Employment relationship SHUFFLED Flashcards
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.
Cornwall CC v Prater CA
Some people fell outside the “employee” category, so this includes people.
Why do we have a “worker” category?
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.
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.
Mutuality of obligation
Community Dental Centres
dentist under contract to provide dental services under the NHS but EAT found that there was “an absence of an obligation to perform services personally” – therefore self-employed.
Not a worker
The EAT expressed surprise that the Employment Judge had on the one hand concluded that there was no mutuality of obligation when deciding the ‘employee’ question but that there was mutuality of obligation when deciding the ’worker’ question. Also, the claimant’s right not to provide dental services did not depend solely on whether he was unable to do this, but it also depended on whether he was willing to provide the services. Therefore they decided that the contract did not entail an undertaking on the claimant to do work or perform personally any work or service, and so he was not a worker.
Established the control test, but Ready Mixed Concrete confirmed it.
Yewen v Noakes CA
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
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.
The Supreme Court has preferred Szilagyi and the dissenting judgment of Elias J in Kalwak:
car valets described in the contractual documents as ‘self-employed’ found to be employees based on an examination of all the relevant evidence, including how the parties were conducting themselves in practice and considering the inequality of bargaining power in the employment relationship.
per Lord Clarke
- The question in every case is what was the ‘true agreement’ between the parties?
- ‘… the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only part. This may be described as a purposive approach to the problem.’
Autoclenz v Belcher [2011] UKSC
Market Investigations v Minister of Social Security
Risk test
Market Investigations [1969] per Cook J: factors suggesting a person is self-employed – ‘in business on his own account’:
Ødoes he provide his own equipment and hire his own helpers?
Øwhat degree of financial risk does he take?
Øwhat responsibility for investment and management?
Øwhat is the opportunity for profit?
1) control
2) risk
Third overarching test of : mutuality of obligation - this helps us distinguish between an employee and a worker
There are three tests for detemining whether a person has a contract of employment and is therefore an employee, what are they
Borrer
but case concerned a clause cutting regular hours - not a typical ZHC - :
had contract to work 48 hours, line manger was allowed to alter the working hours. They were drastically cut to around 20 hours a week – brought action to establish whether this was a breach of contract. Found he was entitled to 48 hours a week due to weaker bargaining power – employer had taken advantage o such a clause (seen as a zero hours clause) in such cases a clause is unenforceable – sufficient evidence under contract and experience of working at 48 hours a eek that the conduct demonstrated a normal expectation of a 48 hour week. Different from a case where no guaranteed hours the standard term of the cotnrac.t an exceptional case.
- Insecurity and uncertainty of such contracts even if not exclusive.
Some suggestion that ZHCs are unlawful as unfair contract terms:
per Lord Clarke
ØThe question in every case is what was the ‘true agreement’ between the parties?
‘… the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only part. This may be described as a purposive approach to the problem.’
Øsame test applies to sham labels in ‘worker’ cases – Pimlico Plumbers v Smith [2018] SC
Autoclenz v Belcher [2011] (UKSC)
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
What is the “risk” test?
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.
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
Danosa
Express & Echo Publications Ltd v Tanton
Personal performance
Mr Tanton contracted with the company to deliver its newspapers around Devon. A term of the contract provided: “In the event that the contractor is unable or unwilling to perform the services personally he shall arrange at his own expense entirely for another suitable person to perform the services.” The Court of Appeal held that the term defeated Mr Tanton’s claim to have been employed under a contract of service
(archaic but a means to establish that someone was under full control of employer)
master/servant - ‘[a] servant is a person who is subject to the command of his master as to the manner in which he shall do his work’ per Bramwell LJ
Yewens v Nokes [1880]
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.
Autoclenz principle
Saha v Viewpoint Field Services
Zero hour contract. No mutuality
irregular hours, no obligation to accept work = no mutuality of obligation.
Distinguished in Pulse Healthcare v Carewatch Care Services [2012]
To an extent:
Hawaiai - substitution allowed in contract === NOT WORKER
Pimlico - distinguishes hawai because not written in contract (same as autoclenz)
Is substitution okay?
