Who is Covered by Employment Laws?

Introduction

Labour law in the United Kingdom has evolved over many
centuries, adapting to the various developments
and changes in the field that have occurred over time.[1] Two of the questions that keep recurring since the history of labour law
is, ‘Who is covered by labour law? Who should be covered by labour law?’ The
answer to the first question is quite straightforward since employees have been
the major subjects of employment law for a long time. The second question,
unlike the initial question, goes beyond looking at the current legal
provisions as to who is entitled to labour law rights and seeks to identify the
persons who, although not currently covered under labour law, they ought to be covered.[2] Today the labour market is
changing and the rate of self-employment
is rising[3]. There are also innovative
forms of work that continue to challenge the established norms. This raises the question whether there are
people who ought to be covered by employment law but are not covered due to the lack of flexibility of the law. [4] In the UK, casual workers
are denied employment rights due to the claim that they lack on-going contracts
of employment.[5]
This is not a problem that only affects
the UK. In Canada, for example, agriculture workers are denied the right to
collective bargaining.[6] This essay argues that there is a need to extend employment law
protection beyond employees to ensure that vulnerable workers are also protected. The essay suggests that
this can be achieved by creating an
intermediate group of dependent contractors to replace workers.[7] This will ensure that dependent contractors benefit from the
employment rights that were previously
restricted to employees. The paper
further looks at the consequences of the introduction of such an
intermediate group and particularly the problems that will be solved and those that
will be created by the recommendation.

Who is
Covered by Labour Law?

Currently, whether or not a person is covered under labour law is determined by
that person’s employment status.[8] Establishing a person’s
employment status is crucial because it determines the person’s eligibility for
certain statutory rights. [9]
There are three major employment statuses namely employer/employee status,
worker and self-employed.[10] The law provides different rights to these three groups. Employees
are the main subjects of employment law hence they have access to all the
available rights whether provided in statute or common law.[11] Self-employed are considered
to have the capability to look out for themselves hence no rights are provided
except basic rights such as the right against discrimination. Workers are in
the middle where they have access to some rights such as minimum wage and the
right against wrongful dismissal.[12]

The question “who is an employee” is important in
employment law because it determines if a person is entitled to a significant
package of rights. Due to the ambiguity in defining
who an employee is, courts have to distinguish between employees and
those who are self-employed.[13]

The courts have over time developed several tests to
determine whether an individual is an employee or an independent contractor.[14]

One of the tests that is
widely accepted and applied is the control test. According to the test, an employee is an individual who is subject to the command of his
master regarding the manner he or she should do the work assigned. [15]  The increased sophistication of industrial
processes and the increase in the number of professionals in salaried
employment such as doctors and engineers have, however, made the test
insufficient. [16]
In an attempt to modernise the control test, the courts developed the
integration test where the focus is whether a person is fully integrated into
the business of the employer or else remained independent and apart from such
business.[17]
Although the test has been useful in dealing with professional and skilled
workers, its disadvantage lies in the fact that it does not define what is
meant by ‘integration.’ [18]The failure to define the
term ‘integration’ makes the test difficult to apply today especially in light
of the changes in employment relationships. [19]

Other tests include the economic reality test a person
is considered to be an independent contractor if the person is the one who
bears the economic risk of the work being
performed.[20] There is also the multi-factorial
test where all the factors for and against a contract of employment are weighed to
determine whether a person is an employee or an independent contractor. [21] Lastly, there is also the mutuality of
obligation test where the court looks at whether the employer is required to provide work and whether the worker has
a corresponding duty to accept the work when offered.[22] Although these tests are
important in determining whether or not a person is an employee, they are
insufficient.[23]
The reason being is that the employment relationship today is changing and new relationships are emerging which
challenge the traditional views regarding employment.[24] Today there are zero hour
contracts where a worker is not obliged to accept work and the employer is not
obliged to dictate minimum working hours. [25]In light of such changes,
it is important for courts to apply several tests and factors when determining whether an employment relationship
exists. A similar approach has been adopted in Canada where the courts
have also acknowledged that whether a person is
an independent contractor or an employee cannot be determined by
applying a single test. [26]In Ontario Ltd v Sagaz Industries,[27] the Canadian Supreme
Court held that there is no single conclusive
test that can be used to determine whether a person is an independent
contractor or employee.[28] Moreover, the court held that other than the level of control the
employer has over the worker, other factors have to be considered such as
whether the person provides his own
helpers, the degree of responsibility for management, the degree of financial
risk among others.[29] This shows that in light of the changes in the employment
relationship, there is a need for courts to widen the scope of factors to be
considered to ensure that fair decisions are
made.[30]
 

Who Should be Covered Under Labour Law?

