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An Employee or Not?

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Date added: 17-06-26

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An Employee or Not? ‘Although distinguishing between those working under a contract of service with those working under a contract for services is more important now than ever. We are still no closer to being able to conclude such a dispute with absolute certainty than we were over 100 years ago.’ This essay will focus on a fundamental area of Employment Law on whether someone is an Employee or Not? In this modern time of law reforms this area has throughout the years been focused on how it would be easier to distinguish between those who are working under a contract of service and those who are working under a contract for services. It is more important than ever for these two aspects of Employment Law to be distinguished and there be a clear answer that will reduce these disputes with complete certainty. There will be a brief illustration on what a contract of service is and what contract for services is. The differences will also be highlighted. Reference to cases, legislation and any other areas of law that are important will be used to form a supported conclusion in relation to the above statement. In order for an examination to be made from the above the statement. What makes a contract of service and what makes a contract for services must be explained and understood. It is hugely important that the difference between a contract of service and a contract for services as per Smith and Wood, “...The independent contractor may be in a better monetary position while working but at a grave disadvantage if he falls off a ladder or is sacked”[1] this idea was supported in Lane v Shire[2] where it can be seen that if there is an issue of safety involved then that court or tribunal should search for proof that the employee involved was a worker. The key here and when dealing with any questions involving these two very different aspects is the distinguishing factors of a contractor and an employee. The definition of a worker can be found on the Employments Rights Act[3] which states; “In this Act ‘employee’ means an individual who has entered into or works under…a contract of employment”. It should be noted here that a ‘contract’ of employment’ is where there is a contract of service or apprenticeship which once again has been set out in statute.[4] On the other hand as per the Trade Union and Labour Regulations a ‘worker’ means “an individual who works, or normally works or seeks to work (a) under a contract of employment, or (b) under any other contract whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his…”.[5] Per these two legislations it is already clear that there is fundamental difference between a worker = contract for service and an employee = contract of service. How does the court deal with this? In order for it to be absolutely clear what the person involved in the case falls under. There are a number of tests the court uses to classify the contractor or employee. The most common of the tests used and one which has become the traditional test when determining the employment status is the control test. A definition of this test can be found in Yewens v Noakes where it was stated, “a servant is a person subject to the command of his master as to the manner in which he shall do work”[6]. This at a first glance seems simple and this is justified when taking account of two specific cases; Mersey Docks and Harbour Board v Coggins and Griffith, and Walker v Crystal Palace Football Club. In both these cases it further evaluated the basic test set down in Yewens, these two cases outlined that, “If a worker is told what to do, but not how to do it, this would be a contract for services”.[7] However if each of these statements is stripped down it becomes clear that there are issues with this test and these issues suggest that the courts and tribunal are still no closer to being able to with absolute certainty conclude a case involving contract of services or a contract for service. The biggest issue here is the fact that in the last hundred years the modern era employers have come to rely on employees who control their own work without the employers input. Furthermore large companies have given out work to small independent contractors where the employer will tell them what, when, where and how to do the job. These two examples go against everything set out by the three cases above; moreover a very important case raised another issue. The case of Whittaker v Minister of Pensions suggest that, “…persons possessed of a high degree of professional skill and expertise…may nevertheless be employed…under contracts of service, notwithstanding that their employers can…exercise little, if any, control, over the way in which the skill is used”[8] This emphasizes the fact that where there is a higher required of skill there is a far less significant factor of control. There has been developments on the basic factors of the control test and these is not a series of factors that were suggested by the court in Park v Wilsons which also stated that, “the right to control the servant in the manner of doing his work is one of the most important tests of employment”[9], it must be noted here that this case does have a negative precedent meaning that it is negative law therefore not to be followed in cases that have the same facts or circumstances. However this case does show that the Courts and Tribunals are aware that the control test is not definite and in this particular case it has been highlighted that there has been effort to make the control test more concrete therefore more