SGS 10 – Settlement Agreements
SGS 1 – Employment Status and Working Time
Self-Employment vs Employment vs Worker
Self-Employment vs Employment
Stage 1: Define employee
s.230(1) and (2) ERA – defines employee as ‘an individual who has entered into or works under a
contract of employment’. A contract of employment is then defined as a ‘contract of service’.
This is not particularly helpful, and so a number of tests have developed through case law.
Stage 2: The criteria for deciding whether someone is an employee or not are set out in Ready Mixed
Concrete
Answer structure: Go through each part of the test and say x would point to them towards being
employee, however x would point them towards self-employed - making mini conclusions after each
factor.
Autoclenz Ltd – form over label , reality of the situation is more important than the written contract.
Personal service
Set out in Ready Mixed Concrete : obligation on the individual to perform the work themselves.
To help you decide if they have the obligation , you can see if there is a right to substitute:
Ready Mixed Concrete – did not have to drive the lorry personally, could employee a
substitute driver to do so.
However, if there is a limited power to appoint substitutes, then they person may still be an
employee:
o Tanton - if unfettered, points against employee as no personal service
o Macfarlane - if the right to substitute is fettered, this is not necessarily inconsistent
with an employee. Facts: to be allowed to substitute, claimant had to be unable to
attend (rather than just preferring not to); and his choice of substitute was limited
o Whether or not the power to substitute is used is not a deciding factor, instead
deciding factor seems to be: Potter – even though the replacement had to be
1
,SGS 10 – Settlement Agreements
suitable, and sometimes client rejected proposed substitute, because P could
substitute for any reason (instead of because he was unavailable like in Macfarlane),
therefore he was self-employed.
Also, possibly consider whether personal performance is the dominant feature of the
agreement: Pimlico
Control
Can the company control what the individual does, and where, how and when it is done?
Greater element of control the employer exerts, more likely that they are employee
Examples of high levels of control: clocking in system control when work is done, requirement that
the individual reports to the same place of work every day (with no flexibility) shows control over
where the work is done, setting of targets/requirement to attend team meetings to work output
control over what work is undertaken, and how.
With highly skilled workers, unlikely employer controls exactly how the work is done (e.g. solicitor
uses their own knowledge and skill), but there will be control over what cases etc.
Uber case – Facts: uber claimed that they were a technology company, drivers had flexibility to work
when they want, and therefore uber were agents. Drivers argued they were workers. ET looked at
the control exercised, as Uber controlled key information n such as passengers’ destination and
could take disciplinary action against drivers. Also, relevant that Uber decides fair and payment
doesn’t go directly to driver. Uber could not be said to be a customer or client of the drivers. Reality
was that the drivers contracted with Uber to personally perform work for Uber
Mutuality of obligations
Is there an obligation on the company to provide work and for the individual to perform work when
given it?
*Second most important fact*
Leading case: Carmichael – no mutuality as guides were not obliged to accept work when offered,
even though they were provided uniforms, and hold high levels of control.
Other factors - economic reality and integration tests
Economic reality
Does the individual take a degree of financial risk? If yes, then SE
Does the individual profit from sound management of tasks? If yes , then SE
Is the individual paid through PAYE or does he or she provide an invoice for services? If
PAYE, then E
Does the individual hire his or her own helpers? If yes, then SE
Who provides the materials and the equipment? If provides for self, then SE
Is there a prohibition on working for others? If yes, then E
How have the parties described their relationship? But Autoclenz
Integration test - How much is the person part of the organisation, integration points towards
employee
Is the individual paid holiday or sick pay?
Is the individual subject to the company’s disciplinary or grievance procedure?
2
,SGS 10 – Settlement Agreements
Does the individual wear the uniform of the company and/or appear to the outside
world to be an employee of the company?
To what extent is the individual ‘part and parcel’ of the company (e.g. attending
company social events, training sessions, team meetings)?
