NEWS@SAIA – Facts and Opinions. April 2016

April 11, 2016adminNewsletters

CEO’s Comment

In today’s turbulent economy and ever changing Legislative environment, it is critical that employers understand the difference between Employment Contracts and Independent Contracts. This matter is elucidated in this newsletter in a manner which is particularly relevant to architects.

Obert Chakarisa
Chief Executive Officer, The South African Institute of Architects

An Introduction

In the Architecture profession we are inevitably confronted with the legal side of things, herewith is a brief look at certain legislation within the profession that deal with the Architect as employer. The inclusion of the Occupational Health and Safety is for the purposes of the Architect as employer and not under the Construction regulations.

  • LABOUR – There are no specific requirements related to the hire of construction sector employees. The Basic Conditions of Employment Act 1997 (BCEA) prohibits employment of any child under 15 years of age or who is under the minimum school leaving age. For foreign nationals who have not been granted permanent resident status in South Africa, they must obtain work permits under the Immigration Act 13 of 2002. It is an offence to employ a foreign person in violation of the Immigration Act.
  • SAFETY – The OH&S Act and the Construction Regulations (as well as various other regulations promulgated under the OH&S Act) regulate the health and safety of all persons (subject to certain minor exceptions) involved in construction work, other than construction work which is regulated under the Mine Health and Safety Act 29 of 1996. The Construction Regulations impose obligations on employers (owners), contractors and designers. The obligations relate principally to the management of health and safety by the employer and designer through the design and procurement phase of the project, and by all parties on the construction site itself. The management of health and safety on the construction site must be undertaken under pre-formulated and agreed health and safety plans, setting out specific minimum safety requirements for various construction activities (Construction Regulations).
  • COPYRIGHT – If the Employer wishes to own the copyright it should expect to pay for it as the previous owner would no longer be entitled to exploit it. Whether taking ‘assignment’ (i.e. becoming the owner) of the copyright or only licensing it, the Employer should ensure that it contracts with the copyright owner. If no such agreement is expressly entered into, and an architect is engaged to draw plans only, the client would probably have an implied licence to erect a building from those plans on the intended site. Although the purchaser of a drawing may become the owner of the (physical) drawing upon its delivery to him, without a formal assignment of copyright he would not become the owner of the (intangible) copyright therein as ownership and copyright are separate and distinct rights. The Copyright Act explains one’s rights and remedies.
  • CERTIFICATES – In Shelagatha Property Investments cc v Kellywood Homes (Pty) Ltd 1995 (3) SA 187 (A) the court found that in the event of a contract being cancelled due to the Employer’s breach there was, in general, no reason why the prior interim certificate should not be enforced. The court therefore found that the Contractor’s right to payment under the interim certificates was independent of the executory part of the contract and that it accordingly survived the cancellation of the contract and should be paid.

 Other questions to elaborate on are:

  • Who normally bears the risk of unforeseen ground conditions?
  • Who bears the risk of a change in law affecting the completion of the works?

“Employers” who intend on making use of a person’s skills and expertise, must most
importantly, determine the nature/purpose of the employment relationship as it will help
guide the employer to enter into the correct type of contract, i.e. whether the agreement
should be a contract of employment or an independent contractor contract for the provision
of work.

There is copious confusion about when someone should be contracted as an independent contractor, or rather an employee. The Basic Conditions of Employment Act (BCEA) makes no differentiation of the following terms and just refers to “employees”:

  • Temporary employees, part-time employees, fixed term contract employees, flexitime
    employees or any other terms which are sometimes used to describe the
    services editors render to a producer or production company.

There are two exceptions though, namely the “independent contractor” and “senior
managerial employee”. The latter is defined by the BCEA as a person who has the authority
to hire, discipline and dismiss employees, and to represent the employer internally and
externally. The independent contractor contract can be defined as “the letting/hiring of piece
work is a reciprocal contract between an employer and an independent contractor in terms of
which the latter undertakes to build, manufacture, repair or alter a corporeal thing within a
certain period and the employer undertakes to pay the contractor a reward in return

Only persons defined as “employees” are protected by legislation and have recourse to the
dispute resolution provisions of the LRA, therefore it is necessary to establish whether a
person is an employee or not. The courts have formulated a dominant impression test =.
See Smit v Workmen’s Compensation Commissioner 1979 (1) SA 51 (A) at 61 A – H and
SABC v McKenzie (1999) which summarises six main differences between the employment
contract and independent contractor contract:

Employment contract Independent Contractor
1 Object is rendering of personal service by the employee to the employer. Object is the performance of a certain specified work, or the production of a certain specified result.
2 The employee is at the beck and call of the employer to render his personal services at the behest of the latter. The independent contractor is not obliged to perform the work himself, or to produce the result himself (unless the parties agree otherwise). He may avail himself of the labour or services of other workmen as assistants or employees to perform the work, or to assist him in the performance of his obligations.
3 The employee’s services are at the disposal of the employer who may in his own discretion decide whether or not he wants to have them rendered. The independent contractor is bound to perform a certain specified work or produce a certain result within the time fixed by the contract of work, or within a reasonable time, where no time has been specified.
4 The employee is subordinate to the will of the employer and is obliged to obey the lawful commands, orders, or instructions of his employer, who is he has to do it. The independent contractor is on a footing of equality with the locator operis. The former is bound by his contract of work, not by the orders of the latter. He is neither under supervision or control of the locator operis nor of the locator operis in regard to the manner in which the work is to be performed.
5 The contract is terminated by the death of the employee. The death of either party to a contract of work does not necessarily terminate it.
6 The contract terminates on expiration of the period of service entered into. The contract terminates on the completion of the specified work, or on the production of the specified result.

Another guideline to take into consideration is section 83 A of the BCEA which states that: A person who works for, or renders services to, another person, is presumed, until the contrary is proved, to be an employee, regardless of the form of the contract, if any one or more of the following factors is present:

  1. The manner in which the person works is subject to the control or direction of another person;
  2. the person’s hours of work are subject to the control or direction of another person;
  3. in the case of a person who works for an organisation, the person is a part of that organisation;
  4. the person has worked for that other person for an average of at least 40 hours per month over the last three months;
  5. the person is economically dependent on the other person for whom that person works or renders services;
  6. the person is provided with tools of trade or work equipment by the other person;
  7. or the person only works for or renders services to one person.

So if an employment relationship exists, the dispute will fall under the jurisdiction of the CCMA (or Bargaining Council etc). If not, then the applicant is not an employee for the purposes of the Act, and the CCMA does not have jurisdiction to conciliate or arbitrate the matter. The applicant could then sue civilly for breach of contract, damages, and so on. Take note though that the onus falls on the “employer” to lead evidence to prove that the applicant is not an employee and that the relationship is in fact one of independent contracting.

As has been noted, the majority of cases which usually arise from such instance generally are resolved through arbitration as opposed to court.

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