What is an Employee and Independent Contractor?

First of all, we need to identify whether the person is an employee or just a contract worker which is also known as independent contractor. Employee and independent contractor may do the same work but they both are different in the terms of employment law.

An employee is a person who performs the work for an employer under a verbal or written understanding where the employer gives direction or guidance on what has suppose to be done according to the employee’s job designation.

An independent contractor however, is a person who is doing an independent trade, business, or profession in which they offer their services to the public. The person who contracts or hire them for their services must have the right to control or direct only the result of the work, not the ways and methods of getting the result.

The employers only liable for the wrongdoings of their employees. Independent contractors who did any mistake only liable for their own, it does not include the employer. Therefore, first of all, we need to find out whether the person is an employee or an independent contractor. In order to identify that, there are 3 tests to find out whether it is an employee or an independent contractor. The three tests are the control test, the integration test and finally, the multiple test.

The control test

The control test is widely known as the traditional test. This is also an earliest test. This test is used to identify whether the master who is the employer, can tell the servant who is the employee, not only to tell what to do but how to do the job. If the conclusion is yes, then the servant is an employee. If the conclusion is no, then the servant is an independent contractor.

In the case of Mersey Docks and Harbour Board v Coggins & Griffiths (Liverpool) Ltd, the board owned and hired mobile cranes driven by skilled operators who were the employees of the board. Coggins & Griffiths who were the dockworkers, hired one of the board’s cranes. The House of Lords held that where a crane was hired with a driver and that driver was negligent, the driver’s employer would be vicariously liable. Where the negligence was in the way in which the hirer used the crane then the hirer would for that purpose be the employer of the driver.

In the case of Hollis v Vabu Pty Ltd, the High Court found that bicycle couriers were performing work on behalf of Vabu are the employees. Despite some indicated a principal/independent contractor relationship, the Court found the following situation to be of enough importance to identify an employment relationship. First, the bicycle couriers were not provided the skilled labour or the labour which needs special qualifications, second, the couriers only had a little control over their work, and finally Vabu supervised the courier’s finances such as deductions, expenses and so on. They do not have the bargaining power to set the pay. The court held that the bicycle couriers are the employees, and the employer is vicariously liable.

The integration test

The integration test which also known as the organization test, was brought in due to the control test was not suitable for the employees who have high skills. The integration test is done to find out whether, if a person who is doing the work and the work he does is integral or component to the business, then he is an employee. If the work he does is just an accessory to the business or the organization, then he is an independent contractor.

In the case of Whittaker v MPNI (Ministry of Pensions & National Insurance), the lady is a trapeze artiste, who is under a contract for the circus for 2 months. She helps the management to arrange the audience to sit inside the circus properly. For one and a half day, she must prepare for herself such as makeup, costumes and so on. The rest of the day, she works in the circus and performs the act. During one of her performance, she injured herself and broke her arm. She wanted to claim from the National Insurance but the ministry was rejected. This is because, she is on a contract with the circus. This means, she is an independent contractor to the company.

In the contrast to the case above, Westall R. v Roulsan, he worked as a polisher in a cutlery factory. Later on, he employed his own people where he paid the salary of the workers himself. He rented a part of the factory to do his work. He wanted to claim the double pay for working during holidays, but was rejected by the company. It was rejected on the basis that he was not an employee but was an independent contractor.

The multiple test

The multiple test is a combination of control and integration test. There are several ways in this test to find out whether the person is an employee or an independent contractor. First of all, if the remuneration of the worker is paid monthly, then he is an employee. If it is paid hourly, then he is an independent contractor. Secondly, if the worker is a member of the company’s pension scheme, then he is an employee, if not he is an independent contractor. Thirdly, if the worker has all the benefits such as annual leave medical leave, hospitalization, paid holidays and so on, then he is an employee, if not, he is an independent contractor. Fourthly, if the worker has prohibition from working for a third party or a rival company, then he is an employee, if not, he is an independent contractor. If the worker gets a uniform to wear, and he is an employee, if not, he is an independent contractor. Finally, if the worker gets the tools from the company, then he is an employee, if he uses his own tools, he is an independent contractor.

In the case of Ready Mixed v MPNI, the worker of this company which is a lorry driver, have to buy a lorry and fit it with a cement mixer. The company will provide the necessary loans to the worker to buy the lorry. However, the lorry must be in the company’s logo and colour, the driver must wear company’s uniform, the driver have to spend their own for maintenance, road tax and insurance and also they cannot work for anyone else. By using the multiple test, this shows that the lorry driver are the employee of the company.

After using the tests above, we can find out whether the person is an employee or an independent contractor to the company.

What is vicarious liability?

In certain circumstances, one person may be taken as liable for the mistakes of another. This type of liability is also known as vicarious liability. An employer is vicariously liable for the mistakes done by his employees when he was authorized, ratified them or when the mistake was committed in the course of employment of the employee’s work. Legal liability is imposed on one person for the mistakes or crimes committed by another person who is usually an employee, but sometimes it can be an independent contractor or an agent as well. Vicarious liability may also apply between partners and between a principle and agent.

The purpose of this vicarious liability is to ensure that an employer pays the money of the damage caused by his business operations. However, there is a liability to the employee as well, who is personally liable for his own mistakes. The person, by the tort, may sue either or both of the employer and employee. But they generally prefer to sue the employer since he is financially capable of paying the damages incurred.

When is the employer liable?