Giving notice to terminate may point towards employee
Agency Workers
In an agency scenario, you could be asked to see if there is contract of employment between the
Agency worker (A), the agency (B) or the end-user (C), or is A just self-employed and the customer is
B.
Dacas - worker can be employee of end user, even though no contract between them. Worker must
belong to somebody
James confirmed in Tilson and Smith- this case being authority for the fact that in agency worker
cases, a contract of employment should be implied where it is necessary to do so. It was not
necessary in James as the written contracts clearly said that the agency worker was not employed by
either B or C. So, unless paperwork governing relationships are unclear as to the individual’s status,
then there is no necessity in finding a relationship.
However, agency worker may receive benefits from AWR below.
Stage 3: FINAL CONCLUSION: they are an employee/self-employee because they meet/or fail to
meet the personal test, control test, mutuality of obligations test, other factors including the
economic reality test and integration test.
Zero Hour Contract
A contract in which the employer does not guarantee the individual any work. The employer offers
the individual work when it arises, and the individual can either accept or decline.
Under a zero-hour contract, an individual will benefit from the level of employment protection
associated with their status (employee, worker or self-employed) as considered above. AN ET will
see the contract as starting point but will look at the test above to decide the reality. E.g. if reality
follows the zero-hour contract, then unlikely to be employment relationship as there is no MofO, but
the individual may be a worker.
Agency Worker Regulation 2010
Came into force on 1 October 2011. The AWR give specific rights to agency workers
‘Day one’ rights: Under regulations 12 and 13, from the first day of an assignment, an agency worker
must be able to access a hirer’s (end user) collective facilities and amenities, for example, a staff
canteen or crèche, and must have access to information about the hirer’s job vacancies
Equal treatment rights: Under regulation 5, after completion of a 12-week qualifying period with the
same hirer, an agency worker will be entitled to the same rights to pay, benefits, rest periods and
holidays as comparable employees or workers engaged directly by the hire
Breach of AWR? Under R17 and 18 a worker can bring a claim that either the day one rights, or equal
treatment rights have been infringed. Time limit? three months from the date of infringement.
3
,SGS 10 – Settlement Agreements
Remedy? An ET can make a declaration that the AWR have been breached and can award such
compensation as it considers just and equitable.
Working Time Regulations 1998
Is the individual covered by the regulation? The regulation covers workers, and Reg.2 defines
workers as those who work under a contract of employment or any other contract to personally
provide any work or services to another person/party. The provisions of the regulations are implied
into every contract.
Issue and Stat Reference?
48 Hour Reg 4(1) A worker’s working time, including overtime, in any reference period shall
Working not exceed an average of 48 hours for each seven days.
Week The reference period shall be 17 weeks, unless there is an agreement which
says otherwise, or he has worked less than 17 weeks (Reg 4(3)).
Because there is a reference period, this means if one week the 48 hour
rule is broken, there may not be a breach of the WTR, a breach will only
become evident once 17 weeks have been worked and an average can be
calculated
Working time? Reg 2 defines it as when the employee is working, at the
employer’s disposal and carrying out his activities or duties. On call
workers: Simap and Jaeger - time spent by doctors on call at hospital
premises (even when asleep) counted as “working time”, if they are
required to be present and available at the workplace rather than at home.
Confirmed in MacCartney. Peripatetic workers: Tyco – for peripatetic
workers who are not assigned a fixed place of work, time spent travelling
between their home and the premises of their first and last customers of
the day was working time because they were at their ‘employer’s disposal’
during these times.
By written agreement workers may opt out of the 48-hour working week -must be
voluntary. This is only area of opt out allowed (reg 4(1)). Employers must keep
records of the names of workers who have opted out.
