LW6004 Employment PDF

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An employee is defined as an individual who enters into a contract of employment or works under one. This is a contract for service, whether expressed or implied and can be oral or written. A worker is a person that has entered a contract of employment or who has entered into a contract to personal...

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LW6004 Employment Law

Task A An employee is defined as an individual who enters into a contract of employment or works under one. This is a contract for service, whether expressed or implied and can be oral or written.1 A worker is a person that has entered a contract of employment or who has entered into a contract to personally undertake any work or services for another party.2 Whereas a self-employed person is someone who works under a contract for services. Jack is hired under a zero-hours contract, the nature of which, allows individuals to agree that they are available for work and when required but they are not guaranteed any hours 3. When determining the nature of Jack’s employment status, it is important to discuss the four common law tests. In order for Jack to be classified as an employee, these tests must first be satisfied.

Firstly, under the control test it must be determined whether there is an employment relationship between Jack and Gloucester Care. The control test stems from an era where the only employment relationship that existed was between a master and a servant. Thus, the test observes the extent of control and supervision an employer has over their staff4 and was regarded as the sole determining factor. 5 In Yewens v Noakes6, it was held that a contract of service will exist if the master can tell the servant not only what to do but how to do it. Therefore, it must be decided whether Jack is the ‘servant’ and Gloucester Care is the ‘master’. Bramwell LJ has defined a servant as an individual that is ‘subjected to the command of his master as to the manner in which he shall do his work’.7 Whereas a master was defined as a person who provides work and is in control of the work being performed.8 It can be submitted that Gloucester Care does have a degree of control over Jack as he is required to wear a uniform with a company logo when he is providing care services on behalf of the company. This level of control between a 1 Employment Rights Act 1996, s.230 (1) 2 Ibid, s. 230 (3) 3Malcolm Sargeant & David Lewis, Employment Law: The Essentials (14th edn, CIPD - Kogan Page 2017) 57 4 Narich Pty Ltd v Payroll Tax Comr [1984] ICR 286, PC 5 Astra Emir, Selwyn’s Law of Employment (21st edn, OUP 2020) 42 6 Yewens v Noakes [1880] 6 QB 530 7 ibid, 532 8 Sadler v Henlock (1855) 4 E & B 570, 578

LW6004 Employment Law

master and a servant was demonstrated in Performing Rights Society Ltd9, thus a servant and master relationship is depicted between Jack and Gloucester Care. Moreover, as long as the master continues to pay wages, he is not required to provide continuous work as seen in Collier v Sunday Referee Publishing.10 The care service works on the basis that when a service user is in need of a caretaker, they will contact the agency, who will then assign an available carer. Thus, Gloucester Care can be considered a master as they are not obligated to give work to their carers but continue to pay them for hours worked as well as their travelling expenses. However, as Jack can choose when to work as well as refuse work that is offered by Gloucester Care, this implies that there is not a level of control between them and thus, an employment relationship cannot exist. Though the typical working relationship is no longer between a master and a servant, the control test is still relevant in modern employment law as an employee will still be subject to a form of supervision or control by an employer, which is relevant in Short v J.W. Henderson Ltd.11 However, the control test has been criticised by Shah as not being accurate or determinative, especially in situations where the employee has a specialist skill set and more expertise than the employer12. In Cassidy v Ministry of Health13, the example of a surgeon being employed by a hospital trust was used. It would be illogical for the hospital trust to inform the surgeon of how to perform complex surgical procedures, but this does not mean that the surgeon is not an employee. Due to Jack’s 10-year experience as a carer, it is unlikely that Gloucester Care will be able to inform Jack in how to do his job. Thus, due to the above suggestions, under the control test, Jack can be classified as an employee. The second test that has to be satisfied to determine Jacks employment status is the integration/organisation test. This test is designed to determine whether an individual is fully integrated in the business. For if an individual is working under a contract of services, though the work is done for the business, they are not integrated in to the business but rather a mere accessory of the business 14. It is highlighted by Amir that the integration test is advantageous in relation to skilled 9 Performing Rights Society Ltd v Mitchell and Brooker (Paliais de Danse) [1924] 1 KB 762 10 Collier v Sunday Referee Publishing [1940] 2 KB 647 11 Short v J.W. Henderson Ltd [1946] 62 TLR 427 12 Waqar Shah, ‘Breaking News – Taxation’ [2019] 184 Taxation Magazine 16, 17 13 Cassidy v Ministry of Health [1951] 2 KB 343 14 Stevenson, Jordan & Harrison v MacDonald & Evans [1952] 1 TLR 101

