Employment Status - Employment Rights Act 1996

Question 1

What legislation defines Employees?

Answer 1

S320 (1) Employment Rights Act 1996 defines an employee as an individual who works under a CONTRACT OF SERVICE.

An Employee will be entitled to more employment rights than workers or self-employed people and will owe more obligations towards their employer.

Question 2

What legislation defines a Contract of Service?

Answer 2

S320 (2) Employment Rights Act 1996 defines a CONTRACT OF EMPLOYMENT as a CONTRACT OF SERVICES, or apprenticeship, whether express or implied, oral or in writing.

Question 3

What legislation defines Workers?

Answer 3

S320(3) Employment Rights Act 1996, defines Workers as individuals who perform services for another party whose status is not that of a client or customer.

People with a ‘worker’ employment status have some employment rights, but not as many as employees. Examples of workers include agency workers, casual workers or zero-hour workers.

Question 4

What is self-employed status?

Answer 4

Self-employed status is not defined in employment law.

A person is usually self-employed if they are their own boss and is a category used by HMRC for tax purposes.

A self-employed individual will have a greater degree of freedom in their method of working and be less likely to submit to the same controls or supervision that would be exercised over an employee.

They would also typically be able to determine their own working days and hours.

Self-employed people have very few employment rights.
(Independent Contractors, sole traders, self-employed or consultants) work under A CONTRACT FOR SERVICES.

Question 5

What tests do the courts use to determine someone’s employment status?

Answer 5

The courts will consider many variables that make up the individual’s working life in determining their status. It is crucial to note that no single aspect will be decisive.

The three common law tests are:
1) The Control Test
2) The Integration Test
3) The Multiple/Economic realities Test

The Courts also consider, Personal Services and Mutuality of Obligation.

Question 6

What is the Control Test?

Answer 6

The CONTROL TEST was used by courts in the 19th century.

This was set out in Yewens v Noaks.

Under this test, employment law was considered as law of master and servant.

The control test is said to be unsuitable for employees who are highly skilled therefore the control test has become less effective.

The ‘right to control’ has been changed to actual control.

Although it remains important, it is no longer seen necessarily conclusive and other tests have emerged.

Question 7

What case supports The Control Test?

Answer 7

Yewens v Noaks

Under this test, employment law was considered as law of master and servant.

Question 8

What is the Integration Test?

Answer 8

The INTEGRATION TEST was developed in the late 1940s and early 1950 in which hospitals were held vicariously liable for the acts of surgeons.

The courts began to look at how a worker was integrated into the company.

The greater the person is integrated in the company, the greater possibility that this person is an employee.

Cassidy v Ministry of Health.

Question 9

What case supports the Integration Test?

Answer 9

Cassidy v Ministry of Health

The courts held that the surgeon was an integral part of the organisation which meant there was a Contract of Service and so was an employee.

Question 10

What is the Multiple/Economic reality Test?

Answer 10

THE MULTIPLE/ECONOMIC REALITY TEST is the most frequently used test looking at several factors in determining employment status.

This test considers many aspects such as:

1) degree of control

2) personal service (If there is an obligation to provide own work and skill)

3) mutuality of obligation (zero-hour workers or agency workers)

4) the elements and terms of the contract being consistent with a contract of service

Question 11

What is the leading case for Multiple/Economic Reality Test?

Answer 11

Ready Mixed Concrete (South East) Limited v the Minister of Pensions and National Insurance.

ECONOMIC REALITIES - Pimlico Plumbers Ltd v Smith (2018)

Question 12

Which case states that the ‘employment label’ is not an overriding consideration?

Answer 12

Massey v Crown Life Insurance (1978).

The ‘label’ provided to Colin is not an overriding consideration in deciding whether or not he is an employee.

The mere fact that the contracting parties agreed to the status of ‘sub-contracted employee’ is not a decisive factor

Question 13

What is the Personal Service Test?

Answer 13

Employees are usually required to provide personal service.

The ability to delegate your duties generally suggests they are more likely to be a worker or self-employed.

Self-employed or independent contractor status are able to provide a substitute or to be able to sub-contract the service they are engaged to carry out.

MacFarlane and Another v Glasgow City Council (2001).

Question 14

What case supports Personal Service Test?

Answer 14

MacFarlane and Another v Glasgow City Council

MacFarlane worked as a fitness instructor. Contract explained if she is unable to work then she could send someone to take the class on her behalf, but only someone on registrar of fitness instructors approved on registered by Glasgow City Council. This clause does not prevent her from being an employee. However, delegation, as with all factors, will be considered in the light of the individual’s full working circumstances.

Question 15

What is the Mutuality of Obligation Test?

Answer 15

MUTUALITY OF OBLIGATION means that there is an obligation on one party to provide work and the other party is obliged to accept the work offered in return for payment.

Carmichael v National Power plc

Question 16

What tests are absorbed into the Multiple Test?

Answer 16

The control test is now included as part of the multiple test.

The integration test has also been absorbed into the multiple test.

The multiple test allows the courts the greatest flexibility when considering all relevant factors when deciding whether a person is an employee.

Personal service and mutuality of obligations are essential requirements in a contract of employment: it would seem that without these there will be no finding of a contract of service.

Question 17

What status is afforded special consideration by the courts?

Answer 17

Homeworkers, casual and agency workers, zero-hours workers, gig economy workers, fixed-term employees and part-time workers.

office holders, crown servants, judges, students and trainees,

Question 18

What case supports homeworkers?

Answer 18

Air fix Footwear Ltd v Cope.

The company provided all the tools, equipment and adhesives and laid down strict rules as to rates of work, quality and safety regulations to follow. Mrs Cope had agreed to be subject to the company’s control

Question 19

What case supports casual workers?

Answer 19

Carmichael v National Power plc.

Their contracts described them as ‘casual’ workers. The documents contained no provisions governing when, how, or with what frequency guide work would be offered; there were no provisions for notice of termination on either side; the sickness, holiday and pension arrangements for regular staff did not apply; nor did the grievance and disciplinary procedures.

The court said that where one person is not obliged to offer work and the other person not obliged to accept it.

Therefore, there is a lack of the irreducible minimum obligation.

Question 20

What is the Gig economy?

Answer 20

The employment status of gig economy workers is often disputed,
and can be complicated to determine.

They are paid for the ‘gig’ that they perform, e.g. delivering a package).

The appeal of the gig economy was that the individuals were classed as self-employed.

Some of the arrangements to consider regarding the status of taxi drivers include:
The Personal Services test is relevant. If you personally have to undertake the ‘gig’ and are not allowed to send someone else in your place, then you are more likely to be classed as a worker, rather than self-employed.

Conversely, if you are able to pick and choose your ‘gigs’, set the prices you charge or even send someone else if you are not available, then you may be genuinely self-employed.

Question 21

What cases support the Gig economy?

Answer 21

Aslam and Others v Uber BV and Others:

ET confirmed that Uber drivers are workers, making them entitled to receive national minimum wage and holiday pay.

Johnson v Transopco UK Ltd.

the EAT upheld the decision that a taxi driver was self-employed. Although the personal service test was met, the driver was not subject to control by the operator in how or when they provided services, nor how frequently.

In Knight v Fairway & Kenwood Car Service Ltd (2012).

there was no obligation on the employee to work at all. Knight could work or not as he wished with no adverse consequences provided that he paid rent to his employer. He also had to give his employer appropriate notification when he could not work. It was clear from looking at the agreement that Knight had not been employed under a contract of employment, despite the fact that there had been some mutual terms.