Paid Amount: Reg 13 (1) and Reg 13A(1) and (2) provide that workers are entitled to 5.6
Annual weeks paid annual leave (equating to 28 days for a full-time worker – only
Leave weekdays). This is pro-rated for a part time worker. This 5.6 week includes the 8
bank holidays (unless agreement says otherwise). Reg 16 workers must be paid at a
rate of a week’s pay for each week’s leave.
Payment in lieu: Reg. 13(9)(b) An employer may not pay a worker in lieu of
permitting him to take annual leave, except on termination of his employment
Rollover: Reg. 13(9)(a) An employer may not allow a worker to roll over any part of
his holiday entitlement under the Regulations to the next holiday year. All annual
leave must be taken in that annual leave year, unless there is contractual leave
which goes above the 5.6 weeks or accrual and sick leaves rule apply (see below).
Notice: Reg 15(1) a worker must give notice to his employer of his intention to take
leave. (4)(a) This notice must be at least twice as long as the amount of leave
requested. (2)(b)If the employer refuses the request, he must serve a counter-
notice on the worker and (4)(b) this counter-notice must be at least as long as the
4
, SGS 10 – Settlement Agreements
number of days’ leave refused. (2)(a) the employer may require the worker to take
all or part of his leave on certain dates and must give the worker notice of that and,
(4)(a) notice must be at least twice as long as the amount of leave requested.
Accrual of annual leave (during sick periods): Stringer – (1) entitlement to paid
holiday does accrue whilst an employee is absent on sick leave, BUT (2) it is for the
member states to decide whether workers may take their holiday while they are on
sick leave – in E&W workers can take paid statutory holiday during periods of long
term sick leave, (3) after termination of the contract, workers are entitled to a
compensatory payment to reflect accrued but untaken holiday leave, even where
the worker was on sick leave for the full holiday year.
Carrying over annual leave to next year due to sickness: Schulte and Plumb –
interpretation of Reg. 13(9) is that Leave to which a worker is entitled under this
regulation may be taken in instalments, but – (a) it may only be taken in the leave
year in respect of which it is due, save that it may be taken within 18 months of the
end of that year where the worker was unable or unwilling to take it because he
was on sick leave and as a consequence did not exercise his right to annual leave.’
Part-time workers and bank holidays: part-time workers who do not work on
Monday, will receive proportionately less leave than a part-time worker who does
work on a Monday and full-time workers. This could offend Part Time Workers
Regulations 2000, so government guidance is work out how many bank holidays a
part-time worker should be entitled to and then compare that to the number of
bank holidays which that worker will actually take off. If there is a shortfall, the part
time worker should be allowed to take that shortfall as holiday during the holiday
year in question
Rest Daily rest: Adult workers are entitled to 11 consecutive hours’ rest in each 24-hour
Periods period (Reg. 10(1)).
Weekly rest: Adult workers are entitled to a rest period of 24 hours in each seven
day period (Reg. 11(1)).This can be changed to two uninterrupted periods of 24
hours in 14 days or one uninterrupted rest period of 48 hours in 14 days (Reg.11(2))
Rest breaks: After six hours at work, a worker is entitled to a rest break no shorter
than 20 minutes and should be away from workstation (Reg. 12(1) and (3)).
Night Work 1. What is the definition of night time? Under the Regulations, night time means a
period of seven hours which includes midnight to 5am (Reg. 2). Employer can
decide whether night time is 11pm to 6am, or 12pm to 7am ,etc.
2. Who is a night worker? A night worker is an individual who, on the majority of
days on which he works, works at least three hours during night time (Reg. 2)
3. What is the limit on the number of hours which a night worker is able to work?
Night workers’ (as defined in question 2 above) normal hours of work should
not exceed an average of eight hours in every 24 hours during a 17-week
period.
Night worker are entitled to free health assessments at regular intervals
Exceptions Reg 20 - those workers whose working time: (i) is not measured or pre-
determined; or (ii) can be determined by the workers themselves are excluded
from the 48-hour week, rest periods/breaks and hours of work for night workers.
