Now our courts have held that directors are to be regarded as employees “in appropriate circumstances”, and that the nature of an employment relationship should be determined primarily via three factors (any one of which could be decisive) :
The court will look at “substance rather than form”. In other words it will apply a “reality test” to determine what the true relationship is between the parties regardless of how the relationship may be labelled or described in agreements.
A case in point
Thus in a matter recently before the Labour Court, a director holding 45% of the shares in a company was held, in all the circumstances of the matter, to be in reality also an “employee” and therefore entitled to the protection of the LRA against unfair dismissal.
Each case will be different, and there are plenty of grey areas here – proceed with caution!
For more information contact Andre du Toit at +27(0) 28 271 3031, Jacques du Toit at +27(0) 28 312 3626 or Charl Cilliers at +27(0) 28 212 1060.
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