PART A: UNIT 2

THE INDIVIDUAL EMPLOYMENT

RELATIONSHIP
 SEE du PLESSIS & Fouche : Practical Guide to Labour
Law reprinted 2023
 Grogan workplace Law
 Law @ work 6th edition reprinted 2023
Introduction

 The employment relationship is

regulated by 3 main sources of law,
namely:
 The Constitution
 Labour Legislation – LRA, BCEA, EEA
 And the law of contract.
 Earlier on only the common law of
contract governed the employment
relationship – based on the principle of
freedom of sanctity of contract.
Common Law Principles

 Principle of freedom of contract

 terms of a contract are freely concluded and reflect the
mutual intentions of the contracting parties
 Principle of sanctity of contract -
 the contracting parties ought to be bound by their
promises and that the terms of the contract should be
enforced without outside interference.
 These principles assume that the parties occupy
positions of equal power.
Cont…

 Under Common law only the interests of the employers

that was protected not of the employees.
 As a result, new labour legislations emerged such as the
LRA, BCEA, EEA.
 Although labour regulated by these legislations, common
law contract still applies to the extent that legislation does
not.
 If the legislation does not on its own supply the answer to a
legal problem, then the agreement between the parties as
well as common law should be consulted.
 Constitution overarches all these and used to interpret the
law.
 See du Plessis and Fouche – A Practical Guide to Labour
Law reprint 2023
1. Parties to the employment relationship

1. Employer and employee?

In a labour dispute the first question is whether the parties
are really an employee and employer within the meaning of
statute or common law. If not the above laws will not apply.
There must be a relationship between the parties. And in this
respect the contract of employment is a deciding factor. The
contract of employment links the employer with the employee
irrespective of the form of that employment contract takes.
In some cases it is not difficult to identify parties to a
contract by in some it is.
In terms of SA Laws it is important to determine whether an
individual is an employee or an “independent contractor”.
The distinction is not easy to arcertain.
 For example it may not be immediately apparent the patties
have entered into the location conduction operarum
(contract of employment), or location conduction operis
(contract of work).
How can we tell whether the contractual basis for
the relationship of the parties is an employment
contract or a different type of contract? And what
test do we use to distinguish between agents and
employees or independent contractors and
employees?
It is crucial to be able to distinguish between an
employees and non-employees, the reason being
that the SA legislation does not protect non-
employees. It is only an employee who can claim
protection against unfair dismissal.
The LRA 66 of 1995, the BCEA 75 of 1997, and the
EEA 55 of 1998 apply to “employees”.
2 Statutory definition

Section 213 of 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
any other person who in any manner assists in carrying on
or conducting the business of an employer.’
This definition is identical to the definition provided in
the s1 of BCEA but some how different to the Employment
Equity Act. Section 1 defines the employee as:
‘any person other than an independent contractor who –
works for another person or for the State and who
receives, or is entitled to receive, any remuneration; and
In any manner assists in carrying on or conducting the
business of an employer.
 The definition of employee in section 213
appears to exclude independent
contractors from part (a) of that
definition.
 The EEA definition as well appears to
excludes independent contractors in part
(b).
 Even in the LRA and BCEA, one can
assume that the independent contractors
are implicitly excluded from the second
part of the definition as well.
3 THE TESTS DEVELOPED BY
THE COURTS (JUDICIAL
TESTS)
 Various tests have been relied upon in order to establish
whether a person is an employee or an independent
contractor.
 The courts in England, other jurisdictions and in South
Africa have develop tests to draw this distinction.
These tests are:
 the control test,
 the organization test,
 the multiple dominant impression test and
 economic test.
3.1 The control test

This test is based on the element of control which is exercised

by the employer over employee.
This test was formulated in Colonial Mutual Life Assurance
Society Ltd v Macdonald 1931 AD 412 at 434 to 435. It was
formulated as follows:
“…one thing appears to me beyond dispute is that the relation
of master and servant cannot exist where there is a total
absence of the right to supervising and controlling the
workman under the contract; in other words, unless the
master not only has the right to prescribe to the workplace
what work has to be done, but also the manner in which such
work has to be done.”
But at a later stage the courts no longer insist on the control
test but still recognizes that the control test is still sufficient –
And still recognises that an employment relationship is
characterised by an element of control by an employer over
an employee..
3.2 The organization test
 The second test is organization test which is based on the assumption that
the test of being a servant does not rest on a submission to orders.
 This test examines whether a person forms part of the employer’s
organisation.
 For example, whether the person must comply with the organisation’s
direct dress code, belongs to the organisation’s pension and medical aid
scheme and abide by its hours of work).
 In R v AMCA Services and Another 1959 (4) SA 207 (A), the court was
required to determine whether premium collectors were employed or
working for any person. The court held that the general picture that
emerged from the facts was of work done ‘inside the company’s
organisation’ and that the collectors were members of its organization and
therefore employees.
 On appeal the test was rejected on the basis that it begged more
questions than answers. The Labour Appeal Court in SABC v McKenzie
[1999] 1 BLLR 1 (LAC) at 5 summarised the test as follows:
 The Labour Appeal Court in SABC v McKenzie [1999] 1
BLLR 1 (LAC) at 5 summarised the test as follows:

 “The second test is the organization test: a person is an

employee, or he is “part and parcel of the
organization”…whereas the work of an independent
contractor “although done for the business, is not
integrated into it but is only accessory to it”’

