Insights · 23 September 2026

Employee or independent contractor?

It’s one of the questions clients ask me most: “My worker would rather invoice me than go on the payroll. Can we do that?”

The short answer: it isn’t up to you or the worker. SARS and the labour law look at how the work is actually done, not at what the contract calls it. So I built a free tool that asks the right questions and gives you the answer under both tests.

The two tests

Tax (PAYE). If the work is done mainly at your premises, and anyone controls or supervises how the person works or their hours, SARS deems them not independent. You deduct PAYE, whatever the contract says. That’s the Income Tax Act’s Fourth Schedule, explained in SARS Interpretation Note 17. The one override: someone who employs three or more full-time staff, none of them family, for the whole tax year, is treated as independent.

Labour law. Section 200A of the Labour Relations Act presumes that anyone earning up to R269 600,90 a year (from 1 May 2026) is an employee if even one of these is true: you control how they work or their hours, they’re part of your organisation, they’ve averaged 40 hours a month with you over three months, they depend on you economically, you supply their tools, or they work only for you.

The two tests can disagree, which is why the tool shows both.

Why it matters

• If you should have deducted PAYE and didn’t, you owe it, plus penalties and interest. SARS won’t rule on it in advance: the decision and the risk are yours.
• An “independent contractor” clause doesn’t stop a worker from going to the CCMA as an employee. The reality of the relationship decides.

When contractor is right

The person runs a business, not a job. They decide how and when the work is done, can send someone else, have other clients, use their own equipment, and invoice for a result.

Use the tool

Start the free employee-or-contractor assessment →

Tick what applies. It shows where the relationship lands under both tests, the reason for every step, what to do next, and links to the SARS sources. Nothing you enter leaves your browser.

If the answer comes back borderline, book a call before anyone signs anything.

Brandon Iverach is a SAIPA professional accountant and the founder of Accounting Connect — accounting, advisory and AI implementation for South African businesses.