EMPLOYEE VS WORKER Flashcards

Question

Ready Mix Concrete v Minister of Pensions [1968] (CONTROL)

Answer 1

He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master.

Answer 2

Not necessary for day to day control, overarching control sufficient to preclude independent status.

Answer 3

A self-employed worker may be a sufficiently integral part of an undertaking when providing services.

Answer 4

A focus on whether the worker markets his services as an independent person to the world in general or is recruited to work as an integral part of the principal’s operation will in most cases demonstrate which side of the line.

Answer 5

A contract of service exists if (i) the servant agrees that in consideration of a wage or other remuneration he will provide his own work and skill in the performance of some service for his master.

Answer 6

The EAT had erred in concentrating on what had actually occurred rather than looking at the obligations by which the parties were bound; that, where a person who worked for another was not required to perform his services personally, as a matter of law the relationship was not one of employee and employer; and that, accordingly, clause 3.3 of the contract was wholly inconsistent with the contract being one of service. Per curiam . If a contractual term is not enforced, that does not justify a conclusion that such a term is not part of the agreement.

Answer 7

The James v. Redcats case refined the personal service test, emphasising that worker status depends on whether the substitution clause undermines the obligation to perform work personally. If substitution is limited to exceptional circumstances (e.g., illness), the requirement of personal service is still satisfied, supporting a finding of worker status. Conversely, broader substitution clauses point to contractor status.

Answer 8

Definition: For an individual to be classified as a worker, they must undertake to perform work or services personally, as per the definition in section 54(3) of the National Minimum Wage Act 1998 and related legislation. Finding: The court held that the valeters were required to provide personal service despite the existence of a substitution clause in the contract. The substitution clause was deemed a sham, as it did not reflect the reality of the working arrangement.

Answer 9

Requirement of Personal Service: The Supreme Court held that for an individual to be classified as a "worker" under section 230(3)(b) of the Employment Rights Act 1996, there must be an obligation to perform work personally. Finding: Mr. Smith’s contract required him to provide services personally, as the right to substitute another worker was extremely limited. His right to substitute only extended to other operatives within Pimlico’s system, which did not amount to a genuine substitution right.

Answer 10

Elias LJ: ]“It would, I think, be an unusual case where a contract of service is found to exist where the worker takes the economic risk and is paid exclusively by third parties”. The quote encapsulates one of the pivotal principles established by the case: that an individual who assumes financial risk and derives payment directly from customers, rather than from the "employer," is unlikely to be classified as an employee under the economic reality test.

Answer 11

The “severe terms” as to when and how much Mr Smith would be paid also betrayed a “grip on his economy inconsistent with his being a truly independent contractor”. [judgement] Economic Reality: The court emphasised that determining worker status requires assessing the level of economic dependency and subordination in the working relationship. Finding: Mr. Smith was found to be economically dependent on Pimlico due to the control they exercised over him and the nature of their contractual obligations.

Answer 12

Illustrates how courts prioritise the true nature of the working relationship over the terms of a written contract. The Supreme Court emphasised that written terms are not decisive if they do not reflect the practical realities of the working relationship. Smith LJ: “The court or tribunal has to consider whether or not the words of the written contract represent the true intentions or expectations of the parties, not only at the inception of the contract but, if appropriate, as time goes by.”

Answer 13

For mutuality of obligation to exist, there needs to be a genuine, enforceable understanding that: - The employer will provide work. - The worker will accept it. If the contract explicitly denies this obligation (e.g., saying there’s no guarantee of work), then the tribunal cannot add new terms to force mutuality where it clearly doesn’t exist. The tribunal made an error by inventing obligations between the worker and employer that didn’t match the contract. For mutuality of obligation to apply, any obligations must align with the actual terms of the agreement, not ones that contradict it.

Answer 14

The parties were under no obligation to provide or accept work, a moral obligation of loyalty merely existed. This case established that MOO must be contractual; the worker is contractually obliged to offer work, and the employer is contractually obliged to offer it.

Answer 15

MOO is a prerequisite to a contract. He was required to accept and perform some minimum of work.

Answer 16

The mere fact that a home worker could arrange his own hours of work, holidays and the amount of work, would not, as a matter of law, negate such a contract; … a course of dealing between the parties continued over several years whereunder the home workers' obligation to accept work offered, implied an obligation on the employer to offer work.

Answer 17

The Autoclenz Ltd v. Belcher (2011) case established that courts must prioritize the true nature of the working relationship over written contractual terms, particularly where terms misrepresent the practical realities. The Supreme Court held that the valeters were "workers" because they were economically dependent on Autoclenz, performed work personally, and were subject to significant control, with mutuality of obligation present—Autoclenz regularly provided work, and the valeters were expected to accept it. This ruling reinforced the use of the economic reality test to protect vulnerable workers and ensure employment protections are applied fairly.

Answer 18

The Pimlico Plumbers v. Smith (2018) case established that Mr. Smith was a worker under UK employment law due to the economic reality of his relationship with Pimlico. He was economically dependent on Pimlico because he worked exclusively for them, was required to wear a branded uniform and drive a company-branded van, and his income was controlled by the company, including strict invoicing and payment terms. The Supreme Court found mutuality of obligation, as Pimlico offered work regularly, and Mr. Smith was required to perform it personally, with only limited substitution rights, alongside significant control over his work practices, showing he lacked true independence.