Employment Law

Internship Agreement

Internship Agreements in South Africa – All you need to know.

Internship Agreements in South Africa – All you need to know.

An Internship relates to the education which an intern shall receive while rendering services for the principle, together with insight and experience into the business of the principle. An Internship Agreement regulates the relationship between an intern and a principle.  It is important to understand the contents of an Internship Agreement and the clauses therein. 

In this blog, we evaluate some of the key concepts and clauses that should be included in all Internship Agreements and provide some background on why these are important!

If you would like to go directly to our shop and purchase our automated Internship Agreement, click here: Internship Agreement 

Contents of this Blog 

  1. Nature of Appointment 
  2. Commencement and Duration
  3. Premature termination
  4. Services
  5. Transport
  6. Remuneration
  7. Sick Leave 
  8. Family Responsibility Leave 
  9. Maternity Leave 
  10. Supervision
  11. Working Days and Hours 
  12. Confidentiality
  13. Intellectual Property 
  14. Domicillium
  15. Liability and Indemnity 
  16. Breach
  17. Dispute Resolution 
  18. Boilerplate clauses 

Nature of Appointment

The Nature of Appointment clause is very important because it describes the type of relationship between an intern and their principle.  The legal relationship between the two is important because it then provides for the legal protection that will be available to both the intern and the principle. Generally, interns enjoy different legal protection from employees and the Nature of Appointment clause will in most cases state that the intern will be seen as an independent contractor. The nature of the relationship being that of a principle and contractor has an effect on the interns benefits. For example, an intern is not protected against dismissal nor entitled to minimum wage. It is important that the principle makes it clear, that the intern will not be entitled to the benefits that are afforded  to employees such as fringe benefits and employment security. The clause also states whether the relationship between the intern and the principle will be continuous or result in formal employment. 

In the case of Smit v Workmen’s Compensation Commissioner, the court summarised a list of factors that outline the difference between an employee and an independent contractor. An intern meets the requirements of an independent contractor and Section 1 of the Basic Conditions of Employment Act  also excludes independent contractors from the definition of an employee meaning that independent contractors are not privileged to them same benefits as of an employee. The effect of this includes but is not limited to the following:

  • The principle will not be bound to make payments to the Intern in instances where the Intern goes on sick/annual leave; 
  • The principle does not need to observe the employment laws when terminating the agreement with the Intern;
  • Tax responsibilities of the Intern’s income rest with the Intern. 

It is usually to the advantage of the principle that the Intern is defined as an independent contractor rather than an employee because it lessens the principles obligations towards the Intern. 

Commencement and Duration

The duration and time of engagement must be agreed upon by both the intern and the principle. The dates in which the Intern will start rendering their services, the term/duration period for which the Internship will last and the date in which the agreement will be terminated should be included within the agreement . Notice periods in respect to early termination should also be provided. The Internship Agreement will also state that termination of the agreement prematurely, will not constitute a dismissal.   

It is possible that a contract may be terminated in a number of ways which do not constitute a dismissal as defined in s 186(1) of the Labour  Relations Act. In the instance of fixed –term employment contracts such as Internship Agreements entered into for a specific period or  expire upon the happening of an event, the termination of such a contract would ordinarily not be considered a dismissal. It has been the position in common law that the expiry of the fixed term- contract of employment such as an Internship Agreement does not constitute termination of the contract by any of the parties. It is rather seen as an automatic termination ex lege (by operation of law) rather than a dismissal. The practical effect of this is that, the intern does not have the right to institute a claim of unfair dismissal should the principle terminate the agreement for unfair or unjustified reasons. 

Premature Termination 

In the event that there is a disagreement between the intern and the principle and the principle wishes to prematurely terminate the agreement, it is important that a Premature Termination clause provides for such instances within the contract. The intern will often not be entitled to receive any termination payment (compensation in lieu of notice) because the nature of the relationship between the intern and principle is that of two independent contractors and allows the principle to terminate the agreement freely for any reason which the principle deems reasonable or in some instances no reason at all. 

