Employment relationship Flashcards
Which category is most desirable to be in?
Employee Employees normally benefit from all the rights employment law has to offer, so from the individual’s perspective, this is usually the most desirable category to be in. They are entitled to anything that constitutes an employment right,for example: 1) right not to be unfairly dismissed 2) right to take maternity leave Some of these rights have”qualifying periods”. The employee must complete a specified period of continuous employment with the employer before he or she becomes eligible to claim.
Section setting out who is an employee?
under s230(1) ERA 1996
Can a contract of employment be oral?
it can be oral or in writing. Where it is oral, the court will figure out from the parties’ claims and the surrounding circumstances exactly what they agreed. Where it is written, the court can interpret and classify the contract document, But labour lawyers generally argue that written contracts should be given less weight in the employment context than they are in the commercial context because of risk of “boundary manipulation”: the use of the written contract b y the employer to make it look as if the individual is in a category with fewer employment rights.
What are the two important rules about written contracts for contractual not employment law
The signature rule The parol evidence rule Under the signature rule, the contracting party is bound by a contract he has signed, even if it is clear that he has no read or understood the contract.
What did the case of Autoclenz change?
Prior to this case, the court followed the contractual approach, apart from denying employers the option for boundary manipulation. But Autoclenz SC laid down a different approach to written contracts in the employment sphere
Autoclenz v Belcher SC [2011]
- Subsitution clause
- Employer not oblidged to offer work
- Said in contract they were self employed.
Lord Clarke - relative bargaining powers of party must be taken into account when deciding whether the terms of any written agreement represents what was agreement.
“The true agreement will often have to be gleaned from all the cirucmsrances of the case, of which the written agreement is only a part”.
SC laid down a different approach to written contracts in the employment sphere. Claimants were valeters. Various terms of the written contract they had signed suggested that they were self-employed: the employer was not obliged to offer them work, or accept work if offered, and they were entitled to send a substitute instead of doing the work themselves. SC Held: the Snook test was not the only situation in which the courts might be entitled to disregard a written agreement. There was a more general power to do so where contracts were concluded in situations of inequality of bargaining power. Lord Clarke - relative bargaining powers of party must be taken into account when deciding whether the terms of any written agreement represents what was agreement.
HELD: valenters were employees because as they were obliged to turn up each day and complete their work themselves under the employer’s detailed supervision. “The true agreement will often have to be gleaned from all the cirucmsrances of the case, of which the written agreement is only a part”.
What are the two tests to see whether B owes A the obligations of an employer?
1) Control 2) risk 3) overarching mutuallity of obligations test
What is the control test?
CA in Yewen v Noakes established it, but Ready Mixed Concrete confirmed it.
Yewen v Noakes CA
Established the control test, but Ready Mixed Concrete confirmed it.
Ready Mixed Concrete
Confirmed the control test in Yewen v Noakes. MacKenna defied control as: including “the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done” 1) deciding the thing to be done 2) the way in which it shall be done 3) the means to be employed in doing it 4) the time when 5) the place where it shall be done In modern literature the control test is sometimes express in terms of subordination,.
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W
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Critisisms with the control test
In some situations, employers employ skilled workers and give them a high degree of discretion: for example a doctor treating patients.
What is the “risk” test?
It is designed to capture the entrepreneurial nature of self-employment. The idea is that A is an employee if B takes the risk of profit and loss in their relationship.whereas if A takes that risk, he is self-employed. The test was recently use in Quashie case
Quashie v Stringfellow
Ms Quashie was a lap-dancer in a nightclub. Customers brought vouchers in the club that they could use to pay her for dances. At the end of the evening, she would present her vouchers, who would give her money, after deducting various fees. A key fact was that she could be out of pocket at the end of the evening if she did not earn enough by performing. This assumption of economic risk was one of the factors which led the CA to conclude that she was not an employee.
The economic risk Q took was also a powerful pointer against there being a contract of employment and the lack of any obligation to pay precluded the establishment of such a contract, O’Kelly v Trusthouse Forte Plc [1984] Q.B. 90, [1983] 7 WLUK 211considered. The tribunal’s conclusion was reinforced by the fact that the contract terms involved Q accepting that she was self-employed, and she conducted her affairs on that basis, paying her own tax,
Express v Tanton
Must invole personal service
Contract between the parties provided that Mr Tanton was required to arrange for another person to do the work if he was “unable or unwilling” to do it himself. The CA held that it was impossible for the contract to be a contract of employment because employment involves personal service: the employer selects the employee and enters into a relationship of mutual trust and confidence with him.
the Court of Appeal held that because the driver’s contract said he did not have to do the work personally, it could not be a contract of employment. However, a limited or occasional power to subcontract may not be fatal. In MacFarlane v Glasgow City Council (2001, IRLR 7), the EAT held that just because a gymnastic instructor could arrange a replacement from a register maintained by the council, if she was unable to attend, did not mean she could not be an employee.