Examples of such workers include managing executives and others with
5
SGS 1 – Employment Status and Working Time
Self-Employment vs Employment vs Worker
Self-Employment vs Employment
Stage 1: Define employee
s.230(1) and (2) ERA – defines employee as ‘an individual who has entered into or works under a
contract of employment’. A contract of employment is then defined as a ‘contract of service’.
This is not particularly helpful, and so a number of tests have developed through case law.
Stage 2: The criteria for deciding whether someone is an employee or not are set out in Ready Mixed
Concrete
Answer structure: Go through each part of the test and say x would point to them towards being
employee, however x would point them towards self-employed - making mini conclusions after each
factor.
Autoclenz Ltd – form over label , reality of the situation is more important than the written contract.
Personal service
Set out in Ready Mixed Concrete : obligation on the individual to perform the work themselves.
To help you decide if they have the obligation , you can see if there is a right to substitute:
Ready Mixed Concrete – did not have to drive the lorry personally, could employee a
substitute driver to do so.
However, if there is a limited power to appoint substitutes, then they person may still be an
employee:
o Tanton - if unfettered, points against employee as no personal service
o Macfarlane - if the right to substitute is fettered, this is not necessarily inconsistent
with an employee. Facts: to be allowed to substitute, claimant had to be unable to
attend (rather than just preferring not to); and his choice of substitute was limited
o Whether or not the power to substitute is used is not a deciding factor, instead
deciding factor seems to be: Potter – even though the replacement had to be
1
,SGS 10 – Settlement Agreements
suitable, and sometimes client rejected proposed substitute, because P could
substitute for any reason (instead of because he was unavailable like in Macfarlane),
therefore he was self-employed.
Also, possibly consider whether personal performance is the dominant feature of the
agreement: Pimlico
Control
Can the company control what the individual does, and where, how and when it is done?
Greater element of control the employer exerts, more likely that they are employee
Examples of high levels of control: clocking in system control when work is done, requirement that
the individual reports to the same place of work every day (with no flexibility) shows control over
where the work is done, setting of targets/requirement to attend team meetings to work output
control over what work is undertaken, and how.
With highly skilled workers, unlikely employer controls exactly how the work is done (e.g. solicitor
uses their own knowledge and skill), but there will be control over what cases etc.
Uber case – Facts: uber claimed that they were a technology company, drivers had flexibility to work
when they want, and therefore uber were agents. Drivers argued they were workers. ET looked at
the control exercised, as Uber controlled key information n such as passengers’ destination and
could take disciplinary action against drivers. Also, relevant that Uber decides fair and payment
doesn’t go directly to driver. Uber could not be said to be a customer or client of the drivers. Reality
was that the drivers contracted with Uber to personally perform work for Uber
Mutuality of obligations
Is there an obligation on the company to provide work and for the individual to perform work when
given it?
*Second most important fact*
Leading case: Carmichael – no mutuality as guides were not obliged to accept work when offered,
even though they were provided uniforms, and hold high levels of control.
Other factors - economic reality and integration tests
Economic reality
Does the individual take a degree of financial risk? If yes, then SE
Does the individual profit from sound management of tasks? If yes , then SE
Is the individual paid through PAYE or does he or she provide an invoice for services? If
PAYE, then E
Does the individual hire his or her own helpers? If yes, then SE
Who provides the materials and the equipment? If provides for self, then SE
Is there a prohibition on working for others? If yes, then E
How have the parties described their relationship? But Autoclenz
Integration test - How much is the person part of the organisation, integration points towards
employee
Is the individual paid holiday or sick pay?
Is the individual subject to the company’s disciplinary or grievance procedure?
2
,SGS 10 – Settlement Agreements
Does the individual wear the uniform of the company and/or appear to the outside
world to be an employee of the company?
To what extent is the individual ‘part and parcel’ of the company (e.g. attending
company social events, training sessions, team meetings)?
