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Employment Law 101 for the Small Business Owner

Posted on Oct 4th, 2021
Articles Law & Taxes

Employment 101 for small business owners

As a small business owner, employing your first employee can be both an exciting and daunting experience. Part of figuring everything out as a small business owner is understanding the employment law and compliance perspective, which could be enough to cause one to reconsider the whole thing.

However, growing your team is a vital part of growing a successful business, so here is employment law 101 that every small business owner needs to keep in mind.

  1. Employment Contracts:

While an employment contract is not necessary to effective employment, having one in place is always a good idea and a legal requirement. Section 29 of the Basic Conditions of Employment Act (BCEA) sets out what must be included in an employment contract.

Outside of a contract of employment or in situations where employment is in dispute, Section 200A of the Labour Relations Acts (LRA) sets out the conditions under which one is presumed to be an employee. Those condition are as follows:

  1. “the manner in which the person works is subject to the control or direction of another person;
  2. the person’s hours of work are subject to the control or direction of another person;
  3. in the case of a person who works for an organisation, the person forms part of that organisation;
  4. the person has worked out for that person for an average of at least 40 hours per month over the last three months;
  5. the person is economically dependent on the other person for whom he or she works or renders services;
  6. the person is provided with tools of trade or work equipment by the other person; or
  7. the person only works for or renders services to one person.”

PS: this means that independent contract might not be an independent contractor after all. It is important to note that the above (s200A of LRA) is not automatically applicable to those that earn above the earning threshold (#GoogleIt).

  1. Understand your rights and obligations as an employer as well as those of your employees:

Section 23 of the Constitution of the Republic of South Africa states the following:

  1. Everyone, both employee and employers, have the right to fair labour practice
  2. Every employee has the right
    (a) to form and join a trade union;
    (b) to participate in the activities and programmes of a trade union; and
    (c) to strikeEvery employee is obligated:
    (a) to report to duty and render a complete service
    (b) render service in good faith
    (c) to be respectful and obey lawful instructions
  3. Every employer has the right:
    (a) to form and join an employer’s organisation; and
    (b) to participate in the activities and programmes of an employer’s organisationEvery employer is obligated:
    (a) to remunerate employees (this include having all UIF and PAYE status in order)
    (b) to provide safe working environment/conditions (this includes mental health)
    (c) to treat employees with dignity and respect

As if all of the above isn’t complicated enough for small business owners to navigate, there is another accepts of common law that all small business owners should be aware of when it comes to employing people, and this is vicarious liability.

See also: Unpacking Employment Law For Employers

Simply put vicarious liability is where someone (the employer) is held responsible for the actions and omission of another (the employee) committed during the course and scope of their employment.

A good example of this would be an employee of a laundry service while carrying out their duties burns a client’s shirt while ironing it, in such a case the employer would be vicariously liable to the client for any loss or damages suffered (silly example but you get the drift).

Therefore, it is important for small business owners to understand such nuances and ensure that they have the necessary cover to mitigate for vicarious liability.

Well, that brings us to the end of today’s lesson. Growing your team as a small business owner is one of many rewarding challenges one faces in the pursuit of growth and success, however equipping yourself with the right knowledge, systems and practices makes such challenges a little less daunting and a little more exciting.

About the author: Kulani Shiluvane is the founder and chief solutionist at Shiluvah. She is an accomplished business development professional with a post-graduation qualification in Management and Labour Law from the University of the Witwatersrand and the University of Johannesburg respectively.

She is a skilled operation, logistic and strategic professional with experience in strategic planning and implementation, stakeholder engagement, human resources and public relations. Kulani severed as Chief Operations Officer in a medium-size organisation in Johannesburg for 4 years and in 2017 she established Shiluvah.

Shiluvah is a Human Resource and Labour Law Consultancy which offers dynamic, customised and integrated people management solutions. Kulani has a keen interest and experience in human resource, conflict resolution, problem solving and organisational relations. Accredited as a mediator by Conflict Dynamics in 2018, her mediation interest areas are: commercial disputes, workplace, management and labour related matters.