Employment Status Flashcards
Location of definition of employee and summary…
s230 an individual who works under a contract of employment
Location of definition of contract of employment and summary…
s230(1) a contract of service orally or in writing
Location of definition of worker and summary…
s230(1) an employee or someone who is self-employed who carries out the work personally not under a contract
What is the WHOLE test for determining an individuals employment status? (in short)
Irreducible minimum
Common law tests
What is the irreducible minimum and what does it consist of?
1) Mutuality of obligation
2) Control
3) That other factors are consistent with the contract
What is the mutuality of obligation? What does it establish?
The obligation for an employer to provide work for a wage in exchange for a personal service performed by the employee
This determines if there is a contract at all
What case first recognised mutuality of obligation? + quote
Nethermere v Gardiner - ‘there must be an irreducible minimum of obligation on each side to create a contract of service’
What happens once the mutuality of obligation has been established?
It must be determined if the individual is working under a contract of services (employee) or contract for services (self-employed)
Which case illustrates the courts determining the type of contract? + essential facts + comment on judgement
Carmichael v National Power
C argued she was an employee because she sometimes worked as much as 25 hours a week, tax and national insurance was deducted. Despite these facts pointed towards she was an employee, it was held she was not because she could turn down work, thus meaning there was a lack of mutuality of obligation
NB: this ruling opposes the earlier case of Nethermere, setting new precedent. This is to keep the law certain.
How do substitution clauses affect mutuality of obligation? (types + how)
If there is an unqualified substitution clause in the contract there will never be mutuality of obligation because they are under not obligation to perform the services themselves. Therefore, they are self-employed NOT an employee
If there is a qualified substitution clause they may be able to gain employee status. A qualified clause allow the employee to send someone else IF they are sick ect
Case which illustrates qualified substitution clause + ruling
Staffordshire Sentinel Newspapers Ltd v Potter - clause said, ‘can send a substitute if you are unable…’. He was an employee, this is because there was an irreducible minimum because a substitute could only be sent in certain circumstances. (i.e. normally he is personally providing the service)
Case which illustrates an unqualified substitution clause + ruling
Express & Echo Publications Ltd v Tanton - substitution clause said he could send someone else if he was unwilling or unable to work. ‘Unwilling’ meant he was never under an obligation to work, therefore, there was no mutuality of obligation and he was not an employee
Distinction of control between employee/self-employed
Employee: be told their work place, working hours, subject to employers rules and policies
Self-employed - determine their own working hours, work without supervision, not bound by the rules
How has the concept of control changed….
It is a contractual right to control (Troutbeck v White) opposed to everyday control (Concrete v National Insurance)
Case for contractual right to control….
Troutbeck v White
Case for everyday use of control….
Concrete v National Insurance
What does it mean if the irreducible minimum is satisfied?
What happens next?
This does not mean someone is an employee but it provides evidence that someone is
The common law tests will be applied by the tribunal to determine if the facts suggest the individual is an employee
What are the common law tests?
Control
Integration
Entrepreneurial
Multifactorial
Explain the common law control test
(this is very similar to control under the irreducible minimum)
The greater level of control, the more likely they will be an employee
Ready Mix v National Insurance “control includes the power of deciding the thing to be done, the way in which it shall be done…and where it shall be done”
Troutbeck v White updated this test, it looks at a ‘contractual right to control’ opposed to every day control
The change bought by Troutbeck was needed because it wasn’t applicable to highly skilled professions e.g. NHS and brain surgeons
Quote from Ready Mix v National Power…
“control includes the power of deciding the thing to be done, the way in which it shall be done…and where it shall be done”
Why was the integration test incorporated?
To expand on the control test and fix problems with it
What is the integration test?
the more valuable your skills are to the business the more likely you are to be an employee AND the more integrated they are the more likely they are to be an employee
Evidence of integration and valued skills…
Integration factors: if they have a desk, phone, uniform, if they are part of the hierarchy, on the telephone list, use of canteen facilities (basically anyway the potential employee uses the employers stuff)
Valued skills: if the make contracts for the employer, they are have specific IT software skills
What is looked at in the entrepreneurial test?
- Degree of investment or financial risk – if the risk is not yours you are an employee
- Do you hire your own helpers? – if yes, more likely to be self-employed.
- Do you provide your own equipment? If yes, you are self-employed.
- Degree of skill and training – the more unskilled the more likely you are to be an employee because you can’t sell your skills
Case exhibiting the entrepreneurial test + ruling
Airfix Footwear v Cope
Q was if she was an employee or not, D tried to argue because she had a skill (assembling shoes) and she was selling this skill to him, thus was not an employee. Tribunal held she was an employee.
What does the multifactorial test look at….
- The contract
- Control
- Obligation for employer/employee to provide/do the work (mutuality of obligation) MOST IMPORTANT
- Duty of personal service
- Provision of tools/equipment
- Tax/NI arrangements (may state you are self-employed, however courts may decide you are an employee (Airfix). This is persuasive, not decisive.
What is a sham contract?
