Case Law Page



  

British Law is made up of Common Law; Statute Law and Case Law
It is frequently the case that the true intent and meaning of Statute Law is determined in the Courts.
The Courts are: High Court; Court of Appeal and House of Lords
The Court of Appeal can over turn a High Court Judgement
The House of Lords can over turn a Court of Appeal Judgement

The following cases are mentioned as an indication of previous judgments.

The Court of Appeal described as a 'misdirection of law'
the view that 'every independent contractor who is content or able only to attract one client
[should] be held to work under a contract of employment'.
"the method of calculating entitlement to remuneration is not an essential aspect of the employment relationship"
(O'Kelly v Trusthouse Forte plc [1983] IRLR 369)
'A man [sic] is without question free under the law to contract
to carry out certain work for another without entering into a contract of service.
Public policy has nothing to say either way.'
Calder v H Kitson Vickers & Sons (Engineers) Ltd. [1988] ICR 232, 250
(Ralph Gibson LJ).

WHPT Housing Ass. Ltd v. S of S (1981) ICR 737 MO
Subject: Architect.
Contract: Freelance, same client for a year.
Basis: To be considered as an employee for NI contributions.
Points: Architect accepted work on a freelance
basis: Paid hourly rate, received car allowance, 28 hour week, worked at client's offices using their equipment.
He included VAT but, did not have any employee benefits and decided on his own hours of work.
Held: There was no mutuality of obligation and therefore the architect worked under a contract for services.


Extending legislation: the concept of 'worker'
it has recently been adopted under:
a) National Minimum Wage Act 1998
b) Working Time Directive.
Control
The Court of Appeal suggested that to determine if an individual was an employee or self-employed:
"who lays down what is to be done,
the way in which it is to be done,
the means by which it is to be done,
and the time when it is done"
Lane v Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493, 495 (Henry LJ).
Would this mean Control depends upon all four conditions?

Integration
Under a contract of service or employment work is done as an integral part of the business.
Under a contract for services, work done is accessory but not integrated into the business.
Stevenson, Jordan & Harrison v MacDonald & Evans [1952] 1 TLR 101 (Denning LJ).

'the greater the skill required for an employee's work,
the less significant is control in determining whether the employee is under a contract of service'.
Beloff v Pressdram Ltd. [1973] 1 All ER 241, 250;

Economic Reality
Involves 'looking to see where the financial risk lies,
and whether and how far [the worker] has an opportunity of profiting from sound management in the performance of his task'
Lane v. Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493, 496 (Henry LJ).

It therefore implies a test of economic dependence, in the sense that employee status is the result of 'the extent to which the individual is dependent or independent of a particular paymaster for the financial exploitation of his talent'
Hall v. Lorimer [1994] IRLR 171, 174 (Nolan LJ).

Mutuality of Obligation
The following are cases where workers are not really classed as employees
Homeworkers, agency workers, zero-hours contract workers, casualised trades workers

Airfix Footwear Ltd v Cope [1978] ICR 1210;
Nethermere (St Neots) Ltd v Taverna and Gardiner [1984] IRLR 240.
Wickens v Champion Employment Agency [1984] ICR 365;
Ironmonger v Movefield Ltd [1988] IRLR 461;
Clark v Oxfordshire Health Authority [1998] IRLR 125.
O'Kelly v. Trusthouse Forte Plc [1983] IRLR 369;
Carmichael v National Power Plc [1998] IRLR 301.

Wickens v. Champion Employment Agency Ltd. [1984] ICR 365, 371:
The law 'does not include as a necessary element the question whether the individual carries on a separate business.
If it did, then it would follow that a casual worker must always be employed under a contract of service unless he has his own business and that, plainly, cannot be the law'.
This was a case of an agency worker.

In addition, legislation in the fields of tax and national insurance occasionally deems individuals to be dependent workers for tax and social security purposes even though such persons would otherwise be classified as self-employed.
This is the case, for example, with certain categories of construction workers, and with agency workers.
Income and Corporation Taxes Act 1988, s. 134
Brady v Hart (trading as Jaclyn Model Agency) [1985] STC 498;
Bhadra v Ellan [1988] STC 239);
Social Security (Categorisation of Earners) Regulations, SI 1978/1689.

The parties' own view of the nature of their relationship may clarify an otherwise unclear situation.

Contract clauses
Temporary workers are engaged under a contract for services
There is no obligation by the Employment Business to provide or the
Temporary Worker to serve any normal number of hours in any day or week.
In the event of the Temporary Worker declining the accept any offer
of work, or failing to attend work for any reason, for any period the contract shall terminate.
In Pertemps, the EAT considered that the terms of the written contract,
taken as a whole, were an important indicator that the agency worker concerned was not an employee.
Pertemps Group plc v. Nixon, unreported, 1 July 1993, EAT/496/91.

