Employer and Contractor - Labour Law - Chiba Attorneys

Employee Vs Independent Contractor

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The employer

In terms of the Basic conditions of Employment Act the difference is as follows:

Employment contract: The contract (employee/employer relationship) is a Contract of Service ‐ the employee undertakes to render his services (as opposed to an agreement to undertake and complete specific tasks) to the employer, either on an indefinite or fixed term basis. In return, the employer undertakes to pay the employee for those services.

Employer and Contractor - Labour Law - Chiba Attorneys

Independent Contractor

contractor undertakes to perform a specific service or task. Unless otherwise agreed, the contractor will be paid upon completion of the specific service or task

IN TERMS OF THE LABOUR RELATIONS ACT 66 of 1995

With an Employment Contract (LOCATIO CONDITIO OPERARUM) the Object:

  1. Is the rendering of personal services between employer and employee.
  2. The Employee renders services at the behest of the employer.
  3. The Employer may decide whether it wishes to have the employee render services.
  4. The Employee must obey lawful instructions in regards with work and the manner it must be done.
  5. The Contract Terminates by the death of the employee/Employer.
  6. Alternatively, the contract terminates on completion of agreed period or is terminated in terms of schedule 8 of the Labour Relations Act, Act 66 of 1995 as amended.

With a contract of Work / Result (LOCATIO CONDITIO OPPERIS) the Object is:

    1. The production of a certain specified service or specified result.
    2. An Independent contractor is not obliged to perform work personally unless so agreed.
    3. The Contractor is Bound to produce certain work or a result within specified period.
    4. The Contractor is not obliged to obey instructions regarding manner in which task is to be performed.
    5. The Contract is not terminated by death of contractor.
    6. The Contract is termination on completion.

When our courts/adjudication bodies are uncertain if a person is an independent contractor or an employee, section 200A of the Labour Relations Act, Act 66 of 1995 is helpful which reads:

Subsection 1 of Section 200A notes that 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:

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

Subsection (1) of Section 200A of the Labour Relation Act does not Automatically apply to any person who earns in excess of the amount determined by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act from time to time.

 

Force Majeure - Chiba Attorneys

Force Majeure

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What is Force Majeure event?

A Force Majeure event is the occurrence of an unforeseen event or circumstance that is beyond the contracting parties control which prevents or makes it impossible for a party to perform its contractual obligations under the contract

Some examples of a Force Majeure

  • War, hostilities, invasion, act of foreign enemies
  • Civil war, riot, rebellion and revolution
  • Currency and trade restriction
  • Act of authority whether lawful or unlawful
  • Compliance with any law or governmental order
  • Plague, epidemic, natural disaster or extreme natural event
  • General labour disturbance such as boycott, strike and lock-out

Why the need for a Force Majeure clause?

A force majeure clause in necessary to protect parties outside of normal business risk. It also suspends performance and avoids a breach of contract.

Standard form construction contracts

FIDIC 1999 & 2017

CNC FIDIC 2017 - Chiba Attorneys_

 

FIDIC 1999 & 2017 encompasses FOUR CRITERIA in order to establish a force majeure:

  1. If an event is beyond a Party’s control;
  2. Which such party could not reasonably have provided against before entering into the Contract;
  3. Which having arisen such party could not reasonably have avoided or overcome; and
  4. Which is not substantially attributable to the other Party.

Subsequently in the FIDIC 2017 version “Force Majeure” was replaced with “Exceptional Event”.

The definition and the non-exhaustive list of events or circumstances remained substantially the same.

JBCC May 2018

In JBCC, a Force Majeure is defined as an exceptional event or circumstance that:

JBCC - Contract Agreement - Chiba Attorneys

  1. Could not have been reasonably foreseen,
  2. Is beyond the control of the parties, and
  3. Could not reasonably have been avoided or overcome.