Pimlico Plumbers v Smith [2018] UKSC 29 [2017] EWCA
Plumbers working for PP found to be workers – had an obligation of personal performance or work/services for PP, strong evidence of control by PP, worked for them - not a client or customer – subordination not essential for ‘worker’ status, could be self-employed for tax purposes and still a ‘worker’ – plumbers had an umbrella contract linking multiple assignments (similar to Uber). Substitution clause used was found to be consistent with an obligation of personal performance. This is the leading case. High level of control.
Pumpers according to manual assigned to them have to wear uniforms with Pimlico id, meant to provide services of Pimlico and prohibited from private work for clients of Pimlico under the contact. Although, not written down, it was practised that a plumber to substitute for them if they do not do a certain job on a day. No obligation to accept work when offered but would normally work 40 hours pw for Pimlico. These factors suggest they are not employees.
Held: the plumers were workers because they had a contract to personally perform work for Pimlico even though substitution arrangement, it was not an unfettered right, they would have to find another Pimlico plumber. Upheld at CA and SC. SC Held: they are plumbers: first they said:
- Smith had “obligation of personal performance” to carry out assignment for PP
- PP not withstanding substitution arrangement, exercise considerable control over the plumbers. SC reinforced what B Hale said about the law firm (bates) that subordination is not essential. This was obiter in that case because there was control.
- Limited right to find a subsittiure to perform work (another Pimlico operative) not inconsistent with an obligation of personal performance which was the dominantfeature of the contract
- Obligation of personal performance was the number one for this contract
- Sometimes substitution is so common that personal performance is means no relations, but that is not the case here
- Economic dependency – distinguished in Halawi
- Not a client or customer – an “umbrella contract” to offer work to S when it was avaialbel – had a degree of independence and freedom to say no, but working within organisation suggesting control and performed this work on basis.
- “Independent contractor” label was a sham.
Both CA and SC found to be workers and did not matter that they put down “self employed” for tax purposes. Therefore, even those who may be called self employed, they can fall within the scope.
No: Singh v Bristol Sikh Temple Management Committee.
Does the worker need to show mutuality of obligation?
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.
Does Equality Law cover more people?
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.
Pimlico
Provide work “from time to time” (said in contract). Contract said company is under no obligation to offer work and no obligation to accept.
Mr Smith’s only right of substitution was of another Pimlico operative. Looking at the words, they required P to do work personally.
Factors whic show X is not a client or customer:
- tight control (requiring him to wear a uniform)
Community Dental Centres v Sultan-Darmon
held: client or customer of NHS, not having relationship of economic dependency. Dentistry can decide not to offer services to the NHS and become only open to private patients. So there was no oblgiation to perform work.
No requirement for mutuality of obligation cf. Baird, above, or ‘subordination’, per Baroness Hale in Clyde & Co v Bates van Winkelhof [2014] UKSC 32. This was obiter in that case because there was control. – endorsed in Pimlico Plumbers v Smith [2018] UKSC 29, but must be an obligation to perform work : Community Dental Centres v Sultan - Darmon
1) Where the individual can invoke the “statutory continuity” mechanism in s212 ERA 1996. 2) wage-work bargains
When might it not be necessary to establish mutuality of obligations?
Jivraj v Hashwani
sc
the Supreme Court applied the concepts of direction and subordination identified in the Allonby case to its interpretation of a “contract personally to do … work” in the predecessor to s 83(2)(a).
court applied the control test. Worker in question used tools in company, wore their uniform, booker holidays through line manager, raised grievance with end user. After period of time, terminated the relationship. Found that although initially hired by agency, he was treated as though he had been directly hired by them. Possible to bring unfair dismissal claim against them.
Motorola v Davidson [2001]
Agency worker
court applied the control test. Worker in question used tools in company, wore their uniform, booker holidays through line manager, raised grievance with end user. After period of time, terminated the relationship. Found that although initially hired by agency, he was treated as though he had been directly hired by them. Possible to bring unfair dismissal claim against them.
