Reimagining employment

Reimagining employment: differences between a contractor and an employee

Nicol Myburgh, Head: CRS Technologies HCM Business Unit unpacks the importance of knowing the difference between a contractor and an employee in the mining sector

The picture of employment within the mining sector has changed. Since 2015, Statistics South Africa has painted direct employment figures with a very different brush – the number of workers directly hired by mines has decreased significantly. While actual hiring numbers have increased, the figures represent an increase in contract, gig and temporary employee workers for the sector. It’s easy to understand why – mining can be varied in its requirements and peak demand periods, and the recent pandemic has hit several parts of the sector hard.

However, it’s important to remember that the lines between contract and freelance employees can blur, and that it’s in the company’s best interests to have an engaged workforce. Research has found that an engaged workforce is more productive and more loyal, and more likely to drive company profitability. An engaged workforce is a significant value-add to the organisation as it not only ticks the boxes of growth and productivity, but also minimises hidden costs to company. Consider this – if the workforce is constantly turning over, then new employees have to be constantly trained. This is time consuming and expensive, especially when it comes to consistent worker safety.

That said, there are benefits to the company if the contractor concept is managed properly. The person comes in, does the job and leaves. No benefits, no sick pay, no maternity leave. They are paid for a task, they do the task and that’s it. However, the flip side is that there is limited control over the contractor. If they make a mistake, there is limited scope for corrective action and they can end up costing more than employees over the long term.

Then, take a step in the other direction towards the legalities of the gig workforce. As demand for outsourced mining services continues to grow across various African markets, so do the complexities attached to their hiring and firing. After all, there is a fine line between a full-time employee and a contractor – the latter can be classified as an employee if they meet certain criteria, and the company may be liable for far more than that last cheque.

Labour Legislation

One of the first considerations is to determine how the contractor is treated. Are they controlled like an employee or are they given a task and left to do it? Are they micromanaged and provided with equipment, or do they provide their own tools to perform the job? In the traditional scenario, the employer provides the employee with equipment, so if this is the case with a contractor, they may be sitting on the employee side of the fence. However, this is not the only consideration. An independent contractor is someone who comes in to do a specific task and can outsource their services to other companies – an employee does not. The contractor will invoice for actual work done and leave, the employee won’t. Finally, if a contractor spends the majority of their time working for one client, then they may be edging into a blurred area once again.

Taking all these factors into consideration, you may find that the weighting will put someone you contracted firmly into the bracket of a full-time employee, with all the rights associated with that. Depending on the country in which the mine operates, this could result in that person gaining the benefits accorded an employee, such as holiday pay or sick leave.

Then there is the ease that comes in when it comes to dealing with complexities in the relationship between mine, employee and contractor. In South Africa, labour legislation is completely employee-centred and this can make dealing with a problem complex for the company – the burden of proof lies on the company when it comes to labour disputes and challenges. However, with a contractor this goes away. The company pays upfront and the job is done.

Ultimately, the real value in choosing a workforce lies in how well you treat your people. That’s it. Whether they are contractors or employees – if they are treated with respect and given fair payment, they will remain engaged and deliver the work. And you are unlikely to end up in labour court…

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