[Question] Rights as an employee

[Nixi]

Hi

I would like advice on where to proceed. I became a permanent employee at a company in March 2015. It is a company that operates from the owner's residential premises. When he started to build on his property questions were raised as to how large his business was and the council came to inspect his premises. He was told that he was only allowed 2 employees on the premises as he is operating in a residential area (he had 3 employees). This debacle went on for a while and in February 2016 they were clamping down on his business having 3 employees. He then approached me and requested that I become an "independent consultant" to his business but still work in a full time capacity. Essentially that rendered me self employed although he gave me his word that it was only the structure of my income that was going to change and I would still keep the full time employee benefits such as leave. I never signed a resignation letter nor did I receive a new contract indicating the change. I had to give him two invoices reflecting different amounts every month for his safety.

Mid April 2016, my employer indicated that his company was struggling and he attempted to find me alternate employment. However this did not work. He then found my colleague work and indicated that she would be going to a new employer as of 1 July 2016. He then indicated to me that I would only receive half of my salary for July 2016 and following that there was uncertainty of any income. He indicated that he was going to change the structure of my pay and that I would receive payment per report. What he proposed was less than half my salary. I did not receive any contract again to indicate the change. Then on 30 June 2016 he told me that he was going to possibly get more income and that he will give me my full salary again for the month of July 2016 and after that he could not guarantee anything. I told him that I do not agree to this and that we should stick to our arrangement of pay per report in order for me source additional work. He was not happy with this as he was aware that he could potentially pay me more than my salary with the amount of work that he "might" get. Things are still uncertain and I am afraid that he might not pay me this month as he indicated to me "if you want to play that game" and went on to say that he might pay me as his clients pay him which would be intermittent as it is legal work and settlements can take years.

I appreciate any advice in this regard. What are my rights here?

[HR Solutions]

Clearly he is battling and can't pay you. It seems things have gone a bit sour - best to move on because it doesn't sound like it is going to get better. You can't get something (money) out of someone if they haven't got it. You are an "independent consultant" which probably means that if he doesn't need you he can stop your services with immediate effect.

[Greig Whitton]

Clearly he is battling and can't pay you.

I don't think that is clear at all. At best, it's clear that OP's employer claims that he is battling. Either way, it doesn't dissolve OP's employer of their legal obligations (i.e. to pay OP as contracted).

You can't get something (money) out of someone if they haven't got it.

OP's employer owns property and was preparing to expand on it. He has also offered / promised to renew OP's full salary.

You are an "independent consultant" which probably means that if he doesn't need you he can stop your services with immediate effect.

Nothing posted by OP proves that he is an independent consultant. Just because an employer and an employee agree to an independent contractor arrangement doesn't mean that it is such legally. Even if OP signed an independent contractor agreement, he might still legally be deemed to be an employee (e.g. if he derives most of his income from a single employer or is subject to their control). As I see it, OP is still legally employed and fully entitled to enforce that contract.

It sounds to me like OP's employer is being exploitative. OP has to choose between enabling this exploitation by acquiescing to his employer's ever-shifting rules or enforcing his rights (e.g. approaching the CCMA) and accepting that doing so will almost certainly sound the death knell for this particular job.

[HR Solutions]

Oh really .......... ? Ok then let's say that lol
Maybe you should read it again and sometimes just realize that companies go thro difficult times and sometimes battle to pay employees or independent consultants which is exactly what this person is .........by his own admission.

[Greig Whitton]

Maybe you should read it again and sometimes just realize that companies go thro difficult times and sometimes battle to pay employees

I'm not unsympathetic to the challenges of running a business, but that's not OP's problem. He has a legal right to be paid.

or independent consultants which is exactly what this person is .........by his own admission.

His admission has no bearing on whether he is legally deemed to be an employee or not. Claiming to be an independent consultant does not make it so.