MacFarlane v Glasgow CC
Substitution
- Employer pay substitute directly
- Alllows subsitute from people on approved list
MacFarlane was a gym instructor who could send a substitute to teach her class, but only if she was ill and only if she chose another instructor from a list approved by her employer. The employer would pay the substitute directly. Held: this term did not defeat the employee status. Although the “personal service” test can be seen as a separate requirement about the terms of the individual’s control, there are echos of “control” and “risk”.
Mutuality of obligation
This refers to a pair of promises: a promise on the part of the employer to provide the employee with future work, and a promise on the part of the employee to accept that work when offered it. The courts have tended to use this principle (mutuality of obligations) as a test for deciding whether or not a contract of employment is present in a particular case.
O’Kelly v Trusthouse
Mutuality of obligations test
Claims were waiters in hotel. They were regular casual staff who could be called into work when required, in practise, these regular casual staff had no other employment. They claimed that they were employees, arguing that they were not at liberty to turn down work if offered, and that therefore, the hotel was under an obligation to offer them work. CA held: their claim failed because the waiters accepted the work because they needed the money, not because they were under a legal obligation to do so. Held: they were self employed.
Autoclenz SC
Car valeters signed a contract document stating that there was no obligation on the “employer” to provide work and that they were free to reject work when offered. SC - the terms of this kind will no longer work automatically to prevent tribunals from deciding that an individual is an employee. If it is clear practice that: 1) the employer provided work on a regular basis 2) expected the employee to accept that work, it may be possible to draw the conclusion that the “real agreement” between the parties was one of employment. From this case, the courts’ new found willingness to look beyond the written agreement between the parties. However, even taking into account the reality of the parties’ relationship, it may still be the case that there is no mutuality of obligation and therefore no contract of employment between them.
Two views about the role of mutuality of obligation
1) Mutuality of obligation is necessary to show that there is a contract between the parties 2) Mutuality of obligation is about showing that the contract is one of employment.
Mutuality of obligations as showing there is a contract:
The contract school of thought is based on the doctrine of consideration in contract law: for consideration, there must be some kind of exchange between the parties. In many cases, the courts have held that without mutuality of obligation, there is no contract of employment because there is no contract at all.
Alternative view on mutuality of obligations
Ordinary law of contract is not fussy about what the parties promised each other. There is no requirement that the pair of promises have any particular content. But in employment cases, the courts have insisted that the parties’ promises have particular content: the employer must promise future work and the employee must promise to accept it. In O’Kelly - it coudl be argued that there were some promises in this case. The employer promised to keep the casual waiters on a list and give them priority when work arrived. These ‘lesser’ promises do not satisfy the courts that mutuality of obligation is fulfilled. Therefore, mutuality is more than just establishing the presence of a contract kind: it helps classify that the contract is one of employment.
Little v BMI Chiltern Hospital
Claimant was a hospital porter. If there was no work for him to do during his shift, he could be sent home and not paid for the remainder of the shift. The Employment Appeal Tribunal held: his engagements were not contracts of employment because there was no mutuality of obligation DURING the shift, in the sense of no obligation to provide work and pay throughout it. On this view, a wage-work bargain is only a miniature contract of employment where the employer is obliged to pay the individual for the whole of the agreed shift.
When might it not be necessary to establish mutuality of obligations?
1) Where the individual can invoke the “statutory continuity” mechanism in s212 ERA 1996. 2) wage-work bargains
What is the statutory continuity mechanism in s212 ERA 1996?
This section is designed to make it more difficult for an employer to defeat a claim that an individual has continuous employment, by providing various breaks in employment do not break the legal concept of continuity.
Cornwall CC v Prater CA
Use of s212 was illustrated in this case.
The claimant was a teacher who provided home tutoring for school pupils who were unable to attend school. She worked for the council for 10 years under a series of different assignments of varying duration.
CA held: once each individual contract was entered into and continued, the claimant was obliged to teach the particular pupil made available to her and the council was obliged to pay her for teaching that pupil; that that was sufficient mutuality of obligation, relating to the work provided and performed under the contract, to establish that each teaching engagement was a contract of service; that, if the claimant had been engaged to teach pupils in a class collectively or individually at a school under a single continuous contract, she would clearly have been employed under a contract of service, and it made no difference to the position at law that she was engaged to teach pupils individually out of school under a series of separate concurrent or successive contracts; and that, therefore, the employment tribunal had been entitled to find that the periods when the claimant was not working were temporary cessations of work within section 212(3) of the Employment Rights Act 1996 and that, accordingly, the claimant was to be regarded as an employee of the council continuously during the relevant period.
To establish employee status which tests will the individual need to comply with?
