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Employment and Labour Law
The tax treatment of independent contractors is a grey area for many South African businesses—especially when the contractor is closely tied to the company, such as a director or shareholder. It may seem easier (or even more tax-efficient) to have that individual invoice the business each month instead of drawing a formal salary. The core issue is whether the independent contractor truly operates independently, or whether the working relationship fits the legal definition of employment under the Income Tax Act.
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Whether it’s a freelance designer, a tech consultant, or a part-time bookkeeper, hiring someone outside of traditional employment can be cost-effective and efficient. But when the legal foundations are shaky, that flexibility comes with risk.
In South African law, the difference between an employee and an independent contractor isn’t just a technicality—it determines what rights and protections apply, who carries the legal obligations, and what happens if the relationship breaks down.
Employment contracts form the foundation of every working relationship, establishing the rights and responsibilities of both employers and employees.
Fair treatment of employees and protection of employer’s rights are guaranteed by South Africa’s clearly defined legal framework, which regulates employment relationships.
To ensure that you're on the right side of the law, it's essential to understand the proper procedures for dismissing an employee. This article will give you an overview on how to dismiss an employee lawfully in South Africa. Under the Labor Relations Act, employers must follow a fair process when dismissing an employee. This includes providing the employee with a valid reason for the dismissal, giving them an opportunity to respond, and giving them access to representation.
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