Employment Status in the Gig Economy Global 2020 NRF Publication – South Africa

What is the state of the law on the status of gig workers today, generally? (What we know)

It is estimated that there are tens of thousands of gig workers in South Africa, making up at least 1 per cent of the South African workforce, and growing by more than 10 per cent each year. Common platforms link customers with a number of services including: transportation, food delivery, cleaning, repair, creative skills and technology development.

There is presently no legislation framework which regulates the gig economy. Furthermore, gig workers are generally categorised as independent contractors in South Africa and are thus not entitled to the rights and benefits afforded to employees under Labour legislation, including: protections against unfair labour practices and dismissals; basic conditions of employment; access to unemployment insurance and occupational injury benefits; and a prescribed minimum wage.

Technology platforms in the gig economy may still incur liability in terms of the Occupational Health and Safety Act which requires businesses in South Africa to take steps to ensure that, as far as is reasonably practicable, any person who may be directly affected by the business’s activities are not thereby exposed to hazards to their health or safety. Gig workers may report their platforms to the Department of Labour should they feel that their safety may be at risk through their business activity. Gig workers themselves also bear the responsibility to guard against unsafe conditions for themselves and anyone affected by their activities.

What are the grey areas in the law? (What isn’t so clear yet)

At this stage, South African courts have not yet been requested to provide guidance as to whether in certain instances gig workers can be categorised as employees and therefore entitled to the associated protection. However, the main employment tribunal in South Africa (the Commission of Conciliation, Mediation and Arbitration or the CCMA) has considered the issue and found favourably for gig workers.

In a relatively recent decision, a Commissioner of the CCMA was required to determine whether drivers engaged by an eHailing service (the “Company”) were employees or independent contractors. The Commissioner referred to Section 213 of the LRA, which defines employees as:

(1) “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

(2) any other person who in any manner assists in carrying on or conducting the business of an employer.”

In conjunction, the Commissioner relied on the statutory Code of Good Practice: Who is an Employee, which introduces a comprehensive test that requires one to consider the real relationship between the parties, despite the form of contract. In this case, the Commissioner held that the drivers are employees under South African law for the following reasons:

1. Firstly, the drivers render their personal services to the Company  as they have to drive in their own name and may not out-source their driving to someone else.
2. Secondly, their relationship with the Company is indefinite so long as the driver complies with the specified requirements.
3. Thirdly, despite the flexibility regarding work hours, the drivers are subject to the control of the Company in the sense that they have to comply with the clear performance standards. Furthermore, if the driver does not meet the required standards, he/she is effectively dismissed or “deactivated.”
4. Lastly, the drivers are economically dependent on the Company.

Whilst the CCMA’s decision was ultimately overturned by the Labour Court, this was on account of the incorrect citation of Company instead of the Netherlands-based holding company. It was thus not necessary for the Court to re-examine the question of the employment status of the drivers. However, the CCMA’s reasoning does provide some insight into one interpretation of the complex relationship between gig workers and their platform providers.

Although a level of guidance can be taken from this decision, South African labour tribunals are yet to make definitive findings on how the divide between employees and independent contractors will be applied in the Gig Economy. This will ultimately depend on a number of factors specific to each case.

What are trends to look out for? (What way the wind is blowing)

We expect that in the near future the courts will be asked to consider the question of whether gig workers in certain instances are employees for the purposes of labour legislation and are accordingly entitled to the protection that such status offers. It is probable that the courts will find that most gig workers will not fall within the traditional definition of an employee and will remain outside the ambit of certain labour protection.

However, it remains to be seen as to whether the government will consider legislating unique protections for gig workers. During the COVID-19 pandemic there has been State recognition that many individuals – including gig workers – fall outside the legislative safety nets and that this issue needs to be addressed.