And just to clarify, OP can't have his cake and eat it. If the "independent contractor" agreement is unenforceable (by virtue of OP being legally considered an employee), then OP has no claim to the benefits associated with that agreement (i.e. payment per report). OP must either:

1. Settle for his original employment contract;
2. Negotiate a new employment contract (e.g. with a base salary + additional payments for reports completed); OR
3. Resign and attempt to earn a living as a genuine independent contractor.

[HR Solutions]

Now u contradicting yourself.

[Greig Whitton]

Where have I contradicted myself?

[HR Solutions]

He then approached me and requested that I become an "independent consultant" to his business but still work in a full time capacity

Discussed and agreed by both parties. No contract needed. An independent consultant can work for many people and invoice accordingly.

Mid April 2016, my employer indicated that his company was struggling and he attempted to find me alternate employment. However this did not work. He then found my colleague work and indicated that she would be going to a new employer as of 1 July 2016

A clear indication that business is not doing well and showing goodwill in finding the employee new employment.


Sometimes in the real world you have to be able to read the signs of a company that is battling. You do not see that and want to always enforce and find a law to make a company "pay". It is not clever to advise an employee to pursue a battle that they will not possibly win.
This guy has been upfront for a couple of months. and has advised accordingly. What exactly more would you like him or would like to force him to do if he does not genuinely have the money.

His admission has no bearing on whether he is legally deemed to be an employee or not. Claiming to be an independent consultant does not make it so.

His admission has got everything to do with it, especially after they have chatted about it. You would be surprised to know how many people out there are "Independent Contractors" ........

Resign and attempt to earn a living as a genuine independent contractor.

Resign from what ? He IS an independent contractor as per his admission - do you not understand this ?

[Greig Whitton]

He then approached me and requested that I become an "independent consultant" to his business but still work in a full time capacity.

Discussed and agreed by both parties. No contract needed. An independent consultant can work for many people and invoice accordingly.

Discussing and agreeing to an independent contractor arrangement does not mean that someone is legally deemed to be an independent contractor. SARS published an interpretation note specifically addressing this issue several years ago. That interpretation note sets out the tests that need to be applied when determining whether someone is an independent contractor or an employee. Here's a Fin24 article that provides an accessible summary.

When those tests are applied to OP's description, it appears almost certain that he is an employee and not an independent contractor regardless of what he and his employer may have discussed / agreed.

Mid April 2016, my employer indicated that his company was struggling and he attempted to find me alternate employment. However this did not work. He then found my colleague work and indicated that she would be going to a new employer as of 1 July 2016.

A clear indication that business is not doing well and showing goodwill in finding the employee new employment.

Or maybe the employer had an ulterior motive for getting rid of that particular employee and alleged business distress to that end. Either way, the employer has a legal obligation to pay OP and OP has a right to be paid.

Sometimes in the real world you have to be able to read the signs of a company that is battling.

I agree 100%. But this applies just as much (if not more so) to business owners as it does to their employees. Unfortunately, many owners don't read the signs and manage their business proactively. Instead, they take reactive measures and blame their woes on the economy / government / God.

You do not see that and want to always enforce and find a law to make a company "pay". It is not clever to advise an employee to pursue a battle that they will not possibly win.

So instead of enforcing his legal rights OP should just take his employer at his word and be paid whatever his employer claims is affordable?

I'm not advising OP to "pursue a battle". OP created this thread with the specific intent of clarifying his rights and I have responded accordingly. Personally, if I were OP, I would approach my employer and suggest that the back-and-forth agreements have produced a confusing state of affairs. I would then propose clarifying and (where necessary) re-negotiating the working arrangement from a clean slate. Specifically:

(1) Does the employer want an employee or an independent contractor?
(2) Does the employer want to pay a fixed monthly amount or per project?

If the negotiations break down, OP can propose independent arbitration. Legal action and "pursuing a battle" ought to be a last resort.

What exactly more would you like him or would like to force him to do if he does not genuinely have the money.

