HR - Getting the Status Right

HR – Getting the Status Right

By Nikki Viljoen of Viljoen Consulting CC , January 2012

Many small business owners are not sure of the correct terminology to use when employing staff, that are not employed on a permanent basis and with the new labour laws, this can and will become problematical. So let’s get the definitions correct to avoid any nasty nightmares.

Temp
A “temp” is a person who is employed on a temporary basis, usually to ‘fill in’ when for example, an employee is on leave or on maternity leave or sick leave. They are often (but not always) employed by a Labour Broker. They can also be employed over a busy or seasonal period, such as Christmas or even for a specific task such as a stock take.

A ‘temp’ is not someone who you employ on a contract for 3 months and then you renew that contract for another 3 months and then another 3 months and so on. Doing that is against the law and will ultimately land you in hot water.

Understand too, that even a temp qualifies for leave pay, sick leave and even overtime in terms of BCEA (Basic Conditions of Employment Act). The Act (Section 20 (b)) stipulates that annual leave accumulates ‘at the rate of 1 day for every 17 worked and that during the first 6 months of employment, sick leave accumulates at the rate of 1 day for every 26 days worked’ (section 22 (3)).

A ‘temp’ is also entitled to be paid for working public holidays, irrespective of whether the contract states that they are to be paid only for the hours that they work.

The Independent Contractor
An ‘independent Contractor’ is not someone who works for you all the time and to whom you give a contract of work. It is someone who comes in and does a specific job for a specific fee for a specific time. An ‘independent contractor’ is someone like the painter that you have brought in to paint the offices. He gives you a quote, you accept it (or not), he purchases the paint, brings in the ladders and/or equipment and paints the place out – cleans up (hopefully) and issues you with the bill, which you pay. That is the end of that. They are therefore essentially a service provider or supplier.

Therefore an independent contractor is someone who:-
- Runs his own business
- Should be registered as a provisional tax payer
- Could be registered as a VAT vendor
- Will work his own hours
- Will have his own equipment/machinery
- Can work or do work for more than one client at a time
- Will invoice the employer (client) either at the end of the month or alternatively once the job has been completed.
- The employer (client) will not have to worry about the usual HR stuff such as (but not limited to) deducting PAYE or UIF or SDL or payment of 13th bonus cheques etc.

So, when you ‘hire’ someone from a Labour Broker, you need to understand that they are not an ‘independent contractor’ as they do not fall under any of the above requirements.

The Fixed Term Contract
A ‘fixed term contract’ is one that usually has an “end” date or alternatively is for a specific project.

Because of the word “fixed”, should the contract not be completed on the due date, technically speaking the contract should be re-entered into with the new termination date.

A 'fixed term contract’ is not a contract that can be extended and then extended and then extended again.

I trust that now all of your employees and/or contractors will be given the correct contracts.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za