Paymaster Magazine

Independent Contractors

Independent contractors.- The dominant impression test

Some important truths

1.    Independent contractors don’t have PAYE, deducted from their payment

2.    Independent contractors are employees if they fail the dominant impression test (see below)

3.    If they fail the test and SARS determines they are employees, the company is liable for the PAYE, including penalties and interest   (you can claim the tax back from the employee/independent contractors)


Please note: This is a complicated subject with many grey areas. If in doubt please consult a labour relations specialist A full 13page discussion document can be downloaded here

Our advice…… If in doubt appoint the person as an employee.


The dominant impression test


Common law tests, as developed by our Courts, are generally used to determine whether a person is an employee or an independent contractor. The common law uses a so-called dominant impression of a relationship. Not one of these tests is conclusive in nature under common law. But the Legislator has, under its powers, elevated three of these tests to form conclusive tests.


A)   The tests provide that a person shall not be an  independent contractor  if –

  • The worker is subject to the control of the employer as to the manner in which the worker’s duties are or will be performed, or as to the hours of work.
  • The worker is subject to the supervision of the employer as to the manner in which the worker’s duties are or will be performed, or as to the hours of work
  • The amounts paid or payable for the worker’s services consist of or include earnings of any description which are payable at regular daily, weekly, monthly or other intervals

Where any of these tests apply positively, the recipient of the remuneration is

deemed not to be an independent contractor and the remuneration so received must be taxed according to the PAYE tables.




B)   The tests provide that that a person shall be an independent contractor if

  • If he/she employs more than three employees to deliver the product or service to the client
  •  Services are rendered at more than geographical location for more than one client

Then there is a good chance that that he will be classified as an independent contractor if he also passes the test in section A

The receiver has drawn up a FLOW DIAGRAM and  a COMMON LAW DOMINANT IMPRESSION TEST GRID which is included in a 13 page discussion document which can be downloaded here

Adrian Baillie-Stewart

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Follow us

Don't be shy, get in touch. We love meeting interesting people and making new friends.