Motorola v Davidson
Allonby v Accrington and Rossendale College [2004]
‘principle of equal pay for male and female workers’ – ‘worker’ must be in a relationship of subordination with the person who receives the services
- where EU law defines who is a ‘worker’ – given an autonomous EU meaning by the CJEU:
Pulse Healthcare v Carewatch Care Services [2012]
had a ‘zero hours contract’ but there was a set working pattern – was mutuality of obligations
Zero hours contract
Held: written contract did not represent the true agreement,
Mutuality of obligation present = employees
written contract of carers was described as a zero hours contract. Contained no fixed hours. In practice, thy worked very regular hours in shifts set by employers. Found that the written contract didn’t represent the true agreement between the parties. Autoclenz was applied based on conduct of employment relationship. Working pattern organised in specific patterns of work. They were shift workers - it was a sham, found to be employees, with mutuality of obligations.
Distinguished in
Saha v Viewpoint Field Services Ltd
Pulse Healthcare v Carewatch Care Services [2012]
Evolved to distinguish between ‘employee’ (common law) and ‘worker’ (statute).
Why was the mutuality of obligations test evolved?
Certain weeks in which there is no contract of employment do not break continuity and do count – s212(3). This rule applies where the employee is:
- incapable of work in consequence of sickness or injury [for not more than twenty-six weeks – s212(4)] incapable of that work:
absence must be by reason of sickness or injury:
Donnelly v Kelvin International Services
Underhill LJ suggested at para 23 that a person’s lack of contractual obligation between assignments might indicate a lack of subordination consistent with the other party being no more than his client or customer
Windle v Secretary of State for Justice [2016]
Uber v Aslam, Farrar, Dawson & Others [2017] UKEAT
Uber drivers performed work personally for Uber not the customer – under the control of Uber and available for work when the driver’s app was switched on uber taxi drivers would found to be working everytime theu turn on the app, meaning the driver was working. Even though they may perform numerous assignments in a day, each together show relationship.
Autoclenz v Belcher [2011] (UKSC)
per Lord Clarke
ØThe question in every case is what was the ‘true agreement’ between the parties?
‘… the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only part. This may be described as a purposive approach to the problem.’
Øsame test applies to sham labels in ‘worker’ cases – Pimlico Plumbers v Smith [2018] SC
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.
James v Greenwich LBC
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.
Non standard working
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”.
Is the EU definition of worker different?
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.
Two views about the role of mutuality of obligation
O’Kelly v Trusthouse Forte
No obligation for the company to provide work and no obligation to offer futher services.
Did not meet the mutuality of obligations test
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.
- 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”.
Autoclenz v Belcher SC [2011]
James v LB of Greenwich [2008] EWCA
implied contract with end user is a separate contractual question – agency workers cannot be “employees in disguise” – Muscat was an exceptional case. James followed in:
Smith v Carillion [2014] IRLR 344
James was agency worker supplied to same end user (Grenwich council) for 3 years. Fact that she had been placed for 3 years but without further evidence that she was an employee, meant that that alone didn’t make her an employee of the council. Mere passage of time didn’t alone lead to implied contract. No mutuality of obligations.
But treat the cases with caution: EAT and CoA have gone in different direction following James v Grenwich case
Cornwall CC v Prater [2006] (CA)
successive individual teaching assignments – all weeks counted, no break in continuity – short breaks between contracts were each a ‘temporary cessation’ – Rule 3b below : concerns teacher in outer school education service – was teaching children at home. Was engaged as a home tutor and there were breaks in tuition periods, was doing one to one lessons with children with special needs. May have been breaks of a few weeks between pupil allocation. Each time she had to teach pupils she had to carry out her duties. She sought a written declaration that she was an employee under s 1 of ERA. Held that she was an employee, had continuity of employment between her employment. Each week counted as an individual contract for teaching and there was a mutuality of obligations. This also brought in 3(b) – any gaps of pupils being brought to her was deemed to be an absence due to “temporary cessation of work”. Any gaps between engagement were merely this.
Wilson v Circular Distributors Ltd [2006]
An ET chairman wrongly decided that Mr Wilson was not an “employee” and therefore he could not present a claim for unfair dismissal. The EAT overrules this error. It was made because the ET chairman wrongly thought that because the employer was not under any obligation to offer work to Mr Wilson “there is no mutuality of obligation such as would be required to constitute a contract of employment”. The ET chairman failed to take into account that Mr Wilson was bound to undertake work if it was offered to him.
absence of mutuality means no obligation on either party to perform work
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.