1) control and/or risk test, to establish that the relationship is one of employment 2) no terms inconsistent with employee status 3) mutuality of obligation giving rise to a global contract (unless the claim arises during a wage-work bargain which, itself, constitutes a contract of employment, or unless statutory continuity can be invoked.)
Autoclenz principle
Terms in a written contract purporting to deny any of these elements may be disregarded if they do not reflect the “trust agreement” between the parties.
Employee shareholder
Since the Growth and Infrastructure Act 2013, inserting s205A into ERA, introduced concept of employee shareholder. The employee shareholder is someone who is classified as an employee, but in exchange for an allocation of shares in the employer company, agrees to give up significant rights that would normally attach to employee status.
Why do we have a “worker” category?
Some people fell outside the “employee” category, so this includes people.
Where is the worker concept defined?
s23O(3) ERA 1996. Under s230(3)(b) to satisfy this definition, the individual must prove that he: 1) has a contract with alleged employer 2) to perform work personally 3) for someone who is not the customer of a business he or she is running.
Does the worker need to show mutuality of obligation?
No: Singh v Bristol Sikh Temple Management Committee.
Tanton and McFarlane approach
If the contract contains an unfettered power of substitution, the individual cannot be an employee or worker, but if the contract contains a more limited power of substitution (as in MacFarlane), this will not necessarily defeat employee or worker status.
Does Autoclenz apply to workers?
Yes - if the individual can prove that the substitution clause in the written contract does not reflect the “true relationship” he may be able to persuade the tribunal to ignore it.
Byrne Bros
EAT took a distinctively purpose approach to s230(3)(b) about the alleged employer not being a customer or client of a business. They suggested that the “control” and risk tests from the employee concept might also be applied in order to determine worker status, but that an individual might qualify as a worker even if he has more independence and took on more risk than would be acceptable in the came of an employee.
BB, contractors, appealed against the decision of an employment tribunal to uphold a claim for holiday pay by its subcontractor, B. B was one of a number of workers who worked exclusively for BB as carpenters or labourers at a particular site. The workers were required to sign a subcontractor’s agreement which provided that they were not entitled to holiday or sick pay. There was no obligation on BB to offer work and the workers were not obliged to accept an offer of work. Where a worker was unable to carry out the work the agreement provided that he could at his own expense provide an alternate worker but only with the express consent of BB. An employment tribunal found that they were workers within the meaning of the Working Time Regulations 1998 Reg.2(1) because they were obliged to perform work or services personally and they were not, as individuals, business undertakings.
Held, dismissing the appeal, that the limited provision permitting the substitution of an alternate worker was not inconsistent with an obligation to provide services personally, and self employed workers in the construction industry were exactly the sort of worker whom the Regulations were designed to protect.
Hospital Medical Group v Westwood
HMG engaged Westwood to provide advice and treatment at its clinic to patients suffering from hair loss. HMG was under no obligation to pay him unless patients wanted to use his service. Westwood’s main job was as a GP, and he also worked for another clinic, but he undertook to provide hair loss treatment exclusively through HMG. CA upheld EAT’s finding that he was a worker on the basis of the integration test drawn up from Cotswold Developments v Williams. Although Westwood was found to be running his own business, it was held that he was integrated into the clinic’s work, in that he was presented by HMG to patients as “its” surgeon, and because it did not make sense to describe HMG as the customer of Westwood’s business. This decision can be seen as broadening the worker test because it accepts that an individual can run a business and still be a worker, provided that the recipient of the business’s service cannot be described as a customer.
Bates Van Winkelhof Clyde SC [2014]
Most recent decision on the issue of s230(3)(b) which appears to be closer to decision of Westwood than to Byrne Brothers. The case concerned a partner in a law firm who sought to establish that she has “worker” status. It was accepted that she had a contract to perform the work personally and that the law firm could not be regarded as her customer or client. However, an attempt was made to argue that she was not a “worker” because she was not “subordinated” to the employer. Baroness Hale rejected this approach as an unwarranted gloss on the statutory legislation: “While subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker”. She suggested that a small firm might be “subordinated” to the demands of a particular client, but nevertheless independent, whereas an individual might be a worker without being “subordinated” at all, like in Westwood.
while the concept of subordination might assist in distinguishing workers from other self-employed people, the Court of Appeal in that case had been wrong to regard it as a universal characteristic of workers.
Does Equality Law cover more people?
In theory, it adopts a broader protection than the “worker” definition, with a view to ensuring that prohibitions on workplace discrimination apply to as many people as possible. Under s83(2)(a) EA 2019, everyone who counts as an employee and worker is covered under this act.