GCC

GICC - Contract agreement - Chiba Attorneys

  1. “Excepted Risks” means: risks of damage or physical loss or any other loss caused by or arising directly or indirectly as a result of the occurrence of certain events;
  2. War, invasion, act of foreign enemies, hostilities or warlike operations;
  3. Insurrection, rebellion, revolution, acts of terrorism or civil war;
  4. Mutiny, military uprising;
  5. Strike, riot, commotion, disorder, violent demonstrations;
  6. Epidemic, famine or plague;
  7. The design, specification or instruction of the Employer’s Agent, or defects in the materials supplied by the Employer for incorporation in the Work.

NEC 4

Clause 19 of NEC4 deals with prevention which states

NEC 4 - Engineering and construction contract - Chiba Attorneys

The event must be one that:

  1. Stops the Contractor from completing the whole of the works or completing the whole of the works by the date for planned Completion shown on the Accepted Programme;
  2. Neither party could prevent; and
  3. An experienced contractor would have judged at the contract date to have such a small chance of occurring it would have been unreasonable to have allowed for it.

Other aspects to consider

  1. Changes in Law;
  2. Suspension of the works;
  3. Release from Performance;
  4. Notification;
  5. Mitigation.

How can we find a way Forward

  1. Check your contractual provisions;
  2. Follow all the contractual processes;
  3. Attempt to agree a commercial solution;
  4. Compromise.
Employee vs Independent Contractor Explained - Chiba Attorneys

Employee vs Independent Contractor Explained

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Minimum Wages - Chiba Attorneys_

Minimum Wage

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Carol worked seven days a week and earned R15.20 an hour.  She was absolutely devasted when she realised that she was paid below the minimum wages according to the gazette. Lets bear in mind that carol is a single parent of four and looks after her ill mum who was recently diagnosed with cancer.

What are minimum wages?

It is the minimum sum payable to a worker for work performed or services rendered, within a given period (…) which may not be reduced either by individual or collective agreement (and) which is guaranteed by law.

The primary goal of any minimum wage policy is to increase the incomes of those at the very bottom of the wage scale through a distribution of national income. Low wages are a prime contributor to poverty and misery for large sections of the working class.

Wages - Labour Law - Chiba Attorneys

The National Minimum Wage Act

The National Minimum Wage Act empowers the National Minimum Wage Commission to assess and review the wage each year. This means that the wage is likely to be reviewed again in the coming years.

N.B South Africa’s new minimum wage which will take effect from 1 March 2020. The gazette states that the new national minimum wage is R20.76 – an increase of 3.8%. 

The gazette also outlines the minimum wage for workers in certain sectors.

This includes:

  • Farmworkers are entitled to a minimum wage of R18.68 per hour;
  • Domestic workers are entitled to a minimum wage of R15.57 per hour;
  • Workers employed on an expanded public works programme are entitled to a minimum wage of R11.42 per hour.
Gender Based Violence - Chiba Attorneys - Labour Law

Gender Based Violence

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This picture is so powerful…. Showing courage, bravery and standing up for what’s right without being afraid of being a victim of gender-based violence

“Don’t mess with me,” Pelosi told a reporter who implied that her impeachment motives were personal.

This is Nancy Pelosi-speaker of the White House and has been voted as one of the world’s top 100 most powerful women

It a general stereotype that men are the breadwinners in the family while the women were meant to stay home to cook, clean and look after the children.

South Africa has evolved ever since, and women are now given greater opportunities to present their capabilities in the workspace. This often leads to men perpetrating violence against women with impunity

Oprah Winfrey- A victim of Gender based Violence

Oprah Winfrey - Gender Based Violence - Chiba Attorneys

Winfrey has stated she was molested by her cousin, uncle, and a family friend, starting when she was nine years old, something she first announced on a 1986 episode of her TV show regarding sexual abuse. She has stated that she was molested during her childhood and early teens and became pregnant at 14; her son was born prematurely and died in infancy. Winfrey was then sent to live with the man she calls her father, Vernon Winfrey,

Winfrey has miraculously changed her life after her dreadful childhood and has become the most powerful and influential women in the world.

Claiming UIF - Chiba Attorneys - Labour Law

Claiming of UIF due to COVID 19

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A company which is in financial distress and has to close its operations for a period of three months or less as a direct result of the COVID-19 pandemic will qualify for TERS (Temporary Employer/employee scheme) benefit.