Services 

It is important that the services that the intern will be rendering are clearly defined within the Agreement to avoid uncertainty and ambiguity.  It is common that interns work remotely for the principle and the Services clause will often include a statement stating whether the intern will be rendering their services remotely or through office attendance. 

Remuneration 

Interns may or may not receive compensation for the work they do. If the agreement between principle and the intern provides that the intern be paid, the payment amount, date of payment and method of payment  must be clearly stated within the agreement. Any deductions that will be made to the interns compensation must be clearly stated.   

Interns are liable to pay tax as they are considered to be earning an income. However, this only applies if they earn a monthly salary/ stipend of R6 500 and above and so if the Intern is earning below the South African Revenue Services threshold at that time, they will not be liable to pay tax. 

The intern will not be liable to pay to the Unemployment Insurance Fund. The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to –

  • workers working less than 24 hours a month for an employer;
  • learners;
  • public servants;
  • foreigners working on contract;
  • Employees in receipt of an old age pension are, since 07/2/2007, no longer excluded from contributing towards UIF; or
  • workers who only earn commission.

An intern is considered to be a learner and accordingly will not be liable to pay towards the Unemployment Insurance Fund. It is uncommon for there to be other deductions such us medical aid to the remuneration of an Intern. 

Sick Leave 

Sick leave is the leave that is granted when an individual is ill and cannot work. Legislation such as the Basic Conditions of Employment Act provides for the number of sick leave days that an employee is afforded. Such legislation does not apply to independent contractors such as interns, however the sick leave concept is often incorporated into an Internship Agreement. It is important that the number of sick leave days that will be afforded to the intern are agreed upon and stated within the agreement. In an Internship Agreement, the intern is often entitled to a pro rata amount of sick leave. The agreement will also state what procedures should be followed when the intern has taken sick leave, for example the requirement of a doctor’s note alluding to the intern’s illness which resulted in them being absent from work. 

Family Responsibility Leave 

Family responsibility leave is the leave granted to someone to allow them to attend to family responsibilities like the sickness of a child or the death of a parent. Although a principle is not obligated to grant family responsibility leave, it is a concept that is often included within an Internship Agreement. It is important that the number of days of family responsibility leave be clear in the agreement. The instances in which such leave can be taken should also be stated within the agreement. 

Maternity Leave 

Legislation provides that female employees are entitled to 4 months unpaid maternity leave when they are pregnant. While such legislation does not apply to independent interns, the maternity leave concept is often included within agreements with independent contractors such as the Internship Agreement. A principle may decide that the female worker be compensated even while on maternity leave. The Internship Agreement should clearly state whether or not the intern’s maternity leave will be paid or unpaid. Some Internship Agreements may also provide that the Internship Agreement will not be extended should the intern become pregnant.

Supervision 

An Internship Agreement involves educating and training the intern. Naturally this would mean that the intern will be under the supervision of the principle or any person designated by the principle. It is important for the intern to be aware of who will be supervising them during the course of their engagement with the principle and the reporting structures therein. 

Working days and  Hours 

The working days and weeks for the intern need to be agreed and stated within the agreement. For example, the intern may only work 3 days and week for 7 hours on each day. 

Confidentiality 

The intern will obtain knowledge of the principles trade secrets or private and confidential information about the principle and the principle will usually prefer that the information remains private. It is important that proprietary and confidential information is protected and the agreement states that the Intern may not share the principle’s private and confidential information to any third parties and doing so will be considered breach of contract.

An employer will generally include a confidentiality clause in a contract, especially if the intern will be working with proprietary information and or top executives. In most cases, confidentiality clauses are signed when an individual is first hired and are valid through the termination of their Internship or, in some cases, a period of time after Internship  ends. On termination of engagement, a formal release document may also include an undertaking whereby the Intern is to refrain from disclosing certain confidential information.

Intellectual Property 

Intellectual property is any product of the human intellect that the law protects from unauthorized use by others. An Internship Agreement should provide for the ownership of  intellectual property rights. The agreement should state who the intellectual property rights belong to. As with most employment agreements, an Internship Agreement will often state that intern will cede all the intellectual property rights obtained during the duration of the engagement to the principle. The agreement may also include that, although goodwill may be accrued, there will be no  payment to the intern for goodwill. 

