LLW2601 Study Notes
Individual Labour Law
Exclusive Protection for Employees in terms of Legislation (Study Guide Unit 1 /
Prescribed book Chapter 2)
Who is an employee
An employee and an independent contractor
It is important to know the difference between an employee and an independent contractor as labour laws only
apply to employees.
The LRA, the BCEA, the EEA and the SDA all use the same definition of “employee”:
“…any person, excluding an independent contractor, who works for another person or for the State who receives,
or is entitled to receive, any remuneration; and any other person who in any manner assists in carrying on or
conducting the business of an employer. ….”
Note that the definition above includes employees in the private and public sectors, and domestic and farm workers.
It also includes any person who in any manner assists in carrying on or conducting the business of an employer. At
the moment, no legislation provides any definition of an independent contractor.
Five tests developed to distinguish between employees and independent contractors
1. The control Test
2. The organisation test
3. The Dominant impression test
4. The economic capacity test
5. The reality test
The Control Test
The control test looks at the control the employer has over the work the person does, the manner in which the work
must be done, and when and where the work must be done.
The Organisation Test
This test looks at whether the person is part and parcel of the business/organisation of the employer. The person’s
work must be integrated into the business of the employer and must not just be an accessory to the business.
The Dominant Impression Test
This test is favoured by the courts and considers the employment relationship as a whole, rather than concentrating
on only one factor (study table below)
Employee Independent Contractor
Object of the contract is to render personal Object of the contract is to perform a specified
services work or produce a specific result
Employee must perform services personally Independent contractors may usually perform
through others
Employer may choose when to make use of the Independent contractor must perform work (or
services of the employee produce result) within a period fixed by the
contract
Contract terminates on death of the employee Contract does not necessarily terminate on
death of an independent contractor
Contract also terminates on expiry of the Contract terminates on the completion of work
period service in the contract or production of specified result
The Economic Capacity Test
An employee’s income-earning capacity is solely dedicated to the employer
,The 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”. This is what the dominant-impression test also does as an objective reality test.
The LRA added a Code to clarify who will be an employee:
As far as the control test is concerned:
Control includes the right to determine what work the employee will do, in what manner and what the
employee’s working hours will be
Control may be a term of the contract, but even where it is not specified in the contract, it does not
necessarily mean that a contract of employment does not exist.
As far as the organisation test is concerned:
The traditional workplace no longer exists and the employee does not need to work from the employee’s
premises in order for an employment relationship to exist
The tools of trade provided by the employer should not be interpreted narrowly and may range from a
modern cell phone to a set of screwdrivers.
As far as the dominant test is concerned:
The code confirms that there is no single decisive factor to determine the existence of absence of an
employment relationship.
All factors should be taken into account when determining the nature of the relationship.
Section 200A of the LRA:
‘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 organisation, the person forms part of that organisation
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. The person is economically dependent on the other person for whom she/he works or renders services.
f. The person is provided with tools of trade or work equipment by the other person
g. The person only works for or renders services to one person.’
Non-Standard Employees
Various terms are used interchangeable for different categories of employees which leads to further confusion.
Amendments to the LRA have brought clarification and determines that non-standard forms of employment relate to
temporary employees, fixed-term employees and part-time employees.
The Act creates three categories of non-standard employees:
Employees provided by a temporary employment service (hereafter TES/Labour brokers) or so-called
temporary employees.
Fixed-Term Employees
Part-time Employees
, Temporary Employment Service (TES)
Who is a temporary employee?
A temporary employee is employed by a temporary employment service.
TES (Temporary Employment Service: “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.”
This refers to employees supplied by a TES/Labour broker, on temporary basis or to render a temporary service for
the client.
Such a relationship is characterised by its triangular form as it involves three parties, namely the employee, the
TES/Labour broker and client.
TES is the employer of the placed employee even though the employee performs work for the client and at the
client’s workplace.
TES/Labour Broker
Employment Relationship Contractual Relationship
Temp Employee Client
No Direct Relationship
In order to protect temporary employees the LRA sets a restriction on the duration of the use of labour brokers and
temporary employees supplied to clients.
An employer may appoint a temporary employee to a client for a period of three months or less or as a substitute for
an employee of the client who is temporarily absent and then the period may be for longer than 3 months. (E.g.
maternity leave or sabbatical replacement 6-12 months).
The Act provides provision that certain services may be declared to be a temporary service and then it would be
allowed to appoint employees on a fixed term for longer than three months even though they would earn less than
the BCEA threshold. (May only be done by a collective agreement concluded in a bargaining council, a sectoral
determination or a notice published by the MoL.
Employees who earn more than the BCEA threshold of R205 433 are excluded from the protection provided by the
LRA for the non-standard employees.
The TES is/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 there is non-compliance, where the employee is no longer really performing a temporary service for the client,
she/he will be deemed to be the employee of the client and employed on an indefinite basis.
This view supports the argument that both the client and the TES/Labour broker become employers of the placed
employee for the purpose of the LRA because of the deeming provision.
