Frik van der Westhuizen, CEO of EQPlus
Independent contractors have become an important part of how businesses access specialist skills, particularly in ICT where a particular capability may be needed urgently or only for the duration of a project. That flexibility is valuable, although the arrangement itself is not necessarily as simple as bringing someone in for a defined period and agreeing a rate.
The risk is that a contractor arrangement may look straightforward on paper but operate very differently in practice. South African tax and labour law already looks beyond the label attached to the relationship, and proposed reforms this year have put disguised employment back under scrutiny. For businesses using more external specialists, that means the structure around each engagement needs as much attention as the person being brought in.
Classification needs more than a label
Calling somebody an independent contractor does not determine the nature of the relationship.
SARS makes this clear in its current Guide for Employers in Respect of Employees’ Tax. Distinguishing an employee from an independent contractor begins with the underlying contract and the rights and obligations created by it. SARS also identifies circumstances in which payments to an independent contractor may be treated as remuneration for employees’ tax purposes, including aspects of where services are performed and the degree of control or supervision involved.
The labour-law position adds another layer. For workers within the applicable earnings threshold, section 83A of the Basic Conditions of Employment Act creates a rebuttable presumption of employment where specified characteristics are present. These include the degree of control over how somebody works, economic dependence and whether the individual has become part of the organisation. The Department of Employment and Labour’s published BCEA text sets out the full test.
Disguised employment is also receiving closer regulatory attention. In August, the Department of Employment and Labour said proposed BCEA amendments are intended to deal with arrangements where someone is called a contractor or freelancer, but is effectively working as an employee. The proposals are not yet law, but businesses would be unwise to ignore the direction of travel. The Department’s explanation of the proposed changes is available here.
For me, the practical lesson is straightforward. Contractor governance starts with understanding the working relationship that is being created rather than relying on the terminology used in the agreement.
Governance continues once the work starts
Even where the contractual position is clear, the business still has to manage what happens once an external specialist starts working inside the organisation.
ICT contractors often need access to parts of the business that carry real risk, including internal systems, customer information, and development environments. The sensible approach is to give people the access they need to do the job, keep that access under review, and remove it when the work is finished. Problems start when permissions are broader than necessary or nobody remembers to close them off afterwards.
POPIA adds specific obligations where an external party acts as an operator processing personal information on behalf of the responsible party. Section 21 requires a written contract to ensure that the operator establishes and maintains the required security safeguards.
That makes onboarding, system access and eventual offboarding part of the governance of the engagement itself. Documentation also deserves attention while the contractor is still available. Specialist knowledge that disappears at the end of an assignment can leave the business dependent on finding the same expertise again when a related problem surfaces months later.
Contractor use becomes harder to govern when every team develops its own way of doing things. Different contracts, different onboarding processes, different access rules, and unclear ownership can creep in surprisingly quickly, especially as the number of external specialists increases.
Governance should support flexibility
The organisation supplying the talent also contributes to the risk picture. South Africa’s Employment Services Act requires private employment agencies to register, with registration differentiating between agencies providing temporary employment services and those providing other employment services. The Department of Employment and Labour maintains a public register of registered private employment agencies and temporary employment services.
Where an organisation uses such a provider, due diligence should extend beyond assessing whether it can quickly produce a technically suitable candidate. The way people are engaged, how responsibilities are divided during the assignment and the controls surrounding the relationship have a direct bearing on how confidently the business can use external talent.
I do not see this structure as an argument against contractor flexibility. It is what allows flexibility to work at scale.
At EQPlus, contractor management has to extend beyond matching technical credentials to a requirement. The surrounding framework influences whether specialist capability can enter an organisation quickly without creating uncertainty that someone else will have to resolve later.
Independent contractors will remain part of the workforce mix because businesses still need access to scarce skills and flexible capacity. The difference between a useful model and a risky one is usually decided before the contractor starts, in the way the engagement is structured, governed, and managed.