Unless there is a statement to the contrary, a work created by an employee under a contract of service such as an Internship Agreement, in the course and scope of their agreement will be automatically assigned to the employer. This was confirmed in the judgment of King v South African Weather Service 2009 (3) SA 13 (SCA); [2009] All SA 31 (SCA).

It is still important to include this clause in the intern’s agreement as this will mitigate against a possible issue arising at a later stage as to the ownership of the particular intellectual property. The Internship Agreement may then also be relied on as being a written assignment in the event of the former Intern being recalcitrant. 

Domicilium 

The addresses that the parties have chosen to be their designated addresses in respect to communication and notices is referred to as  domicillium. The domicillium must be included within the contract for clarity and to ensure that notices are sent to the correct address. Procedures that should be followed should one of the parties change their addresses should also be included, to ensure that the parties can communicate effectively and to avoid communication being missed. For example, the agreement may include that a notice of change of address must be sent in writing within 10 days of the change of address. 

Liability and Indemnity

It is of importance that both parties are aware of who assumes the risks that may be involved when entering into an agreement. Often in an Internship Agreement, the intern agrees to take on all risks associated with entering into an Internship Agreement with the principle. The intern usually agrees to indemnify and holds the principle harmless for any injuries suffered or losses incurred during the engagement between the parties.

Due to the high cost of risk, the principle in an Internship Agreement usually wants to assume minimal risk and so naturally the principle will ensure that the contract states that the intern will be liable for all risks involved with entering the agreement. To avoid problems that may arise at a later stage, where the intern institutes a claim against the principle for any injuries or losses suffered, it is important that the agreement clearly states who will bear the risk and be liable for losses or injuries. 

Breach 

It is important that a contract provides for instances when either the principle or the intern are found to be in breach of contract and the procedures that should be followed thereafter, including clearly stated notice periods. The remedies that are available when one is in breach should be clearly stated, as well a clear indication of who be bear the costs incurred when seeking remedial action or costs incurred as a result of the breach. 

It is common that a party may be found in breach of contract and the Breach clause provides for such instances in detail. It is important know when one can institute legal action against another party for breach of contract as well as the remedies that are available to an aggrieved party. Should the case of breach of contract reach the courts, the courts will consider whether the provisions within the agreement were complied with and take into consideration which remedies the parties agreed to rely on in the event that a party is found in breach. This clause makes it easier for a court to rule on a matter of breach of contract because the parties would have already agreed to what action should be taken, should a party be found in breach. 

Dispute Resolution 

In the event of that a dispute arises between the parties, it is important the agreement states which dispute resolution methods are preferred  and the procedures that should be followed. The agreement should also clearly state which court will have jurisdiction over any dispute that may arise from the agreement. 

It is important that parties agree to which procedure they will follow should a dispute arise before a dispute arises. The South African Law Commission Issue Paper 8  Project 94 Alternative Dispute Resolution highlights the alternative dispute resolutions that are favourable in employment agreements such an Internship Agreement which include mediation and arbitration. Disputes arising from an employment contract may also be resolved under the conditions and pursuant to the procedure provided for in Individual Labour Disputes Resolution Act.

Boilerplate clauses 

Apart from the above, all Internship Agreements should contain standard boiler plate clauses (or general clauses) which are included to ensure certainty and prevent ambiguity. 

These clauses would include, for example:

  1. Severability
  2. Variation
  3. Indulgences
  4. Assignment
  5. Whole Agreement 

To understand boilerplate clauses more, please read here.

At Hello Contract, we have taken into account all of the above considerations so that you can create a version of an Internship Agreement that is perfectly suited to your needs. All that you need to do is select the appropriate document that you would like to generate, answer a few questions, and our document generation software will automatically compile the Internship Agreement here



Business contracts

6 Business Contracts you, and your business, need

6 Business Contracts you, and your business, need

Contracts… Let’s be honest, most entrepreneurs would far prefer to spend time on something different. Contracts always seem to get in the way of getting on with daily business.

