contracts which would be considered as independent contractors contracts as opposed to employment contracts.



[1] Du Plessis & Fouche, 2006. A Practical Guide to Labour Law, 9

[2] Du Plessis & Fouche, 2006. A Practical Guide to Labour Law, 9

 

The contract of employment

The contract of employment is the foundation of the relationship between an employee and his employer. The contract links the employer and the employee in an employment relationship. The existence of an employment relationship is the starting point for the application of all labour law rules: if there is no employment relationship between the parties, the rules of labour law do not apply to that relationship[1].

1.1      General requirements

The parties must enter into the contract freely and voluntarily. Forced labour is prohibited – in terms of section 48 of the BCEA no one can be compelled to work for another. Likewise, no employer can be compelled to take a particular person into service, and as all contracts in our law, parties cannot enter into illegal contracts of employment.

 

This last requirement is illustrated in Georgieva – Deyanova / Craighall Spar [2004] 9 BALR 1143 (CCMA) where an employer addressed a letter to the employee calling on her to furnish the required proof of legal documentation or a South African identity for her to work in South Africa. A further letter was also sent to the employee for her to provide proof with a deadline. On 1 July 2003, the employer informed the applicant that it could not employ her because of her failure to provide proof of her legal status. The employee approached the CCMA, claiming that she had been unfairly dismissed. In line with three other decisions, the commissioner found the CCMA did not have jurisdiction as the contract of employment was void ab initio (to be treated as invalid from the outset).

 

It is also necessary for the parties to be in agreement as to the nature of the contract. The employee might for instance believe that he is offered a contract of employment, whilst the employer believes that they are concluding an agency contract. Not only the nature of the contract is important – the parties must also be in agreement as to the contents of the contract.

1.2      Formalities

By common law no formalities are required when an employment contract is concluded. The contract of employment arises when the employee accepts them employer’s offer unconditionally. Although the common law does not require the contract to be in writing, section 29 of the Basic Conditions of Employment Act, requires an employer to supply the employee with written particulars of employment – this does not mean that a written contract is required, or that the contract is void. Certain contracts of employment must be in writing – this is required by other statutes. Examples are those of merchant seamen, learners under the Skills Development Act and candidate attorneys.

 

When the contract is concluded, the parties must agree on the work the employee is required to perform. The employee offers his/her services (labour potential) to the employer (either an individual or juristic person such as a company.) The employee is obliged to do the agreed work, as well as any unspecified task related to the main work, provided that it is not unlawful or beyond the area of expertise of the employee. This means that the employer can tell the employee what to do and how to do it.

 

The parties must agree on the remuneration to be paid to the employee at conclusion of the contract. Remuneration may be payable in cash and/or in kind (other benefits), and can take many forms, such as a monthly or weekly salary, weekly or daily wages, or even irregular payments.

 



[1] Basson et al, 2005. Essential Labour Law, 19

 

What does POPI compliance mean?

By Jan du Toit

 

Latest developments – Registration of Information Officers:

 

On 17 May 2021 the Information Regulator’s long awaited online portal went live for the registration of Information and Deputy Information Officers.

 

The Information Officer of a Responsible Party is the person at the head of your company (CEO or MD) or any person acting in such capacity, or specifically appointed by the MD or CEO to be the Information Officer. Registration must be completed before the end for June 2021.

 

The address for the portal is  https://justice.gov.za/inforeg/portal.html   

 

The following information is required to successfully register: 

  • Company name.

  • Company registration number.

  • Company type.

  • Company physical and postal addresses.

  • Company telephone and fax numbers.

  • Information Officer gender, nationality, full name and surname, ID or passport number.

  • Deputy Information Officers same details as per above.

 

POPIA Compliance – what must be done?

With a little more than a month left before POPI becomes fully effective, many employers may find themselves out of time to become fully compliant to amongst other considerations, the 8 processing conditions prescribed in the Protection of Personal Information Act.

 

To be considered compliant the following must be considered and applied in the business of a Responsible Party before 1 July 2021. 

  1. POPI training / awareness sessions for the CEO / MD, managers and others tasked with the company’s POPI compliance project. Have a look on our website for the next POPIA training dates.

