In distinguishing between an employee and an independent contractor / trader one must commence with an analysis of the employment contract.
The object of the contract (or the parties ‘rights and obligations under the contract) must be established.
The object of the contract is not a mere indicator, but determines the legal nature of the contract.
The object to be established is the pre-eminent object, for example, if the object is the surrender of productive capacity (whether capacity to provide a service or to produce things), then the contract is for employment of an employee.
The essence of an employee’s contract (contract of service) is the placing of one person’s services (labour) at the disposal of another, enabling the acquisition of that service itself and not simply the fruits of that productive capacity.
If the object is the acquisition of the result of deployed productive capacity (of a produced thing or of a provided service), then the contract is for the employment of an independent contractor. The essence of an independent contractor’s contract (contract for services or work) is that the independent contractor only commits himself/herself to deliver the product or end result of that capacity.
Deemed independent contractor
The person will be deemed to be an independent contractor if he/she throughout the year of assessment employs three or more employees (other than any employee who is a connected person in relation to such person) who are on a full-time basis engage in the business of persons rendering any such service and providing that neither of the above two proviso’s under exceptions are applicable
The employer, being a party to the employment contract, is in the best position to determine whether or not the employee is an independent contractor.