With reference to case law, discuss the difficulties surrounding the legal tests used to identify a contract of employment.

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Steven Mather                        /

Employment Law

Coursework 1

Title

“Certainly there is no one factor which marks out a contract of employment. A factor which is important in one case may be insignificant or not present in the next”. (Michael Jefferson, Principles of Employment Law)

With reference to case law, discuss the difficulties surrounding the legal tests used to identify a contract of employment.

Word Guidance: 2000 Words

Hand in date: Monday November 17th 2003


Most people, I think, could answer the question “Are you an employee?”. Some people may answer yes, while others, those being self-employed, will reply in the negative. However, as simple the question appears, in law a positive result gives significant rights and obligations. It is imperative therefore that an employee be distinguished from a independent contractor. It is said that an employee works under a contract of service, whereas an independent contractor works under a contract for services. In my opinion, that distinction does nothing to help distinguish, indeed it perhaps confuses, the situation.

There are a multitude of rights that flow from being an employee which are not available to independent contractors. These include written particulars of employment; unfair dismissal, redundancy, equal pay, statutory sick pay and maternity rights; health and safety provisions; rights to statutory and contractual notice periods; social security payments; amongst many others. Therefore, it will generally be in the interest of the worker to be an ‘employee’, but in the interests of the employer for them to be ‘self-employed’ to avoid offering such rights. The exception is the perceived tax benefit of being self-employed, and it is for this reason many of the cases to be examined have come about.

The importance of distinguishing each type of worker has prompted the Courts over the years to develop a series of tests they can apply to discover the relationship between the parties. The Employee Rights Act 1996, s230(1) does provide a definition of an employee, but it is unsuitable for these purposes as it refers solely to a contract of employment and not the factors attributable to either type.

Control Test

Thus, the first test the courts created flowed directly from the test for Vicarious Liability. Based on the antediluvian idea of Master and Servant, it looked to the extent of control exercised by the employer over his ‘servant’. In Performing Rights Society v Mitchell and Booker, the test was determined by whether the employer controlled, or had the right to control, what the worker did and the manner in which the worker carried out their work.

In a modern working environment though, this test is clearly inadequate. An employee may be highly skilled and qualified, and employed for that reason, so the employer may often be in a position where he is unable to offer instruction as to how the work is to be done.

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In Hillyer v Governers of St Bartholomew’s Hospital, the court held that nurses were not employees of the hospital when carrying out theatre duties as they took instruction from the surgeon not the hospital authority. This judgement was heavily criticised, and effectively brought the end to the single factor control test.

Organisation Test

In Stevenson, Jordan and Harrison v MacDonald and Evans, Denning LJ suggested a more up-to-date test. An employee “is employed as part of the business and his work is done as an integral part of the business”, whereas an independent contractor “is not integrated ...

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