Employment status Flashcards
Why does the common law draw a distinction between employees under contracts of service/employment and other types of worker?
(a) employer’s vicarious liability to third parties for their employees’ civil legal wrongs (i.e. their torts) and
(b) the personal common law duty of care owed by employers to employees
Who differentiates between employed earners under contract of service/employment as the ‘self employed’?
The tax, NI and social security systems -different benefits/taxation
How would you maximize your statutory rights?
- Necessary to be an ‘employee’
- E.g. most of the rights contained in the ERA 1996(inc UD and redundancy) an individual must be an ‘employee’ who has entered into or works under a ‘contract of employment’
What is the definition of ‘contract of employment’? And who does it exclude?
Section 230(2) of the ERA defines a 'CoE' as: 'a contract of service or apprenticeship, whether expressed or implied, and (if it is express) whether oral or written' Therefore excludes 'independent contractors' or self-employed persons working under what are characterized as contracts for services
What other statutory rights are conferred on a broader category of ‘worker’?
Protection against unlawful deduction of wages, national minimum wage and Working Time Regulations 1998
What is the definition of ‘worker’?
‘…an individual who has entered into or works under (or, where the employment has ceased, worked under) -
(a) a contract of employment; or
(b) any other contract, whether express or implied and (if it is express) whether oral or written, whereby the individual undertakes to do or perform personally any work or services for another party to the contract…’ (reg 2(1))
What are the relevant cases to do with ‘defining worker’?
Byrne Brothers (Formwork) Ltd v Baird and others (2002) more recently: Cotswold Developments Construction Ltd v Williams (2006)
Byrne Brothers (Formwork) Ltd v Baird and others (2002)
- applicants self-employed building trade workers who started working for BB in 1999
- signed a standard form of ‘subcontractor agreement’
- ’ not entitled to holiday pay, sick pay or pension’
- ‘no liability for contractor if fails to give assignment to subcontractor’
- ‘no obligation to accept work’
- ’ can provide alternative worker…only after express approval of contractor’
FACTS
- worked exclusively at site in MK
- worked under direction of Co + paid/time
- paid tax on basis of self-employed
- no holiday pay over xmas
CLAIM
They were entitled to holiday pay over xmas under the Working Regulations 1998
Depends on whether they are workers within the definition reg 2(1) of ERA 1996
ET held - They were workers under (b) of reg 2(1) and were entitled to holiday pay
(1) applicants undertook personally to perform work or services for the company notwithstanding that they could be replaced - A LIMITED POWER TO APPOINT SUBSTITUTES IS NOT INCONSISTENT WITH AN OBLIGATION OF PERSONAL SERVICE
(2) applicant power to appoint a substitute was qualified and exceptional
(3) worked under close control of the company
(4) significant and indefinite period
(5) paid on time basis
Cotswold Developments Construction Ltd v Williams (2006)
- carpenter for London Underground
- worker but employee? holiday pay and UD
The EAT said there had to be “mutual obligations” to have any sort of contract. The real question for the tribunal was “whether or not there was some minimum amount of work which the facts demonstrated that the claimant had obliged himself to do”.
In order to decide whether someone like Mr Williams was an “employee” or a “worker”, the EAT said that tribunals must ask:
• was there one contract or a succession of shorter assignments?
• if one contract, can it be inferred from the facts that the claimant agreed to undertake a minimum amount of work for the company in return for being given that work, or pay?
• if so, did the employer exercise sufficient control over the individual to make it a contract of employment, giving rise to rights of unfair dismissal, as well as a right to holiday pay?
• if there was insufficient control, or any factor negating employment, was the claimant nevertheless obliged to do some minimum (or reasonable) amount of work personally?
In this case, it said that the tribunal did not seem to have addressed the question of whether or not there was some minimum amount of work that the claimant had to do personally. The EAT therefore allowed his appeal and remitted it to the employment tribunal to look at again.