However, it really is incredibly important to spend time in advance, on the preparation of contracts. This will allow you to frame the rules of your engagement in your favour, without ambiguity, and will prevent a fall out at a later stage as parties to an agreement have a very clear idea of what is required of them.

Below are 6 very important contracts that all businesses should have in place from the start…

At Hello Contract, we deliver high quality contracts through our automated document platform for a fixed price and at highly reduced costs when compared with ordinary law firms. As contracts are the core of our business, we want our customers to fully understand the risks and obligations arising from them. In this

Table of Contents:

  1. Terms and Conditions
  2. NDA or Non-Disclosure Agreement
  3. Website Privacy Policy
  4. Employment Agreements
  5. Copyright Assignments
  6. Independent Contractor Agreement

1.      Terms and Conditions

No matter what kind of business you run, every entrepreneur will need to pull together a set of Terms and Conditions.

These are your rules, your way of doing business. You determine how you provide your products/services, from quotation all the way to termination, being strict but fair, and providing a clear idea between you and your customers of how you conduct business, what you charge, price increases, delivery times, limitations of liability and the like.

Good Terms and Conditions shorten discussions between you and your potential clients and prevent disputes. If a dispute does arise concerning a subject which is clearly recorded in your Terms and Conditions, the dispute should be stopped dead in its tracks, as the subject and its contents have been recorded and agreed to in black and white.

We offer Website Terms of Services here

2.      NDA or Non-Disclosure Agreement

Before you set out with your epic world changing product / service, you naturally want to be able to talk to your customers, partners or suppliers in confidence, without fear of your confidential information being used by them, without your permission.

The legal instrument to help enforce and protect this is known as a Non-Disclosure Agreement (or NDA for short), and prevents confidential details of your conversation being used or leaked, or from parties being able to approach directly any other persons which have been introduced by the parties to each other in confidence.

We provide a mutal NDA here

3. Website Privacy Policy

Okay, this isn’t exactly a contract, but it is required by law. A Privacy Policy records, among other things, exactly what personal information you collect from users, who you share that personal information with, and what you use it for.

A Privacy Policy need not be signed to be agreed to, but a user needs to have the opportunity to view it and is required to consent to it before you can process their personal information.

Take a look at ours right here

4.   Employment Agreements

Congratulations, you have employed staff! Of course you trust them completely, and hope that nothing will ever go wrong.

This is always the thought process at the beginning of the hire, but setting clear expectations of salary, leave, duties, notice periods and the like is crucially important.

We have a few ready to get you started here:

In the lifespan of your business you will most likely outsource hundreds of tasks to independent parties and freelancers. These might entail for example, software development, blog content, logo creations and the like.

Outsourcing tasks of your business to external people not employed by you has one main unintended consequence, although you pay the outside party for work done, you do not own the work that they create, as these are all owned by the person who authored them, being the external party.

A Copyright Assignment Agreement is the correct legal document to transfer the above ownership to you.

A valid assignment of copyright must be in writing and signed by, or on behalf of, the external party.

Feel free to purchase one here.

6. Independent Contract Agreement

In today’s interconnected world, where freelancers are available from all corners of the globe, bringing together expertise on a vast array of topics has never been easier. In this regard, you will in the lifetime of your company, engage with external services providers that you do not employ. These relationships are normally regulated by an Independent Contractor Agreement.

An independent contractor is different to an employee in that you employ an employee (to state the obvious) and have control over their day to day services, but only engage, an Independent contractor when and if you need them and don’t have much control over their day to day service renderings.

It is important to regulate the relationship between you and your independent contractor by recording obligations, expectations, time for delivery, payment guidelines, intellectual property ownership and the like.

You can purchase our fully automated one here.

About Hello Contract

Hello Contract is SA’s first Legal Document Platform. We provide high quality legal documents and support at highly discounted price. We are here to educate entrepreneurs and business owners on the opportunities of well written contracts. Today is the day to take full advantage of the digital age and Legal Tech.

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