Agents - independents or employees?

13 Mar 2012

Agency principals should be more concerned about the misconception in the industry regarding the working relationship between themselves and agents.

Erasmus, who has firsthand experience after having been involved in a leading case at the start of the millennium, says that she has no doubt that the law sees the estate agent as an employee and that the industry needs to prepare itself better to support the estate agent as an employee in the workplace.

According to Linda Erasmus, chief executive officer of Fine & Country International Realty South Africa, many estate agents still argue that they are independent contractors and not “employed” by the agency.  

The real concern is the fact that so many principals operating real estate agencies agree.

Erasmus says in the first instance, one has to look at the definition of the employment contract as described in the Labour Relations Act. 

The contract of employment is a voluntary agreement between two parties, in terms of which one party (the employee) places his or her labour potential at the disposal of the other party (the employer) in exchange for some form of remuneration.

Estate agents seem to prefer the feeling of being “independent” and therefore do not like to be categorised as employees.  

On the other hand, many owners of real estate businesses prefer to keep their distance because independent contractors fall outside the scope of the Labour Relations Act and the Basic Conditions of Employment Act.

“There is currently an entire debate going on to establish whether an estate agent is an employee or an independent contractor,” says Erasmus.     

The law is very clear about the difference between being an independent contractor and being an employee. 

Courts apply various tests which include the control, organisational, dominant impression and economic capacity tests to clarify the difference between the two.

One could argue that companies exercise reasonable control over estate agents to ensure brand protection and promotion, a high quality of service and commitment to the companies’ clients.  

Estate agents are also not allowed to work for more than one specific brand and the amount of control the principal has to exercise in relation to trust accounts imposes a further measure of control.  

The organisational test determines whether the person is part and parcel of the business and the dominant impression test speaks for itself.

Back in 2002, the law changed, providing more clarity on the subject.

The new law highlighted the fact that real estate companies should provide tools, marketing material and technology to the estate agent to equip him or her better for his or her job and that the estate agent in general, should render his or her services only through one company.

Erasmus, who has firsthand experience after having  been involved in a leading case at the start of the millennium, says that she has no doubt that the law sees the estate agent as an employee and that the industry needs to prepare itself better to support the estate agent as an employee in the workplace. 

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