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What is regarded as a full time employee in respect of a personal service provider?

12 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: My question relates to personal service providers. I want to ask for clarity around the definition of full-time employees.  If an employee works a 4.5 hour workday, will such an employee be regarded as a full time employee?

A: No definition is provided in either the Income Tax Act or the Fourth Schedule as to what constitutes a full time employee. In Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18 the test for interpretation is set out:

Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or un-business-like results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used.

The Oxford Dictionary defines "full time” as:

Occupying or using the whole of someone’s available working time:

In a labour law sense a similar approach has been introduced by the Labour Relations Amendment Act 2014 which inserted section 198C which states as follows:

(1) For the purpose of this section— 

(a) a part-time employee is an employee who is remunerated wholly or partly by reference to the time that the employee works and who works less hours than a comparable full-time employee; and 

(b) a comparable full-time employee— 

(i) is an employee who is remunerated wholly or partly by reference to the time that the employee works and who is identifiable as a full-time employee in terms of the custom and practice of the employer of that employee; and 

(ii) does not include a full-time employee whose hours of work are temporarily reduced for operational requirements as a result of an agreement.

In our view both these citations would be an appropriate meaning to the word "full time” as used in the definition of Personal Service Provider” in the Fourth Schedule. Accordingly we do not believe that a person employed "half day” would be in full time employment unless all the employees are employed on such basis.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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