According to OP, his employer is capable of paying him as agreed:

Then on 30 June 2016 he told me that he was going to possibly get more income and that he will give me my full salary again for the month of July 2016 and after that he could not guarantee anything. I told him that I do not agree to this and that we should stick to our arrangement of pay per report in order for me source additional work. He was not happy with this as he was aware that he could potentially pay me more than my salary with the amount of work that he "might" get.

Sounds to me like OP's employer wants the best of both worlds: to pay OP on a project basis but not pay OP more than his original salary. This is unfair to OP. His employer must either abide by the original employment contract or fully commit to the pay-per-project agreement.

And if the employer is genuinely cash-strapped, there are alternative measures that he can take (e.g. applying to the Training Layoff Scheme for payroll relief).

[HR Solutions]

I find it funny how you try to "complicate" a simple thing and end up arguing for both sides and don't achieve anything at the end of the day.

[BusFact]

I find it funny how you try to "complicate" a simple thing and end up arguing for both sides and don't achieve anything at the end of the day.

I think that's a bit unfair. Greig has given details, an explanation and options to the OP. It might just be a bit more complicated than a simple thing.

In your original answer you said:

Clearly he is battling and can't pay you. It seems things have gone a bit sour - best to move on because it doesn't sound like it is going to get better. You can't get something (money) out of someone if they haven't got it. You are an "independent consultant" which probably means that if he doesn't need you he can stop your services with immediate effect.

These are quite true for a certain scenario. Greig has however added that there are alternative scenarios to be considered, such as the guy might actually be able to pay. If a client of yours did not pay you for a placing, would you just take him at his word that he did not have enough money so wanted a 50% discount?

The suggestions on renegotiating are good ones. However at the end of the day both of you have either said or implied that this relationship is not good and that the OP should seek alternative employment or work as a genuine independent with other sources of revenue. And this bit, I think we can all agree on. The OP should make plans to move on.

[HR Solutions]

I think that's a bit unfair. Greig has given details, an explanation and options to the OP. It might just be a bit more complicated than a simple thing.

More often than not, companies that advise on these sort of scenarios make things much worse. Sometimes you have to way up your options and cut your losses.

If a client of yours did not pay you for a placing, would you just take him at his word that he did not have enough money so wanted a 50% discount?

No I would never take him at his word. I would do my homework properly and decide the way forward. In past experience I have had a client that has said this - a very nice guy - after thoroughly checking him out I agreed. Sometimes it is a waste of energy and money to take things further if you know for a fact that you are not going to get any money from someone. I had another client that went into business rescue - same scenario - I accommodated him and at the end of the day he came back. A little compassion is sometimes called for - times are tough out there so I do not agree with some business advice that advises to nail a person and try to twist a contract or an agreement to suit so that they can advise to take a case further.

At the end of the day this person is an independent consultant - don't try to twist this around to suit to make a case. The employer and the employee at that stage agreed to this.

[Greig Whitton]

At the end of the day this person is an independent consultant - don't try to twist this around to suit to make a case. The employer and the employee at that stage agreed to this.

SARS says he is an employee, not an independent contractor.

The Department of Labour says that he is an employee, not an independent contractor.

[HR Solutions]

Read it properly - don't read it to interpret what you want it to interpret !

We will continue to disagree on an interpretation. So be it. My opinion still stands for this guy. Your advice will cost him time & money not guaranteed to get back.

[Justloadit]

So if an independent contractor, who has little work and can not find any work, and is available for doing work for you, and has crapy tools, and uses your tools to make the job, and because you tell what to do on your job, and does so for more than 3 months, and when you tell him you have no further work for him, takes you to the CCMA because according to the LRA is now your employee, since just one of the criteria set out makes it so.

A person is presumed to be an employee if they are able to establish that
one of seven listed factors is present in their relationship with a person for
whom they work or to whom they render services.

I have quoted 3 above