Individual Labour Law – LLW2601 - SUMMARY
• South Africa is regulated by 3 main sources:
1. The Constitution
2. Labour Legislation
3. The law of contract regulated by common law
AN EMPLOYEE & AN INDEPENDENT CONTRACTOR
• 5 tests that have been developed by the courts & are used to determine who is an employee & who is an
independent contract:
1. Control test
2. Organization test
3. Dominant impression test
4. Economic capacity test
5. Reality test
• Who is an employee:
Any person, excluding an independent contractor, who works for another person or for the State & receives, or is
entitled to receive, any remuneration; & any other person who in any manner assists in carrying on or conducting
the business of an employer
• Labour law protects employees against unfair dismissal or exploitation and victimisation in the workplace
• Primary aims of the LRA is to promote sound relations between employers & employees in the workplace
• Independent contractor:
Contracted to perform a specified task or to produce a specific result (location conductio operis)
• Employee is appointed to render personal services in terms of a job description (locatio conductio operarum)
1. CONTROL TEST
• Looks at the control the employer has over the work the person does, manner in which work must be done, &
when & where the work must be done
2. ORGANIZATION TEST
• Looks at whether the person is part & parcel of the business / organization
• Person’s work must be integrated into the business – not just an accessory to the business
3. DOMINANT IMPRESSION TEST
• Favoured by the courts & considers employment relationship as a whole, rather than concentrating on only one
factor
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, Individual Labour Law – LLW2601 - SUMMARY
4. ECONOMIC CAPACITY TEST
• In Niselow v Liberty Life the court added a so-called ‘economic capacity test’, in terms of which an employees’
income-earning capacity is solely dedicated to the employer
5. REALITY TEST
• When determining the true status of a worker, the court will look at the ‘substance of the relationship as
opposed to the form thereof
• Control test (code: Who is an employee): control includes the right to determine what work the employee will
do, in what manner & what the working hours will be
• Control may be a term of contract
• Organization test – code states inter alia
• Traditional workplace no longer exists & employee does not need to work from employer’s premises in order
for an employment relationship to exist
• Tools of trade provided by the employer should not be interpreted narrowly and may range from a modern /
cellphone package to a set of screwdrivers
• Dominant – impression test, code confirms the importance of this test
• States there is no single decisive factor to determine the existence or absence of an employment relationship &
all factors should be considered when determining the nature of the relationship
EMPLOYEE INDEPENDENT CONTRACTOR
Object of the contract is to render personal services Object of the contract is to perform a specified work or
produce specified results
Employee must perform services personally IC may usually perform through others
Employer may choose when to make use of the IC must perform work (produce result) within a period fixed
services of the employee by the contract
Contract terminates on death of the employee Contract does not necessarily terminate on death of IC
Contract also terminates on expiry of the period of Contract terminates on completion of work or production of
service in the contract specified results
• LRA & BCEA amended in 2002 to include a rebuttable presumption as to who would be regarded as an
employee
• Presumptions do not apply to people earning more than the threshold amount determined by the MOL in terms
of the BCEA (Section 83A(2))
• LRA reads as follows: (Section 200A):
‘Until the contrary is proved, for the purpose of this act…, a person who works for, or renders services to, any other
person is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following
factors are present:
(a) The manner in which the person works is subject to the control or direction of another person
(b) The person’s hours of work are subject to the control or direction of another person
(c) In the case of a person who works for an organization, the person forms part of that organization
(d) The person has worked for that other person for an average of at least 40 hours per month over the last three
months
(e) Person is economically dependent on the other person for whom he works or renders services
(f) Person is provided with tools of trade or work equipment by the other person
(g) Person only works for or renders services to one person
Page 2 of 53
, Individual Labour Law – LLW2601 - SUMMARY
Example: Richard sold newspapers for a Sunday newspaper, Paper Palace. This was his only source of income since
he was unemployed during the week. Paper Palace had an area manager who phoned the vendors every Friday to
arrange when and where they will be picked up. The vendors are paid on commission basis. When Richard’s
services were terminated, he claimed unfair dismissal. The first step to get access to the ‘umbrella’ of labour law
protection, is to show that at least one of the factors in the presumption had been present in the work relationship.
Richard held that he was an employee because he reported to the area manager, he was supplied with the tools of
the trade (posters and the newspapers to sell) and he was economically dependent on Paper Palace.
