The Concept of Employment
1. Why is employment status important? Should it be?
It is important because the contract of employment act 1963- gives employees rights- this only applies to emloyees not self employed people.
Statutory Protection- only for employees
Implied terms in the contract to protect employee
Vicarious liability- the employer is responsible for the employee but not for independent contractor. Therefore, employment status si important in order to place fault.
Tax and NI contribution- self employed gain tax benefits- so need to be able to distinguish in order for people not to take advantage.
Employees and social benefit- employees get certain social benefits.
2. With reference to decided case-law (which you will be expected to discuss) - what are the main “indicators” of employment status?
Statutory Protection: employment rights act 1996 s.230 (1) and s.230 (2)
Contract of services- employee contract
Contract for services- self employed contract
Common Law Tests
O'kelly v Trusthouse Forte the question of whether someone is an employee is a question of fact rather than a question of law
Ferguson v Dawson & Partners The parties have attempted to define contractual status of an employee/ independent contractor? the basic rule is that the conduct of the parties prevails over the contract.
4 MAIN TESTS
A) Control test
Yewens v Noakes: based on servants who are controlled by masters.
Ready Mixed Concrete v minister for pension control “included the power of deciding the thing to be done, the means to be employed in doing it, the time when and the place when it shall be done”.
B) The integration Test
Eg: doctors and nurses- fully integrated but not employees
Stevenson, Johnson and Harrison v Mcdonald &Evans ‘under a contract of service, a man is employed as part of the business and his work is done as an integral part of the business; whereas under a contract for services his work, although done for the business, is not integrated into it but is only accessory to it.'
c) The economic reality test
Market Investigations ‘The fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes, " then the contract is a contract for services. If the answer is "no," then the contract is a contract of service. Control (…) can no longer be regarded as the sole determining factor'
Lee v Chung deemed to be an employee even though he turned up with his own equipment at a building site.
Hall v Lorimer he was deemed to be self employed because he an office at home, short terms contracts and he was not provided with any equipment, didn't contribute to the costs or have a share in the dividends.
d) Mutuality of obligation test
First level - exchange of work and remuneration
Second level - exchange of mutual obligation for future performance
O'Kelly v Trusthouse - ET: neither employees / global employment contract. EAT: Agreed with ET- it made a contract of services.
Clark v Oxfordshire - nurse bank-only came in when she needed to be in at work, contract even stated no guarantee of work for her. COA - no contract of employment
Carmichael v national power plc- tour guides. No penalty if they refused to work. ET refused to find global employment contract. COA- entitled to a determination because of their contract of employment and HOL - upheld ET's decision that they were not obliged to accept work and not guaranteed that casual work would be available therefore no global contract.
Hope for casual workers:
Cornwall v Prater- tutor was an employee during each engagement as she could establish continuity of employemtn even though no global contract
Nethermere v Gardiner- Part time home workers sewing pockets onto trouser. No fixed hours for working, paid according to amount sewn. Did amount to contract of employment - legal obligation present.
e) Multifactor test: Ready mixed concrete.
‘The fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes, " then the contract is a contract for services. If the answer is "no," then the contract is a contract of service. Control (…) can no longer be regarded as the sole determining factor'
3. What legal protection exists for ‘atypical workers'? Is it adequate?
Frank v Reuter the contract should have atleast considered whether a contract could have been implied.
Dacas v brooks street bureau Dacas claimed unfair dismissal agains the council and agency but she dropped it against the council and just took it to the agency. The ET said if she had upheld it against the council then she could have implied a contract between council and Dacas.
Cable & wireless plc v Muscat The employer dismissed the employee and hired him thrioug and agency and paid himn through the agency but this was only an administrative convenience. EAT : implied contract could be inferred/.
James v London b. of Greenwich Cant just imply a contract because a person has worked there for a long time, only if the agency is a sham, like in Muscat.
4. Tracy and Steven live in Happyville, a seaside resort on the South Coast popular with retired people and families who often came to take in the fresh sea air and walk along the golden sands. Tracy and Steven both work for the local Council. Tracy works as a secretary, but was supplied to them by the ‘Back Street Bureau' employment agency. Her job is described as ‘temporary' but she has been working there three mornings a week for just over a year now. She recently discovered that she is pregnant and wants to take advantage of the wonderful maternity rights on offer at the Council.
Steven works ‘as required' as a tour guide on the yellow ‘hop on and off' tour buses. When he does work, he has to wear a ‘nasty' pale green uniform and is paid at a flat hourly rate by credit transfer, with income tax and national insurance deducted. He does not receive sick pay, holiday pay or pension entitlement. He recently had an argument with a pensioner on the bus and was dismissed without warning that same day. He wants to claim unfair dismissal and race discrimination.
Advise Steven and Tracy of their employment status (you do not need to concern yourself with the merits of their claims).