Two main problems with Zero hours contract
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.
Which category is most desirable to be in?
absence of mutuality between assignments was a relevant factor – but see now:
Capita Translation and Interpreting v Siauciunas [2017]
Pulse Healthcare [2012]
zero hours contract but set working pattern – was mutuality of obligations = employee
No obligation for the company to provide work and no obligation to offer futher services.
Did not meet the mutuality of obligations test
O’Kelly v Trusthouse Forte
represents a shift away from the strict ‘contractual approach’ but the label is still relevant in the ET’s consideration of the facts if it is deemed to be consistent with the parties’ own understanding of their agreement – if so it reflects the ‘true agreement’ in the absence of compelling evidence to the contrary:
Stringfellows v Quashie [2013] EWCA
What does Autoclenz represent?
he power station guides were paid for working for up to 25 hours a week, but the respondent was under no duty to provide them with any work and could not have disciplined them for refusing to work. They were held not to be employees. When work was available they were free to undertake it or not as they chose. They worked on a ‘casual as required basis’ which did not create a contract of service, as there was an absence of mutuality from the working arrangements. The case did not, however, address the case of individual work contracts, in which there were mutual obligations or the status of the claimants when actually working as guides
Carmichael v National Power [2000] IRLR 43 (HL)
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.
Employee shareholder
Mutuality of obligaitons test
must be no obligation to work on either party – W was obliged to work = employee
Wilson v Circular Distributors [2006
where EU Directives extend protection to workers – ‘personal scope’ of protection
O’Brien v Ministry of Justice
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.
Halawi v World Duty Free [2013]
not a ‘worker’ if no economic dependency, distinguished in Pimlico Plumbers. – so-called power of substitution was not a contractual right at all. World Duty Free’s declaration that Mrs Halawi might appoint a substitute reflected its understandable lack of interest in personal performance on her part under her contract with her own service company and/or under its contract with the management services company. Its interest was only that someone sufficiently presentable and competent to have secured its approval to work in an outlet. In Pimlico - In circumstances in which the contract provided no express right to substitute
Halawi was working in controlled outlet, no contract with them. Her job was to sell cosmetics, her contract was with a management services company. The controlled outlet then withdrew their consent to let her work there, the effect was akin to dismissal. Found: she could not be a worker with the controlled outlet because no contract with them, even though they exerted control over her. She did not do work for them. Suggesting protection lacks here.
Hospital Medical Group Ltd v Westwood
ca
one may be a professional person with a high degree of autonomy as to how the work is performed and more than one string to one’s bow, and still be so closely integrated into the other party’s operation as to fall within the definition.
Carmichael v National Power [2000] IRLR 43 (HL)
he power station guides were paid for working for up to 25 hours a week, but the respondent was under no duty to provide them with any work and could not have disciplined them for refusing to work. They were held not to be employees. When work was available they were free to undertake it or not as they chose. They worked on a ‘casual as required basis’ which did not create a contract of service, as there was an absence of mutuality from the working arrangements. The case did not, however, address the case of individual work contracts, in which there were mutual obligations or the status of the claimants when actually working as guides
No requirement for mutuality of obligation cf. Baird, above, or ‘subordination’, per Baroness Hale .
question is: is a partner in a law firm a worker? SC satisfied that there was sufficient evidence of worker evidence even though being a partner in a law firm, she was not subordinate to other partner because she had a contract to work personally for the law firm, and the firm would not be regarded as a customer or client so put these together, even in the event of no subordination, it was a relationship.personally, Hale though: subordination was sometimes an aid to help decide, but it is not a free standing and universal characteristic of being a work. No essential, providing there is an obligation to work personally for the law firm.
Clyde & Co v Bates van Winkelhof [2014] UKSC 32
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.
Question before tribunal was “can an agency worker entitled after 12 weeks of placement as the same end users employees, be compensated for having unpaid breaks by being a higher hourly pay?” Individual got high hourly pay but less holiday (among one or two others). Tribunal found this higher pay offset the loss of holiday, so there is no breach of equal principle. On appeal found: an agency cannot offset a failure to convey a specific entitlement under the regulations, I.E there should be “the SAME” holiday. The entitlement is for the same terms and conditions between employees, NOT by comparing the overall package. There might besome flexibility to pay holiday pay as a lump sum, but this must be ttransparent and made clear to the worker.