 The problem with this test is that it is not easy to

measure the extent of integration. The AD in 1979
rejected this test as being too vague to be of any use.
3.3 The multiple or
dominant impression test
 This is a standard test used by our courts,
which relies on various indicators to
determine whether or not the contract in
question is a contract of service.
 This test looks at the main or dominant
impression left by the contract and
working relationship in determining the
nature of the relationship.
 The courts examines a number of factors
other than focusing on just one factor.
 The factor the court would take into
consideration to obtain the dominant
impression would include the ff:

 The employers right to select who will do the

work;
 Employers' powers to dismiss;
 The right to supervision;
 The extent to which the worker depends on
the employer in the performance of duties;
 Whether the employee is not allowed to work
for another.
 Whether the worker is required to devote a specific
time to his or her work;
 Whether the worker is obliged to perform his or her
duties personally;
 Whether the worker is paid according to a fixed rate or
by commission.
 Whether the work provides his own tools and
equipment.
 Whether the employer has a right to discipline the
worker. The existence of this right would normally
indicate control, this in turn indicating an employment
contract.
 InSA Broadcasting Corporation v
Mckenczie the LAC summarized the
main differences between the
contract of employment proper
(Locatio conductio operarum) and
contract of work (location
conductio operis).
Locatio conductio operarum (Employee)
Object is the rendering of personal services
between employer and employee
Employee renders service at the behest of the
employer
Employer may decide whether it wishes to have
the employee render service
Employee is obliged to obey lawful, reasonable
instructions regarding work to be done and
manner in which it is to be done
Terminated by the death of the employee
Terminates on completion of the agreed period
Locatio conductio operis
(Independent contractor)
Object is the production of a certain
specified service or result
Independent contractor is not
obliged to perform the work
personally unless otherwise agreed
Independent contractor is bound to
perform specified work or produce a
specified result within a specified or
reasonable time
Independent contractor is not
obliged to obey instructions
regarding the manner in which work
is to be done
Not terminated by the death of the
contractor
Terminates on completion of the
specified work or production of the
specified result
The economic test

 This test gives an alternative.

 The Court in Montreal v Nontreal Locomotive Works
[1947] 1 DLR 161 proposed a test that would ask
‘whose business it is’ – whether the party performing
the work or rendering the service is carrying on the
business for himself or herself and on his or her own
behalf and not merely for another.
“EMPLOYEES”

CASUAL EMPLOYEES
A SALARIED SHAREHOLDER REPORTING TO THE MANAGING
DIRECTOR
A DIRECTOR OF A COMPANY;
FORMER EMPLOYEES WHO HAD BEEn DISMISSED BUT WERE
RE-EMPLOYED AT A LATER STAGE;
SEASONAL WORKERS.
The Recognized approach
In
2002 a rebutable presumption regarding who is an employee
was added to the LRA Section 200A which reads:
“Until the contrary is proved, 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 to an organisation, the
person form 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 he or she works or renders services;
(f) The person is provided with tools of trade or work
equipment by the other persons; or
(g) The person only works for or renders services to one person.
 This amendment incorporates elements of control,
organisation and dominant impression tests and reverses the
onus of proof –
 that is the employer has to prove that the applicant is not
an employee once any of these factors has been established.
 The Approach in s200A was adopted by our
courts. In the Case of Linda Erasmus Properties
Enterprise (Pty) Ltd v Jenine Breytell v Mhlong0
and Others 2007
 The court had to deal with the question of
whether the relationship between a particular
estate agent and agency constituted one of
employment relationship or to be an independent
contactor relationship.
 The court held that the legislative framework and
the employment tests and the facts surrounding
the relationship, the relationship was one of
employment.
 To determine whether a person who is doing work for
another is an employee or independent contractor –
 The dominant impression test;
 The Code of Good Practice; and
 If the alleged employee earns less than the BCEA threshold,
section 83A or s 200A of the LRA.

 Read the following cases:

 Kylie v CCMA & others [2008] LC; 2010 (LAC)
 Discovery Health LTD v CCMA & Others [2008} LC
 Ndikumdavyi v Valkenberg Hospital & Others [2012] 8 BLLR
LC
Employer

The term employer is not defined in the BCEA

or LRA. The meaning of employer therefore is
determined by reference to employee.
It is important to be able to define and
identify who the employer is in borderline
situations.
Difficulty may arise if the a labour broker or
temporary employment service is involved.
The question that arises is whether the
employee is in service of the labour broker or
the labour broker’s client
The Labour Appeal Court in Buffalo Signs
Co Ltd and others v De Castro & another
(1999) 20 ILJ 1501 (LAC) examined the
questions of who the true employer was in a
case of the transfer or sale of a business
and when the court should be prepared to
lift the corporate veil.
This arose in the context of sale of a
business, where the selling employer had
pretended to retrench employees prior to
the sale of the business, so as to relieve the
buying employer of its responsibilities.
 The LAC held that in each case, the
correct enquiry is into the true identity of
the employer. If necessary the true
employer may be plucked from his hiding
place behind the corporate veil, but once
the corporate veil has been lifted he must
still be show to be the real employer.
 See LAD Brokers (Pty) Ltd v Mandla [2001]
9 BLLR 993 (LAC); MEC for Transport:
Kwazulu-Natal & others v Jele [2004] 12
BLLR 1238 (LAC)
Statutory exclusions

The LRA and BCEA excludes from their

scope a certain categories of people who
are employees in the common law sense
and who are deemed not to be employees
for purposes of the Act.
These include:
Members of the National Defence Force (see Phike
v South African National Defence Force (2001) 22
ILJ 2298 (LC))
 Members of the South African Secret Service.
Members of National Intelligence agency
 QUESTIONS
 1.
 2..
 3.