Week 1 – Intro and Employment Status
Sources of employment law:
- Common Law
- Legislation (recent)
o Trade Union and Labour Relations (Consolidation) Act 1992
o Employment Rights Act 1996
o Equality Act 2010
o EU Legislation – consider Brexit
▪ Article 157 TFEU - equal pay for male and female workers for equal
work or work of equal value is applied’ overrides inconsistent national
law
▪ Employees who work for a private sector can rely on EU directives
that haven’t been properly implemented
• EU Withdrawal Act - When interpreting retained EU law after
Brexit, UK courts and tribunals will not be bound by any
decisions made on or after exit day – ‘but may have regard to
so far as is relevant’
- Codes of Practice
o Produced by ACAS
▪ Duties of ACAS
• Encouraging settlement of employment disputes
• Carrying out pre-claim conciliation
• Issuing codes of practice
o Not legally binding – more of guidance
o Can be used as evidence
Institutions of Employment Law
- Employment Tribunals (not a court, more formal, designed for members of public to
represent themselves successfully)
o Employment Appeal Tribunal (EAT)
o Further appeals go to normal court system (CA, SC)
- Trade Unions – aim to improve workplace conditions for employees (pay)
- Advisory, Conciliation, and Arbitration Service (ACAS)
o Equality and Human Rights Commission (EHRC)
UK Labour Market is very flexible (63% full time employees with shift to more flexible work,
26% part time and 15% self-employed – increasing variety of employment status with GIG
economy with roles such as Deliveroo/Uber)
,Employment Status
= first thing to work out when dealing with a query (different Nat Insurance contributions)
Hall (Inspector or Taxes v Lorimer [1994] - Court of Appeal stated that determining status
was like “painting a picture from the accumulation of detail”
- Employee
o Traditional status – pays income tax
o Entitled to redundancy payment
- Worker
o Pay tax under different scheme
o Taylor Review scheme suggested there should be a new categorisation of
‘dependent contractor’ – give basic rights eg sick pay
- Self-employed = contract ‘for service’ compared to employment contract ‘of’
o Uber say this is what their workers are (GIG Economy) giving them few rights
Employee
s230(1) “Employee” “an individual who has entered into or works under (or
Employment where the employment has ceased, worked under) a
Rights Act 1996 contract of employment”
(ERA 1996)
s230(2) ERA 1996 “Contract of “a contract OF service or apprenticeship, where express or
– for definition of employment” implied, and (if it is express) whether oral or in writing”. (if
COE there is a contract FOR services, they are self-
employed/independent contractor)
Sham contracts
Autoclenz v Belcher [2011] UKSC 41
• In writing - ‘the subcontractor hereby confirms that he is a self-employed
independent contractor’
• BUT in practice – they were in full-time work since 1991 with uniform & materials
• Held: courts do not take agreement at face value, but will consider all circumstances
to consider true nature of agreement. Here, it was acknowledged that the employee
did not have much power and it was indeed an employee relationship rather than
self-employed
• ‘the true agreement will often have to be gleaned from all the circumstances
of the case, of which the written agreement is only a part’ (para. 35)
,TEST FOR EMPLOYEE STATUS
Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance
(1968) = Multiple factor test
has developed recently but 3 things must be found to determine employee status:
1) Personal service
a. Member of staff must be required to perform work personally
b. Employers add ‘substitution clause’ into staff contracts to enable them to
substitute staff in for them
i. Express and Echo – delivery driver contract had substitution clause,
and driver had legitimately got others to deliver newspapers so was
not an employee as no personal service
ii. Autoclenz – if delegatory powers are not used in practice by
employee then this will be considered, despite substitution clauses
existing in contract, allowing an employee status to exist
iii. McFarlane v Glasgow CC – gym instructor’s substitution clause had
conditions attached (illness, and substitute had to be from approved
list). Tribunal held that there was still personal service and thus
employee.
2) Mutuality of obligation
a. Two way obligations – employee must do work and employer must provide
work and pay for work
i. Stringfellow Restaurants v Quashie – lapdancer had agreement that
she was an ‘independent contractor’ (self-employed) but she wanted
to argue that she was an employee (controlled by rota, had to book
holidays). However, she did not have a set wage as customers would
pay in a ‘heavenly money’ voucher which was subject to deductions
by the club. CA found no mutuality of obligation as risks lay with the
dancers (no obligation to provide work as men show up)
ii. St Ives Plymouth Ltd v Haggerty - sufficient mutuality of obligation to
be an employee – despite no obligation to accept offers of work the
claimant had an exception that she would be offered a reasonable
amount of work.
iii. Little v BMI Chiltern Hospital– employer could and did send porters
home during a shift without paying for those hours and so negated
the mutuality of obligation – ‘as and when required’ was the wording.
