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Defining the Employment Relationship

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Defining the Employment Relationship Defining the Employment relationship Who is an ‘employee’? - There can be no binding precedent for any category of workers. - Use existing case-law to draw analogies between similar categories of worker. - Different criteria will apply depending on the context e.g. vicarious liability, health and safety, social security, income tax. Statutory definition Employment Rights Act 1996, section 230 - (1) ‘Employee’ = individual who has entered into or works under a contract of employment. - (2) ‘Contract of employment’ = a contract of service/apprenticeship, whether express or implied, and whether oral or in writing. - ‘Worker’ defined in (3) ‘Contract gateway’? ERA + common law à employee status turns on establishing a contract of service, as opposed to a contract for services (which indicates the person is performing work as an independent contractor). Common law ‘3 step’ approach used by Mckenna J in Ready Mixed Concrete: 1. Is there a ‘wage-work’ bargain? 2. Has the employee agreed that he will be subject to the employer’s control to a sufficient degree? -Control = necessary but not determinative. -Nowadays, with modern working conditions – it cannot be sole indicator. -But still very important: - Humberstone v Northern Timber Mills: “does ultimate authority over the man in the performance of his work reside in the employer so that he was subject to the latter’s order and directions”. -Lack of control does not negate employee status (e.g. skilled workers – may have very little supervision yet still be employees) -Extensive control does not guarantee employee status (Queensland Stations, approved in Ready Mixed Concrete). 3. Are the other provisions of the contract consistent with it being a contract of service? But, there is no decisive test for employee status Courts have considered following factors: - Whose business it is o Montreal v Montreal Locomotive – Fourfold test involving control, ownership of tools, chance of profit and risk of loss. - Integration o Stevenson, Jordan and Harrison Ltd v Macdonald and Evans – Denning: “In a contract of service a man is employed as part of the business + his work is an integral part of the business but under a contract for services his work, although for the business, is not integrated into it but only accessory to it”. - Economic reality o US v Silk – who bears the financial risk? o An employee who has nothing to invest in an enterprise beyond the time he puts in + who sells his services to only one “customer”, the employer, is economically dependent upon that work. An independent contractor is not normally dependent upon only one customer, but rather, being in business for herself. o Stringfellow Restaurants v Quashie – lap dancer subject to ‘club agreement’ + ‘house rules’, weekly rota, had to book for holidays. § Provided own costumes + could work elsewhere on non-scheduled days § No ‘wage’ – just fees from customers out of which she had to pay tips to the floor manager § Services dispensed with after 80 weeks + she claimed UD § EAT: She was self-employed: took risk of earning nothing + she dealt with tax + holiday pay. No strict rules on which factors to be considered or their relative weight, but case law can assist… Ready Mixed Concrete v Minister of Pensions: - Is Mr Latimer, a truck driver delivering RMC concrete, an employee for the purposes of social security contributions? - Court considered: o ‘Whenever and Wherever’ clause – depending on availability o Could not use truck for any other purpose o Uniform o Company had strict control over maintenance of the vehicle - BUT: o Ownership of assets o Result-based remuneration – paid on mileage basis, per amount of concrete delivered o System for appointing substitute driver – administered by owner drivers only o Freedom to choose where to buy fuel - Held: Independent contractor. Contract = contract of carriage, not contract of employment. Market Investigations Ltd v Minister of Social Security - Is Mrs Irving, an interviewer for a market research company, an employee for the purposes of social security contributions? - Company only had a handful of permanent interviewers but most interviewers (Mrs I) were only engaged for particular assignments. - Is she in business on her own account? i.e. owns equipment, hires own helpers, bears financial risk? - Pro- Employee status: o Extent + degree of control o Imperative language of ‘Interviewer’s Guide’ + detailed engagement instructions for the particular survey - Against: o Company could not dictate when Mrs I should work o Could work for other employers if she wanted o No entitlement to sick pay or holidays - Held: Mrs I was an employee for the duration of her assignment. - Gives rise to concept of a series of contracts of service. - Obiter: ability to deploy skill + personality is frequently present in contracts of service. Broader approach: Lane v Shire Roofing Company (Oxford) Ltd - Mr L fell from ladder while repairing a roof. Did company owe him a duty of care in respect of his health and safety? - Court considered control + whose