Independent contractor can be an employee

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However, Intersect Sectional Title Services' managing director, Martin Bester, advises that one must be careful in this regard.

"Regardless of the contract in place, if any, if an employee/employer relationship can be proven, then the scheme, as the employer, is liable and obliged to register the employee for PAYE, and to deduct contributions accordingly for unemployment insurance, taxation and skills development levy, if applicable.

"The differentiation between an employee and an independent contractor is not clearly defined," says Bester. "However, we have learnt that in order to ascertain whether an employee/employer relationship exits, certain tests are conducted. In many circumstances where an individual is employed to carry out regular duties such as those of an estate or building manager the tests prove that an employee/employer relationship does exist."

Indicators of employment

The following characteristics are indicative of the employment relationship:

• An employee is subject to the ongoing control and supervision by the employer.
  
• An employee's remuneration is not dependant on what she or he produces.
  
• An employee places his or her productive capacity at the sole disposal of the employer.
  
• An employee is usually entitled to certain benefits such as bonuses or thirteenth cheques; sick and leave pay, medical aid and pension benefits.
  
• An employee usually works out of the employer's office.

"The above items are merely indicators of the employment relationship. Therefore if you are employing a person in such a capacity then you are advised to ensure that you comply with the regulations. A labour specialist will be able to assist in this regard.

"Furthermore, the above also fulfils the employer's obligations with regard to the Compensation for Occupational Injuries and Diseases Act, which also places the onus of ensuring that the employee is registered and an annual return submitted and paid for, on the employer," concludes Bester.