Page 12 - DRG HR HANDBOOK- Nikita Pillay

VARIATIONS OF

EMPLOYMENT

CONTRACTS AND

RELATIONSHIPS (CONT.)

ƒ Doing work on a specific project for a determined the appointment of an employee to perform services in
period (building a house). respect of an identified project or to perform a specific
ƒ Doing seasonal work (harvesting vegetables). set of tasks.
ƒ Students attending training or obtaining work Project-Based Employment Contracts will need to be
experience (vocational training). used to appoint employees who are hired to perform
certain identified tasks or projects. The employment
A fixed term employee, compensated under the legal
relationship terminates once the identified tasks or
threshold, employed for longer than 3 months (without
project have been completed. This type of contract
a justifiable reason) will be deemed to be a permanent
is a Fixed-Term Contract, however clearly defined by
employee, irrespective whether or not a contract has
highlighting specifications of what exactly the project
been signed, and the employee may not be treated
details. A project-based contract can be renewed
less favourable than permanent employees doing the
upon project incompletion, however continuous
same or similar work. Such an employee must also
renewal raises the question of legitimacy of the
be provided with the same work opportunities as
employment relationship.
permanent employees.
PERSONAL SERVICES ENTITY
A fixed term employee compensated under the legal
threshold, who is employed for 24 months or more
A personal service provider is a company, close
shall be entitled to severance pay on termination
corporation or trust that is seen as an employee. This
of employment.
applies to any company other than that which is a
If an employer created a reasonable expectation of Labour Broker.

permanent employment to a fixed term employee, such
A company or trust is classified as a Personal
an employee may refer an unfair dismissal dispute
Service Provider upon meeting the various terms
to the CCMA when his/her contract of employment
and conditions as defined in the Income Tax Act. A
terminates.
personal service provider is subject to PAYE at the
rate of 35% in the case of a company and 40% in the
PROJECT-BASED CONTRACTS
case of a trust.
In terms of the SA Labour Relations Amendment Act,
A key differentiation of Personal Services is where
2014 on temporary employment, as of 01 January
more than 80 per cent of the income of such company
2015 an employee cannot be appointed on a
during the year of assessment, from services rendered,
temporary employment basis for longer than
consists of or is likely to consist of amounts received
3-months.
directly or indirectly from any one client of such
With certain exceptions, such as where company, or any associated institution as defined in the
12 justifiable reasons exist, which may include 7th Schedule to the Income Tax Act, except where such