(applied Stephenson)
3) Control
a. Employee must be under control of Employer
i. Concrete Case definition – ‘employer has power of deciding thing to
be done, the way, means, time and place’
ii. Montogomery v Johnston Underwoods Ltd [2001]– control requires a
general ultimate direct authority over an employee in the
performance of his work
iii. White and Another v Troutbeck SA – must address cumulative effect
of the total of provisions in any written agreement and the
circumstances of the relationship created by it – so not just whether
the worker has day to day control over their own work.
, iv. Enfield Technical Services Limited v Payne; Grace v BF Components
Limited [2008]- individuals who characterise themselves as self-
employed but who are actually employees can still bring unfair
dismissal claims (these contracts were not illegal, as failing to
categorise employment status correctly does not make the contract
illegal)
Will also consider:
• Nature and length of the engagement.
• Degree of integration into business.
• Who provides and maintains the tools or equipment used.
• Whether the person hires their own help.
• The degree of financial risk adopted.
• The degree of investment in and management of the business.
• Whether the individual has the opportunity to profit from their own good
performance.
• Pay and benefits.
• Whether the person is paid a fixed wage or salary.
• Whether the person is paid when absent due to holiday or sickness
Umbrella Contracts
Secretary of State for Justice v Windle [2016] EWCA Civ 459 – absence of an umbrella
contract for a series of assignments
- “the fact that a person supplying services is only doing so on an assignment-to-
assignment basis may tend to indicate a degree of independence, or lack of
subordination, in the relationship while at work which is incompatible with
employee status”
Worker (employee is also a worker)
s230(3) “worker” “an individual who has entered into or works under (or, where the
ERA 1996 employment has ceased, worked under):
1) A contract of employment [so if you’re an employee you’re also
a worker]; or
2) 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 that of a client or customer of any profession or
business undertaking carried on by the individual.”
1) ‘any other contract’ – does not have to be contract of employment, but must meet
basic contract law rules with employer
o Offer, acceptance and consideration
2) ‘personal service’ – worker has to personally perform service under contract
Sources of employment law:
- Common Law
- Legislation (recent)
o Trade Union and Labour Relations (Consolidation) Act 1992
o Employment Rights Act 1996
o Equality Act 2010
o EU Legislation – consider Brexit
▪ Article 157 TFEU - equal pay for male and female workers for equal
work or work of equal value is applied’ overrides inconsistent national
law
▪ Employees who work for a private sector can rely on EU directives
that haven’t been properly implemented
• EU Withdrawal Act - When interpreting retained EU law after
Brexit, UK courts and tribunals will not be bound by any
decisions made on or after exit day – ‘but may have regard to
so far as is relevant’
- Codes of Practice
o Produced by ACAS
▪ Duties of ACAS
• Encouraging settlement of employment disputes
• Carrying out pre-claim conciliation
• Issuing codes of practice
o Not legally binding – more of guidance
o Can be used as evidence
Institutions of Employment Law
- Employment Tribunals (not a court, more formal, designed for members of public to
represent themselves successfully)
o Employment Appeal Tribunal (EAT)
o Further appeals go to normal court system (CA, SC)
- Trade Unions – aim to improve workplace conditions for employees (pay)
- Advisory, Conciliation, and Arbitration Service (ACAS)
o Equality and Human Rights Commission (EHRC)
UK Labour Market is very flexible (63% full time employees with shift to more flexible work,
26% part time and 15% self-employed – increasing variety of employment status with GIG
economy with roles such as Deliveroo/Uber)
,Employment Status
= first thing to work out when dealing with a query (different Nat Insurance contributions)
Hall (Inspector or Taxes v Lorimer [1994] - Court of Appeal stated that determining status
was like “painting a picture from the accumulation of detail”
- Employee
o Traditional status – pays income tax
o Entitled to redundancy payment
- Worker
o Pay tax under different scheme
o Taylor Review scheme suggested there should be a new categorisation of
‘dependent contractor’ – give basic rights eg sick pay
- Self-employed = contract ‘for service’ compared to employment contract ‘of’
o Uber say this is what their workers are (GIG Economy) giving them few rights
Employee
s230(1) “Employee” “an individual who has entered into or works under (or
Employment where the employment has ceased, worked under) a
Rights Act 1996 contract of employment”
(ERA 1996)
s230(2) ERA 1996 “Contract of “a contract OF service or apprenticeship, where express or
– for definition of employment” implied, and (if it is express) whether oral or in writing”. (if
COE there is a contract FOR services, they are self-
