Distinguishing Between An Employee And An Independent Contractor

Distinguishing Between An Employee And An Independent Contractor

The first question to be asked when seeking to resolve any labour law dispute is whether the parties are indeed ‘employees’ and ‘employers’ within the meaning of the Labour Act Chapter 28:01 or the common law. If they are not, then the Labour Act and other relevant statutory instruments do not apply to them. In most cases employers or employees can be identified without much trouble but in marginal cases it may not be immediately apparent whether the parties have concluded a contract of employment proper (location conductio operarum) or a contract for the provision of work (locatio conductio operis). Although the locatio conductio operis entails provision of work or services, it is not a contract of employment. The independent contractor of the common law is not an employee under the labour legislation nor are partners or agents even though one of the parties may work for each other. The distinction between location conductio operarum and other forms of contracts of service is important because different legal consequences flow from various forms of contract. Only employees proper are covered by the Labour act and are entitled to rights stipulated therein and they have access to the statutory court and tribunals created in terms of the Labour Act to redress labour disputes.

Where parties reduce their agreement into writing it is usually easy to discern whether the parties have concluded a contract of employment (location conductio operarum) as opposed to any other forms of contract. However, in the absence of any written document and in the event of a dispute pertaining to the nature of the relationship the courts have to resort to other tests to determine whether or not the parties where in an employer-employee relationship. There is no requirement that all contracts of employment be reduced into writing as per Section 12(1) of the Labour Act hence verbal contracts are a common practice.

The manner in which the parties related therefore can assist the court to determine the form of relationship. One of the judicial tests laid down is the supervision and control test. In Colonial Mutual Life Assurance Society v Macdonald 1931 AD at pages 434 to 435, the court had this to say;

“The relation of master and servant cannot exist where there is a total absence of the right of supervising and controlling the workman under the contract, in other words unless the master not only has the right to prescribe to the workman what has to be done but also the manner in which that work has to be done.”

In terms of this test, the employer-employment relationship can only exist where the employee (servant) follows instructions and supervision from his master (employer) in the manner of doing work. This test emphasizes on the ‘right to control’ but however the mere fact that the employer does not choose to exercise that right to control how the employee does the work does not render the contract something other than one of employment. This makes the supervision and control test unhelpful if applied in isolation.

The deficiencies of the supervision and control test have led to courts to approach the question whether a particular relationship is one of employment in the same way as they approach many other problems; the relationship is viewed as a whole and a conclusion is drawn from the entire picture. This is called the dominant impression test.

The other test is called the economic test. The test entails asking the question ‘whose business is it’ that is whether the party performing the work or rendering service is carrying on the business for himself or for another. If the business is profiting someone else then the one rendering the service is an employee of the business owner.

It should be emphasized that none of the judicial test laid down are exhaustive as there is no one size fits all. Each set of facts is decided on its own. It is always prudent for the parties to enter into a clearly written contract which defines the nature of the relationship which the parties intend to conclude rather than to leave the fate of the parties to be determined by the courts of law in the event of a dispute.

The contents of this article are for general information purposes only and do not constitute our legal or professional advice. We accept no responsibility for any loss or damage of whatsoever nature which may arise from reliance on any of the information published herein.

Copyright © Marume & Furidzo Legal Practitioners 2021

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