Kocur v Royal Mail [2018]
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”.
the Court of Justice of the European Communities, at paras 67 and 68, interpreted the word “workers” in what is now art 157(1) as persons who perform “services for and under the direction of another person in return for which [they receive] remuneration” but excluding “independent providers of services who are not in a relationship of subordination with the person who receives the services”.
Allonby v Accrington and Rossendale College
contractual document referred to a ‘partnership agreement’ – ET held that S was not a ‘partner’, was an employee. Document designed to deceive others and was a sham, decision upheld on appeal – CA: it is for the court or tribunal to decide if the written document does not accurately describe the true ongoing employment relationship:
Smith LJ: ‘the court must look at the substance not the label… . Although there will be in many cases (as there was in this one) an intention to conceal or misrepresent the actual relationship, there is no logical reason why this should be a universal requirement”
Protectacoat Firthglow v Szilagyi [2009] IRLR 365 (CA)
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.
Does a self employeed person work under a contract of service?
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
How is the equality act 2010 s83(2)(a) provide more protection than workers
Mingeley v Pennock [2004]
taxi drivers who can take their own fares are not workers– distinguished in Uber
Subsitution was allowed once work was accepted
Distinguish between: employees, workers and self-employed people
Employees: subordination, control, dependency, mutuality, obligations
Workers: Is dependent but not necessarily subordinate, may be self-employed for tax purposes
Self employed: independence, autonomy, risk
Jivraj v Hashwani [2011] UKSC
arbitrator found not to be subordinate – case may be confined to its facts.
Equality Act s83(2) = those within this concept are ‘employees’ under that Act – deemed to be in employment – definition similar to s230(3)(b) ERA except that no reference to client or customer
Subordination requirement? Compare Jivraj (SC) with Lady Hale in Bates van Winkelhof (SC) - latter suggests that the concept of employee is broadly the same as ‘worker’, endorsed in Pimlico Plumbers (obiter)
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.
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”.
Yewens v Nokes [1880]
(archaic but a means to establish that someone was under full control of employer)
master/servant - ‘[a] servant is a person who is subject to the command of his master as to the manner in which he shall do his work’ per Bramwell LJ
Autoclenz v Belcher [2011] UKSC
The Supreme Court has preferred Szilagyi and the dissenting judgment of Elias J in Kalwak:
car valets described in the contractual documents as ‘self-employed’ found to be employees based on an examination of all the relevant evidence, including how the parties were conducting themselves in practice and considering the inequality of bargaining power in the employment relationship.
per Lord Clarke
- The question in every case is what was the ‘true agreement’ between the parties?
- ‘… the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only part. This may be described as a purposive approach to the problem.’
Windle v Secretary of State for Justice [2016]
Underhill LJ suggested at para 23 that a person’s lack of contractual obligation between assignments might indicate a lack of subordination consistent with the other party being no more than his client or customer
Stringfellows v Quashie [2013] EWCA
Risk test
lap dancer – was controlled but not paid by clubs. She paid them to be provided with the opportunity to earn money by dancing with clients, took the economic risk
Certain weeks in which there is no contract of employment do not break continuity and do count – s212(3). This rule applies where the employee is:
- absent from work on account of a temporary cessation of work:
- interpreted widely to protect intermittent employees or those with fixed-term contracts where continuity would otherwise be deemed to have been broken:
people on fixed term contracts but then rehired on regular basis. Mrs F employed as lecturer at further education college with successive contracts for 8 years. September – July had contract, “fired” for summer period, then rehired in September. When wsant rehired brought clam of unfair dismissal and redundancy payment. Could it count for absence due to temporary cessation of work. Found on basis of earlier case of Fitzgerald – found that there was continuity of employment. Test to be applied: gaps should be short in comparison to the period of employment. But wouldnt help seasonal workers – e.g. fruit pickers hired every summer, because the gap is longer than the period of work.