  2. Compliance audit to be conducted company-wide per department / division to determine the current processing practices within the organization and to establish what needs to be done to be compliant.

  3. Correction of contraventions as identified, and to introduce reasonable technical and organizational measures to prevent the loss or unauthorized access of Personal Information.

  4. Introduction of Data Subject rights and consent in the business through policies and consent clauses / paragraphs / contracts.

  5. The introduction of a PAIA manual (Promotion of Access to Information Act) that incorporates data subject rights and participation in terms of POPIA. This manual must be published on one of the company’s websites. It is also important to note that the current exemption granted by the Minister of Justice for some business to not have such a manual in place currently, expires at the end of June 2021.

  6. General staff POPI policy and legislation awareness training.

  7. Registration of the company’s Information Officer (the CEO, MD or any person acting in such position).

  8. Follow-up assessment on compliance measures and adherence thereto.

 

It is important to note that no institution, not even the Information Regulator, can “accredit” any Responsible Party in South Africa to be compliant in terms of legislation. Compliance (or otherwise) will only be determined should an investigation be launched by the Information Regulator following a complaint. Should such an investigation confirm a lack of compliance, consequences such an administrative fine not exceeding R10m may follow (which one may luckily pay off in instalments). Further to this those whose rights are infringed upon by a Responsible Party not adhering to the requirements of POPIA, may also institute civil proceedings. Such  proceedings may result in compensation being awarded for loss, as well as aggravated damages determined at the discretion of the court.

 

In terms of section 19 of the Act, the Responsible Party (business owner / employer) is required to introduce reasonable organizational and technical measures to secure the integrity and confidentiality of Personal Information. The organizational measures referred  to above includes inter alia both internal and external policies to introduce the principle of protection of personal information in the workplace, as well as the rights of data subjects.

 

To allow you more time to focus on your business, the author of this article compiled a bundle of detailed policies for your business, ready to use. This includes all relevant forms to be used and a template document with draft consent clauses / paragraphs / rules  to be incorporated into service and employment contracts, job applications, credit and other applications forms, WhatsApp and Facebook groups / pages, and Independent Contractor agreements.

 

Also included is an Operator Agreement as required in terms of section 21 of the Act and a consent letter for existing clients / service providers, to agree to the continued processing of their Personal Information beyond June 2021.

 

The policies bundle includes: 

  • Privacy notice template to be published on your website.

  • Personal information protection policy.

  • Personal information retention policy.

  • Data breach policy.

  • Data breach register - form.

  • Data breach report - form.

  • Data security policy.

  • Data subject access request policy and procedures.

  • Data subject access request forms.

  • Processing agreement with third parties as Operators - contract.

  • Data subject participation - draft consent paragraphs / clauses to be incorporated into service and employment contracts, job applications, credit and other applications forms, WhatsApp and Facebook groups / pages and Independent Contractor agreements

  • Guidelines on the appointment of deputy information officers, inclusive of appointment letter.

 

For only R3750 you can now order you set of POPI policies, ready to use. Contact Jan du Toit for further assistance at [email protected]

 

 

 

 

 

 

 

 

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Strategic Human Resources Management (HRM) and - Business Partnering

27, 28 & 29 October 2021 (08:30 - 16:00)

Interactive Online Course

Employment Equity Committee Training

27 October 2021 (09:00 - 16:00)

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Health and Safety Representative and Committee Training Course

28 October 2021 (08:30 - 16:00)

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Managing Day to Day Issues/ Problem Employees Full day workshop

28 October 2021 (09:00 - 16:00)

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29 October 2021 (09:00 - 12:00) (Fully Booked)

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19 November 2021 (09:00 - 12:00)

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10, 11 & 12 November 2021 (08:30 - 16:00)

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Basic Labour Relations

12 November 2021 (09:00 - 16:00)

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The OHS Act and the Responsibilities of Management

18 November 2021 (08:30 – 16:00)

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AARTO and the Impact on Your Business

19 November 2021 (09:00 - 12:00)

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Compensation for Occupational Injuries and Diseases Course

25 November 2021 (08:30 - 16:00)

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POPIA: Protection of Personal Information Act

26 November 2021 (09:00 - 12:00)

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