Labour Law (Intro)

Topic 1 – Worker Status

Introduction

We look to determine what status a worker may be for various reasons. These include the benefits that individual may accrue, the ability of that individual to sue and be sued etc. An example in tort would be as follows –> Imagine Party A is a lorry driver. A is on duty, delivering packages to shops all over the country. A is negligent in his driving (he might have been talking on his phone or not paying attention to the road) and crashes into Party B’s car. B is injured. If we look to Tort, B can certainly sue A, but if B could sue A’s employer, B may be entitled to a greater payout for the injuries. The question we must ask ourselves now is whether A was an employee, which would make A’s employer vicariously liable, or is he in fact an independent contractor, which would not allow B to sue an employer.

  • The basic premise in distinguishing employer from independent contractor is: Contract of services (employee) vs. Contract for services (independent contractor).
    • The distinction here is critical as it determines the rights, duties and obligations of both parties to the relationship.
      • This is important as independent contractors are generally excluded from many protective statutory measures.
      • The distinction can also be significant with regard to the rights of 3rd parties.
    • However, in this modernized world, not all working relationships are clearly defined. Increased competitiveness and greater work specialization has led to the creation of more flexible working relationships. The demarcation between employer or employee and independent contractor can and has become blurred in many senses.

1. Determining Whether the Worker is an Employee

  • No test has been developed yet and as a consequence it is difficult to identify a unifying theme through the case law.
    • Much would seem however to depend on the background policy considerations. In **Lane v Shire Roofing Company the Court of Appeal in England held that a worker who fell from a ladder while carrying out work for the defendant company was an employee notwithstanding the fact that the claimant had his own business, dealt with his own tax affairs and did not work under the control or supervision of the defendant company.
      • Health and safety were the underlying policy considerations that were seen to be stronger than imposing liability, even when seemingly unfairly. There was a ‘real public interest’ according to the judge.
      • Although difficult, the aim is to “identify correctly those who should fall within the embrace of Employment Law and to exclude those who have sufficient economic independence to make it unnecessary to protect them.”
    • ****Henry Denny & Sons (Ireland) v Minister for Social Welfare [1998] 1 IR 34
      • This is the leading Irish case as regards the status of workers.
        • Keane J: “Each case must be considered in light of its particular facts and of the general principles which the courts have developed.
        • It was seen in **Minister for Agriculture and Food v Barry that the approach by Keane J in Henry Denny was not intended to create a single overarching test.

1.i. Was the Worker in Business on His or Her Own Account?

  •  Initially the control test (See Topic 10  -Tort Law) was dominant. This however, is no longer a determinative test, merely a factor to be considered.
    • What is the problem with the control test?
      • The courts kept requiring higher and higher levels of control. It became unrealistic.
      • The test became unsuited or outdated in the modern era as the modern employee is usually very highly skilled.
      • The usability of the test has declined. There are many situations where the control test is useful, but it is becoming less and less so. All we can say nowadays is that the higher the degree of control the employer has, the more likely that person is an employee. A lack of control is not fatal, but a higher degree is indicative of an employee based relationship.
  • For a while the “integration” (organizational) test was also fashionable. This test provided that if the work was considered ‘integral‘ to the employer’s business then the worker would be labeled as an employee.
  • The approach favoured now is a multifaceted one.
    • It views the relationship holistically and is summarized as: “was the worker in business on his/her own account?” Arose in *US v Silk.
    • This approach was approved in England with **Ready Mix Concrete Ltd v Minister of Pensions.
      • Here, MacKenna J stated 3 essential characteristics of the employment relationship:
  1. The employee agrees that in consideration of a wage or other remuneration he or she will provide his or her own work and skill in the performance of some service for the employer.
  2. The employee agrees, expressly or impliedly, that in the performance of that service he or she will be subject to the other’s control in a sufficient degree to make that other the employer.
  3. That the other conditions of the contract are consistent with it being a contract of service.
  • This point in *Silk was clarified in **Market Investigations v Minister of Social Security – The fundamental test to be applied is this: “Is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer is ‘yes’, then the contract is a contract of services. If it is ‘no’ then it is a contract for services.”
    • In Ireland, the SCt approved Cooke J’s formula in *Market Investigations in ***Henry Denny & Sons v Minister for Social Welfare.
      • The appellants engaged in-store product demonstrators on yearly contracts. The demonstrators would be contacted when needed and invoices would be submitted and signed. They were paid by the day and given a mileage allowance but not nentitled to enter pension scheme or trade union. The demonstrator in question was under renewable contracts. The written contract described her as an independent contractor and carried out her own tax affairs. However, she was provided with written instructions as to how to carry out her work. She was supplied with the materials etc. and require consent prior to sub-contracting out any work.
      • Keane J noted that whether the individual was in business on his or her own account was fundamental as well as the degree of control.
        • The fact that there was no continuous supervision of the demonstrator by the appellants, that she was provided with the clothing/equipment necessary for the demonstration and made no contribution, financial or otherwise, to the business were all indicators that she was an employee.
        • The contract in stating she was an independent contractor was considered but not found determinative.
      • This case was followed by the SCt in ****Castleisland Cattle Breeding Society v Minister for Social and Family Affairs
        • The Society appealed to the HCt which categorized Mr. Walsh, an artifical inseminator, as an “employee”.
        • There were two determinative factors:
  1. Mr. Walsh knew why his contract was terminated.
  2. The Society retained a degree of control over who could carry out the work.
  • So, what is the test?
    • It remains a vexed and complex one with some fundamental issues being whether the worker was in business on his/her own account, whether they used their own equipment, or whether he/she could profit from their own efficiency can prove crucial.
      • The factors taken into consideration in this regards are:
  1. Mutuality of Obligation
  2. Control
  3. Parties’ own description of the relationship; and
  4. Personal service

