Employees versus independent contractors

In October 2012 discussions started in the office as to whether it would be better for all the staff to be full-time Paperight employees or consultants contracted to the Shuttleworth Foundation.

It was decided in the end that we were all contracted employees of Paperight.

The reasons

  • According to legislative guidelines we would all be employees of Paperight from a legal perspective whether we decided to call ourselves employees or consultants.
  • There were more expenses involved in being consultants for the company such as higher tax deductions, and accountants’ fees for calculating and reconciling annual income tax returns.
  • Almost all staff are permanently based in the office.
  • There was better job security as contract employees.
  • The Shuttleworth Foundation consultancy agreement did not cover special conditions that some of had agreed upon in our employment contracts, such as working hours.
  • We had three staff members with special religious conditions built into their contract with Paperight: Yazeed and Oscar as Muslims were given the freedom to leave the office during certain hours to pray at mosque and had been explicitly promised leave for Eid days. It was understood that Dezre as a Seventh Day Adventist was not able to work during Sabbath hours.

Factors that determine whether an employment relationship exists

These factors are determined by state regulations as inportant when considering whether someone is ’employed’:

  • Whether the the worker is subject to the control or direction of the business
  • Whether the workers hours of work are subject to control or direction
  • Whether the worker forms part of the organisation
  • Whether the worker works for an average of 40 hours or more per month
  • Whether the worker is economically dependent on the business
  • Whether the worker is equipped with tools to work with or whether they have their own
  • Whether the worker is working for more than one business or not and whether the majority of the income is from the business.

The contractual relationship

The nature of the contract and the working relationship between the business and the person hired is very different if they are an employee or an independent contractor.

In the the independent-contractor scenario a person is contracted to do a specific job or a specific piece of work which must be delivered. The person who is doing the work is seen as a the agent and the business is seen as the principal. It is not a contract of employment, but related to performance of a predetermined task. There is less control over the agent (or independent contractor) than over the employee and there is no flexibility in terms of the related performance. This relationship is not governed by the Labour Relations Act or the Basic Conditions of Employment Act.

It is important to note that all workers are presumed to be employees of a company unless it is proven otherwise.