LW6004 Employment Law

employees, who are integrated into a business. 15 This was demonstrated in Whittaker16, where a trapeze artiste was held to be an integral part of the business and was consequently classified as an employee. On this basis, it can be submitted that Jack is integrated in to the business as he has been working for Gloucester Care for 10-years and has never worked less than 35 hours per week. Maugham has emphasised that a court will further look at factors such as sick pay schemes, holiday pay and participation in work place social activities when determining employment status.17 As Gloucester Care is lenient on holidays, so long as another carer can cover the carer’s clients, Jack is integrated into the business and not a mere independent accessory to it as was the question in Bank voor Handel.18 However, given the fact that Jack is easily replaceable when on annual leave as he is on a zero-hours contact, this is evidence that he is not integrated into the business. Furthermore, as Jack must use his own means of transport between clients, it implies that he is not fully integrated into Gloucester Care. Like the control test, the integration test has been criticised heavily due to modern employment and many businesses outsourcing areas of their work. Sargeant and Lewis have argued that it’s possible for those who do not have a contract of employment, are still able to be closely integrated into a business, as well as controlled by them. 19 This criticism was demonstrated in Tilson v Alstom Transport20, which had been previously acknowledged in Franks v Reuters Ltd21 by the Court of Appeal. It is likely that these submissions will not lead to conclusive evidence that Jack is integrated in the business and an employee. Therefore, the next text to consider is the Economic Reality/Multiple Test. The next to be applied is the Economic Reality/Multiple Test, in determining Jack’s employment status. The leading case is Ready Mixed Concrete 22, where Mackenna J supplied three criteria to be satisfied when determining the existence of an employment contract23. The first criteria states that the employee agreed to the 15 Astra Emir  42. Astra Emir, (n5) 42 16 Whittaker v Minister of Pensions and National Insurance [1967] 1 QB 17Jolyon Maugham, ‘The Status Tests: Employment Status’ [2002] 149 Taxation Magazine 357, 358 18 Bank voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248 19Malcolm Sargeant & David Lewis, Employment Law (7th edn, Pearson 2014) 21 20 Tilson v Alstom Transport [2011] IRLR 169 CA 21 Franks v Reuters Ltd [2003] IRLR 423 22 Ready Mixed Concrete v Minister of Pensions [1968] 2 QB 497 23 Ibid, 515

LW6004 Employment Law

exchange of remuneration for performance of work for his employer. It’s clear that Jack has agreed to exchange remuneration for his performance of work as a carer for Gloucester Care. The second criteria provides whether the employee agreed that they will be subjected to the control of the employer during the performance of work. It has been established that Jack is subjected to a degree of control by Gloucester Care due his mandatory uniform with the company’s logo. The third criteria includes that the other provisions of the contract are consistent with a contract of service. This has been developed to encompass all relevant factors to include, the method of payments, tax and NI contribution, ownership of tools, self-description, level of independence and insurance cover. It was further understood in Montgomery v Johnson Underwood24, by Buckley J as ‘all the terms of the agreement must be considered’25. Furthermore, Quigley has highlighted that the Inland Revenue is interested in the distinction of an employee as tax is deducted by employers from their employees’ wages.26 Gloucester Care deducts income tax and national insurance contributions before Jack is given his wages, this indicates that he is an employee.27 In Market Investigations 28, Cook J has suggested that the distinction between and employee and self-employed is a person ‘in business of her own account’29. This is where the individual will provide their own equipment, has opportunities for profit making as well as be accountable for management and investment. The fact that Jack provides his own car to get to his different clients and appointments, is an indication that he is self-employed. However, Gloucester Care provides him with expenses for his milage and parking. Moreover, Jack does not have any opportunity to receive any of the profits from his work other than his pay check as in Lee v Chung & Shun Shing Construction30, this shows that he is not self-employed. John Duddington31 has expressed criticism of Cook J’s judgement as having the possibility of not looking at the relationship as a whole and is echoed in Hall v Lormier.32 Thus, due the mentioned submissions, when applying the

24 Montgomery v Johnson Underwood [2001] IRLR 269 25 Ibid, 101, 104 26John Quigley, ‘Who is an Employee?’ [2004] Tax Journal 13, 14 27 Gould v Minister of National Insurance [1951] 1 All ER 368 28 Market Investigations v Minister of Social Security [1969] 2 QB 173 29 Ibid, 188 30 Lee v Chung & Shun Shing Construction & Engineering Co Ltd [1990] IRLR 236 31John Duddington, Employment Law (2nd edn, Longman 2007) 59 32 Hall v Lormier [1993] EWCA Civ 25

