Answer to a question from a reader

Are caregivers employees or independent contractors?

The short answer

They are employees if you control when and how they work.

The whole question

Dear Athalie

I have hired two caregivers. They said that they are independent contractors, so I should not deduct UIF or PAYE. I'm not sure if they really fall under the category of contract workers. Please help. 

The long answer

To answer that question, you need to answer the following questions:

  1. Do the caregivers decide on their own hours of work or do they work the hours required by you?

  2. Do the caregivers decide how they will do their work or do they receive instructions on how the work is to be done?

  3. Do the caregivers use their own tools and equipment to do the work or do they use tools and equipment provided by you?

I think it must be clear that the answer to all three questions is no. If you as the employer have the right to control what the worker does, and how and when she does it – she is not an independent contractor but an employee.

The two pieces of legislation that provide rights and protections to workers in South Africa are the Labour Relations Act 66 of 1995 (LRA) and the Basic Conditions of Employment Act 75 of 1997 (BCEA). The LRA and the BCEA regulate hours and conditions of work, overtime, deduction of contributions to UIF and PAYE, dismissal, and so on, and an employee can take a grievance to the labour courts if it cannot be resolved with the employer. There is no such protection for an independent contractor in the labour courts. An independent contractor who is aggrieved by the termination of a contract may only sue for damages in a civil case.

In terms of whether a worker is an employee or an independent contractor, the courts have found that the LRA presumes that until it can be proved otherwise, a person who works for, or renders services to, any other person (or company or organisation) is an employee if the person works the hours required by the other person, and if the way in which a person works is directed or controlled by another person. 

The courts have found that the onus is on an employer to prove that the worker is an independent contractor and not an employee. If the worker is indeed an employee, the employer is legally obliged to deduct and contribute UIF contributions (1% to be paid by the employer and 1% to be deducted from the employee’s wages).

An independent contractor is responsible for paying their own tax and will invoice for services provided rather than be paid a salary.

On 1 March 2021, the Minister declared a new earnings threshold of R211,596.30 per annum (about R17,633.00 per month). Employees earning more than that are excluded from the provisions that control ordinary hours of work, overtime work and pay, weekend work and night work and pay, and work on public holidays and pay. But employees earning under the earnings threshold are entitled to claim payment for services rendered outside of normal working hours. 

So, it seems pretty clear that although the caregivers wished to be regarded as independent contractors to avoid UIF deductions, they are in fact employees, and their employment is subject to the LRA and the BCEA.

Wishing you the best,

Answered on July 12, 2021, 10:36 a.m.

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