1. INTRODUCTION

There are several forms of employment/ utilisation of labour that are apposite in given circumstances. Confusion often arises regarding fixed term employment, project or event linked employment, contract labour, independent contracting and casual labour. These terms are used loosely in industry. Many employers have appointed staff incorrectly assuming that certain principles apply. There are, however, some very important differences in consequence. Although we have discussed some of these forms of employment in previous articles, it is good to see how they relate to one another.

2. DIFFERENT APPLICATIONS OF LABOUR

The different ways in which labour can be utilised, as well as the circumstances in which it would be appropriate, are described in summary as follows:

2.1. Permanent employment
This is the most common form of employment. A person is employed on an indefinite basis, subject to a probationary period that is reasonable with reference to the nature of the job (normally not more than six months). During probation employment may be terminated, but with due regard to the reasons and applicable procedures laid down by the Labour Relations Act of 1995. As the law currently stands, it does not really make a difference whether a person is serving a probationary period or not - the employee enjoys similar protection to any other ("permanent") employee regarding security of employment (The law is however due to change during the course of this year, making it easier to dismiss a probationer). During and after probation the employer cannot simply give notice of termination of employment in terms of the employment contract. Different procedures have to be followed, depending on whether the intended termination is due to misconduct, poor work performance, medical incapacity or operational requirements. These procedures are rather cumbersome and the employer's failure to follow them could result in a claim for reinstatement or compensation.

2.2. Temporary employment
In this case the employer engages the services of persons for a fixed term or in respect of a particular project. These employees enjoy similar basic conditions of employment to permanent employees, but proportionate to the period of employment (although full entitlement to leave is delayed - 4 months in the case of annual and family responsibility leave and 6 months in the case of sick leave). Upon expiry of the fixed term or termination of the project, the contract may or may not be renewed. It is not necessary to follow any of the procedures mentioned in respect of permanent employment. Care must, however, be taken that this type of contract is not simply used to avoid the termination provisions of the Labour Relations Act. There must be a good underlying reason for entering into a temporary contract (e.g. a temporary replacement of a permanent staff member, seasonal fluctuation in work load or a particular project that is of a temporary nature). The regular renewal of a fixed term contract can lead to an employee claiming that he/she has a reasonable expectation of a further renewal - not renewing a contract where there is such a reasonable expectation could be regarded as unfair dismissal.

2.3. Temporary employment service
As an alternative to employing persons on a temporary basis, an employer may approach a temporary employment service (formerly known as a labour broker). The labour that is needed is employed by the temporary employment service ("TES") and you are regarded as the client. However, the TES and the client are jointly and severally liable for compliance with the Basic Conditions of Employment Act (i.e. with regard to working hours, overtime, annual leave, sick leave, etc.). As far as security and termination of employment are concerned (i.e. protection against unfair dismissal and unfair labour practices), the responsibility remains with the TES as the employer. Although you as the client do not automatically bear the latter responsibility by law, some form of responsibility will most certainly be introduced through the agreement with TES or there will be some risk contingency built into the cost. This type of utilisation of labour is more appropriate in industries where there are projects that require temporary labour or there are seasonal fluctuations in the need for labour, particularly unskilled or semi-skilled labour.

2.4. "Casual" employment
Since the Basic Conditions of Employment Act of 1997 became law the concept of a "casual" employee has virtually fallen away. Any person who is employed for 24 hours or more per month enjoys the protection afforded by the Act. This means that the provisions regarding working hours, overtime and meal intervals would apply. The employee may even qualify for annual leave, sick leave, family responsibility leave, etc. (There are, however, certain sectors in industry where a person that works for 3 days or less per week may still be regarded as a casual labourer)

2.5. Independent contracting
Entering into an agreement where somebody works for you as an independent contractor has distinct advantages. The person would not enjoy the rights and protections afforded by legislation, such as protection against dismissal, minimum wage, restrictions on working time, annual leave, sick leave, etc.

However, an independent contracting arrangement is not always appropriate. It will be more difficult in future for an employer to argue that an independent contractor is not an employee. One would not be able to rely solely on a signed agreement. Within this year the legislator will be introducing specific parameters to create a presumption as to whether a person is to be considered independent contractor or employee.

The questions to ask would be whether the manner in which the person works and the hours of work are subject to the control or direction of another person; whether the person forms part of the organisation (business card, uniform, etc.); whether the person has worked for that person or organisation for an average of at least 40 hours per month over the last three months; whether there is economic dependency; whether the person is provided with his or her tools of trade or work equipment; whether the person only works or supplies services to one person or organisation.

If one or more of the above-mentioned factors are present, a person who provides a service to you would be presumed to be an employee until the contrary is proved. For example, if you terminate the contract without a hearing and the person says it was an unfair dismissal, you would have to prove that the person is not an employee.

Notwithstanding the above, there are circumstances where the use of an independent contractor can be very useful indeed. Undesired consequences can be avoided if the relationship is clearly defined from the outset.

3. CONCLUSION

In summary, the following can be concluded:

3.1. Permanent employment: Appropriate in most cases, although protection of security of employment limits flexibility.
3.2. Temporary employment: Appropriate in cases where the commitment of a full-time employee is required, but only for a fixed term or in respect of a particular project.
3.3. Temporary employment service: Appropriate where there is a need for labour flexibility based on temporary projects or seasonal fluctuation, normally unskilled or semi-skilled labour.
3.4. Casual labour: Very seldom appropriate - only for one off cleaning jobs, loading, etc.
3.5. Independent contracting: Appropriate where certain specialist skills are needed on a temporary basis; the contractor is required to provided a result - supervision and control not required; contractor acts independently and invoices the client.

Jan Truter, www.labourwise.co.za

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