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What is meant by 'ambiguous employment?'

What is meant by the terms ‘ambiguous employment’, triangular employment’, ‘disguised employment’ and ‘atypical employment’?

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For almost as long as there has been labour legislation (around early Babylonian times if you really want to know), employers have been trying to find to find creative ways in which to turn employees into non-employees.

There is really nothing new about this, and the chances of your stumbling on a new and foolproof formula are slim indeed.The whole issue has been dealt with in Code of Good Practice, issues in GG no. 29445 Dated 1st December 2006.

The terms ‘non standard’, ‘triangular’ and disguised employment are all terms used to describe the various arrangements whereby employers seek to lighten their load.  Some are legitimate, some are not.  In the Code, the term ‘ambiguous employment’ is also used, as well as ‘atypical’ employment relationships.

At the heart of all of these attempts, and therefore at the heart of the definitions, is the motivation behind the attempt.  Employers attempt to enter into arrangements whereby work is done, but done on a basis that the relationship is not one of employment, for if there is no employment relationship, there is no labour law that applies, and the various protective requirements, which are seen to be both costly and in the employees favour, do not apply.  This is the purpose behind the attempt, and the law seeks to prevent this, as it is an attempt to escape from the purpose of legislation itself – namely to protect the employees.

It is, of course quite possible to have employment relationships which differ from the usual – permanent full time employment status, which are not unlawful, but wherever the employer alleges that there is no employment relationship, but that the person is rather an independent contractor, the law will get suspicious.

By and large, ‘non standard’ employment is the name given to all forms of employment which are not the usual nine to five arrangement, but which are nevertheless legitimate.  The best example of this being the labour obtained from a labour broker, which is quite lawful and legitimate (this, because there is an employment relationship – although it is with the labour broker see Section 198 of the LRA).  The employee is still protected by labour law, and the user of brokered labour is jointly and severally liable for substantive terms and conditions.  Thus, the employee is protected, and the employer has flexibility.  Everybody lives happily ever after.

Not so with disguised employment, where, as the name suggests the employer tries to hide the fact that this is an employment relationship.  The most usual manner being by way of a contract, which says “this is not an employment relationship”  Such contracts are absolutely worthless, and if you have bought one from a consultant, you have been the victim of a confidence trick.  As the Code of Good Practice itself says;

“The presumption applies regardless of the form of the contract……. The issue of the applicant’s employment status cannot be determined merely by reference either to the applicants obligations as stipulated in a contract, or a ‘label’ attached to the relationship in a contract.  Therefore, a statement in a contract that the applicant is not an employee, or is an independent contractor must not be taken as conclusive proof of the status of the applicant. “..   Code of Good Practice, Clause 16.

Disguised employment may take other forms, but is usually easily recognizable, as the employer seeks to hide or disguise the fact that there is an employment relationship.

Triangular employment usually refers to a situation where the employer uses another vehicle (often a company or a close corporation in his wife’s name), to house the employees), and claims, by this interpolation of a third vehicle, that they are not his employees.

Labour Law, has always been willing to ‘pierce the corporate veil’ as lawyers say, and to see through legal personalities, to find out what really lies behind them.  Whilst this would never wash in the world of the accountant, labour law takes a far more realistic approach, and sees things in terms of their substance, and not their form.

Of course, the use of a labour broker (‘temporary employment service’ as they are called in the LRA) is a species of triangular employment, but, since it is sanctioned by the LRA itself, it is acceptable, and this is understandable from the logic shown above.


What is meant by 'ambiguous employment?'