LW6004 Employment Law

Economic Reality/Multiple tests, Jack does not fit into the mould of self-employment and his employment status indicates an employee of Gloucester Care. The Mutuality of Obligation test is the final test when determining a person’s employment status. This test identifies, that in order to have employment status, there is an obligation for the employer to provide work and a complimentary obligation for the employee to accept the work. This is significant as if a person is able to refuse work, it’s unlikely they are an employee due this degree of independence as in O’Kelly v Trust House Forte.33 Additionally, it was held in British Home Stores v Burchell34, that consequences such as dismissal will be applied if an employee refuses or fails to perform work to a satisfactory standard. Similarly, Gloucester Care has an implied term, where a carer will not be contacted again if they have refused too much work, as they will be considered unreliable. However, Jack has not refused to work in the 10-years he has worked at Gloucester Care. This will suggest that Jack is an employee of Gloucester Care as if Jack had refused to many offers of work, he would be dismissed. Furthermore, it was held in Carmichael v National Power35 that casual workers will not amount to employees as there is no mutuality of obligation for the employer to provide work. The method that Gloucester Care offers its carers work, suggests that Jack is a casual worker as there is no obligation for Jack to accept the work as he is hired on a zero-hours contract. This degree of independence to reject work signifies that Jack is unlikely to be an employee. Conversely, if an employer is not bound to make any bookings for workers and they are not obligated to accept any bookings made, an employment status will be denied to the individual 36. As Gloucester Care is not obligated to continuously assign new clients to Jack, this implies that Jack is not an employee. However, the exception in Prater v Cornwall CC 37, suggests that it is possible to infer mutuality of obligation between parties if the contract has been operating for a significant period of time. Jack has continuously worked for Gloucester Care for a duration of 10 years, without his weekly hours being below 35 hours. This suggests that mutuality of obligation is inferred between Jack and 33 O’Kelly v Trust House Forte [1983] QB 90 34 [1980] ICR 303 35 Carmichael v National Power Plc [2000] IRLR 362 36 Wickens v Champion Employment [1984] ICR 365 37 Prater v Cornwall Country Council [2006] ILRL 362.

LW6004 Employment Law

Gloucester Care. Thus, under the test for mutuality of obligation, it’s likely that Jack will be classified as an employee. Additionally, it is important to discuss whether mutuality of obligation exists despite Jack being hired under a zero-hours contract. The nature of a zero-hours contract differs from a standard contract of employment as in some situations, individuals do not have to accept work that is offered to them. This is problematic when determining if a person is an employee as mutuality of obligation is a requirement of employment status. However, Lewis and Sargeant have highlighted that the wording of the contract is not the only factor determining whether there is mutuality of obligation. It is rather for the tribunals and courts to examine whether an employment relationship has developed based on the facts. 38 In Roddis v Sheffield Hallam University,39 it was held on the facts that zero-hours contracts are equivalent to a full-time contract for employment in order to allow the individual to pursue claims of less-favourable treatment. As Jack as worked for Gloucester Care for 10 years and always working more than 35 hours a week, this can suggest that Jack has a full-time contract for employment. Moreover, if a relationship between an employer and a worker is of a significant duration and during this time, the worker as regularly accepted work that is offered, it is possible for the courts to identify an umbrella contract that will give right to mutuality of obligations. This was seen in Airfix Footwear Ltd v Cope40 where a worker was held to be an employee for working at the company for seven years. Thus, a possible umbrella contract may have been formed between Gloucester Care and Jack as due to his 10-year continuity and never failing to accept work that is offered. Due to this, Jack will be classified as an employee of Gloucester Care, despite being hired under a zerohours contract. To conclude, it can be submitted that Jack has satisfied nearly all of the four common law tests, with the exception of the Integration/Organisation test. This is due to the fact that he is easily replicable by working under a zero-hours contract. However, as the other test have been satisfied due to the control exerted over Jack, 38 Lewis & Sargeant (n3) 57 39 Roddis v Sheffield Hallam University [2018] IRLR 706 40 Airfix Footwear Ltd v Cope [1978] ICR 1210

LW6004 Employment Law

the deduction of tax and national insurance distributions, it is likely that Jack will be classified as an employee. The exception of the Mutuality of Obligation test is also concurrent in the view as Jack has worked for Gloucester Care for over 10 years, where a mutuality of obligation would be inferred. Due to this long continuation of work, an umbrella contract is likely to have developed, despite Jake working under a zero-hours contract. Therefore, despite failing to satisfy the Integration Test, Jack is still likely to be considered as an employee.