CCMA said that the term “deemed” means that the client becomes the sole employer of the employee as soon as
the three months period comes to an end. According to the Labour Appeal Court, an employee who performs a
temporary service for the client, is the employee of the TES/labour broker and the employee who is not performing
such temporary service, the client is deemed to be the employee of that client. (Looking at the NATURE of the
service being performed)
, The aim of the deeming provision is to restrict the employment of vulnerable workers by the TES to genuine
“temporary work”.
The deeming provision does not create dual or parallel employers.
This is intended to prevent the exploitation of placed workers. An employee who is deemed to be an employee of
the client must be treated “on the whole” not less favourably than an employee of the client performing the same or
similar work, unless there is a justifiable reason for different treatment.
Fixed-term Employees
Who is a fixed-term employee?
This refers to a contract of employment that terminates at/on:
The occurrence of a specified event
The completion of a specified task r project
A fixed date other than an employee’s normal or agreed retirement age.
The following employees are excluded from the restrictions with regard to fixed-term employees:
Employees earning more than the BCEA threshold of R205 344 per year.
Employees of an employer that employs fewer than 10 employees, or an employer that employs fewer than
50 employees and whose business has been in operation for less than 2 years, unless the employer conducts
more than one business; or the business was formed by the division or dissolution for any reason of an
existing business.
An employee employed in terms of a fixed-term contract permitted by any:
- Statute
- Sextoral determination
- Collective Agreement
There is no triangular relationship with a fixed-term contract. It is the employer and employee who conclude the
contract of employment which will terminate at some set stage.
When will it be allowed?
A fixed-term contract will be allowed if the employee is appointed for a period of three months or less. The
employer wants to offer an employee employment on a fixed term contract or to renew or extend a fixed term
contract, will be required to do so in wiring and state the reasons for it.
An employer may employ an employee on a fixed-term contract or successive fixed-term contracts for longer than
three months only if:
The nature of the work for which the employee is employed is of a limited or definite duration
The employer can demonstrate any other justifiable reason for fixing the term of the contract
The Act determines that justifiable reasons for a fixed-term employee will be where such an employee:
Is replacing another employee who is temporarily absent from work
Is employed on account of a temporary increase in the volume of work which is not expected to last beyond
12 months
Is a student or a recent graduate who is employed for the purpose of being trained or gaining work
experience
Is employed to work exclusively on a specific project that has a limited or defined duration
Is a non-citizen who has been granted a work permit for a specific period
Is employed to perform seasonal work
Is employed for an official public works or similar scheme
Is employed in a position which is funded by an external source for a limited period
Has reached the normal or agreed retirement age applicable in the employer’s business and continues to
perform work for that employer.
Individual Labour Law
Exclusive Protection for Employees in terms of Legislation (Study Guide Unit 1 /
Prescribed book Chapter 2)
Who is an employee
An employee and an independent contractor
It is important to know the difference between an employee and an independent contractor as labour laws only
apply to employees.
The LRA, the BCEA, the EEA and the SDA all use the same definition of “employee”:
“…any person, excluding an independent contractor, who works for another person or for the State who receives,
or is entitled to receive, any remuneration; and any other person who in any manner assists in carrying on or
conducting the business of an employer. ….”
Note that the definition above includes employees in the private and public sectors, and domestic and farm workers.
It also includes any person who in any manner assists in carrying on or conducting the business of an employer. At
the moment, no legislation provides any definition of an independent contractor.
Five tests developed to distinguish between employees and independent contractors
1. The control Test
2. The organisation test
3. The Dominant impression test
4. The economic capacity test
5. The reality test
The Control Test
The control test looks at the control the employer has over the work the person does, the manner in which the work
must be done, and when and where the work must be done.
The Organisation Test
This test looks at whether the person is part and parcel of the business/organisation of the employer. The person’s
work must be integrated into the business of the employer and must not just be an accessory to the business.
The Dominant Impression Test
This test is favoured by the courts and considers the employment relationship as a whole, rather than concentrating
on only one factor (study table below)
Employee Independent Contractor
Object of the contract is to render personal Object of the contract is to perform a specified
services work or produce a specific result
Employee must perform services personally Independent contractors may usually perform
through others
Employer may choose when to make use of the Independent contractor must perform work (or
services of the employee produce result) within a period fixed by the
contract
Contract terminates on death of the employee Contract does not necessarily terminate on
death of an independent contractor
Contract also terminates on expiry of the Contract terminates on the completion of work
period service in the contract or production of specified result
The Economic Capacity Test
An employee’s income-earning capacity is solely dedicated to the employer
,The 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”. This is what the dominant-impression test also does as an objective reality test.
The LRA added a Code to clarify who will be an employee:
As far as the control test is concerned:
Control includes the right to determine what work the employee will do, in what manner and what the
employee’s working hours will be
Control may be a term of the contract, but even where it is not specified in the contract, it does not
necessarily mean that a contract of employment does not exist.
As far as the organisation test is concerned:
The traditional workplace no longer exists and the employee does not need to work from the employee’s
premises in order for an employment relationship to exist
The tools of trade provided by the employer should not be interpreted narrowly and may range from a
modern cell phone to a set of screwdrivers.
