The Identification of Employees

It is important to distinguish between an employee and independent contractor due to several reasons. Firstly, under the Employment Right Act 1996 there are rights and protections which is given for a person who an employee and not enjoy by self-employed person. Typically, an employee who has been terminated from a contract of employment could claim a remedy either for wrongful dismissal or unfair dismissal. An employee is entitled to bring an action for breach of contract (wrongful dismissal) to recover any loss or damages provided there is a relevant breach of contract and the requirements of causation, remoteness and mitigation are satisfied.[9] An employee is also entitled to bring an action for unfair dismissal which only eligible if the employee was at least one year’s continuous employment. [10] However, there is no such qualifying period of continuous employment when it comes to automatically unfair dismissal.[11] The employee must prove the fact of the dismissal and was unfairly dismissed in either the dismissal is actual, constructive[12] or deemed. An employee may claims a remedy for unfairly dismissed in form of reinstatement,[14] re-engagement order [15] or compensation.[16] An independent contractor is not entitle to claim these remedies.

Besides that, The employee who was made redundant may claims for redundancy payment or may additionally claim for unfair dismissal it the redundancy did not meet good industrial practice standards.[18]

Secondly, there are implied terms imposed to a person who works under contracts of employment. Implied terms in the way the terms and duties stated under the Employment Right Act 1996 and common law. One of the implied terms is the obligations of employer towards the employee. For instance, employer obligates and owes the duty to pay the wages to the employees whether or not the work is provided.[6] The employers also owe the same duty to respect and maintain the trust and confidence of the employees, as in Malik v. Bank of Credit and Commerce International [1997]. The employer also has an obligation to provide the employee with safe working condition, it means they must take a reasonable step to make sure the employee feel safe and secure while doing their job. These implied terms are not working to an independent contractor.

Third way, the employer can be vicariously liable for torts committed by his/her employee in the course of employment. The employer is implied a duty under tort to take reasonable care of his/her employees. Generally, the duty of care is comprised in particular of three matters. If the employer fails to do so, it could cause to breach of the contract which enable the employee to bring action. An employer will not liable for torts committed by independent contractor unless due to special circumstances. [23]

For various reasons mentioned before, the courts have had to distinguish between employee and independent contractor through several tests which assist in explaining the nature of employment.

The court had used the control test in early practices. The control test is questioning on who has the right to control the servant (worker)? The issue arrived on the degree to what extant the employer control over the employees’ work. Generally, the employee is told not only what he/she needs to do but also how it is done. [24] The reason behind this degree is because the independent contractor may be told on what he/she need to do but how it is done is on his/her own concern. In Yewens v. Noakes [1880] where Bramwell LJ stated ‘A servant (employee) is a person subject to the command of his master (employer) as to the manner in which he shall do his work.’ [25] However, the control test had evolved in later case of Walker v. Crystal Palace Football Club [1910], Walker was employed as a professional footballer with the defendant club and it has become important to decide whether Walker would be categorized under contract of service or contract for service. The court held that he was employed under contract of employment because the club has a control in form of training, discipline and methods of play.[26]

Nevertheless, if the control test is interpreted in modern working practices, it is insufficient due to the existence of highly skilled by the professional workers and makes detailed control impossible. The professional may perform the job on their own judgments due to their extra knowledge which no other person has it. Yet, the problem comes onto when there is injured party as a result of their negligence at work.[26] Thus, it led to integration test.

Integration test or organization test is looking into whether the job is part of the contribution to the profit of the company. The test stated that if a person as a part of the organization and his work is performed as an integral part of the organization, then he is under a contract of service, whereas under a contract for service, although the job is done for the organization, it is not an integral part of that organization, but is barely an accessory to it. [27] This was illustrated in Stevenson Jordan and Harrison Ltd v. MacDonald and Evans [1952]. Besides, this test is helpful in determining the professional’s position where there is obviously no right of control over the method of performance as in Cassidy v. Ministry of Health [1951]. [28] However, the question arrived on what the word ‘integration’ is meant because Lord Denning never explained on it. [29] Consequently, the multiple test was developed.

Multiple test or economic reality test indicates the nature of employment by considering a wider view and factors including wearing of uniform, provision of took holiday/ sick pay entitlements, use of substitute labour, method of remuneration, etc.[30] In Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and National Insurance [1968], the owner-drivers were occupied by RMC to deliver concrete and arranged for them to buy lorries from the company on hire purchase. The lorries were painted in RMC’s colours and drivers had to wear the company’s uniform. The company claims that the drivers were independent contractors, but Ministry of Pensions claims that drivers were employees and the company was liable for insurance contributions. This case was heard by MacKenna J and applied three-point test to determine the drivers’ status. First, did the employees agree to provide work and skill in consideration of a wage or other remuneration? Second, did the employees agree expressly or impliedly to subject to the other’s control in a sufficient degree to make the other master? Third, were there any terms in contract which were consistent with its being a contract of service? In this case, it was held that there were factors which were inconsistent with contract of service, thus the drivers were independent contractor. [31] Later the decision was criticized in the case Market Investigations Ltd v. Minister of Social Security [1969]. [32]

Further, there was a development in court test known as mutuality obligation test which indicates the status of casual or part-time workers by looking into the result of the existence of a contract of employment, in where both employer and employee must have obligations in respect of one another. In O’Kelly v. Trusthouse Forte plc [1983], it was held that casual workers were self-employed because there was no mutuality of obligations between both parties, as the employer was not obliged to provide work and the casual workers were not obliged to offer their services. [33]

As a conclusion, employee may regarded as a person who do the job on the basis of serving his/her employer, whereas, independent contractor may regarded as a person who do the job on his own account. The distinction between both of them become important for the purpose of benefits and rights which only enjoy by a person who is entitled as an employee. The courts have developed various tests throughout the years to determine the nature of employment where at the end neither one could adequately satisfy the employment status but the tests could be compromised along together to get the better answer to explain the status of the worker in particular businesses.

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