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Employment Law Notes
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EMPLOYMENT LAWUNIT 1
Relevant statutes;
● Equality Act 2010
● Employment Rights Act 1996
Institutions and organisations that are relevant to employment law
● Employment Tribunal ‘ET”
● Employment Appeal Tribunal “EAT”
● Advisory, Conciliation and Arbitration Service “ACAS” - free and impartial information
and advice to employers and employees on all aspects of workplace relations and
employment law.
There are three categories of employment status:
● Employee
● Worker
● Self-employed
Self-employed people have very few employment rights - they are in business working for
themselves and choose the potential financial rewards and increased independence,
freedom and flexibility over the reassurance of protected employment rights.
Workers rights have been created largely as a consequence of our membership of the EU.
Workers have a variety of rights which they share with employees such as minimum wage,
max working hours, paid annual leave etc. It is true to say that workers have more rights
than those who are self-employed but not as many as employees.
The employer will have the administrative burden of deducting tax and NI at source from
their employees and accounting to HMRC.
An employer has to provide a pension scheme for their employees and will need to provide
certain benefits such as maternity or adoption leave.
An employer will need to be mindful of minimum wage and obligations to employees and
workers whereas, if a business is dealing with a self-employed person, there will be
complete freedom to contract for whatever payment the parties agree.
It is important to be able to determine employment status as this will establish their rights
and obligations. The starting point for any definition (employed, worker, SE) is to see if it is
dealt with by statute.
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,EMPLOYEES
S.230(1) of the Employment Rights Act 1996 defines an employee “as an individual
who...works under... a contract of employment.”
S.230(2) defines a contract of employment as “a contract of service...whether express or
implied, and (if it is express) whether oral or in writing”.
What does a “contract of service” mean?
In employment situations, an individual will either be engaged under a contract of service
or a contract for services which means that they have agreed to provide specific services
under a self-employed basis (they are in business on their own account).
Over the years various tests have been developed to determine whether someone is
employed or self-employed. One of the key cases is
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance
[1968] 2 QB 497
From this case stems a three basic requirements all of which must be satisfied for the
arrangement to be classed as a contract of service:
1. The employee must be under an obligation to provide a ‘personal service’ that is to
do the work personally so they cannot send someone else to do the work in their
place.
2. There must be a ‘mutuality of obligation’ between the employer and employee.
3. The employee must be subject to the ‘control’ of the employer. This means that to
be an employee, the worker must be subject to an employer’s supervision and
orders.
These three things are also referred to as the irreducible minimum
CASE LAW
1. Perform the work personally
● Express & Echo Publications Ltd v Tanton [1999] IRLR 367
○ A has a clause in his contract allowing him to provide a substitute if he is
unable OR unwilling to work.
● MacFarlane v Glasgow City Council [2001] IRLR 7
○ A has a clause in his contract allowing him to provide a substitute if he is
unable to work.
● James v Redcats (Brands) Ltd [2007] IRLR 236
○ This concerned a term that allowed for a substitution during holidays and
sickness and this was deemed to still require personal service and so was
still indicative of employee status as it fell within inability as opposed to
unwillingness to perform.
Important note to distinguish the significance between these cases - If the individual need
not perform work when they are unwilling, then there is never truly an obligation to perform
it and so there is no requirement of personal service. But if relief from duties is only
possible when an individual is unable to do the work, it follows that he must personally do
the work if he is able and therefore, they be an employee.
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,2. Mutuality of Obligation
● Is there an obligation:
○ On an individual to work? AND
○ On the other party to provide or pay for it?
CASE LAW
2. Mutuality of Obligation
● Cotswold Developments Construction Ltd v Williams [2006] IRLR 181
○ The focus should be on whether there is some obligation on an individual to
work and some obligation upon the other party to provide and pay for it.
● Wilson v Circular Distributors Ltd [2006] IRLR 38
○ Even if the employer was not obliged to supply work at all times, there still
could be a contract of employment if the individual was required to work
when required to do so.
3. Control
This required the employee to comply with
● Internal procedures
● Reasonable management orders
● The processes of the employer
Generally speaking these are the minimum requirements (the irreducible minimum) to be
an employee however, the court/ tribunal will consider a number of other factors. These are
particularly important where specialist, professional/ skilled workers are involved because
they might not meet the ‘control’ test.
Other factors include:
● Does the worker use their ‘own equipment’?
● “Own helpers’
● ‘Financial risk’ - who bears the responsibility or extra cost?
● Degree of ‘Investment and management’
● Terms of agreement relating to pay, holidays, discipline etc
WORKERS
S.230(3) Employment Rights Act 1996 - “Worker...means an individual who has entered into
or works under…
(a) A contract of employment, or
(b) Any other contract, whether express or implied and (if it is express) whether oral or in
writing, whereby the individual undertakes to do or perform personally any work or
services for another party to the contract whose status is not by virtue of the contract
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, that of a client or customer of any profession or business undertaking carries on by
the individual;”
Based on this definition of a worker, it means that an employee is also covered by the
definition of a worker. This means that any rights or obligations imposed on a worker apply to
employees. But who else is covered?
S.230(3)(b) ERA 96, - widens the definition of a worker beyond just employees. If an
individual is in a contractual relationship where they provide work for the other party, even if
they do not meet the test of an employee, they might be a worker. If so, they will be entitled
to certain rights such as paid holiday, min wage etc.
CASE LAW
Clyde and Co v Bates van Winkelhof [2014] 3 All ER 225
● Case of a whistleblower who sought protection as a worker under the Public
Interest Disclosure Act 1998
● The Supreme Court held that the defendant was a worker under s 230(3) of the
Employment Rights Act 1996
Differentiating between employees and workers
i) Are all employees workers? No
ii) Give an example of someone who might be a worker rather than an employee. An agency
worker
iii) Does a worker have a right to paid annual leave? Yes
iv) Does a worker have protection against unfair dismissal? No
CASE LAW
Autoclenz Limited v Belcher and others [2011] UKSC 41
Facts:
● The claimants were car valeters working for Autoclenz on a piecework basis. They
bought their own materials and uniforms from Autoclenz. They paid for their own
business insurance. They paid income tax and NI on a self-employed basis.
● Autoclenz then required the car valeters to sign contracts which contained a
substitution clause, allowing the car valeters to provide substitutes to do their work.
● The contract also gave the car valeters the right to refuse work and stated that the
relationship between them and Autoclenz was that of the client and independent
contractor.
● Autoclenz expected any car valeter not coming to work to give notice of absence
● The car valeters were ignorant of their right to provide substitutes and had never
done this.
Legal Questions:
● Were the car valeters workers as defined by the Working Time Regulations and the
National Minimum Wage Regulations?
● Could the terms of the written agreement between the car valeters and Autoclenz
be disregarded because it did not reflect the true intention of the parties?
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