Richard was consequently assumed to be an employee. Paper Palace then had the opportunity to rebut this
assumption. They had presented the following facts to show on a balance of probabilities that Richard was not an
employee:
• Richard did not form part of the organization
• The area member was a mere contact person for practical arrangements
• Richard was not under the control of the employer, Paper Palace
• The job necessitated him to work on Sundays and to be available to sell newspapers from 05h00 – 15h00
• The employer did not control what he did, so he could choose to sit under a tree for the duration of the time
if he wanted
• Richards was not economically dependent on Paper Palace as a result of their doing
• He was allowed to work for any other employer during the week but since he was unemployed, the selling
of newspapers was his only income
• However, the employer did not force him to only use his economic capacity for this purpose
The dominant impression test indicated that Richard was not an employee.
He could thus not pursue his claim in terms of labour law since he was an IC
NON-STANDARD EMPLOYEES
• LRA brought clarification and determines that ‘non-standard forms of employment’ relate to temporary
employees, fixed-term employees and part-time employees
• LRA regulates non-standard employment, extends more protection to vulnerable workers and promotes decent
work
• 3 categories of non-standard employees
1. Employees provided by a temporary employment service (TES) or so-called temporary employees
2. Fixed-term employees
3. Part-time employees
1. Temporary employment services (TES)
→ Who is a temporary employee?
• Employed by a temporary employment service & a TES: ‘any person who, for reward, procures for or provides
to a client other persons who render services to, or perform work for, the client; and who are remunerated by
the temporary employment service’
• Represented by a triangular form – involves 3 parties
1. Employee
2. TES / Labour Broker
3. Client
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, Individual Labour Law – LLW2601 - SUMMARY
TES / Labour Broker
Temporary employee Client
• Protect temporary employees, LRA sets a restriction on the duration of the use of labour brokers and temporary
employees supplied to clients
• Employer may appoint a temporary employee to a client for a period of 3 months or less or as a substitute for
an employee who is temporarily absent and then the period may be longer than 3 months (e.g. maternity leave)
• Certain services may appoint employees on fixed-terms for longer than 3 months even though they would earn
less than the BCEA threshold
• Employees who earn more than the BCEA threshold of R205 433 are excluded from the protection provided by
the LRA
• TES / Labour broker is responsible for its statutory obligations regarding the placed worker for as long as the
employee renders a temporary service to the client
• If non-compliance – employee deemed to be the employee of the client and employed on an indefinite basis
• Both the client and the TES / Labour broker become employers of the placed employee for the purposes of the
LRA because of the deeming provision
TES / Labour Broker = Employer
Temporary Client = Employer
employee
Page 4 of 53
• South Africa is regulated by 3 main sources:
1. The Constitution
2. Labour Legislation
3. The law of contract regulated by common law
AN EMPLOYEE & AN INDEPENDENT CONTRACTOR
• 5 tests that have been developed by the courts & are used to determine who is an employee & who is an
independent contract:
1. Control test
2. Organization test
3. Dominant impression test
4. Economic capacity test
5. Reality test
• Who is an employee:
Any person, excluding an independent contractor, who works for another person or for the State & receives, or is
entitled to receive, any remuneration; & any other person who in any manner assists in carrying on or conducting
the business of an employer
• Labour law protects employees against unfair dismissal or exploitation and victimisation in the workplace
• Primary aims of the LRA is to promote sound relations between employers & employees in the workplace
• Independent contractor:
Contracted to perform a specified task or to produce a specific result (location conductio operis)
• Employee is appointed to render personal services in terms of a job description (locatio conductio operarum)
1. CONTROL TEST
• Looks at the control the employer has over the work the person does, manner in which work must be done, &
when & where the work must be done
2. ORGANIZATION TEST
• Looks at whether the person is part & parcel of the business / organization
• Person’s work must be integrated into the business – not just an accessory to the business
3. DOMINANT IMPRESSION TEST
• Favoured by the courts & considers employment relationship as a whole, rather than concentrating on only one
factor
Page 1 of 53
, Individual Labour Law – LLW2601 - SUMMARY
4. ECONOMIC CAPACITY TEST
• In Niselow v Liberty Life the court added a so-called ‘economic capacity test’, in terms of which an employees’
income-earning capacity is solely dedicated to the employer
5. REALITY TEST
• When determining the true status of a worker, the court will look at the ‘substance of the relationship as
opposed to the form thereof
• Control test (code: Who is an employee): control includes the right to determine what work the employee will
do, in what manner & what the working hours will be
• Control may be a term of contract
• Organization test – code states inter alia
• Traditional workplace no longer exists & employee does not need to work from employer’s premises in order
for an employment relationship to exist
• Tools of trade provided by the employer should not be interpreted narrowly and may range from a modern /
cellphone package to a set of screwdrivers
• Dominant – impression test, code confirms the importance of this test
• States there is no single decisive factor to determine the existence or absence of an employment relationship &
