Historically, there is a common practice within the fishing industry that skippers on fishing vessels act as independent contractors whilst rendering their service to the vessel owner. As a result of this it has been assumed that between skipper and owner the relationship is not that of an employer/employee.
There have been several arbitration decisions in respect of skippers which have reached the conclusion that they are not employees based on factors which include, inter alia, the complete control that skippers have over their crews whilst at sea, the determination of their own incomes which is usually on a commission basis, and further that their day to day activities are not controlled by the vessel owners.
There has, however, been a recent judgment handed down by the Labour Court which has held that a skipper employed by a vessel owner was in fact an employee in terms of the Labour Relations Act, and furthermore his dismissal by the vessel owner constituted an unfair dismissal and accordingly a referral in accordance with section 191(2A) of the LRA was lodged.
- Applicable laws
By virtue of section 355 of the Merchant Shipping Act of 1951, the Labour Relations Act of 1956 applies to seamen which in turn facilitates the referral of an unfair dismissal to the Commission for Conciliation, Mediation & Arbitration (CCMA) should the skipper constitute an ‘employee’ as defined in section 213 of the Labour Relations Act. The definition of “employee” contained therein is:
(a) Any person, excluding an independent contractor, who works for another person or for the state and who receives, or is entitled to receive any remuneration and;
(b) Any other person who in any manner assists in carrying on or conducting the business of an employer, and “employed” and “employment” have meanings corresponding to that of ‘employee’.
- The tests formulated by the Courts
There has been much litigation on the distinction between an independent contractor and an employee and the courts have formulated several tests in order to make the distinction. These include, the ‘control test’ which considers the extent of control that the purported employer exercises over the employee, the ‘organisational test’ which enquires into whether the employee forms an integral part of the business and the ‘dominant impression test’ which determines whether the dominant impression is one of an employment contract or that of an independent contractor.
The three criteria that have emerged as primary determinants of whether or not there is an employment relationship are the following:
- The degree of control exercised by the employer over the employee;
- The degree to which the employer’s position forms an integral part of the employer’s organization;
- The extent to which the employee is economically dependent on the employer.
- Recent Labour Court Judgment
In the recent Labour Court Judgment in the matter of J & J Freeze Trust v The Statutory Council for the Squid and Related Fisheries of South Africa, handed down by the Honorable Molahlehi J, it was held that the skipper of a fishing vessel was in fact an employee and not an independent contractor. The facts of the case were that the skipper skippered a vessel for a period of about a year. The relationship between him and the owners of the vessel soured and he was relieved of his duties. The skipper then referred the matter (under the premise of an unfair dismissal) to the Statutory Council for the Squid and Related Fisheries of South Africa whereupon the vessel owner took exception to the referral based on the fact that the Council did not have jurisdiction as the skipper was not an employee but an independent contractor. The matter was thereafter referred to an arbitrator who found that the Council did have jurisdiction to hear the alleged unfair dismissal. The applicant then appealed the decision of the arbitrator at the Labour Court where Molahlehi J confirmed the findings of the arbitrator and concluded that the skipper was an employee and had been unfairly dismissed.
The parties had entered into a written contract of employment, but the court held that the written agreement between the parties was insufficient on its own to determine the true nature of the relationship between the parties. Molahlehi J considered the contract in light of the de facto circumstances and other facts associated with the provisions contained in the agreement. The following factors were taken into consideration:
- The contract of employment clearly categorized the skipper as an employee;
- His duties as skipper were clearly defined in his contract of employment;
- The employment contract provided for a three month probationary period, after which the skipper was to be employed on a permanent basis;
- The skipper’s income, although his earnings were on a commission basis, was effected through a salary advice which further categorized the skipper as an employee;
- The contract made provision for a three month termination period which in turn meant that the skipper was not able to gain employment on another vessel as and how he wished;
- The skipper was not able to dock the vessel when and how he desired (he required the permission of the shore skipper first);
- The written agreement further made the skipper an integral part of the business which in turn made him economically dependent on the vessel owners;
- The vessel owner had confirmed the status of the skipper as an employee with an estate agent when the skipper was looking to purchase a house;
- The skipper had been hired to manage the crew and not to catch the fish; the crew was responsible for catching the fish.
Although there had been several earlier decisions that found skippers to be independent contractors, the assessment of what the de facto relationship is will depend primarily on the facts and merits of each individual case. The applicant in this case sought to argue that the following factors gave an indication that the skipper was an independent contractor:
- It did not deduct UIF from the salary of the skipper;
- It had no control over him whilst he was at sea;
- The skipper was responsible for employing his own crew;
- He determined the amount of money he received for each fishing trip;
- His tax liability was determined in terms of a tax directive;
- He was at liberty to work on any other vessel of his choice.
Molahlehi J having considered the above factors as well as the various tests, held that despite the written provisions in the agreement which pointed towards an independent contractor, the factual implementation of the provisions gave the distinct impression that an employer/employee relationship did in fact exist.
What is clear now is that each case is assessed on its individual merits and that the courts will not simply accept the written terms of an agreement in order to determine the relationship between the skipper and the owner. The contract between the parties cannot change the factual basis of the relationship. Therefore the circumstances and working conditions of the skipper must also be examined in order to determine whether there is in fact an employee/employer relationship.
This case should serve as a warning to vessel owners who hire skippers to operate their vessels under the guise that they are independent contractors whilst at the same time enjoying certain rights that are available to employers.
Therefore, “Independent Contractor Agreements” with skippers must be carefully drafted and the implementation thereof in practice must reflect the contractual relationship identified in the agreement.