reliable to use. Due to the control test not being a hundred percent reliable there are a number of other tests that the courts can use to determine the statue of employment such as the Integration Test and the Multiple Test. The Integration test is fairly simple as it was formulated in Stevenson v MacDonald[10] where it was stated, “under a contract of service, a man is employed as part of the business and work is done as an integral part of the business” and “under a contract for services, the work, although done for the business, is not integrated into it but only an accessory to it”. Basically this test is all about asking the question – is the worker integrated into the organisation? It is pretty clear that this test cannot be used in these modern times due the nature of businesses where employees can work from home or that contractors are becoming a very huge piece of the work place engine, as well as including those higher skilled workers that have previously failed the control test[11]. Nevertheless besides the Integration Test the Multiple Test can be considered alongside the Control Test as being one of the most important tests when dealing with employment status. The Multiple test or as it is commonly known the contemporary approach the Multiple Factor/Basic Ingredients + Test was created due to the clear failures and inadequacies of all the single tests as seen above. The best example of this test is in Ready Mixed Concrete v Minister of Pensions[12], in this particular case it had to be considered whether seven hundred drivers were considered to be working under a contract for services or a contract of service. In this case there were a lot of criteria that became apparent. Not all of it was conclusive but they all had to be considered. This case heard that in order for the existence of a contract of service to exist there had to be three factors. A) The servant agreed in consideration of a wage of other remuneration to provide his own work and skill in the performance of some service for his master. B) The servant agreed expressly or impliedly that, in performance of the service he would be subject to the control of the other party sufficiently to make him the master. C) The other provision of the contract were consistent with its being a contract of service[13]. These three factors have to be present before a contract of service can be considered. If they are present then other factors that are considered to be relevant can be considered. The Ready case also was fundamental in illustrating the principle of delectus personae (choice of the person); this concept was missing from the Ready case. There has been modern interpretation of this concept in 2001 where it was stated that, “…was unable to take a class, she would contact a replacement from the register of coaches maintained by the responds, and arrange her class to be covered by a member on the register”[14] this goes along with a quote from the Byrne Bros case; “…unable to provide the services…[they]may provide an alternative worker to undertake the service but only having first obtained the express approval of the contractor"[15]. These two cases highlight just how far the law has come. As these cases highlight that in these modern times there is a more flexible interpretation allowed which goes against its very strict past. Where this would not be allowed as the old requirement was interpreted as being black or white and having no grey area (Strict) this can be seen when it first came about.[16] In conclusion even though it can be seen that there is still difficulty when dealing with contract of service and contract for services there has been a lot of change in the law that has reduced the courts originally strict view and greatly enhanced their interpretation skills allowing them to become more confident. As well as being easier for them to determine the employment statues. However this does not mean there are still not problems. There is and there always will be especially due to the complex nature of Employment Law. Nevertheless it can be seen that there has been an improvement and the law has come a long way in a hundred years. Although the courts cannot conclude a dispute with absolute certainty the presence of the new tests and legislation has allowed the courts and tribunals to make a decision with almost complete certainty. A hundred years is a long time ago with these new fundamental factors. Although with the constantly changing environment of law in general being an undermining issue there could be more changes on the way or the improvements made over a hundred years might be undone by a law itself there bringing employment status disputes back to the beginning. Final Word Count = 1,978 Final Word Count without footnotes = 1,825
[1] Smith and Wood, Industrial Law(6th Edn 1996) p9 [2] Lane v Shire Roofing Co (Oxford) Ltd (1995) [3] Employments Rights Act 1996 s230 [4] ibid [5] Trade Union and Labour Regulations (Consolidation) Act 1992 s296 [6] Yewens v Noakes (1880) 6 QBD 530 [7] Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd [1947] AC 1; Walker v Crystal Palace Football Club [1910] 1 KB 87 [8] Whittaker v Minister of Pensions and National Insurance [1967] 1 QB 156 [9] Park v Wilsons & Clyde Co Ltd (No 1) 1928 SC 121 [10]Stevenson, Jordan and Harrison Ltd v MacDonald and Evans [1952] 1 TLR 101 [11] Whittaker v Minister of Pensions and National Insurance [1967] 1 QB 156 [12] Ready Mixed Concrete v Minister of Pensions and National Insurance [1968] 2 QB 496 [13] ibid [14] MacFarlane v Glasgow City Council [2001] IRLR 7 [15] Byrne Bros (Formwork) Ltd v Baird [2002] IRLR 96 [16] Express & Echo Publications Ltd v Tanton [1999] IRLR 367
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