However, it is only if the other factors are unclear that the parties' own view of their relationship will carry much weight,
and, even then, the courts will be aware of the need not to take at face value arrangements which only benefit one side.
Judges will steadily become more willing to respect the parties' own categorisation at least in cases where the parties perceive the relationship as one of self-employment or where self-employment is the custom for the trade in question.
Cataraman Cruisers Ltd v Williams [1994] IRLR 386
Calder v H Kitson Vickers & Sons (Engineers) Ltd. [1988] ICR 232, 250 (Ralph Gibson LJ).
Hellyer Bros. Ltd. v McLeod [1987] ICR 526.
Degree of economic dependence between the two parties.
The issue here is how far the applicant was dependent upon a particular employer or client for the bulk of the work they do,
as opposed to having numerous clients or buyers of their services.
For example, in the tax case of Hall v. Lorimer,45
a key finding was that the respondent, who was a freelance film mixer,
worked in the course of a year for over twenty clients, and had over one hundred separate engagements.
In the view of the Court, it could not be said that he was dependent on any single one of them for a significant proportion of his income. The Court of Appeal therefore held that he was self-employed and so classified under Schedule D for the purposes of income tax. It seems likely that, on this basis, he would have not have been classified as a 'worker' for the purposes of employment legislation.

"I work as a lecturer in Further Education.I am hourly paid , I work on the clients premises with the clients equipment. I take no financial risk, have no other clients and I have to do the work personally. I do not have a service company.However the Inland Revenue and the courts consider me and thousands of my colleagues as self-employed! According to IR175 I am an employee but when some colleagues tried to take their college to court to prove they were employees,they lost
(Mclaughin V North Tyneside College and ELS)."

Cooke J. in Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, 184-185:
"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 to that question is 'yes,' then the contract is a contract for services.
If the answer is 'no,' then the contract is a contract of service."