Due to the changing labour practices, the legal
dichotomy between an employee and an independent contractor is now too
simplistic to cover the diverse workforce that exists today.[31] The employment law has
for a long time focused more on differentiating employees and independent
contractors that it has ignored the fact that there
are more workers who need protection.[32] The Employment Rights Act
1996 defines a worker as any person who works or worked under an employment contract or any other contract where the person
undertook to perform any work or services personally for another person who is
a party to the contract and who is not a client or customer.[33] This means that all employees are workers but not all workers are employees. Based on the definition of a
worker, therefore, for a person to be considered a worker there must be a
contract, an obligation to perform work or a
service personally and the
services must not be provided as part of a business where the other party
becomes a client. [34]

Workers are entitled to several rights such as the
right to a minimum wage, the right to health and safety precautions, [35] the right to protection
from unlawful deductions from salary and the wrongful
dismissal among others.[36] Workers, however, do not
enjoy the additional rights enjoyed by employees such as the right not to be unfairly dismissed, a right to written terms
and conditions of employment, statutory maternity leave.[37] This is despite the fact that
most of these workers have similar characteristics to employees only that they are regarded as casual workers. Due to the
changing dynamics in the labour market and the diverse workforce which has
emerged today, there is a need to ensure that more workers can enjoy the rights
enjoyed by employees. [38] Today there are employees working under zero hour
contracts and others working under relationships which are different from traditional employment relationships. [39]Such employees need the
protection of the employment law. The reason being is that due to the unequal
relationship between the employer and the employee. Since the workers also have
an unequal bargaining power compared to employers, there is a need to ensure that more workers are protected under
labour law.[40]

A recent review of modern work practices in the UK found
that there is a need to provide a fair balance
of rights and responsibilities for workers and employees.[41] The increasing casualization of the labour market has rendered
many workers with employee-like characteristics unprotected.[42] As a result, it would be
prudent to introduce an intermediate category of workers to be known as
dependent contractors covering casual and independent relationships.[43] This approach would
require the government to maintain the three-tier
system of employment status but for those
workers who are entitled to worker rights but who are not employees, a new
category should be introduced to ensure that that they can also benefit from
the protection of employment law.[44] The provision of benefits
under employment law has for a long time been
based on the selective approach as opposed to the universal approach
where only those employees who pass the tests provided by law can enjoy the
benefits.[45]
The introduction of the dependent contractor category will change the approach
to one that leans closer to universalism. This
will ensure that workers in relationships that were
not previously recognised as employer/employee relationships can now
enjoy the rights guaranteed to employees. [46]

The need to expand the scope of the employment law
protection to workers with employee-like characteristics has also been acknowledged in Canada.[47] In McKee v Reid Heritage Homes Ltd[48]the Court of Appeal in Canada held that case law had developed a
dependent contractor category evidenced by economic dependency and exclusivity
in the work relationship. The workers
covered under the new category can enjoy the right to reasonable notice before
termination or severance pay.[49] Recently in Keenan v Canac Kitchens Ltd the Court of
Appeal confirmed the existence of dependent contractors and upheld a 26-month
award for the failure to give notice of termination.[50]

In order to prevent negative effects on employees who are already covered under employment law, it is
important that the introduction of the dependent
contractor category be followed by a clear definition in law of which
people fall under this category.[51] The definition should be
such that it covers the more casual employment relationships that continue to
increase today. All those people who are not employees and are also not
independent contractors or self-employed should be
covered.[52]
In order to make the change work, it is
important that courts put less emphasis on personal service or the issue of
substitution in employment and instead focus more on the aspect of control. Employers
include the aspect of substitution to deny casual workers employee benefits
hence the tests for determining whether a worker
is a dependent contractor should be developed to ensure that more casual
workers are covered. [53]