Word Count: 2342 Bibliography Books Davies A.C.L, Employment Law (1st edn, Pearson 2015) Duddington J, Employment Law (2nd edn, Longman 2007) Emir A, Selwyn’s Law of Employment (21st edn, OUP 2020) Lewi, D.B & Sargeant, M, Employment Law: The Essentials (14th edn, CIPD – Kogan Page 2017) Lewis D.B & Sargeant M, Employment Law (7th edn, Pearson 2014) Smith I, Baker A & Warnock O, Smith & Wood’s Employment Law (14th edn OUP 2019) Strevens C & Welch R, Employment Law (1st edn, Pearson 2013) Turner C, Unlocking Employment Law (1 st edn, Routledge 2013)

Journal Articles Baker N, ‘Legal Status of Employees’ [2004] 27 CSR 25, 198 Leighton P ‘Recent Cases – Notes – Problems for Zero-Hours Workers’ [2002] 31 Ind Law J 71

LW6004 Employment Law

Leighton P & Wynn M, ‘Classifying Employment Relationships – More Sliding Doors or a Better Regulatory Framework?’ [2011] 40 Ind Law J 5 Liddington J, ‘Employed or Self-Employed?’ [2000] 6 E.L.N 9 Maugham J, ‘The Status Tests: Employment Status’ [2002] 149 Taxation Magazine 357 McGaughey E, ‘Uber, the Taylor Review, Mutuality and the Duty Not to Misrepresent Employment Status’ [2019] 48 Ind Law J 180 Quigley J, ‘Who is an Employee?’ [2004] Tax Journal 13 Shah W, ‘Breaking News – Taxation’ [2019] 184 Taxation Magazine 16

Other Publications

LW6004 Employment Law

Task B Employment Tribunal

BETWEEN:

Sandra Booth Claimant

-v– University of Zandaland Respondent

SKELETON ARGUMENT ON BEHALF OF THE RESPONDENT Background: 1. Sandra has been working for University of Zandaland for three years and has been summarily dismissed after being placed on a performance improvement plan (PIP), with the eventual conclusion that she was not well-suited with the program. Submissions: 1. Fair dismissal on the ground of capability under neglectful incompetence. a. If an employee is not working to the standard of employment, then a warning is appropriate. The claimant was warned of this when she was placed on PIP and was given the chance to improve her competence. b. As per Cook v Thomas Linnell & Sons Ltd, once an employer has lost confidence in an employee’s ability, then it is appropriate to dismiss. c. Referring to Alidair Ltd v Taylor, it is not necessary for an employer to

LW6004 Employment Law

prove an employee’s incompetence. The test is whether the employer honestly and reasonable believed that the employee was incompetent and whether there are reasonable grounds for this belief. 2. Evidence that misconduct was committed by the Claimant a. As per s.98(2) Employment Rights Act 1996, if there is evidence of misconduct by an employee, it will act as a ground for fair dismissal b. As the claimant has refused to follow direct instructions from her line manager since being placed on PIP amounts to misconduct c. The claimant has issued a threat the Head of the Business School that if her suggestion that her line manager should be placed on PIP is not considered, she will contact the UK Education Committee and report alleged malpractices taking place at the university. d. Referring to Sainsbury’s Supermarkets Ltd v Hitt [2002], misconduct is grounds for fair dismissal when the employer’s procedural actions fall within the ‘band of reasonable responses.’ As the claimant was already placed on PIP, essentially on probation, dismissal is a reasonable response to misconduct. e. According to Associated Society of Locomotive Engineers and Firemen v Brady [2006], if the employer welcomes the opportunity to dismiss the employee when misconduct arises, this opportunity does not make the dismissal unfair. 3. Other Substantial Reasons have contributed to the fair dismissal of the claimant a. As per Tregannowan v Robert Knee & Co ltd [1975], fair dismissal is acceptable when there is pressure on the employer to dismiss an employee due to the relationship with other employees. b. A breakdown of trust and confidence between and employer and employee are a substantial reason for dismissal when a fair procedure is followed. c. According to Gorfin v Distressed Gentlefolk’s Aid Association, dismissing o...