Applying the Dominant Impression Test

The test for determining whether someone is an employee or an independent contractor is the dominant impression test — even if the parties to the contract state that their relationship is one of an independent contractor, the true nature of the relationship may in fact be one of employment. Our Courts have always been prepared to look beyond the written description of the nature of the relationship to ascertain what the true and underlying nature of the contract is.

This test and its application again arose in the recent decision of the Labour Court in Linda Erasmus Properties Enterprise (Pty) Ltd v Mholongo & others (2007) 16 LC 1.11.5. The respondent was employed as an independent contractor and her responsibility was to obtain houses for sale. She was initially assisted by being given two houses to sell — from that point on it was now up to her to secure the houses she was to sell. A written contract had been concluded between the parties, in terms of which the respondent was an independent contractor, appointed in terms of the Estate Agents Affairs Act 112 of 1967 — the contract made it clear that she was not an employee.

She was paid on a commission basis and she could determine her own working hours. The only fixed rule in this regard was that she had to attend one meeting every Monday. No evidence was led as to the length of this meeting, but it was argued that the purpose of the meeting was to encourage her to sell as many houses as possible. No Unemployment Insurance Fund contributions were deducted from her commission; nor was Pay-As-You-Earn (PAYE). Like the other 50 “agents” she was not entitled to join the provident fund and she was not obliged to present medical certificates if she was off sick.

Invariably, in cases such as these, the challenge is to evaluate all the factors and especially the provisions of the contract in order to obtain a dominant impression. One of the clauses in the contract stated that there remained some areas where the estate agency needed to maintain control and/or supervision over the agent’s activities. Certain limitations were also placed on what the agent could, and could not do. She could not, for instance, divide the commission with another estate agency or any other person unless this was approved by the agency. She was also obliged to comply with all the agency’s office rules. Other clauses in the agreement also shed some light on the true relationship: the agent was required to keep all correspondence she received or wrote in the agency office; a restraint of trade was imposed, and provision had been made for an exit interview (a practice common in employment).

It was also significant, said the Court, that the agent was given a timetable or roster which regulated all aspects of her activities. The agency said that this roster was purely for the purpose of assisting the agent to sell houses. Not so, said the CCMA commissioner (and the Labour Court agreed): the roster showed the extent of control the agency had over the agent. She even had to run errands for one of the managers and she had to report any absence from work to this manager. The agency emphasised the fact that UIF and PAYE were not deducted. This, said the Court, does not tilt the balance of probabilities in this case towards a finding that the agent was indeed an independent contractor.

The Labour Court concluded that the agent was not an independent contractor, but was in fact an employee of the estate agency at the time she was dismissed. The objection raised by the agency — that the CCMA did not have jurisdiction because the agent was not an employee — was dismissed and the Labour Court remitted the matter back to the CCMA for arbitration.

New appointments to the Labour Court and the Labour Appeal Court
The following Judges have been appointed to the Labour Appeal Court:

• Judge Achmat Maaim Jappie
• Judge Hendrik Mmolii Thekeso Musi
• Judge Chimanial Narotam Patel
• Judge Basheer Waglay

The following two Judges have been appointed to the Labour Court:

• Professor Annali Christelle Basson
• Mr Edwin Mogomotsi Molahleli

Congratulations to all — especially to the two appointees to the Labour Court: erstwhile colleagues.