business was involved. - Public policy consideration – safety at work. - Held: Mr L = employee. Montgomery v Johnson Underwood - M = part-time receptionist, employed through employment agency. - Sought UD from agency + firm she worked for. - CoA: ‘control’ + ‘mutuality of obligation’ = ‘irreducible minimum’ for a contract of employment. - Held: No employee status - agency had lack of control over her. She had not ‘transmuted’ over time into an employee. Troutbeck SA v White & Todd (On control…) - Mummery LJ: should address cumulative effect of the provisions + circumstances of the relationship rather than treating absence of day-to-day control as determinative factor. EVOLVING CONTRACT WITH CLIENT OVER TIME? Motorola v Davidson - Skilled telephone repairer, recruited by agency to the client’s own specifications. - Worked wholly for client for 2yrs, entirely under its control + no contract with agency. - Client disciplined worker when concerned + effected termination through agency. - Complained for UD. - Held: There was an employment contract with the CLIENT. Also implied in Franks v Reuters ‘Umbrella’ contracts and the requirement of mutuality of obligation è “Casual” workers typically work on a series of short engagements/contracts, but lack a clear on-going relationship. è ‘Mutuality of obligation’ = obligation of the employer to offer work to the employee; and the obligation of the employee to do work for the employer. è Mutuality can ‘link up’ a series of shorter contracts of service, into a single overarching contract of employment. O’Kelly v Trusthouse Forte plc - ‘Regular casual’ waiters hired by hotel for short catering jobs. - Hotel kept a list of preferential casuals, who would be removed from list if ever refuse work. - Waiters claimed UD + that they had been employed under an overall, continuous contract. - In favour of employee status: holiday pay, ‘integration’ into the organisation (uniform, a specific ‘casuals’ handbook and were included in the company consultation process) + were under extensive control + supervision. - Against status: no sick pay, no fringe benefits and no company pension scheme. - ET + CoA: They were in business on their own account – ‘It was purely a commercial transaction for the supply + purchase of services for specific events’ o Did not matter that the casuals only worked for hotel –this was ‘their choice’. - Held: They were independent contractors. St Ives Plymouth v Haggerty - Book-binder kept on a bank of casual workers by a publisher + used regularly over considerable period of time. - Held: entitled to claim UD as overall umbrella contract had evolved due to conduct of parties, lengthy period of employment + ‘importance’ of work. Nethermere (St Neots) Ltd v Taverna & Gardiner - Outworkers making garments at home on piecework basis. - They claimed unfair dismissal. - Approach: ‘useful’ (but not ‘fundamental’) test: mutuality? - Held: Homeworkers were employees. - They had a regular, longstanding arrangement, even though not covered by a formal contract. Clark v Oxfordshire Health Authority - Clark had been a ‘Bank nurse’ + claimed UD, on the basis that she had been employed under a ‘global’ contract across various engagements. - ET found: o Though she never refused work, there was no obligation for her to accept work nor any obligation on the Authority to offer her work; o She was not entitled to any pay when she did not work, nor holiday or sick pay. - Held: No ‘global’ contract as lack of mutuality. Thus, C = not an employee across the whole period of claim. Express and Echo Publications Ltd v Tanton - Driver made redundant + sought a written statement of particulars of employment. - Clause of his contract gave him the right to provide a substitute driver. - Held: T = not an employee. Substitution clauses = ‘inherently inconsistent’ with employment status. o Personal service = an ‘irreducible minimum’ for a contract of employment. Rubenstein, M, ‘Highlights’ - This decision carries with it real danger of abuse. - Opens possibility for employers to draft contracts which will negate employment status for certain workers by including a substitution clause in their contracts. Carmichael v National Power plc - Could power station tour guides employed on an ‘as required’ basis, require a written statement of their terms of employment under s1 EPA (now ERA= only employees can require this). - Held: lack of mutuality (the ‘irreducible minimum’) as there was no contractual relationship with the company. Wilson v Circular Distributors - Mr W worked as a ‘relief area manager’ + claimed UD from CD. - Contract set out with many ‘employment-like’ features but which also stated ‘due to fluctuating workload of a RAM, there are no regular or guaranteed hours of work per work’. - Held: Mutuality present. ‘If there is work available it must be offered + when work is offered, we are quite satisfied that the terms of the contract require Mr W to undertake that work unless there is some very good reason’. Employee status. - For absence of mutuality, there has to be absence of obligations on both sides. Knight v BCCP - C worked for a taxi company for 6 weeks before being dismissed.
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