The company must be:

  1. Registered with the UIF
  2. Comply with the application procedure for the financial relief scheme &
  3. The company’s closure must be directly linked to the COVID-19 pandemic

Unemployment Benefits

  1. The benefit shall be de-linked from the UIF’s normal benefits and therefore the normal rule that for every four days worked the employee accumulates a one day’s credit and the maximum credit days payable is 365 for every four years will not apply.
  2. The benefit will only be for the cost of salary for employees during the temporary closure.
  3. The salary benefits will be capped to a maximum amount of R17,712 per month per employee and an employee will be paid in terms of the income replacement sliding scale (38%-60%) as provided for in the Unemployment Insurance Act. This is subject to the limitation that at no time will the salary paid fall before the minimum wage provided for in a particular sector. Presumably this would also take into account the National Minimum Wage.

Claiming UIF - Chiba Attorneys

  1. In addition to the above, an employee who is in quarantine for 14 days due to the COVID-19 pandemic will qualify for illness benefits. Where the employee is in an agreed self-quarantine for 14 days then the employer and employee must both submit confirmation of this. Confirmation letters will suffice in this regard. Where the employee is quarantined for a period exceeding 14 days then a medical certificate must be submitted by a doctor for continued payments.
  2. Employers must apply by reporting their closure via email to Covid19ters@labour.gov.za. An automatic response will be generated setting out the application process. The employer shall be required to submit the following documents:
    (a) Letter of authority from the company; and
    (b) Signed memorandum of agreement from the employer or Bargaining Council with the UIF.
Labour Law - Chiba Attorneys - Retrenchment

Retrenchments

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Retrenchment is a form of dismissal due to no fault of the employee; it is a process whereby the employer reviews its business needs in order to increase profits or limit losses, which leads to reducing its employees.

The employer must give fair reasons for making the decision to retrench and follow a fair procedure when making such a decision or the retrenchment may be considered unfair.

Legally a South African employee is entitled to one week’s pay for every year in a retrenchment case however many contracts come with retrenchment policies in place which will provide the employee with a greater level of severance pay than the governmental minimum.

And then the covid-19 Pandemic happened

Companies are already beginning to suffer financially as people practice social distancing and self-isolation, meaning that more social spaces like restaurants, nail bars, theatres, hotels etc lose revenue as consumers stay home. This unfortunately puts pressure on staff retention, and could lead to retrenchments.

Labour Law - Chiba Attorneys - Retrenchment

However, government as well as the various regulations have indicated that retrenchments must be the absolute last resort after all alternative measures have been implemented.

The alternatives which should be considered are:

Possibly, instead of outright retrenchments, employers might want to look at demotions during this extraordinary time.

Despite the trying circumstances, if employers look at taking this route, they should take all labour law considerations into account before imposing demotion on an employee because should the CCMA or bargaining council find the demotion to be unfair, the commissioner has the right to:

  • Reinstate the employee into the position from which he/she was demoted;
  • award the employee compensation;
  • apply any other corrective measure that he/she may deem to be appropriate.

However, an employer should consider a demotion as an alternative to retrenchment, chiefly because a person would rather have a job with less money than no job at all.

Should an employee refuse the demotion, the employee will be entitled to severance pay, as long as the reason for refusal is justifiable.

A demotion cannot be imposed unilaterally by an employer without consulting with the employee. And must also be in writing as it is a change to the terms and conditions. Should an employer demote an employee without affording the employee the right to be heard, it could amount to an unfair labour practice with the employer being liable to the employee for either reinstatement or compensation.

An employer could also consider temporary lay-offs and skeleton staff

What is temporary lay-off?

Where it is not possible to continue with normal business activities, employers may temporarily lay-off employees. Temporary lay-off is unpaid and is an alternative to retrenchment.  The individual is still an employee of the company however, they are unpaid until such time as normal business activity resumes.  While on lay-off employees must remain available to the company, and may be called upon at any time to resume full or partial duties.  Should an employee secure alternative employment during lay-off, they must resign from the company.