Employers are becoming more and more desperate in their attempts to run orderly, productive and profitable businesses. The special obstacles to the achievement of this goal are intense and growing international competition, the world economic crisis South Africa’s culture of crime and disciplinary legislation that severely restricts the rights of employers.
In their attempt to deal with this restrictive labour legislation employers place new employees on probation so as to detect and get rid of ‘bad apples’ without having to travel the tortuous disciplinary procedure route mapped out by the law. However, employers have discovered to their alarm that, while probationary contracts are legal, they are not a license to fire at will.
In the case of Tharratt vs Volume Injection Products (Pty) Ltd (2005, 6 BALR 652) a probationer was dismissed for poor performance. As the employer had failed to investigate the cause of the poor performance the CCMA found the dismissal to be unfair.
As probation fails as a quick fix employers use fixed-term contracts as a way of testing out whether the employee is going to fit into the organization. However, in the case of Abrahams vs Rapitrade (Pty) Ltd (2007, 6 BALR 501) the employee was hired on a probationary contract. However, when the employee performed badly the employer claimed that the employee was on a fixed-term contract and terminated his employment at the alleged expiry date. The arbitrator found that the dismissal was unfair because the employee was not on a fixed-term contract and dismissals for poor performance must be preceded by counseling and/or training.
Other employers hire workers as independent or external contractors to disguise the fact that the workers are employees. If the contractor works and behaves well the employer might then make him/her an employee. However, the pawpaw hits the fan when the worker fails to meet the standards and is terminated on short notice. Labour law procedures are not used because the worker is seen as an independent contractor.
However, workers terminated in this way have a good chance of succeeding at the CCMA because section 200A of the Labour Relations Act (LRA) effectively distinguishes between genuine independent contractors and employees. That is, this section provides that, unless the employer can prove otherwise, the worker is presumed to be an employee and not an independent contractor if any one of the following factors is present:
- The manner in which the person works is subject to the control or direction of another person;
- The person’s hours of work are subject to the control or direction of another person;
- The person forms part of the organisation or business;
- The person has worked for the organisation/business or other person for an average of at least 40 hours per month over the last three months;
- The person is economically dependent on the organisation/business/person;
- The person is provided with work tools or equipment by the organisation/business;
- The person only works for one organisation/business/person.
I must stress that these criteria apply regardless of the form of the contract. This means that, even if the employee has contractually agreed that he/she is an independent contractor the CCMA may well find that he is not one!
Therefore, at CCMA there is a heavy onus on the employer to prove that, despite the existence of any one of these seven factors, the worker is an independent contractor. However, due to the fact that the majority of such workers are employees disguised as independent contractors the employer loses the case. And, because the employer fails to use disciplinary procedures they are forced to reinstate or compensate the employees.
The loopholes for avoiding the law of discipline are all but closed and the impending new legislation on labour brokering and contracting is likely to finish off the job. This means that employers will have to abandon the quest for loopholes and become more adept at implementing the laws of discipline and dismissal.
BY Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: email@example.com. Go to: www.labourlawadvice.co.za
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