The boundaries between employees, workers and self-employed
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Course
Employment Law (LAW3020)
Institution
Newcastle University (NCL)
Arguments to support and counter-arguments will be critically reviewed during the course of this essay to conclude that the way in which law divides the workforce into employees, workers and self-employed needs to be improved because of the lack of sufficiency of the tests of common law resulted in...
The constantly changing boundaries between employees, workers and self-
employed have led to a demand that traditional concepts be re-examined and that
employment law classifications be simplified.1 The distinction between various types
of the workforce has become increasingly significant because entitlement to
legislative benefits is defined by classifying workers into one category. Therefore, the
courts should establish more transparent and coherent common law. Arguments to
support and counter-arguments will be critically reviewed during the course of this
essay conclude that the way in which law divides the workforce into employees,
workers and self-employed needs to be improved because of the lack of sufficiency of
the tests of common law resulted in the denial of constitutional rights for the working
class. Furthermore, the major implications will be considered and a few
recommendations for reform will be made.
WHAT THE LAW IS AT THE MOMENT AND WHY IT NEEDS TO BE
SIMPLIFIED?
Common law defines three types of workforce: employees, workers and self-
employed individuals, each of whom has varying levels of protection and rights under
the law. The boundary between self-employed, workers and employees has become
particularly significant because legal rights and obligations rely on what kind of
working arrangement occurs. The boundary between employees and self-employed is
defined by statute, but it is rather narrow. Much of the instruction is identified in case
law, where the courts have established several common law tests to help them define
the employment status. Specifically, four tests are commonly used: ‘control’,
‘integration’, ‘business reality’, and ‘mutuality of obligation’. 2 These tests are
followed by several factor considerations such as the payment mode, the duration and
stability of the job arrangement and how administrative and complaint processes are
covered.3 The weight that courts give to each consideration continues to be a matter of
discretion.4 The mutuality of responsibility test is utilised in some situations, while the
1
Judy Fudge, Eric Tucker & Leah F Vosko, ‘Changing Boundaries in Employment: Developing a New
Platform for Labour Law’ (2003), Vol 10 No 3, Canadian Labour and Employment Law Journal
2
Simon Deakin & Gillian S Morris, Labour Law (2nd edn, Butterworths 1998)
3
Brendan Burchell, Simon Deakin & Sheila Honey, The Employment Status of Individuals in Non-
standard Employment (DTI 1999)
4
ibid
1
, control test is adopted in others, leading to a failure to 'achieve consensus' about what
constitutes an ‘employee’ and how it differs from a worker or a self-employed
individual.5
As stated above, the distinctions between worker, employee, and self-employed have
become increasingly blurred as time has passed. The courts' use of ever-evolving
case law tests to draw a rational boundary to cope with the shifting complexity of
working relationships has added to the ambiguity. In the case of Young and Wood Ltd
v West, the court specifically stated that it retains the discretion to determine
employment status on a case-by-case basis.6 In reality, the case of O'Kelly stresses
that the ruling is founded on a combination of fact and statute, emphasizing that
judges accept all of the details of the case but are not necessarily bound by precedent. 7
As a consequence, case law has been unpredictable, resulting in contradictory
proceedings reaching varying decisions based on the same evidence. Workers are now
discovering that they must appear in court to figure out whether they are entitled to
contractual rights and there is no real definition or concept for them or their
employers to rely on.
Moreover, legislative strategies have struggled to solve issues of employee and self-
employed classification. Both categories have never been entirely established in law,
and the legal distinction between employment and self-employment does not lead to a
straightforward distinction between them.8 It has been said that ‘the meaning and
measure of self-employment is somewhat of an enigma.’ 9 Not only is the gap between
employers and self-employed impossible to discern, but also self-employed people
vary the spectrum to the point that self-employer as a unitary group is impossible to
understand.10 Only the basic concept of worker has been defined in s.230 (3) ERA as
‘an individual who has entered into or works under a contract of employment or any
other contract [...] 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
5
Douglas Brodie, ‘Mutual Trust and Confidence: Further Clarification’ (2011), Vol 37 No 4, ILJ, 329-
346
6
Young and Wood Ltd v West [1980] IRLR 201
7
O'Kelly v Trusthouse Forte plc [1983] ICR 728
8
Burchell, Deakin & Honey (n 3)
9
Robert L. Aronson, Self-Employment: A Labor Market Perspective (ILR Press 1991) 11
10
Fudge, Tucker & Vosko (n 1)
2
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