How is the equality act 2010 s83(2)(a) provide more protection than workers
1) reference to “contract personally to do word” does no include the “client or customer” exception that is applicable in the “worker” definition. This might suggest the concept might include some people who are running their own business and therefore have clients or customers, but still undertake to perform the work personally. A self employed plumber might be protected under the Equality Act 2010 definition provided that he undertook to perform the work personally. Therefore, a householder could be liable in employment law when he hires a plumber! But SC has cast doubt on this argument in Jivraj v Hashwani
Jivraj v Hashwani SC
Parties entered into a commercial venture. Any dispute was subject to arbititration. The parties agreed that the arbitrators would be members of a certain community. When a dispute arose, one of the parties sought to appoint a member of the non-community. When this was challenged, the person appointing the arbitrator argued that the requirement to be a member of a certain community was discriminatory on grounds of religion. SC held the phrase “employed under”… a contract personally to do work” implied that a person within the definition was somehow subordinate to an employer. Since arbitrators are supposed to act independently, they are not subordinate to an employer as a matter of principle and are not therefore within the definition.
Impact of Jivraj v Hashwani
In addition to the requirement of personal service - it is also necessary to show that there is a relationship of subordination before an individual falls within the Equality Act definition. Therefore, the Equality Act may now be narrower than the worker concept, because the requirement of subordination was rejected for the worker concept in Bates Van Winkelhof. On this view, the doctor in Westwood would be entitled to the NMW but not to the protection of equality law because he provided his work personally to the hospital but was not subordinated to it. Baroness Hale in Bates avoided this conclusion by treating the subordination requirement in Jivraj as having been “introduced in order to distinguish the immediate category [of workers] from people who were dealing with clients or customers on their own accounts”. She believed that the worker definition and the Equality Act definition were broadly the same. The best solution would be to confine Jivraj on its unusual facts.
Is the EU definition of worker different?
Yes. Lawrie -Blum = essential feature of an employment relationship… is that for a certain period of time a person persons services for and under the direction of another person in return for which he receives remuneration. Levin - The work does not need to be full time. The work must be “effective and genuine, not purely marginal and ancillary”.
Danosa
Court has emphasised subordination in later case, it has applied the term in a flexible way which suggests that it will not prove much of an obstacle in practise. Here a claimant was a company director who was dismissed from her employment on grounds of pregnancy. She brought a claim. The court held: the application of the worker definition required a careful assessment of the context. The court suggested that it was significant for the purposes of “subordination”, that the claimant had to report on her work to the supervisory board and could be dismissed by shareholders. This suggests that the use of subordination in EU law is less about identifying employee-like relationships and more about excluding genuine self-employment from the scope of protection. On this reading, it is closer to the SC’s analysis in Bates Van Winkelhof than Jivraj
Does a self employeed person work under a contract of service?
No. A self-employed person works under a contract for services rather than a contract of service. This relationship is governed by ordinary law of contract rather than by labour law. This is because a self-employed person is an entrepreneur capable of bargaining with anyone who wishes to use his services. They can also: 1) employ other people (so inconsistent with assumption that someone who is an employee or worker provides PERSONAL service and cannot send someone else to do his job). 2) they may have numerous customers or clients for whom they work. This suggests that they are able to SPREAD their economic risks across clients and customers. They are dependent on one income.
Non standard working
1) zero hours contract 2) agency working There is a standard form of working - i.e. employees on an indefinite, full-time contract with an employer - and that anything else is a deviation from the norm. But today, non standard working is becoming increasingly common.
Zero hours contracts
Refers to the situation where an individual has an arrangement with an employer under which the employer does not promise any particular level of work to the individual.
Borrer v Cardinal Security
An individual’s contract may purport to be a zero hours contract when in fact he has regular working hours, but the Autoclenz decision addresses this.
Two main problems with Zero hours contract
1) they do not have any guaranteed level of income 2) their employment status is uncertain There is no mutuality of obligation so they will not be classified as an employee.
Pulse Healthcare v Carewatch
Found that zero-hours term in the contract did not reflect the true arrangement between the parties and that the employees in the case had in fact regular working hours.
What is Agency work?
Agency work is where the end user contracts with the agency for the supply of workers, and the agency provides suitable people who are “on its books” looking for work. Although the workers normally perform their tasks under the careful supervision by the end user, they are usually paid via the agency.
Can a worker perusade the court that a contract can be IMPLIED between him and the end user, in the case of agency work?
This augment was successful in some earlier cases, but the courts’ more recent approach has been to hold that it is only appropriate to imply a contract where the “business necessity” test is satisfied: where implying a contract is the only way to make sense of the arrangements.
James v Greenwich LBC
it is only appropriate to imply a contract where the “business necessity” test is satisfied: where implying a contract is the only way to make sense of the arrangements. This test is unlikely to be satisfied in agency work cases because the worker’s provision of labour to the end user can be explained by reference to the agency’s contract with the end user and the worker’s contract with the agency. Therefore, there is no need to imply an additional contract between worker and end user.