Next, we have to find out when is the employer is liable for the mistakes of his employees. The principle law applies that employer to be liable for any damage caused by his employee to another person during the employee’s course of employment. The employer is liable even though he was not acted wrongly in any way. Therefore, this rule may seem unfair to the employer but this rule is practically based on the law and policy.

When the law is concerned, employer and employee are considered as associated parties in the business because both are engaged. If the work increases and he, the employer, cannot handle the pressure, he must employ another person so that the work pressure is lowered. In law, they are responsible for the damages done by his workers as he would be for the damages done by his own.

In the point of policy, generally it is to provide the injured person with a defendant who is capable of paying the damages on which the court may award. An employer and the business usually get the profit from the employee’s work. The employer thinks that it is unfair that they should pay the compensation to the victims because of the wrongdoings of their employee during their course of employment.

The course of employment

In the situation where an employee causes injury to another person or their property, it is important to identify whether the employee was acting within his course of employment or during his free time. The employer is highly responsible for the damages if the employee did the mistake while on their job duty.

The course of employment is where a legal consideration of all situations which may happen in the performance of a person’s work. It is during a period of time where specific tasks are given by the employer to the employee. Because of this, the employer is vicariously liable for the mistakes for his employee. Vicarious liability is the responsibility where it falls on one person as a result of an action of another person. In the employment law, the employer would be liable for the torts and omissions of his employees.

For example, if a driver for a transportation firm such as buses was involved in an accident with a pedestrian, the injured person can sue both the driver and the transportation company. Therefore, the negligent driving by someone who was employed as a driver is a tort committed in the course of his employment which the employer is liable for his wrongdoings.

However, if the driver seeks to assault or some private revenge to the pedestrian, then the assault would not be related to his job and the employer is not liable. The employee cannot be on a “frolic of his own” which is acting on his own actions and not abiding to the rules and regulations. In the case of Hilton v Thomas Burton, there was an accident when employees were returning in a van. Hilton was driving the van to their work after they had gone to a cafe. A passenger was killed due to Hilton’s negligence. His widow claimed damages against the employer as being vicariously responsible for Hilton’s negligence. It was found that at the time, the driver was not doing anything he was employed to do, and therefore, the employer was not liable.

In order to differentiate whether the employer would be held to be liable for his employee’s tort, let’s see the different circumstances where the law applies and where it is not. First of all, whether the acts are outside the contractual duties or not. If the employee has acted on a personal revenge, then the employer will not be liable for the injuries caused by the employee during this time. In the case of Britt v Galmoye & Nevill, Nevill was hired by Galmoye as a van driver. Nevill wanted to take a friend to go for movies after he finished his works. Galmoye gave his private car to Nevill for the travelling purpose. Nevill carelessly injured Britt and Britt took action against Galmoye based on vicarious liability so that the case would be dealt on the basis of Nevill’s course of employment. The court held that the journey was not Galmoye’s business and therefore, he was not liable for Nevill’s act.

Secondly, the unauthorized ways of performing the contractual duties. The employer may held liable despite the reason that the employee was acting improperly even the act was part of his duties. In the case of Century Insurance Co. v Northern Ireland Road Transport Board, the driver of the petrol tanker was transferring the fuel to an underground storage. He lit a cigarette and threw the match to the ground which caused fire and a big explosion. The court held that the employer was liable for the driver’s negligence because his carelessness was not written in his contract of service, but was a negligent in the way of discharging his actual job under the contract of service.

Thirdly, the employee must not allow other people to do his job while the person is on his course of employment. If the person allows outsiders to operate or perform his job, then the employer is not liable for any mistakes or wrongdoings of his employee. In the case of Ilkrw v Samuels, the lorry driver allowed another person to drive the vehicle. However, the lorry driver never ask the permission from his employer whether such act can be done and the another person’s ability to handle the vehicle. During this act, a third party was injured and the employer was liable due to the negligence of the employee.

Fourthly, we have to identify whether is it the employee’s fraudulent acts has been involved. The courts will not make the employers to be liable if there is a fraudulent act on the employee’s side. However, the court may soon accept that the employer could be held liable. This is because, the employee may performed the fraudulent act on the employer’s benefit. Or maybe the employee committed the act on his own hands.

Finally, whether the employee’s criminal act is involved or not. The employer may be vicariously liable for any criminal act from his employee. The criminal act may be taken during the course of the employment so that the employer will be charged at civil law for any losses caused by the employee. In the case of Leesh River Tea Co v British India Steam Navigation Co, a person was employed to unload the tea from the ship. That person stole a copper cover plate from the ship while he was unloading the tea. The court held that the worker was not in his course of employment because his job has nothing to do with the copper plate therefore the employer is not liable for this act. If a cleaner was sent to the ship to clean it, then that person may have acted in his course of employment and therefore the employer is liable. In contrast of the case above, Morris v Martin Ltd, where a fur coat sent to cleaners was stolen by the employee. The job of the employee was to clean the coat therefore the cleaners were liable for the theft.

Conclusion

Where vicarious liability is imposed on an employer, both the employer and employee will be held jointly liable. It must be noted that in the context of an independent contractor, an employer would be held vicariously liable where he authorized or ratified the tort.

Vicarious liability will continue to happen significantly for an employee’s acts committed within the “course of employment.” There will be occasions when the conduct or misconduct of the employees in their employment will results in the employer’s organization either assuming vicarious liability or being held vicariously liable. On some of those occasions, the employer make look to their employees to indemnify against employer’s loss, and on some of those occasions, the employer will indemnify the employees against personal loss.