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Flashcards in Employment Status Deck (51)
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Location of definition of employee and summary...

s230 an individual who works under a contract of employment


Location of definition of contract of employment and summary...

s230(1) a contract of service orally or in writing


Location of definition of worker and summary...

s230(1) an employee or someone who is self-employed who carries out the work personally not under a contract


What is the WHOLE test for determining an individuals employment status? (in short)

Irreducible minimum
Common law tests


What is the irreducible minimum and what does it consist of?

1) Mutuality of obligation
2) Control
3) That other factors are consistent with the contract


What is the mutuality of obligation? What does it establish?

The obligation for an employer to provide work for a wage in exchange for a personal service performed by the employee

This determines if there is a contract at all


What case first recognised mutuality of obligation? + quote

Nethermere v Gardiner - 'there must be an irreducible minimum of obligation on each side to create a contract of service'


What happens once the mutuality of obligation has been established?

It must be determined if the individual is working under a contract of services (employee) or contract for services (self-employed)


Which case illustrates the courts determining the type of contract? + essential facts + comment on judgement

Carmichael v National Power
C argued she was an employee because she sometimes worked as much as 25 hours a week, tax and national insurance was deducted. Despite these facts pointed towards she was an employee, it was held she was not because she could turn down work, thus meaning there was a lack of mutuality of obligation

NB: this ruling opposes the earlier case of Nethermere, setting new precedent. This is to keep the law certain.


How do substitution clauses affect mutuality of obligation? (types + how)

If there is an unqualified substitution clause in the contract there will never be mutuality of obligation because they are under not obligation to perform the services themselves. Therefore, they are self-employed NOT an employee

If there is a qualified substitution clause they may be able to gain employee status. A qualified clause allow the employee to send someone else IF they are sick ect


Case which illustrates qualified substitution clause + ruling

Staffordshire Sentinel Newspapers Ltd v Potter - clause said, ‘can send a substitute if you are unable…’. He was an employee, this is because there was an irreducible minimum because a substitute could only be sent in certain circumstances. (i.e. normally he is personally providing the service)


Case which illustrates an unqualified substitution clause + ruling

Express & Echo Publications Ltd v Tanton - substitution clause said he could send someone else if he was unwilling or unable to work. 'Unwilling' meant he was never under an obligation to work, therefore, there was no mutuality of obligation and he was not an employee


Distinction of control between employee/self-employed

Employee: be told their work place, working hours, subject to employers rules and policies

Self-employed - determine their own working hours, work without supervision, not bound by the rules


How has the concept of control changed....

It is a contractual right to control (Troutbeck v White) opposed to everyday control (Concrete v National Insurance)


Case for contractual right to control....

Troutbeck v White


Case for everyday use of control....

Concrete v National Insurance


What does it mean if the irreducible minimum is satisfied?

What happens next?

This does not mean someone is an employee but it provides evidence that someone is

The common law tests will be applied by the tribunal to determine if the facts suggest the individual is an employee


What are the common law tests?



Explain the common law control test

(this is very similar to control under the irreducible minimum)

The greater level of control, the more likely they will be an employee

Ready Mix v National Insurance “control includes the power of deciding the thing to be done, the way in which it shall be done...and where it shall be done"

Troutbeck v White updated this test, it looks at a 'contractual right to control' opposed to every day control

The change bought by Troutbeck was needed because it wasn't applicable to highly skilled professions e.g. NHS and brain surgeons


Quote from Ready Mix v National Power...

“control includes the power of deciding the thing to be done, the way in which it shall be done...and where it shall be done"


Why was the integration test incorporated?

To expand on the control test and fix problems with it


What is the integration test?

the more valuable your skills are to the business the more likely you are to be an employee AND the more integrated they are the more likely they are to be an employee


Evidence of integration and valued skills...

Integration factors: if they have a desk, phone, uniform, if they are part of the hierarchy, on the telephone list, use of canteen facilities (basically anyway the potential employee uses the employers stuff)

Valued skills: if the make contracts for the employer, they are have specific IT software skills


What is looked at in the entrepreneurial test?

- Degree of investment or financial risk – if the risk is not yours you are an employee
- Do you hire your own helpers? – if yes, more likely to be self-employed.
- Do you provide your own equipment? If yes, you are self-employed.
- Degree of skill and training – the more unskilled the more likely you are to be an employee because you can’t sell your skills


Case exhibiting the entrepreneurial test + ruling

Airfix Footwear v Cope
Q was if she was an employee or not, D tried to argue because she had a skill (assembling shoes) and she was selling this skill to him, thus was not an employee. Tribunal held she was an employee.


What does the multifactorial test look at....

- The contract
- Control
- Obligation for employer/employee to provide/do the work (mutuality of obligation) MOST IMPORTANT
- Duty of personal service
- Provision of tools/equipment
- Tax/NI arrangements (may state you are self-employed, however courts may decide you are an employee (Airfix). This is persuasive, not decisive.


What is a sham contract?

A contract that doesn't reflect the reality of the situation


What case is relevant to sham contracts? + ruling

Autoclenz Ltd v Belcher - set out that both parties no longer need to be deceitful. If the contract doesn’t reflect the reality of the situation then it will be held to be a sham contract


Why do people want worker status?

Gain the statutory rights of a worker


What case is relevant to worker status? What was laid out?

Byrne Brothers v Baird - Courts had to determine if they were self-employed or employed to gain workers rights. Held they were NOT genuinely self-employed because they were dependant on the company.

It laid down the test to help determine if someone is self employed:
a. Did the individual undertake to personally perform work or services?
b. Was the status of the ‘employer’ under the contract that of a customer of a business undertaking carried on by the individual?
c. Was there mutuality of obligation between the ‘employer’ and the individual?