employed/independent contractor)
Sham contracts
Autoclenz v Belcher [2011] UKSC 41
• In writing - ‘the subcontractor hereby confirms that he is a self-employed
independent contractor’
• BUT in practice – they were in full-time work since 1991 with uniform & materials
• Held: courts do not take agreement at face value, but will consider all circumstances
to consider true nature of agreement. Here, it was acknowledged that the employee
did not have much power and it was indeed an employee relationship rather than
self-employed
• ‘the true agreement will often have to be gleaned from all the circumstances
of the case, of which the written agreement is only a part’ (para. 35)
,TEST FOR EMPLOYEE STATUS
Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance
(1968) = Multiple factor test
has developed recently but 3 things must be found to determine employee status:
1) Personal service
a. Member of staff must be required to perform work personally
b. Employers add ‘substitution clause’ into staff contracts to enable them to
substitute staff in for them
i. Express and Echo – delivery driver contract had substitution clause,
and driver had legitimately got others to deliver newspapers so was
not an employee as no personal service
ii. Autoclenz – if delegatory powers are not used in practice by
employee then this will be considered, despite substitution clauses
existing in contract, allowing an employee status to exist
iii. McFarlane v Glasgow CC – gym instructor’s substitution clause had
conditions attached (illness, and substitute had to be from approved
list). Tribunal held that there was still personal service and thus
employee.
2) Mutuality of obligation
a. Two way obligations – employee must do work and employer must provide
work and pay for work
i. Stringfellow Restaurants v Quashie – lapdancer had agreement that
she was an ‘independent contractor’ (self-employed) but she wanted
to argue that she was an employee (controlled by rota, had to book
holidays). However, she did not have a set wage as customers would
pay in a ‘heavenly money’ voucher which was subject to deductions
by the club. CA found no mutuality of obligation as risks lay with the
dancers (no obligation to provide work as men show up)
ii. St Ives Plymouth Ltd v Haggerty - sufficient mutuality of obligation to
be an employee – despite no obligation to accept offers of work the
claimant had an exception that she would be offered a reasonable
amount of work.
iii. Little v BMI Chiltern Hospital– employer could and did send porters
home during a shift without paying for those hours and so negated
the mutuality of obligation – ‘as and when required’ was the wording.
(applied Stephenson)
3) Control
a. Employee must be under control of Employer
i. Concrete Case definition – ‘employer has power of deciding thing to
be done, the way, means, time and place’
ii. Montogomery v Johnston Underwoods Ltd [2001]– control requires a
general ultimate direct authority over an employee in the
performance of his work
iii. White and Another v Troutbeck SA – must address cumulative effect
of the total of provisions in any written agreement and the
circumstances of the relationship created by it – so not just whether
the worker has day to day control over their own work.
, iv. Enfield Technical Services Limited v Payne; Grace v BF Components
Limited [2008]- individuals who characterise themselves as self-
employed but who are actually employees can still bring unfair
dismissal claims (these contracts were not illegal, as failing to
categorise employment status correctly does not make the contract
illegal)
Will also consider:
• Nature and length of the engagement.
• Degree of integration into business.
• Who provides and maintains the tools or equipment used.
• Whether the person hires their own help.
• The degree of financial risk adopted.
• The degree of investment in and management of the business.
• Whether the individual has the opportunity to profit from their own good
performance.
• Pay and benefits.
• Whether the person is paid a fixed wage or salary.
• Whether the person is paid when absent due to holiday or sickness
Umbrella Contracts
Secretary of State for Justice v Windle [2016] EWCA Civ 459 – absence of an umbrella
contract for a series of assignments
- “the fact that a person supplying services is only doing so on an assignment-to-
assignment basis may tend to indicate a degree of independence, or lack of
subordination, in the relationship while at work which is incompatible with
employee status”
Worker (employee is also a worker)
s230(3) “worker” “an individual who has entered into or works under (or, where the
ERA 1996 employment has ceased, worked under):
1) A contract of employment [so if you’re an employee you’re also
a worker]; or
2) 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 that of a client or customer of any profession or
business undertaking carried on by the individual.”
1) ‘any other contract’ – does not have to be contract of employment, but must meet
basic contract law rules with employer
o Offer, acceptance and consideration
2) ‘personal service’ – worker has to personally perform service under contract
