Things to consider when taking an independent contracting job

Things to consider when taking an independent contracting job
The way in which employers are hiring is changing due to the increased demand for certain skills. They are increasingly interested in hiring skills on-demand to add value when they are required. Subsequently, there is a rise in the flexible workforce, which includes freelancers and independent contractors. In the US, 20-30% of jobs already fall under the flexible workforce category. With the 4IR underway, which demands staffing agility due to the need for new yet-to-be-defined skills, we can expect to see even more flexible jobs arising. 

With the dire unemployment rates in South Africa, many job-seekers are willing to accept any job on a contractual basis, which is offered to them. It is good to know what you agree to and what the labour law says about the different types of jobs. 

This article aims to explain the difference between an independent contracting job and a permanent job; why some employers hire independent contractors as an alternative to permanent employees; what the pros and cons are if you have been offered an independent contracting position; and how RecruitMyMom assists with the different job types. This article does not cover fixed duration contracts and will be dealt with at a later time. 

 

What is the difference between being an independent contractor and a permanent employee?

According to The South African Labour Guide:

The main difference between employee and Independent contractor is the nature of the contract itself.  

The one contract (employee/employer relationship) is a Contract of Service - the employee undertakes to render her services (as opposed to an agreement to undertake and complete specific tasks) to the employer, usually for an undetermined or understated period of time, in return for which the employer undertakes to pay the employee for those services.

The other contract (Independent contractor) is a Contract for Service, and is usually a contract where the contractor undertakes to perform a specific service or task, and upon completion of the agreed service or task, or upon production of the result agreed upon, the contractor will be paid.

In the Contract of Service (employee contract) the employee is subject to the control and direction of the employer, the employer stipulates what hours the employee shall work, the employer dictates how and when the various tasks shall be performed, the employer provides all the resources to enable those tasks or services to be performed.

The employee is obliged, in terms of the contract, to obey the employer's instructions and direction is in regard of all the above. In the Contract for Service (Independent contracting), the "employer" may dictate a certain date by which the agreed task must be completed, but he would not, for example, be able to instruct the contractor regarding what materials must be used and how the job is to be completed. 

A permanent job is governed by the Labour Relations Act of South Africa. Permanent employees will pay UIF and employers will contribute to UIF and Workman's compensation. There are other possible benefits such as medical, pension fund etc. 

The table below attempts to explain the difference between the two job types: 

Independent Contractor

Permanent Employee

Is completed upon service or task delivery. 

Has no end date.

Is not on the company payroll.

Is on the company payroll.

Contractor is not directed as to how the job should be completed. 

Direction is given from the employer to employee as to how the job is to be done. 

Responsible to pay income tax on personal earnings. 

The company is responsible to pay income tax on the employees behalf.

No contribution to UIF and therefore cannot claim from the fund.

Both the company and employee contribute to UIF which is claimable if unemployed. 

Not covered by workman’s compensation.

Covered by workman’s compensation. 

Not governed by the LRA. 

Governed by the LRA. 

No annual, parental or sick leave. 

Leave governed by the LRA and company policy. 

Can claim work related expenses from SARS. 

Do not incur work related expenses, or they are reimbursed. 

 

A true independent contractor has no protection under the  provisions of the Labour Relations Act and section 83A does not apply to persons who earns in excess of the amount determined by the Minister. It is for this reason that many employers will prefer to employ someone as an independent contractor. 

That said if an employment relationship can be shown to exist, the CCMA can in fact rule that an independent contractor is an employee and should therefore benefit from the benefits of such a relationship as a permanent employee. If the "Independent contractor" does challenge the status, and allege that she is an employee, the onus to prove that she is an Independent contractor shifts to the employer. 

 

Take, for example, the UBER case illustrated by Labourwise. UBER sees their drivers as independent contractors and that the deactivation of a driver’s app (making the driver unable to work for UBER anymore) as merely a deactivation of the contract. The CCMA has found that this action is, in fact, unfair dismissal and should have followed a different process.

READ: Independent contactor or employee - the Uber case

 

Why do employers hire independent contractors?

  • Budget – the hourly cost of an independent contractor to deliver a much needed service or skill may be higher, but the overall cost to the company is less than employing someone permanently. This may suit a company’s budget when hiring particularly expensive skill sets. 
  • Staffing agility and the ability to scale - companies can quickly meet demand and resource requirements and then cut back on them when work demand decreases. 
  • Access to a diversity of skills - the ability to quickly access diverse sets of skills needed as a project progresses. 
  • Fixed company headcount -  independent contractors don’t go onto the company payroll. 
  • Security to test a skill - a company might want to test the calibre of expertise and fit of a resource before offering them an extended fixed contract or permanent employment. 

READ: Staffing Agility In Times Of Need – The Case For Independent Contractors

 

Pros of working as an independent contractor

  • Flexibility. You get to choose when and where you work and at what rate. 
  • You are guaranteed to have income for the period of a set contract.
  • You gain valuable experiences across a variety of clients. 
  • You get to experience a diverse range of office set-ups, which keeps it interesting.
  • You get to create an expansive network of clients and colleagues. 
  • You can charge a premium compared to permanent employment. 
  • If working as a RecruitMyMom independent contractor, you are only working with trusted employers, and you don’t need to collect the money, RecruitMyMom does it for you. 

 

Cons of working as an independent contractor

  • Your income and earning can be erratic depending on how many contracts you have.
  • You need to do your own business development and find clients (unless you work for RecruitMyMom, then you work on our clients).
  • Banks may not allow you to take out a home or car loan.
  • You are responsible for paying your income tax.
  • You need to save for your pension fund and medical aid.
  • You need to purchase your own tools of the trade. For example, Adobe Illustrator if you are a web designer.

 

Being an independent contractor for RecruitMyMom

We contract your services and skills on behalf of our clients.  We set up all the contractual agreements and collect the money due to you after receiving a completed and authorized timesheet for services rendered. As a RecruitMyMom independent contractor, your agreed rate is adjusted upwards to include our service fee to the client. 

Independent contractors may not negotiate their own rates, bill our clients directly or offer any other products and services to clients of RecruitMyMom. If a client is introduced via RecruitMyMom, the client remains a client of RecruitMyMom for two years and not the independent contractor. 

Contractor rates need to be reasonable and take into consideration the fact that we adjust the rate upwards to include an agency fee.

 

How to become an independent contractor for RecruitMyMom

It’s easy to indicate that you are willing to be considered for independent contractor roles.  

From your account, go to Edit my CV and select Contract from Select the types of jobs you are interested in section. 

 

Changes in the employment landscape are unavoidable, and it these changes come with both pros and cons. We are hopeful that these changes will lead to more meaningful,  flexible and work-from-home job opportunities for skilled moms. 


Ready to apply for the job of your dreams? Register on our award-winning recruitment site and fill in your detailed CV.

Share On