The introduction of this category may overburden employers in
terms of extending benefits to dependent workers. Despite this likely
outcome, casual workers are in need of protection and this can only be achieved
by ensuring that they also enjoy the rights enjoyed by employees such as the
right to a termination notice or severance pay.[54]

Conclusion

Employment law has for a long time guaranteed the full
protection of employees while leaving out other workers. Due to the changing
trends in the labour market and in
employment dynamics, it is important to protect
more workers by ensuring that they can also enjoy employee rights contained in statutes.
The introduction of the dependent contractors
category will ensure that those workers who are in employee-like employment
relationships but are not covered under
employment law can enjoy the rights enjoyed by employees. A clear stipulation of the definition of dependent
contractors will ensure that employers are not excessively burdened and that
the employees who are already covered are not adversely affected by the change.
 

Bibliography

Statute

• Employment and Rights Act 1996

Case Law

• Carmichael v National Power [1999] 1 WLR 2042 (HL)
• Keenan v Canac Kitchens Ltd [2016] ONCA 79
• Lane v The Shire Roofing Co. [1995] PIQR P417 (CA)
• Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173
• Market Investigations v Minister of Social Security [1969] 2 QB 173
• McKee v Reid Heritage Homes Ltd [2009] ONCA 916
• Ontario Ltd v Sagaz Industries [2001] 2 SCR 983
• Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
• Stevenson Jordan & Harrison Ltd v McDonald and Evans [1952] 1 TLR 101
• Yemens v Noakes [1880] 6 QBD 530 CA
• McKee v Reid Heritage Homes Ltd [2009] ONCA 916

Books

• ACL D, Perspectives on labour law (Cambridge University Press 2004) 75.
• Barnard, C., EC Employment Law. Oxford University Press 2006.
• Bennett M, ‘Interpreting Unfair Dismissal and Redundancy Payments Law: The Judicial Reluctance to Disprove Employer Decisions to Dismiss’ Statute Law Review (2002)
• Bowers, J., A Practical Approach to Employment Law, (7^th Ed., 2005)
• Burchell B, Honey S and Deakin S, ‘The Employment Status of Individuals In Non-standard Employment’ (Unknown Binding 1999)
• Butlin, S.F. and Allen, R., 2018. Worker Status and Vicarious Liability: The Need for Coherence.
• Ciaran C, “Focus: Starting from Scratch: A Manifesto for UK Labour Law.” International Union Rights 23, no. 2 (2016): 10-13.
• Clarke L, ‘Mutuality of Obligation and the Contract of Employment: Carmichael and Another V National Power Plc’ Modern Law Review, Vol.63, Issue.5.
• Clayton, D. ‘Legal Update: Employment Law’ 21 Law Society Gazzette (2008)
• Coase, R. H. (1990). The Firm, the Market and the Law. Chicago: Chicago University Press
• Collins, H., 2010. Employment Law. Oxford University Press.
• Danny K, The gig economy: A Canadian perspective (American Bar Association 2017) 9.
• Davidov G, ‘who is a worker?’ 2005 Industrial Law Journal, Volume 34, Issue 1.
• Doug P, Key employment rights (House of Commons 2017).
• Duggan, M. ‘Unfair Dismissal’ 11 Employment Law and Litigation 6 (2007)
• Elwes S ‘Autoclenz Ltd V Belcher: Written agreements and the determination of employment statutes’ (2011)  
• Forde M, Employment Law (The Round Hall Press 1992)
• Freedland, M. ‘Constructing Fairness in Employment Contracts’ Industrial Law Journal (2007)
• Freer, A “The Range of Reasonable Responses Test – From Guidelines to Statute” (1998)
• G. Pitt, ‘Law, Fact & Casual Workers’ [1985] 101 Law Quarterly Review 2017.
• Greenfield, G 2001 ‘Core Labor Standards in the WTO: Reducing labor to a global commodity’,
• Guy D, “Setting labour law’s coverage: Between universalism and selectivity” [2014] Oxford Journal of Legal Studies 543, 550.
• G. Pitt, ‘Law, Fact & Casual Workers’ [1985] 101 Law Quarterly Review 2017.
• Holland, J. & Burnett, S., Employment Law, LPC Guide 2005
• Ian, S Smith and Wood’s employment law (Oxford University Press 2017) 44
• Kahn-Freund O, ‘Servants and Independent Contractors’. [1951] M. L.R 14.
• Kirwan B, Injunctions: Law and practice (3^rd edn, Roundhall University )
• Marson J (2013) ‘Anatomy of an employee’ Web Journal of Current Legal Issues, Vol.19, No.3 
• Matthew T, The Taylor review of modern work practices (UK Government 2017) 110.
• Murphy A & Regan M, Employment Law (2^nd Edn. Bloomsbury Publishing 2017)
• Nairns J, Employment Law for Business Students (4^th edn, Person Education Ltd, 2011) 
• Nyombi, C., 2015. A Response to the Challenges Posed by the Binary Divide between Employee and Self-employed.
• Osman C. and Brennan T., Employment Law Guide Butterworths (Fourth Edition): 2005
• Phillips G. and Scott K., Employment Law, (2004) Jordan
• Randy K, The gig economy: Dependent contractors, workers’ rights and the Canadian approach (Hunter Publishing 2018).
• Russell Tim, A guide to UK employment law (UK Government 2011).
• Sanders, A. ‘Expanding the ‘No-Difference’ Rule in Unfair Dismissal ’ Industrial Law Review (2007)
• Sargeant M., Employment Law, (2001) Longman
• Selwyn, N., Selwyn’s Law of Employment, (2004) Butterworths
• Simon H, “Contract, employment and the contract of employment” [2006] Industrial Law Journal 30.
• Smith I, and Baker A, Smith & Woods Employment Law (10th edn, Oxford University Press, 2010).
• Taylor S and Emir A, Employment Law an introduction (4^th edn, Oxford University Press, 2015)
• Tim R, A guide to UK employment law (UK Government 2011).
• Tucker, K. (ed.) ‘Discrimination in Employment’ Sweet and Maxwell, London (2004)
  Willey B, Employment Law In context (4^th edn, Person Education Ltd, 2012)