Giving notice to terminate may point towards employee
Agency Workers
In an agency scenario, you could be asked to see if there is contract of employment between the
Agency worker (A), the agency (B) or the end-user (C), or is A just self-employed and the customer is
B.
Dacas - worker can be employee of end user, even though no contract between them. Worker must
belong to somebody
James confirmed in Tilson and Smith- this case being authority for the fact that in agency worker
cases, a contract of employment should be implied where it is necessary to do so. It was not
necessary in James as the written contracts clearly said that the agency worker was not employed by
either B or C. So, unless paperwork governing relationships are unclear as to the individual’s status,
then there is no necessity in finding a relationship.
However, agency worker may receive benefits from AWR below.
Stage 3: FINAL CONCLUSION: they are an employee/self-employee because they meet/or fail to
meet the personal test, control test, mutuality of obligations test, other factors including the
economic reality test and integration test.
Zero Hour Contract
A contract in which the employer does not guarantee the individual any work. The employer offers
the individual work when it arises, and the individual can either accept or decline.
Under a zero-hour contract, an individual will benefit from the level of employment protection
associated with their status (employee, worker or self-employed) as considered above. AN ET will
see the contract as starting point but will look at the test above to decide the reality. E.g. if reality
follows the zero-hour contract, then unlikely to be employment relationship as there is no MofO, but
the individual may be a worker.
Agency Worker Regulation 2010
Came into force on 1 October 2011. The AWR give specific rights to agency workers
‘Day one’ rights: Under regulations 12 and 13, from the first day of an assignment, an agency worker
must be able to access a hirer’s (end user) collective facilities and amenities, for example, a staff
canteen or crèche, and must have access to information about the hirer’s job vacancies
Equal treatment rights: Under regulation 5, after completion of a 12-week qualifying period with the
same hirer, an agency worker will be entitled to the same rights to pay, benefits, rest periods and
holidays as comparable employees or workers engaged directly by the hire
Breach of AWR? Under R17 and 18 a worker can bring a claim that either the day one rights, or equal
treatment rights have been infringed. Time limit? three months from the date of infringement.
3
,SGS 10 – Settlement Agreements
Remedy? An ET can make a declaration that the AWR have been breached and can award such
compensation as it considers just and equitable.
Working Time Regulations 1998
Is the individual covered by the regulation? The regulation covers workers, and Reg.2 defines
workers as those who work under a contract of employment or any other contract to personally
provide any work or services to another person/party. The provisions of the regulations are implied
into every contract.
Issue and Stat Reference?
48 Hour Reg 4(1) A worker’s working time, including overtime, in any reference period shall
Working not exceed an average of 48 hours for each seven days.
Week The reference period shall be 17 weeks, unless there is an agreement which
says otherwise, or he has worked less than 17 weeks (Reg 4(3)).
Because there is a reference period, this means if one week the 48 hour
rule is broken, there may not be a breach of the WTR, a breach will only
become evident once 17 weeks have been worked and an average can be
calculated
Working time? Reg 2 defines it as when the employee is working, at the
employer’s disposal and carrying out his activities or duties. On call
workers: Simap and Jaeger - time spent by doctors on call at hospital
premises (even when asleep) counted as “working time”, if they are
required to be present and available at the workplace rather than at home.
Confirmed in MacCartney. Peripatetic workers: Tyco – for peripatetic
workers who are not assigned a fixed place of work, time spent travelling
between their home and the premises of their first and last customers of
the day was working time because they were at their ‘employer’s disposal’
during these times.
By written agreement workers may opt out of the 48-hour working week -must be
voluntary. This is only area of opt out allowed (reg 4(1)). Employers must keep
records of the names of workers who have opted out.
Paid Amount: Reg 13 (1) and Reg 13A(1) and (2) provide that workers are entitled to 5.6
Annual weeks paid annual leave (equating to 28 days for a full-time worker – only
Leave weekdays). This is pro-rated for a part time worker. This 5.6 week includes the 8
bank holidays (unless agreement says otherwise). Reg 16 workers must be paid at a
rate of a week’s pay for each week’s leave.
