Page 13 - DRG HR HANDBOOK- Nikita Pillay

company throughout the year of assessment, employs the sole proprietorship may choose to use a trade
more than three full-time employees who are on a full- name for their business. Based on the fact that this is a
time basis engaged in the business of such company “one-man band”, there isn’t a need for an Employment
of rendering any such service, other than any employee Contract to be drawn up, as the Sole Prop manages
who is a shareholder or member of the company or is a his time according to operational needs. Because the
connected person in relation to such person. individual and the sole proprietorship are one and the
same at law, the individual who is operating the sole
For these reasons above, Employment Contracts will
proprietorship has unlimited personal responsibility for
not be necessary, unless the latter comes into effect,
the debts and liabilities of the sole proprietorship.
whereby full-time employees are engaged.
Generally, contracts of employment are poorly drafted
SOLE PROPRIETARY
and inadequate. In many cases there is verbal agreement
which challenges agreed terms and conditions at a later
A sole proprietorship is the most basic formation a
stage. Such scenario may bring difficulties to parties;
business can undertake. Sole proprietorships are
informal businesses operated by one individual; the hence one needs to have an excellent understanding
of which type of contract is applicable, and in addition,
business and the individual are the same thing in the
have employment contracts drafted correctly at
eyes of the law. No formal paperwork is required to form
inception of employment.
a sole proprietorship, however the individual operating

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