[1] Forde M, Employment Law (The Round Hall Press 1992)

[2] Tucker, K. (ed.) ‘Discrimination in Employment’ Sweet and Maxwell, London
(2004)

[3] Bennett M, ‘Interpreting
Unfair Dismissal and Redundancy Payments Law: The Judicial Reluctance to
Disprove Employer Decisions to Dismiss’ Statute Law Review
(2002)

[4] Holland J., Burnett S., Employment Law, (2004)
Oxford University Press

[5] Sanders, A. ‘Expanding
the ‘No-Difference’ Rule in Unfair Dismissal ’ Industrial Law
Review (2007)

[6]  Guy D, “Setting labour law’s coverage: Between
universalism and selectivity” [2014] Oxford Journal of Legal Studies 543, 543.

[7] Selwyn, N., Selwyn’s Law of Employment, (2004)
Butterworths

[8] Nyombi, C., 2015.
A Response to the Challenges Posed by the Binary Divide between Employee and
Self-employed. International Journal of Law and Management, 57(1), pp.3-16.

[9] Freer, A “The Range of Reasonable Responses Test – From Guidelines
to Statute” (1998)

[10]  ACL D, Perspectives on labour law
(Cambridge University Press 2004) 75.

[11] Osman C. and
Brennan T., Employment Law Guide Butterworths (Fourth
Edition): 2005

[12] Clayton,
D. ‘Legal
Update: Employment Law’ 21 Law Society Gazzette (2008)

[13] Butlin,
S.F. and Allen, R., 2018. Worker Status and Vicarious Liability: The Need for
Coherence.

[14] Coase, R. H.
(1990). The Firm, the Market and the Law. Chicago: Chicago
University Press

[15] Ciaran C,
“Focus: Starting from Scratch: A Manifesto for UK Labour Law.”
International Union Rights 23, no. 2 (2016): 10-13.