S212 of ERA 1996 overriding contracts
Dacas v Brook Street Bureau (2004)
- Dacas worked for Wandsworth Council (on assignment through Brook Street) as a cleaner for 4Y
- Dismissed for rudeness with a visitor
CLAIM: Unfair dismissal
HELD
- Brook street had been under no obligation to provide her with work / no obligation to accept it
- Simply because Brook paid her did not make her an employee
- Council had day to day control
- No employment contract between Brook and Dacas
- But IMPLIED CONTRACT between council and Dacas
Protectacoat Firthglow Ltd. v Szilagyi (2009)
- Court must decide what the true relationship is
- If true relationship different from what is described in the document then it is that relationship that defines the contract
- Have the parties ever realistically intended or envisaged that its terms particularly its essential terms would be carried out as written
- essential terms: mutuality of obligation and the obligation of personal performance of work
FACTS
- S worked for PF Ltd.
- Required to sign what purported to be a partnership agreement with another man, Mr Nesbitt, who would work as his assistant
- Provided with equipment
- If someone asked: he was employed by P
- pay goes directly to individuals / not partnership
- Went to P yard each morning and returned after shift
- P terminated the contract after S asked for a scaffold
CLAIM
- Unfair dismissal
P said not an employee nor but ‘partnership agreement’
HELD
- Employment judge held that P wanted to enjoy the advantages of being able to control its installers without the disadvantaged of being an employer
- Partnership agreement and service agreement were a SHAM contract - didn’t reflect true relationship
What is a sham contract?
- working as a contractor but believe you are an employee
- employer attempts to disguise an employment relationship as a contracting arrangement
- one party employer/principal dictates the terms of the agreement, employee/contractor takes it or leaves it
- basic principle said to be that courts and tribunals should focus on the realities of the relationship and not simply its appearance, and that the parties cannot alter the truth of their relationship by putting a different label upon it
- however, when situation is in doubt or is ambiguous an agreement between the parties stipulating what the legal relationship between them is affords strong evidence as to the real relationship and may be decisive
- CASES: , Protectacoat, Autoclenz Ltd.
What are the tests utilized by courts to distinguish contracts of service/employment from other firms of hiring? (i.e. tests for determining who is an ‘employee’)
(a) Control test
(b) Organisation and integration test
(c) ‘Multiple’ test
(d) Entrepreneurial and economic reality test
(e) Mutuality of obligation
(f) Minimum requirements: coming full circle?
Define ‘Control test’
A requirement for a ‘sufficient framework of control’ recognizing that on many cases the employer or controlling management ‘may have no more than a very general idea of how the work is done and no in inclination directly to interfere with it’
Montgomery v Johnson Underwood Ltd. (2001)
Montgomery v Johnson Underwood Ltd. (2001)
THE FACTS
- Mrs Montgomery registered with agency JU Ltd. Got offered a job with a local company and worked there for over two years.
- She was paid through the agency.
- Not doing a good job responding to phone.
- Contract terminated by agency and offered a different position.
- She declined and claimed UD
- The ET had erred in holding that the applicant was employed by the employment agency notwithstanding “little or no control, direction or supervision” of the applicant by the agency
“Mutuality of obligation” and “control” are the irreducible minimum legal requirements for the existence of a contract of employment. In determining whether a contract of employment exists, the guidance of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance (1968) - best guide and should be followed by tribunals.
MULTIPLE TEST
This requires three conditions to be fulfilled: (i) that the servant agrees that, in consideration for a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master, “mutuality of obligation”; (ii) he agrees, expressly or implicitly 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; and (iii) the other provisions of the contract are consistent with its being a contract of service.
- Test show ‘ mutual obligations’ and the “control” an employer has over the individual.
- A contractual relationship concerning work to be carried out in which there is no control cannot sensibly be called a contract of employment. It is not essential that there is control of how the work should be done. In many cases, the employer or controlling management may have no more than a very general idea of how the work is done and no inclination directly to interfere with it. However, some sufficient framework of control must exist.
- In certain circumstances, an offer of work by an employment agency, even at another’s workplace, accepted by an individual for remuneration to be paid by the agency, could satisfy the requirement of mutual obligation.
- Whether in any given situation “sufficient control” exists to constitute the one party an employer is a matter for the tribunal. In the present case, however, the employment tribunal’s clear finding of lack of control was fatal to its decision that the applicant was an employee of the agency and the appeal would be allowed.