As far as the dominant test is concerned:
The code confirms that there is no single decisive factor to determine the existence of absence of an
employment relationship.
All factors should be taken into account when determining the nature of the relationship.
Section 200A of the LRA:
‘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 organisation, the person forms part of that organisation
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. The person is economically dependent on the other person for whom she/he works or renders services.
f. The person is provided with tools of trade or work equipment by the other person
g. The person only works for or renders services to one person.’
Non-Standard Employees
Various terms are used interchangeable for different categories of employees which leads to further confusion.
Amendments to the LRA have brought clarification and determines that non-standard forms of employment relate to
temporary employees, fixed-term employees and part-time employees.
The Act creates three categories of non-standard employees:
Employees provided by a temporary employment service (hereafter TES/Labour brokers) or so-called
temporary employees.
Fixed-Term Employees
Part-time Employees
, Temporary Employment Service (TES)
Who is a temporary employee?
A temporary employee is employed by a temporary employment service.
TES (Temporary Employment Service: “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.”
This refers to employees supplied by a TES/Labour broker, on temporary basis or to render a temporary service for
the client.
Such a relationship is characterised by its triangular form as it involves three parties, namely the employee, the
TES/Labour broker and client.
TES is the employer of the placed employee even though the employee performs work for the client and at the
client’s workplace.
TES/Labour Broker
Employment Relationship Contractual Relationship
Temp Employee Client
No Direct Relationship
In order to protect temporary employees the LRA sets a restriction on the duration of the use of labour brokers and
temporary employees supplied to clients.
An employer may appoint a temporary employee to a client for a period of three months or less or as a substitute for
an employee of the client who is temporarily absent and then the period may be for longer than 3 months. (E.g.
maternity leave or sabbatical replacement 6-12 months).
The Act provides provision that certain services may be declared to be a temporary service and then it would be
allowed to appoint employees on a fixed term for longer than three months even though they would earn less than
the BCEA threshold. (May only be done by a collective agreement concluded in a bargaining council, a sectoral
determination or a notice published by the MoL.
Employees who earn more than the BCEA threshold of R205 433 are excluded from the protection provided by the
LRA for the non-standard employees.
The TES is/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 there is non-compliance, where the employee is no longer really performing a temporary service for the client,
she/he will be deemed to be the employee of the client and employed on an indefinite basis.
This view supports the argument that both the client and the TES/Labour broker become employers of the placed
employee for the purpose of the LRA because of the deeming provision.
CCMA said that the term “deemed” means that the client becomes the sole employer of the employee as soon as
the three months period comes to an end. According to the Labour Appeal Court, an employee who performs a
temporary service for the client, is the employee of the TES/labour broker and the employee who is not performing
such temporary service, the client is deemed to be the employee of that client. (Looking at the NATURE of the
service being performed)
, The aim of the deeming provision is to restrict the employment of vulnerable workers by the TES to genuine
“temporary work”.
The deeming provision does not create dual or parallel employers.
This is intended to prevent the exploitation of placed workers. An employee who is deemed to be an employee of
the client must be treated “on the whole” not less favourably than an employee of the client performing the same or
similar work, unless there is a justifiable reason for different treatment.
Fixed-term Employees
Who is a fixed-term employee?
This refers to a contract of employment that terminates at/on:
The occurrence of a specified event
The completion of a specified task r project
A fixed date other than an employee’s normal or agreed retirement age.
The following employees are excluded from the restrictions with regard to fixed-term employees:
Employees earning more than the BCEA threshold of R205 344 per year.
Employees of an employer that employs fewer than 10 employees, or an employer that employs fewer than
50 employees and whose business has been in operation for less than 2 years, unless the employer conducts
more than one business; or the business was formed by the division or dissolution for any reason of an
existing business.
An employee employed in terms of a fixed-term contract permitted by any:
- Statute
- Sextoral determination
- Collective Agreement
There is no triangular relationship with a fixed-term contract. It is the employer and employee who conclude the
contract of employment which will terminate at some set stage.
When will it be allowed?
A fixed-term contract will be allowed if the employee is appointed for a period of three months or less. The
employer wants to offer an employee employment on a fixed term contract or to renew or extend a fixed term
contract, will be required to do so in wiring and state the reasons for it.
An employer may employ an employee on a fixed-term contract or successive fixed-term contracts for longer than
three months only if:
The nature of the work for which the employee is employed is of a limited or definite duration
The employer can demonstrate any other justifiable reason for fixing the term of the contract
The Act determines that justifiable reasons for a fixed-term employee will be where such an employee:
Is replacing another employee who is temporarily absent from work
Is employed on account of a temporary increase in the volume of work which is not expected to last beyond
12 months
Is a student or a recent graduate who is employed for the purpose of being trained or gaining work
experience
Is employed to work exclusively on a specific project that has a limited or defined duration
Is a non-citizen who has been granted a work permit for a specific period
Is employed to perform seasonal work
Is employed for an official public works or similar scheme
Is employed in a position which is funded by an external source for a limited period
Has reached the normal or agreed retirement age applicable in the employer’s business and continues to
perform work for that employer.