     –1.i.i. – Mutuality of Obligation

  • Definition: A requirement that there exist mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer.
    • If this is not present there cannot be a contract of service.
    • ***Minister for Agriculture and Food v Barry
      • Respondents were veterinary surgeons who worked for the appellant as temporary veterinarian inspectors. Following the closure of the plant, the respondents claimed redundancy payments. The Employment Tribunal held that they were employees.

     -2.i.ii. – Control

  • Although not a determinative factor anymore, it is still taken into account.
    • Keane J in **Henry Denny & Sons.
    • The test has changed: Formerly it was actual control, now it is more the potential control. (who, what, where, when and how).
    • A number of questions flow from this approach:
  1. Did the employer retain control over who did the work?
    1. In Ready Mixed Concrete v Minister of Pensions – held that the fact that driver of lorries were entitled – with the consent of the company – to employ substitute drivers to do their work was evidence that the drivers were independent contractors.
  2. Did the employer control what the employee did?
  3. Did the employee control when the employee did the work?
  4. Di the employer control where the work was done?
  5. Did the employer control how the work was to be done?
  • In ***O’Keefe v Hickey, the control test was determinative (vicarious liability).
  • In ***ESB v Minister for Social Community & Family Affairs & Others – Here it was found that meter readers, who could nominate substitutes (on approval of the ESB) and who were provided handheld computers and required to use them as such, but filed their own taxes etc. were found to be employees.

–1.i.iii – Parties’ own Description of the Relationship

  • Due to unequal bargaining powers, courts are reluctant to weigh so heavily on the parties’ own descriptions of the relationship.
  • ***Ferguson v John Dawson & Partners (UK) – Oral agreement that worker was a ‘labour-only sub-contractor’. No deductions for tax were made. Obliged to follow defendant’s instructions of what to do and when to do it. Also, the equipment was supplied by the defendant’s company. The man was injured and contrary to the contract, the majority of the court found that he was an employee.
  • The Irish courts have adopted a similar approach – **In re Sunday Tribune Ltd – an arrangement by journalists where, for tax purposes, they were considered to be independent contractors, was held not to be a determinative factor when assessing the relationship. Carroll J stated that the court must look to the “realities of the relationship”.
  • However, where it is clear that both parties genuinely wished to clarify their working relationship and drafted a formal contract to this end, greater regard will be had to the terms of such a contract when determining the status of the worker.
    • In ******Massey v Crown Life Insurance Co Ltd – Mr Massey worked as a branch manager for one of the insurance company’s offices. His pay was partly based on commission. After receiving financial advice, he found it would be advantageous to have his status changed from that of an employee to an independent contractor. Lord Denning, on the specific facts of this case felt that there was a genuine intention to change Mr. Massey’s status.
      • This case should be viewed with caution however, so as not to elevate the status of what was contractually agreed between the parties to the point where it can be considered a key factor in determining the status of a worker.
      • Massey can perhaps best be interpreted as authority for the proposition that it would be unfair to allow Mr Massey to request the change in status for tax reasons but then seek the protection offered to employees when it suited him.
      • The potential scope of Massey was curbed in *****Young v Woods
        • Mr West, decided to operate as an independent contractor.

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