Independent contractors and Covid-19 relief: Tax and social insurance legislative reform to extend protection to independent contractors

Abstract

Abstract Since the Covid-19 virus arrived in South Africa, government has quite swiftly created a legislative framework to support its efforts to curb the rapid spread of the virus. For the most part the initiatives of government are commendable, but they very clearly leave out a great number of independent contractors and workers who may be currently incorrectly classified as such. The Department of Labour has created the TERS system (Temporary Employee/Employer Relief Scheme), geared at providing support to employers in the event that the business, as a result of the pandemic, may find that they need to retrench staff or close their business altogether in the foreseeable future. TERS is aimed at assisting employers to avoid these measures. However, the key word in all of these measures is employees. Who is an employee? There are some key differences between employees and independent contractors, the latter falling outside of the scope of the support structures set out above. However, what we know is that because of the downturn of many global economies we have seen an increased ‘uberisation’ of work. More and more companies are resorting to fixed term and independent contracts to perform work, as opposed to permanent employment. Uber drivers, domestic workers, consultants, waste pickers, performing artists, actors are all amongst the individuals who cannot claim from the UIF fund. The main criterion for access to TERS and the National Disaster Benefit is that you already contribute to the Fund through your employer. This contribution considers the challenges with the linking of social insurance to the definition of an employee, the possibility of expansion of the scope of the UIF Act as well the restructuring of tax contributions made by independent contractors to possibly allow them access to increased social protection.