When to collaborate and when to employ?

Given the complexity of the labour legislation in South Africa, entrepreneurs are often reluctant to employ and instead look at other forms of agreements to achieve the same outcome. There are instances when it is more appropriate to contract differently and not to employ. However, these reasons must be sound.

To help you navigate the maze, we have constructed some key questions.

Supplier

Question: Is this a unilateral arrangement (to some degree)? In other words, will one party supply or provide something to the other in exchange for payment?

Clients or customers are typically engaged by agreement, usually a form of terms and conditions or perhaps even an agreement detailing credit terms.

Agency

Question: Do you want to engage multiple people or organisations to sell the goods or services you supply?

An agency agreement could either relate to an individual or an organisation. This means an individual or a business could represent the supplier of the goods or services and earn a commission or remuneration for actual sales. One of the advantages is that this does not create the commitment usually associated with an employment relationship. However, several aspects should be carefully considered, including the agent’s powers of representation and repercussions of client complaints.

Distribution

Question: Do you sell and market goods? Are you concerned about multiple people or organisations selling the products you supply, overstepping? Instead, prefer that the goods be purchased and delivered to the end consumer from there?

Detailing the price to be paid, the passing of risk, storage and logistics are critical. It could also be suitable (where logistics and warehousing would be less important) for software products.

Independent Contractor

Question: Have you contracted with an organisation and require a skill you don’t have, to perform the contract only for purposes to finish the contract or project involved? There is no need for the person only working for you.

An independent contractor agreement detailing remuneration and term being linked to the contract or project.

PocketAdvisor teaches users to identify various critical relationships that are vital to achieving business success.  In addition, we provide all the relevant legal structures, documents and contracts needed. For more information please contact us or enrol for one of our programs today!