2000 Glasgow City Council v Macfarlane - Employment Appeal Tribunal -
the appellants - trained gymnastic instructors - claimed unfair dismissal on grounds that they were Council employees since they paid tax and NI and used the Council's venue and equipment. The Council argued that the appellants were self-employed because they could provide a substitute and were not entitled to sick/holiday pays and pension benefits. The court ruled that while the substitution right existed it was fettered by the following factors. 1. The appellants could provide a substitute only from among the coaches maintained by the Council. 2. The Council did not pay the appellants but paid the substitute direct and the appellants had no say in the amount paid. 3. The Council sometimes arranged the substitute itself. The court referred the case back to the Employment Tribunal to further investigate the facts to decide employment status. The decision has revised the meaning of substitution suggesting a more restrictive and narrow definition.
1999 Express and Echo Publications v Tanton - Court of Appeal -
despite the fact that the Inland Revenue took the view that Mr. Tanton was undoubtedly an employee the Court of Appeal decided that he was not an employee because he had the right to send a substitute. This is a very important case law precedent and Lord Justice Peter Gibson noted in his judgement that the first thing you should consider in determining status is whether there are any aspects of the working relationship which are fundamentally inconsistent with PAYE. If there are then the matter could be concluded there and then. The intention of the parties was also given prominence in this case.
1999 Costain v Smith - Employment Appeal Tribunal -
this case followed Serco v Blair from 1998 and said that where there is the classic worker/agency/PLC client chain the worker has a relationship with the Agency and not with the PLC client. This is important in as much as we have to consider the contractual circumstances of the worker and we have always argued that they should be restricted to the contract the worker or his own personal service business enters into an should not be clouded by references to the PLC client the top of the chain. This case confirms this.
1999 Carmichael v National Power - House of Lords -
National Power successfully contended that a number of tour guides were not the PAYE employees because there was a lack of mutuality of obligations. Indeed Lord Irvine confirmed that the workers' case failed because it floundered on the rock of a lack of mutuality. This case once again puts the importance of mutuality at the top of the agenda together with the substitution issue.
1997 McManus v Griffiths - High Court -
this is a case where the Inland Revenue argued that the taxpayer should be treated as self-employed despite the fact he wanted to be treated as an employee. The Inland Revenue's arguments prevailed despite the fact that the taxpayer in question provided no premises or plant to undertake the work involved.
1996 Brabyn v Barnett - High Court -
this interesting case concerned a worker whom the Inland Revenue argued was self-employed when the worker himself wanted to be treated as an employee. The Inland Revenue identified three overwhelming factors in favour of self-employment being the original intention to have a self-employed relationship, the fact that the worker had an element of flexibility as to the hours he worked and the "cogent factor" that the Inland Revenue had determined his tax assessments in previous years on a self-employed basis. Mr. Justice Lightman in the High Court agreed with the Inland Revenue and it is a very helpful case.
1993 Hall v Lorimer - Court of Appeal -
this is one of the leading case law decisions regarding self-employed status and one of the important aspects is that Lord Justice Nolan accepted in the Court of Appeal that the taxpayer was self-employed despite the fact that he provided no equipment premises plant or materials. The Court of Appeal identified that it wasn't the taxpayer's business to provide premises and equipment but that he was in the business of "providing his services". Although Mr. Lorimer was found to be self-employed for a number of reasons not least the fact he undertook many engagements for different clients, this is an important case in respect of the lack of provision of equipment and plant.
1991 McMenamin v Diggles - High Court -
this was a tax case which amongst other things established the importance of being able to send a substitute despite the fact that on the facts of the case the taxpayer would have found in virtually impossible to have sent one.
1990 Lee Ting Sang Case - Privy Council -
this case concerned a stone mason who suffered a serious accident and despite having been self-employed claimed that he was an employee for the purposes of seeking compensation when working in Hong Kong. The case came through to the Privy Council who decided that he should be treated as an employee for the purposes of accident compensation. It has been suggested that the worker had the benefit of the doubt and received something of a sympathy vote because he would not have received the same compensation had he been treated as self-employed.
1983 Swan Hellenic Case - High Court -
this case once again underlined the importance of the intention of the parties but also significantly played down the so-called "control" test. The High Court judge Mr. Justice McCullough explained that even people who are subject to a very considerable degree of control can nonetheless be independent contractors. This is an unreported case.
1983 O'Kelly v THF - Court of Appeal -
this case established the importance of the concept of mutuality of obligations. Where there is no ongoing obligation for the work provider to continue providing work and where there is no ongoing obligation for the work doer to accept such work there is a lack of mutuality of obligations and this will preclude a contract of employment coming into force. In this case casual wine waiters were held not be employees despite working in the "employer's" hotel sometimes working 50 hours per week. This case also established that the method of calculating pay is not a crucial element in deciding whether a person is employed or self-employed.
1978 The BSM Case - High Court -
again this case shows that it is perfectly possible to renegotiate your terms and conditions and also established the principle that where there are practical or commercial reasons for the "employer" to provide essential equipment to do the job, this will not point towards a PAYE contract of employment.
1978 Chaplin's Case - Privy Council -
this case built on the idea of personal service being a necessary prerequisite for a contract of employment and Lord Fraser explained that if there is a genuine freedom to send a substitute then that would virtually prove conclusive against a contract of employment i.e. PAYE.
1977 Massey v Crown Life Assurance - Court of Appeal -
this case established that it is perfectly possible to renegotiate your terms and that in cases which are overall neutral or balanced it is the intention of the parties which will then decide the issue.
1969 Market Investigations Case - High Court -
this case developed the well-known test that to show a person is self-employed they have to be "in business on their own account". This test is not universally accepted and in later case law has to some extent been played down
Stevedoring & Haulage Services Ltd v Fuller and Others (2001)
a number of permanent dock workers took voluntary redundancy from Stevedoring in 1995.
In January 1996 Stevedoring took them back on as casual workers.
The letter offering casual work made it clear that the workers would be re-employed
on an “ad hoc and casual basis” with “no obligation on the part of the company
to provide such work for you nor for you to accept any work so offered.”
The dockers worked regularly for Stevedoring and did not work for any other employer.
They were only paid for the hours that they worked and tax was deducted under the PAYE scheme.
The dockers were given priority over other casual workers supplied by an agency.
A rota system was devised so that those who said they were available for work
but were not offered it were rewarded and those who were not available when offered work were penalised.
Training and protective clothing was provided for the dockers.
Having worked on this basis for three years, the dockers applied to the Employment Tribunal (ET)
for written statements of the particulars of their employment.
The ET held that they were employees, stating that they were not working under
a series of individual arrangements but under an “overarching” contract of employment.
The ET felt that despite the wording of the offer letter expressly denying a mutuality of obligation,
the conduct of the parties meant that a minimum obligation could in fact be implied.
These implied terms were that the company would offer the dockers a reasonable amount
of work when it was available, giving them priority over agency workers,
and that, in return, the dockers would make themselves available for work on a reasonable number of occasions.
The Employment Appeal Tribunal agreed that these implied terms reflected the reality of the arrangement
between the parties.
Stevedoring successfully appealed to the Court of Appeal (CoA).
The CoA stated that if no contract exists, one could not be created by the implication of terms.
They held that if a contract did exist, expressly precluding mutuality of obligation,
an implied obligation to offer and accept a reasonable amount of work could not be incorporated into it,
as this would contradict the express terms.
The CoA stressed that neither business efficacy nor necessity required the implication of terms
which were so entirely inconsistent with the express terms.
The dockers were not employees and not entitled to written particulars of employment.


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