[16] Ian, S Smith
and Wood’s employment law (Oxford University Press 2017) 44.

[17] Sanders,
A., Expanding the ‘No-Difference’ Rule in the Law of Unfair Dismissal (2007)
ILJ 355

[18] Greenfield, G
2001 ‘Core Labor Standards in the WTO: Reducing labor to a global commodity’,

[19] Burchell B, Honey
S and Deakin S, ‘The Employment Status of Individuals In Non-standard
Employment’ (Unknown Binding 1999)

[20] Marson J (2013) ‘Anatomy of an employee’
Web Journal of Current Legal Issues, Vol.19, No.3  

[21] Kirwan B, Injunctions: Law and practice (3^rd
edn, Roundhall University )

[22] Davidov G, ‘who is a worker?’ 2005 Industrial Law Journal,
Volume 34, Issue 1.

[23] Taylor S and Emir A, Employment Law an introduction (4^th
edn, Oxford University Press, 2015)

[24]  Elwes S ‘Autoclenz
Ltd V Belcher: Written agreements and the determination of employment statutes’
(2011)  

[25] G. Pitt, ‘Law, Fact & Casual Workers’ [1985]
101 Law Quarterly Review 2017.

[26] Willey B, Employment
Law In context (4^th edn, Person Education Ltd, 2012)

[27] Clarke L, ‘Mutuality of Obligation and the Contract of
Employment: Carmichael and Another V National Power Plc’ Modern Law Review,
Vol.63, Issue.5.

[28] Randy K, The gig economy:
Dependent contractors, workers’ rights and the Canadian approach (Hunter
Publishing 2018).

[29] Murphy A & Regan M, Employment Law (2^nd Edn.
Bloomsbury Publishing 2017)

[30] Sargeant M., Employment Law, (2001)
Longman

[31] Nairns J, Employment Law for Business Students (4^th edn,
Person Education Ltd, 2011) 

[32] Kahn-Freund O, ‘Servants and Independent Contractors’.
[1951] M. L.R 14.

[33] Smith I, and Baker A, Smith & Woods Employment Law (10th
edn, Oxford University Press, 2010).

[34] Freedland, M. ‘Constructing Fairness in Employment Contracts’ Industrial
Law Journal (2007)

[35] Clayton, D. ‘Legal
Update: Employment Law’ 21 Law Society Gazzette (2008)

[36] Duggan, M. ‘Unfair
Dismissal’ 11 Employment Law and Litigation 6 (2007)

[37] Bowers, J., A
Practical Approach to Employment Law, (7^th Ed., 2005)

[38] Simon H, “Contract, employment and the
contract of employment” [2006] Industrial Law Journal 30.

[39] Russell Tim, A guide to UK employment law
(UK Government 2011).

[40] Simon H, “Contract, employment and the
contract of employment” [2006] Industrial Law Journal 30.

[41] Matthew T, The Taylor review of modern work
practices (UK Government 2017) 110.

[42] Barnard, C., EC Employment Law. Oxford
University Press 2006.

[43]  Tim
R, A guide to UK employment law (UK Government 2011).

[44] Collins, H., 2010. Employment Law. Oxford
University Press.

[45] Guy D, “Setting labour law’s
coverage: Between universalism and selectivity” [2014] Oxford Journal of Legal
Studies 543, 550.

[46] Phillips G. and Scott K., Employment Law, (2004)
Jordans

[47] Randy K, The gig economy:
Dependent contractors, workers’ rights and the Canadian approach (Hunter
Publishing 2018).

[48]  Doug P, Key employment rights (House of Commons 2017).

[49] Danny k, The gig
economy: A Canadian perspective (American Bar Association 2017) 9.

[50] Danny K, The gig
economy: A Canadian perspective (American Bar Association 2017) 9.

[51]  Matthew T,
The Taylor review of modern work practices (UK Government 2017) 36.

[52] Rose E, Employment Relations (3^rd  Edn, London 2008)

[53] Selwyn,
N., Selwyn’s
Law of Employment, (13^th Ed., 2004)

[54] Holland, J.
& Burnett, S., Employment Law, LPC Guide 2005