During the past two months we have consulted to a number of Body Corporates / Home Owner Associations around issues with their employees.
We have found that whilst the Body Corporate / Home Owner Association and the Employees are clear and happy to state that there is an employment relationship between them, there is no contract or letter of appointment. Secondly, the Body Corporate has never registered as an employer with SARS and the Department of Labour, despite having employees for a number of years.
Upon further investigation it was also discovered that when the Body Corporate had changed from one Managing Agent to another, the Managing Agent had assumed the “administrative” responsibility for the employee. The Managing Agent had merely absorbed the employees into their processes and invoiced the client for their services. The Managing Agent then submitted declarations to SARS for PAYE, SDL and UIF on their own registration numbers and paid over the contributions as if the employees were employed by their organisation.
In the case of COIDA / WCA returns, the employees’ earnings were declared on the Building Administrators WCA / COIDA returns. They did not take over the employment, nor did they appear to accept responsibility for any claims relating to CCMA awards, retrenchments etc. They did not prepare a letter of employment, nor did they have a meeting with the employee to explain that they now work for another entity.
It follows that when an employee’s services are to be terminated for any reason including misconduct, retrenchment etc., legally the employer is the Managing Agent and not the Body Corporate to whom the actual services have been provided. When the employees are dismissed or leave the service, they are entitled to receive a Certificate of Service and UI 19 documents stating the starting and end date of employment with their ’employer’. The Body Corporate cannot complete these documents as they are not registered and the Managing Agent can only complete the documents from when they took over the management and started making payments to the Department of Labour for these employees.
This practice obviously prejudices the employees as their full service / credits for UIF are not accurately declared and they will not qualify for their full benefits when claiming. The only recourse is for the Department of Labour to take this up as a complaint on behalf of the employee concerned.
If an employee is injured on duty, the problem is far worse because the actual employer is not registered and therefore cannot claim for an employee injured on duty. They would therefore be vulnerable with relation to civil claims for medical costs and loss of income.
If your Body Corporate or Home Owners Association is in this position you are at risk from a legal and financial perspective and should address this situation immediately.