all factors should be considered when determining the nature of the relationship
EMPLOYEE INDEPENDENT CONTRACTOR
Object of the contract is to render personal services Object of the contract is to perform a specified work or
produce specified results
Employee must perform services personally IC may usually perform through others
Employer may choose when to make use of the IC must perform work (produce result) within a period fixed
services of the employee by the contract
Contract terminates on death of the employee Contract does not necessarily terminate on death of IC
Contract also terminates on expiry of the period of Contract terminates on completion of work or production of
service in the contract specified results
• LRA & BCEA amended in 2002 to include a rebuttable presumption as to who would be regarded as an
employee
• Presumptions do not apply to people earning more than the threshold amount determined by the MOL in terms
of the BCEA (Section 83A(2))
• LRA reads as follows: (Section 200A):
‘Until the contrary is proved, for the purpose of this act…, a person who works for, or renders services to, any other
person is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following
factors are present:
(a) The manner in which the person works is subject to the control or direction of another person
(b) The person’s hours of work are subject to the control or direction of another person
(c) In the case of a person who works for an organization, the person forms part of that organization
(d) The person has worked for that other person for an average of at least 40 hours per month over the last three
months
(e) Person is economically dependent on the other person for whom he works or renders services
(f) Person is provided with tools of trade or work equipment by the other person
(g) Person only works for or renders services to one person
Page 2 of 53
, Individual Labour Law – LLW2601 - SUMMARY
Example: Richard sold newspapers for a Sunday newspaper, Paper Palace. This was his only source of income since
he was unemployed during the week. Paper Palace had an area manager who phoned the vendors every Friday to
arrange when and where they will be picked up. The vendors are paid on commission basis. When Richard’s
services were terminated, he claimed unfair dismissal. The first step to get access to the ‘umbrella’ of labour law
protection, is to show that at least one of the factors in the presumption had been present in the work relationship.
Richard held that he was an employee because he reported to the area manager, he was supplied with the tools of
the trade (posters and the newspapers to sell) and he was economically dependent on Paper Palace.
Richard was consequently assumed to be an employee. Paper Palace then had the opportunity to rebut this
assumption. They had presented the following facts to show on a balance of probabilities that Richard was not an
employee:
• Richard did not form part of the organization
• The area member was a mere contact person for practical arrangements
• Richard was not under the control of the employer, Paper Palace
• The job necessitated him to work on Sundays and to be available to sell newspapers from 05h00 – 15h00
• The employer did not control what he did, so he could choose to sit under a tree for the duration of the time
if he wanted
• Richards was not economically dependent on Paper Palace as a result of their doing
• He was allowed to work for any other employer during the week but since he was unemployed, the selling
of newspapers was his only income
• However, the employer did not force him to only use his economic capacity for this purpose
The dominant impression test indicated that Richard was not an employee.
He could thus not pursue his claim in terms of labour law since he was an IC
NON-STANDARD EMPLOYEES
• LRA brought clarification and determines that ‘non-standard forms of employment’ relate to temporary
employees, fixed-term employees and part-time employees
• LRA regulates non-standard employment, extends more protection to vulnerable workers and promotes decent
work
• 3 categories of non-standard employees
1. Employees provided by a temporary employment service (TES) or so-called temporary employees
2. Fixed-term employees
3. Part-time employees
1. Temporary employment services (TES)
→ Who is a temporary employee?
• Employed by a temporary employment service & a TES: ‘any person who, for reward, procures for or provides
to a client other persons who render services to, or perform work for, the client; and who are remunerated by
the temporary employment service’
• Represented by a triangular form – involves 3 parties
1. Employee
2. TES / Labour Broker
3. Client
Page 3 of 53
, Individual Labour Law – LLW2601 - SUMMARY
TES / Labour Broker
Temporary employee Client
• Protect temporary employees, LRA sets a restriction on the duration of the use of labour brokers and temporary
employees supplied to clients
• Employer may appoint a temporary employee to a client for a period of 3 months or less or as a substitute for
an employee who is temporarily absent and then the period may be longer than 3 months (e.g. maternity leave)
• Certain services may appoint employees on fixed-terms for longer than 3 months even though they would earn
less than the BCEA threshold
• Employees who earn more than the BCEA threshold of R205 433 are excluded from the protection provided by
the LRA
• TES / Labour broker is responsible for its statutory obligations regarding the placed worker for as long as the
employee renders a temporary service to the client
• If non-compliance – employee deemed to be the employee of the client and employed on an indefinite basis
• Both the client and the TES / Labour broker become employers of the placed employee for the purposes of the
LRA because of the deeming provision
TES / Labour Broker = Employer
Temporary Client = Employer
employee
Page 4 of 53
