How an employer instantly added 9,181 employees to its workforce

How an employer instantly added 9,181 employees to its workforce

Are your volunteers/independent contractors actually employees?

The case:

In a Labour Court case with considerable significance for the non-profit sector, Acting Judge P Benjamin has ruled that community health workers (“CHW’s”) engaged by the Gauteng Department of Health (“GDoH”) on fixed term contracts are employees and not independent contractors, as had been argued by GDoH. Referring to the Labour Relations Act (“LRA”), the judgement states there is “… no doubt that CHW’s are not independent contractors” … “their work clearly falls within the scope of the definition of an employee”. The ruling also confirmed that the “stipend” paid to them fell within the definition of “remuneration” contained in the LRA.

What we learn from the case:

  • Even if you call a payment a “stipend”, it is remuneration.  At the broadest level, employees are workers who work for an employee for remuneration; irrespective of what the payment is called, it falls within the statutory definition of remuneration. Have you carefully considered the position of any “volunteers” to whom the organisation makes payment?
  • Employees place their “capacity to work” at the disposal of the “employer”; by describing tasks (instructions to do work) as “deliverables”, the employer does not alter the employer/employee relationship. The courts look beyond the description of contractual status and examine the reality of the working relationship.
  • Employees do not perform unsupervised work on an independent basis, which is the case with independent contractors, even though an employer can exercise a measure of control over them. Are gross payments being made by your organisation to “service providers” who are, in reality, employees?

The relevant details from the case:

The CHW’s had been “employed” since 2013 under fixed term contracts, after the previous way of working (through NPO’s funded by GDoH) was stopped because it became unworkable (for example, there were instances of funding of NPO’s operated by the Department‘s own officials and of the under/non-payment of the CHW’s themselves). The workers were given “vendor numbers” but their contracts expired in March 2016.

On becoming aware of this, the Gauteng Community Health Forum approached Khanya College to assist them and a leading firm of attorneys took on the matter probono.

The judgement took account of the case of State Information Technology Agency (Pty) Ltd v CCMA and Others in which the Labour Appeal Court held that there are 3 “primary criteria” for determining whether a person is an employee (the “SITA test”) – the presence of any 1 of these will generally be sufficient to establish that the person is an employee:

  1. An employer’s right to supervision and control;
  2. Whether the employee forms an integral part of the organisation with the employer;
  3. The extent to which the employee is economically dependent on the employer.

In the case of the CHW’s, they had to report for duty at 08h00 at a clinic of the Department, sign an attendance register and work in the relevant community until 14h00 when they returned to the clinic to complete and file forms recording work done for the day (which were monitored and checked by the team leader). Based on these forms, which were submitted to the GDoH, the CHW’s stipends were calculated.

The CHW’s contract was headed “contract to volunteer as a community health worker” and was in 2 parts – the contract itself and a service level agreement which was incorporated into the contract.  The 2 parts together stipulated 4 deliverables that the CHW’s had to fulfil. The contract specified the stipend that the CHW’s were to receive and granted annual leave.

In arriving at his judgement, Judge Benjamin only referred to the 1st criteria in the SITA test above and ruled that the CHW’s were employees of the GDoH as contemplated by the Labour Relations Act 1995.

We do hope that the considerations in this case will provide you with further guidance when making the sometimes difficult decisions around the status of employees, volunteers and independent contractors. If you feel we could help further, please do not hesitate to contact us.

Ziyo will share more important information on issues related to employment and human resources in our newsletters and workshops later in the year.