Are commission only employees considered employees in terms of the Basic Conditions of Employment Act?
20 Jan 2020
A commission only employee is an employee who derives his or her entire income from commission on the work performed by such employee (“Commission Only Employee”). Generally, Commission Only Employees may have flexible working times and the manner in which their work is performed may be left to the Commission Only Employee’s discretion.
Purpose and application of the Basic Conditions of Employment Act No. 75 of 1997:
The Basic Conditions of Employment Act No. 75 of 1997 (“Basic Conditions of Employment Act”) gives effect to and regulates the right to fair labour practices by establishing and enforcing basic conditions of employment and regulating the variation thereof. The Basic Conditions of Employment Act applies to all employees and employers with the exception of members of the state security agency and unpaid volunteers working for an organization or serving a charitable purpose.
Who is an employee?
Section 1 of the Basic Conditions of Employment Act defines an employee as:
- any person, excluding an independent contractor, who works for another person or for the state and who receives, or is entitled to receive any remuneration; and
- any other person who in any manner assists in carrying on or conducting the business of an employer.
Additionally section 83A of the Basic Conditions of Employment Act states that a person who works for, or renders services to, any other person is presumed, until the contrary is proved, to be an employee, regardless of the form of contract, 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;
- in the case of a person who works for an organization, the person is part of that organization;
- the person has worked for that other person for an average of at least 40 (fourty) hours per month over the last 3 (three) months;
- the person is economically dependent on the other person for whom that person works or renders services;
- the person is provided with tools of trade or work equipment by the other person; or
- the person only works for or renders services to 1 (one) person,
collectively referred to as the (“Section 83A Presumption”).
The Section 83A Presumption is however not applicable to persons who earn in excess of R205 433.30 (two hundred and fifty thousand four hundred and thirty-three Rands) per annum as determined by the minister in terms of section 6(3) of the Basic Conditions of Employment Act (“Section 6(3) Threshold”).
A Commission Only Employee may be allowed to determine his/her own working time. The Basic Conditions of Employment Act does not provide for a minimum time for which an employee has to work, it merely provides for limits on work time in terms of chapter 2 of the Basic Conditions of Employment Act.
Section 7 of the Basic Conditions of Employment Act further states that every employer must regulate the working time of each employee:
- in accordance with the provisions of any Act governing occupational health and safety;
- with due regard to the health and safety of employees;
- with due regard to the code of good practice on the regulation of working time issued under section 87(1)(a) of the Basic Conditions of Employment Act; and
- with due regard to the family responsibilities of employees.
The provisions relating to working time as contained in chapter 2 of the Basic Conditions of Employment Act, with the exception of section 7 of the Basic Conditions of Employment Act, do not apply to:
- senior managerial employees;
- employees engaged as sales staff who travel to the premises of customers and who regulate their own hours of work; and
- employees who work less than 24 (twenty-four) hours a month for an employer.
Employees who earn in excess of the Section 6(3) Threshold also remain protected by section 7 of the Basic Conditions of Employment Act.
A Commission Only Employee will in all likelihood fall under the definition of an employee for purposes of the Basic Conditions of Employment Act and, depending on the relationship between the employer and employee, may be presumed to be an employee in terms of section 83A of the Basic Conditions of Employment Act if any one of the factors contained in section 83A are present and the Section 6(3) Threshold is not exceeded. Employers must therefore ensure that Commission Only Employees are provided the necessary minimum rights provided to employees by the Basic Conditions of Employment Act to avoid any potential exposure to employee liability.
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