Davies Ndumiso Sibanda
WITH many organisations struggling to pay wages, many employers have resorted to engaging people who work for commission without being tied to a contract of employment.
The challenge with contracts for service as opposed to contracts of employment is that when times are good service providers are happy with the commission they get but in times when sales collapse, most individuals claim they were employees and sue the employer and claim salaries and unfair dismissal.
The first legal challenge with employment contract is that it is not at all times that parties are tied down to what they agreed in writing but there are occasions where the courts will inquire into how the contract has been lived by the parties to establish the true nature of the relationship.
At times the courts will rule that the individual was an employee as opposed to a service provider or one with a contract for service.
There are many contracts of service that are in reality contracts of employment as they fail to pass tests like the independence test. This is a test whereby the law says if the individual worked stipulated hours, used your tools, used your transport, put on your uniform, observed work rules, and when sick was to provide sick leave note from a doctor and is expected to do the work personally, then the individual is an employee.
These tests are not applied the same in all cases but each case is dealt with in its own merits. This means that a number of people we think are independent service providers could easily be employees.
There is also the famous “dependence test”, that says even if one deemed an independent contractor or service provider in some instances where one can prove to the court that he is at all times at the beck and call of the employer and fully depends economically on the employer, then the individual could qualify to be an employee even if he presents an invoice at the end of the month and pays his own taxes.
Usually this test is used by courts together with other tests.
Jane worked as an independent cleaner and tea lady at a small factory. Every month-end she presented her invoice and was paid for her services.
She put on the employer’s uniform, her working hours were fixed, she had to do the work personally, she did qualify for any type of leave, she was paid for hours worked and the employer provided all the tools and materials to work with.
She signed a new service contract every three years. When the company was sold to new owners and Jane’s contract was terminated, she claimed that she was an employee and as such she should also be transferred to the new employers.
The court used various tests and Jane was declared an employee. This case shows that there is a need for one to ensure that a service contract is legally crafted and lived as per legal requirements.
In conclusion, employers must seek expert advice in crafting of different types of work related contracts and also seek guidance on how each of the different types of contracts is lived.
Davies Ndumiso Sibanda can be contacted on: email: [email protected] or cell number 0772 375 235