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Employment Law Lecture Notes
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Detailed lecture notes on employment law. Features case law, examples and detailed descriptions
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EMPLOYMENTLAW
, Week 1 – Employment Status & Contract of Employment
Employment Status
There are 3 main types that fall into the bracket of ‘status’ –
1. Employee – have the most protection and rights
2. Worker – falls in the middle of employee and self-employed. Less rights than employee but
more than a self-employed person
3. Self-employed – rights are much more limited
1. Employee
Defined by S 230(1) Employment Rights Act (ERA) 1996 as “…an individual who has entered into or
works under… a contract of employment”
Requires a contract of employment to be in place – must be, expressly or impliedly, an offer,
acceptance, consideration and an intention to make legal relations.
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] –
FACTS - a driver contracted with a mixed concrete company for delivery of concrete. Contract
declared him an ‘independent contractor’ and set out wages and expenses. Driver was to
purchase his own vehicle, yet with a requirement that the vehicle be painted in company colours.
He was to drive the vehicle himself but under a compliance with the company’s rules including the
manner of vehicle repairs and payments.
ISSUES – the question arose as to whether the driver was an ‘employed person’ under a contract
of service with the company for the purposes of the National Insurance Act 1965
DECISION – firstly the Court held that whether a contract creates a ‘master and servant’
relationship between an employer and employee is determined on the basis of contractual rights
and duties, and that the nomenclature used in the contract is irrelevant. Thus, the fact that the
contract termed the driver to be an ‘independent contractor’ is not material. Secondly, the Court
held that employment under a contract of service exists when –
1. A person agrees to perform a service for a company in exchange for remuneration, and
2. A person agrees, expressly or impliedly, to subject himself to the control of the company
to a sufficient degree and render the company his ‘master’, including control over the
task’s performance, means, time, and
3. The contractual provisions are consistent with ordinary contracts of service
On the facts, the Court held that the driver had insufficient freedom in the performance of his
contractual obligations as he was free to decide the vehicle, his own labour, fuel, and other
requirements in the performance of the task. In lieu of these freedoms, he was an independent
contractor and not an employee of the company.
Things to Consider
Mutual obligation – obligation on the employer to provide work to the employee and pay them
for that work. Obligation of employee is to perform that work.
Personal service – Does that person actually have to do the work involved? Look into the
circumstances of any powers of performance or personal service. If you have the absolute right to
substitute another person to do the job or perform the work/service for you, this is inconsistent
with the idea/need of personal service. If it is more of a conditional right to substitute another
person, that may or may not be inconsistent with personal performance.
where you are an employee, you cannot send someone else to do your role, it is for you to do that
task. (Pimlico Plumbers Ltd v Smith [2017]) – in this case, the C of A reviewed the existing
,authorities in relation to personal service in a case about whether plumbers were workers or
independent contractors and summarised the basic principles:
1. An unfettered right to substitute another person to do the work or perform the services is
inconsistent with an undertaking to do so personally.
2. A conditional right to substitute another person may or may not be inconsistent with
personal performance depending upon the conditionality. It will depend on the precise
contractual agreements and the nature and degree of any fetter on a right of substitution
or, using different language, the extent to which the right of substitution is limited or
occasional.
3. By way of example, a right of substitution only when the contractor is unable to carry out
the work will, subject to any exceptional facts, be consistent with personal performance.
4. By way of example, a right of substitution limited only by the need to show that the
substitute is as qualified as the contractor to do the work, whether or not that entails a
particular procedure, will, subject to any exceptional facts, be inconsistent with personal
performance.
5. By way of an example, a right to substitute only with the consent of another person who
has an absolute and unqualified discretion to withhold consent will be consistent with
personal performance.
If only the contractor is able to carry out the work, that will be consistent with personal service =
employee.
Integration – whether the person whose employment status is in question markets their services
to the world. Or have they been recruited by a company to do work which is integral to their
operation? Have they been integrated? Not a test which is always appropriate. Sometimes court
have looked at what is the dominant purpose or feature of someone’s employment.
Economic reality – this test is more relied upon when it considers several factors in order to
determine whether there is an employer and employee relationship.
Those factors can include:
Remuneration by way of payment of wages or salary,
Membership of company pension scheme,
Holiday pay,
Payment when absent illness,
Prohibition on working for competitors,
Control by employer’s disciplinary code and
Work done on employer’s premises rather than at home.
Market Investigations ltd v Minister of Social Security [1969] –
FACTS – a woman was engaged by a market research company to act as an interviewer on a part-
time basis. For each particular survey, she would conduct interviews in exchange for payment. She
was required to work a certain number of days at a time during each occasion, following a
comprehensive ‘Interviewer’s Guide’ and comply with other contractual terms.
ISSUE - The question arose as to whether she was an ‘employed person’ under a contract of
service.
DECISION - Firstly, the Court stipulated that employment is determined by the degree and extent
of control hat a company exercises over a person’s performance of the task to show a ‘master and
servant’ relationship.
Secondly, the Court held that in order to distinguish between a contract ‘of service’ and ‘for
, services’, the test to be applied is whether the person is engaging the services ‘as a person in
business on his own account’. Considering the surrounding circumstances and contractual
provisions, if the answer is ‘no’, the person is an employee under a contract ‘of service’.
On the facts of the case, the Court placed weight on the way in which the company exercised
control over, for example, the technique of the interviewing, subjects of the interviews, content
of the interviews, questionnaires, forms and other details concerning the performance of the task
and the way in which the woman was not conducting the business on her own account but on
behalf of the company. Accordingly, Court held that she as an employee under a ‘contract of
service’
Control – Montgomery v Johnson Underwood Ltd [2001] – C of A confirmed that for a contract of
service to exist there had to be control, that control is a separate factor, and no less important
than mutuality of obligation when considering whether there is a contract of service. Control
requires general ultimate direct authority over an employee in the performance of his work.
Control in itself, however, is not conclusive: an independent contractor can agree to submit
himself to the same control as an employee without actually becoming an employee, and many
employees will, by virtue of seniority for example, be subject to very little control.
Relevant documents – contract, personnel documents, office manuals, policies and procedures
Do the terms of the contract accurately reflect the relationship that there is between the parties?
If employment contract calls you a worker but it’s quite clear that you are an employee, court will
infer that you are an employee.
There is no one test that will give you the answer, you have to consider all of the circumstances
and come to a conclusion that best fits.
Other matters to consider –
How is the individual paid?
Who pays tax and National Insurance?
Who provides tools and equipment?
How integral to the business is the individual’s role?
Is the individual paid for sickness and holiday?
Where does the economic risk lie?
How did the parties view the relationship at the outset?
How was the arrangement terminable?
2. Worker
Defined by S 230(3) Employment Rights Act (ERA) 1996 –
“an individual who has entered into or works under…
(a) A contract of employment
(b) Or by any other contract, whether express or implied… oral or in writing, whereby the
individual undertakes to do or perform personally any work or services for another”
Also requires a contract of employment to be in place
Usually casual workers with less structured employment such as agency workers or those on 0
hour contracts
Uber BV v Aslam [2021] – there was no written contract, the nature of their legal relationship had
to be inferred from the parties’ relationships. There are 5 main factors –
1. Uber that sets the fare, drivers are unable to change it and Uber dictates how much
drivers are paid
2. The contract terms are imposed by Uber and drivers have no say in them
3. Once a driver has logged onto the Uber app, the driver’s choice about whether to accept
request for rides is constrained by Uber
4. Uber exercises significant control over the drivers
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