Ford v Warwickshire County Council [1982]
Any agreement between the parties to waive continuity would be void – s203:
Parties cannot agree to break continuity – PROTECTS EMPLOYEE, the weaker party of the relationship.
M&P Steelcraft v Ellis [2008]
However, a limited or occasional power to subcontract may not be fatal. 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 City Council [2001] IRLR 7
Troutbeck v White [2013] EWCA
Control test
the question is not by whom day-to-day control was exercised but with whom and to what extent the ultimate right of control resided’ per Richardson J
Who has the ultimate right of control
no mutuality of obligation during shift work
Little v BMI Chiltern [2009]
Prater was engaged by CCC under individual contracts to teach children who were unable to attend school.
The fact that there was a succession of individual contracts in the 10 year priod played a HUGE part. If we spoke about a single umbrella agreement this might have turned to a different result.
LA was not under contractual obligation to offer pupils to her and she was under no obligation to accept. However, when she took them on, she was obliged to fulfil her committment. For 10 years, she never refused any work offers.
Continuity
Because schools were closed for holidays, Prater would not work them. This temporary cessation fell within s212(3) 1996 act.
Mutual obligations
Councel tried to argue there was no “irreducible mimumum” of continuing obligations. Prater was under no obligation to undertake work and council under no obligation to offer.
Fact that the enaggements were extension (!0 years) did not satisfy requirement of mutual obligations as she was still under no obligation to accept further engagements.
It did not make any difference to the legal position that, after the end of each engagement, the council was under no obligation to offer her another teaching engagement or that she was under no obligation to accept one. The important point is that, once a contract was entered into and while that contract continued, she was under an obligation to teach the pupil and the council was under an obligation to pay her for teaching the pupil made available to her by the council under that contract.
There was a mutuality of obligation in each engagement namely that the county council would pay Ms Prater for the work which she, in turn, agreed to do by way of giving tuition to the pupil for whom the council wanted her to provide tuition.
Per J Lewison - The appellant’s argument presupposes that it was necessary to find mutuality of obligation over the whole period from the beginning of the first engagement to the conclusion of the last. In a case where s.212 does not apply, that may well be right. But in a case where gaps between individual engagements can be bridged by s.212, that necessity does not arise.
CORNWALL COUNTY COUNCIL (appellants) v. PRATER
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.
suggests that it may be possible to imply a contract between the employer and the end user where there is evidence of mutuality of obligation; even though being paid by agency after being placed with company, because had reworked there for over 2 years, provided with equipment, given mobile phone bill, held sufficient mutuality of obligation -> obligation to provide him with work in return for pay. An implied contract of employment in absence of express agreement, based on conduct of the parties. Two essential requirements were found – control and mutuality of obligations. Idea of economic reality. but distinguished in the leading case of:
James v LB of Greenwich [2008
Cable & Wireless v Muscat [2006]
GP was a client or customer of the hospital trust – Westwood distinguished
This case could be distinguished from Westwood, the essential point in Westwood being that, although Dr Westwood had other “jobs”, the key factual finding was that he had agreed to provide his services as a hair restoration surgeon exclusively to HMG, he did not offer that service to the world in general, and he was recruited by HMG to work as an integral part of its operations. That exclusivity was wholly missing on the facts of the present case.
Not a worker
Barking
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.
Tanton and McFarlane approach
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.
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.
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
not a ‘worker’ if no economic dependency, distinguished in Pimlico Plumbers. – so-called power of substitution was not a contractual right at all. World Duty Free’s declaration that Mrs Halawi might appoint a substitute reflected its understandable lack of interest in personal performance on her part under her contract with her own service company and/or under its contract with the management services company. Its interest was only that someone sufficiently presentable and competent to have secured its approval to work in an outlet. In Pimlico - In circumstances in which the contract provided no express right to substitute
Halawi was working in controlled outlet, no contract with them. Her job was to sell cosmetics, her contract was with a management services company. The controlled outlet then withdrew their consent to let her work there, the effect was akin to dismissal. Found: she could not be a worker with the controlled outlet because no contract with them, even though they exerted control over her. She did not do work for them. Suggesting protection lacks here.
Halawi v World Duty Free [2013]
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.
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.
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.