A contract that doesn’t reflect the reality of the situation
What case is relevant to sham contracts? + ruling
Autoclenz Ltd v Belcher - set out that both parties no longer need to be deceitful. If the contract doesn’t reflect the reality of the situation then it will be held to be a sham contract
Why do people want worker status?
Gain the statutory rights of a worker
What case is relevant to worker status? What was laid out?
Byrne Brothers v Baird - Courts had to determine if they were self-employed or employed to gain workers rights. Held they were NOT genuinely self-employed because they were dependant on the company.
It laid down the test to help determine if someone is self employed:
a. Did the individual undertake to personally perform work or services?
b. Was the status of the ‘employer’ under the contract that of a customer of a business undertaking carried on by the individual?
c. Was there mutuality of obligation between the ‘employer’ and the individual?
Why is the threshold for self-employed proving they are workers low?
To fill the power gap and protect employees from less credible employers
Case that illustrates the low threshold of gaining worker status…+ facts
Conroy v Scottish FA Ltd – C filed for unfair dismissal. D argued she was a self-employed contractor. ET found she could be classified as a worker, BUPA health care pointed towards this. However, she was not an employee because there was a lack of disciplinary procedures, C had to purchase her own flags ect.
What is a casual worker?
an individual who works under a series or short term contract with gaps in between (seen in Carmichael v National Power)
How do you establish the employment status of casual workers? Why is it difficult to establish?
Because they work under a series of contract there is a lack of continuity of employment, thus no mutuality of obligation so they cannot be an employee UNLESS an umbrella/global contract can be inferred
You establish a casual workers employment status by applying the irreducible minimum, common law tests.
There then must be continuity of employment, evidenced by umbrella/global contract or temporary cessation of work under s212(3)(b)
Temporary cessation of work statute…
s212(3)(b)
Case illustrating global contracts + ruling
Clark v Oxfordshire Health Authority – claim for unfair dismissal because there was no ‘global contract’ of service due to the lack of mutuality of obligation because she could turn down the work when she wanted
Case illustrating temporary cessation + ruling
Ford v Warwickshire CC - D argued there was continuity of employment because there was no continuity over the 6 weeks holiday. Courts disagreed, they looked at the fact she was employed for the remaining 46 weeks of the year
Flack v Kodak Ltd – if the gaps in employment are greater than the time in employment the courts are less likely to rule temporary succession of work
Continuity of employment statute…
s212(1) a whole/part of a week governed by a contract of employment
Why is agency work problematic
Agency workers have no rights because there is no mutuality of obligation to satisfy the irreducible minimum because they provide the service for the end user but are paid by the agency
What is an agency worker
Someone who signs up with an agency who sends them to the end user. The agency pays them
Cases related to agency workers and ruling
James v Greenwich BC - ET put a halt to creative arguments put forwards by agency workers. Held they will not imply a contract of employment because the situation is unfair
Cable and Wireless v Muscat - this was before James, successful unfair dismissal claim because the business advised C to go self-employed so the business would look for attractive in a take over. Courts implied a contract of service, likely this was for policy reasons to fill the power vacuum between employers and employees and encourage fairer practices.
What was introduced to help agency workers?
Agency Workers Regulations
What was the problem with Agency Worker Regulations 2010?
It only applies if the employment was more than 12 weeks, a lot of agency work isn’t this long or they will relieve the agency worker at 11 weeks to avoid giving them access to these rights
- therefore the statute is pointless
What are other categories of employee?
Part Time Workers
Fixed-term Workers
Casual Workers (if continuity of employment is satisfied)
What is an example of a part time worker?
e.g. seasonal workers or maternity cover
what do the PTW 2000 and FTW 2002 permit?
allows workers and employees to challenge less favourable treatment because they are part time or fixed term
NB: they don’t need continuity of employment
What is the test for determining less favourable treatment?
1) What is the less favourable treatment complained of? (e.g. less pay, one given more flexible hours)
2) There needs to be a comparator
3) Is the less favourable treatment on the grounds of there PT/FT status?
4) If so, can it be justified? `
Requirements of PT and FT comparator… (explain difference between FT and PT)
Must identify full term comparator who:
1) works for the same employer
2) under the same type of contract e.g. worker must be compared to a workers
3) must be engaged in similar types of work and have similar qualifications and experience
For a fixed term comparator the full time comparator can be someone from the employer’s other establishment, former employee or hypothetical comparator
How can less favourable treatment be justified?
o Needs to prove that discrimination is necessary to achieve an objective
o If employee can prove a less discriminatory way of achieving the objective this will defeat the defence
Case which illustrates PT worker enacting PTW Regulations + ruling
Matthews v Kent and Medway Towns Fire Authority - C claimed unlawful discrimination under PTW 2000. This was dismissed because the FT fire fighters done admin work and the PT workers didn’t. (They are favoured because they are paid more, however justified because they do more work)
Case which illustrates the problem with causation with PTW 2000 AND FTW 2002
Sharma v Manchester CC– employers admitted they discriminated because he was a PTW but also because he was a man city fan. This removed the causal link and is problematic because employers could add in any reason for discrimination to avoid liability.