Payment in lieu: Reg. 13(9)(b) An employer may not pay a worker in lieu of
permitting him to take annual leave, except on termination of his employment
Rollover: Reg. 13(9)(a) An employer may not allow a worker to roll over any part of
his holiday entitlement under the Regulations to the next holiday year. All annual
leave must be taken in that annual leave year, unless there is contractual leave
which goes above the 5.6 weeks or accrual and sick leaves rule apply (see below).
Notice: Reg 15(1) a worker must give notice to his employer of his intention to take
leave. (4)(a) This notice must be at least twice as long as the amount of leave
requested. (2)(b)If the employer refuses the request, he must serve a counter-
notice on the worker and (4)(b) this counter-notice must be at least as long as the
4
, SGS 10 – Settlement Agreements
number of days’ leave refused. (2)(a) the employer may require the worker to take
all or part of his leave on certain dates and must give the worker notice of that and,
(4)(a) notice must be at least twice as long as the amount of leave requested.
Accrual of annual leave (during sick periods): Stringer – (1) entitlement to paid
holiday does accrue whilst an employee is absent on sick leave, BUT (2) it is for the
member states to decide whether workers may take their holiday while they are on
sick leave – in E&W workers can take paid statutory holiday during periods of long
term sick leave, (3) after termination of the contract, workers are entitled to a
compensatory payment to reflect accrued but untaken holiday leave, even where
the worker was on sick leave for the full holiday year.
Carrying over annual leave to next year due to sickness: Schulte and Plumb –
interpretation of Reg. 13(9) is that Leave to which a worker is entitled under this
regulation may be taken in instalments, but – (a) it may only be taken in the leave
year in respect of which it is due, save that it may be taken within 18 months of the
end of that year where the worker was unable or unwilling to take it because he
was on sick leave and as a consequence did not exercise his right to annual leave.’
Part-time workers and bank holidays: part-time workers who do not work on
Monday, will receive proportionately less leave than a part-time worker who does
work on a Monday and full-time workers. This could offend Part Time Workers
Regulations 2000, so government guidance is work out how many bank holidays a
part-time worker should be entitled to and then compare that to the number of
bank holidays which that worker will actually take off. If there is a shortfall, the part
time worker should be allowed to take that shortfall as holiday during the holiday
year in question
Rest Daily rest: Adult workers are entitled to 11 consecutive hours’ rest in each 24-hour
Periods period (Reg. 10(1)).
Weekly rest: Adult workers are entitled to a rest period of 24 hours in each seven
day period (Reg. 11(1)).This can be changed to two uninterrupted periods of 24
hours in 14 days or one uninterrupted rest period of 48 hours in 14 days (Reg.11(2))
Rest breaks: After six hours at work, a worker is entitled to a rest break no shorter
than 20 minutes and should be away from workstation (Reg. 12(1) and (3)).
Night Work 1. What is the definition of night time? Under the Regulations, night time means a
period of seven hours which includes midnight to 5am (Reg. 2). Employer can
decide whether night time is 11pm to 6am, or 12pm to 7am ,etc.
2. Who is a night worker? A night worker is an individual who, on the majority of
days on which he works, works at least three hours during night time (Reg. 2)
3. What is the limit on the number of hours which a night worker is able to work?
Night workers’ (as defined in question 2 above) normal hours of work should
not exceed an average of eight hours in every 24 hours during a 17-week
period.
Night worker are entitled to free health assessments at regular intervals
Exceptions Reg 20 - those workers whose working time: (i) is not measured or pre-
determined; or (ii) can be determined by the workers themselves are excluded
from the 48-hour week, rest periods/breaks and hours of work for night workers.
Examples of such workers include managing executives and others with
5
