In 2023, many businesses are working in new, collaborative ways. This means that the line between employment and independent contracting, can get blurred. In this article we explain how employers can prevent disputes around employees vs independent contractors.
The annual threshold that is excluding employees from the BCEA
Section 6 of the Basic Conditions of Employment Act (BCEA) says that the Minister of Labour must publish a determination of the yearly threshold which excludes employees from certain parts of the BCEA.
What does this mean for employees and employers?
There is an important consequence that most employees and employers are not aware of: the rebuttable presumption as contained in Section 200A of the Labour Relations Act (LRA) does not apply to employees earning above the yearly threshold published by the Minister of Labour.
This means that we cannot automatically assume that an employee is an employee and not an independent contractor. It is for the employee to prove that he or she is an employee and not an independent contractor.
How to avoid a dispute as an employer
The above does not seem to be complicated but it can get complicated quite quickly.
For example, a medical practice hire locum tenens as independent contractors to do a specific task at the practice. The independent contractor chooses his/her shifts and is free to work for any other practice and is not bound to one practice. Is the locum tenens an independent contractor or employee? Bear in mind, the locum tenens earn well above the yearly threshold so the rebuttable presumption is not applicable.
The easiest way to avoid the above dilemma is to ensure that a service level agreement is conducted between the company and the independent contractor. If no service level agreement is in place, the argument can be made that the independent contractor is an employee.
How the employer can identify an independent contractor
Businesses should keep the following factors in mind when determining whether an independent contractor is a true independent contractor, or an employee.
A true independent contractor will:
1. Will be a registered provisional taxpayer
2. Will work his/her own hours
3. Runs his/her own business
4. Will be free to work for more than one employer at a time
5. Will render invoices for service done
6. Will not be subjected to normal employment matters like UIF and PAYE
