As can be seen from the above definition, an independent contractor is excluded from the definition of an employee as defined by the act. Therefore an independent contractor does not have any of the rights that are given to employee’s (including the right not to be unfairly dismissed) in the act. The question then arises as to how we can differentiate between an employee and an independent contractor. This is where the problem for employers arises.

As is the case with most things in life, there is no clear delineation between an employee and an independent contractor. Identity here, is largely a matter of degree. While there are clear cases where a party is either an employee or independent contractor, these occupy opposite extremes on a scale with a penumbra of grey areas occupying the space in between.

As mentioned, there are cases where it is easy to identify the nature of the relationship. Take for example the plumber that you call on to fix your pipes or the builder who does your patio. These are clearly independent contractors. On the other hand, your domestic worker who comes to work on a daily basis and who is paid on a regular weekly or monthly basis, is clearly an employee. However in between these two “clear cases” are a penumbra of difficult cases. For this reason, the courts have developed a test to differentiate between an employer and an independent contractor. The test is known as the dominant impression test.

This test first reared its head in the law of delict (torts), in response to the problems posed by vicarious liability. Vicarious liability holds that employers are responsible for the delicts of their employees. Therefore, in order to decide whether X is vicariously liable for Y’s delict, the dominate impression test was developed in order to determine the nature of the X-Y relationship. The test is based on the premise that the employment relationship has certain features and characteristics that do not occur in a relationship with an independent contractor. The test is applied by asking whether or not the majority of these characteristics inhere in the relationship, if they do, then it is an employment relationship.

Over the years, the courts have established the following characteristics to be indicative of the employment relationship:

The above list is not a closed list nor does it constitute necessary and sufficient conditions of an employment relationship. They are merely indicators of the employment relationship.

Let us return to the example of a plumber used earlier to see how this test is used in practice. When you call a plumber to fix your pipes, you usually do not have the power to supervise and control the manner in which he or she works, although you may be entitled to a certain quality of work. Although a plumber does not produce anything in a direct sense, he or she is paid to perform a specific task and is paid on completion of that task. His or her remuneration is dependant on the completion of a specific task. Also that plumber does the same kind of work for many clients and therefore does not place his productive capacity in the hands of one person. A plumber is also not entitled to receive any medical aid, pension or sick leave benefits from his client. Thus as we can see that very few of the characteristics of the employment relationship are present here. We would thus, applying the dominant impression test, feel compelled to call the plumber an independent contractor.

The dominant impression test presents a problem for those employers seeking to exclude their labour force from the definition of an employee by labelling them independent contractors. These employers cannot merely do this in a formal sense, by labelling. What these employers commonly do is to make the employee sign a contact that labels them as an independent contractor. Yet the employer usually wants to maintain a certain degree of control and supervision over the way in which this “independent contractor” works or where she or he works. Typically this is done by either including such terms in the contract that allows them to maintain control or in reality exercises control over the “independent contractor”. However if this is the case, then the “independent contractor” may in reality be an employee. Formal attempts to dress up an employee in the clothing of an independent contractor may be not only useless but are likely to get the employer into trouble in the event of a labour dispute. Such attempts, upon discovery constitute prima facie proof of a deliberate attempt to deprive an employee of his or her rights. This practice will not be looked on favourably by the CCMA or Labour Court.

Another mistake that employers make is to confuse an independent contractor with an employee who is on a fixed time or fixed term contract. These latter types of contract only differ from ordinary employment in one sense, that they do not constitute permanent employment. They are different in that they terminate after a certain amount of time has passed or on the completion of a task. Again, and this is important, in order for a party to be an independent contractor, your relationship with him or her must lack the majority of employment characteristics listed above. Employers cannot eat their cake and have it too.