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ACADEMIC YEAR 2015/2016 TRIMESTER THREE

EMPLOYMENT LAW
MODULE CODE: MOD004665
Question 1
The basic division for our purposes is between those who are
employed persons and those who are self-employed, and the distinction
between these categories is that the employed person works under a
contract of service, whereas the self-employed person works under a
contract for servicesit is easy to state this distinction, but in practice
it has proved difficult to draw, and over the years the courts have
developed a number of tests designed to produce a given result.
Norman M Selwyn and Astra Emir, Selwyn's Law of Employment (18th
edn, OUP 2014) 43
Why is it necessary to distinguish between those serving under a
contract of service and a contract for services? Explain the various tests
developed by the courts in order to identify the distinction between the
two types of contract and explain how these tests are applied, using
illustrative case law throughout.
Introduction
A number of differences are evident between workers serving under a contract of
service and those serving under a contract for services. These common-law
terms are used to differentiate the two different types of service a worker could
provide. The differences between the two are extensive. The following are
examples of where differences between the two types of employment could
occur, these include the workers eligibility to employment rights,
worker/employer liability and tax affairs.
The term contract of service refers to an individual that is in employment, on the
other hand, contract for services relates to an individual who provides services to
clients. It is important to note that these terms have not been legally defined,
and although the terms are frequently used in regards to employment and tax
legislation, no statutory interpretation has been provided for the definition of
employment and self-employment.
Various areas of the law are affected by the legal status of a worker. This is the
case as only employees are entitled to benefit fully from the employment
legislation in place and therefore differences in the areas relating to welfare, tax
affairs, employment rights and liability can be evident between those working
under a contract for services and those working under a contract of service.
The case of Market Investigations v Ltd v The Minister of Social Security (1969)
noted that the majority of employee rights relating to unfair dismissals, notice
periods, provision of maternity and paternity leave, redundancy packages and
working time regulations are only applicable to employees. For the purpose of
employee rights and payroll, an employee is an individual that works under a
contract of service.

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The distinction is particularly important in cases regarding liability. Whereas the
employer is liable for torts committed by its employees, those working under a
contract for services would be liable for their torts.
It is necessary to distinguish between the two as in the event of a dispute, the
type of contract that was adopted for the purposes of employment will play a
major role in the determination of the outcome. It has however proven difficult to
identify the distinction between the two types of workers due to the complexity
of individual cases. A number of tests however have been developed over the
years to assist judges in a court of law.
Generally speaking, an employee is a worker that is in receipt of wages in return
for the time worked, is not expected to supply materials for carrying out the job
in hand, would not be personally exposed to financial risk and is entitled to all
employee benefits and rights related to their employment. Contrarily, a
contractor would not be eligible for the same employment rights of that of an
employee, they would be expected to provide the necessary supplies in order to
carry out the job, they would usually be paid only upon the submission of an
invoice and they are responsible for their own tax affairs.
Despite the fact that in essence there seems to be a clear distinction between
the two terms (off vs for) it is evidently not as easy in practice due to the
complexity of the individual cases. There may be conflicting aspects some of
which may point to the worker being employed under a contract for services and
others which suggest the worker being employed under a contract for services. It
is important that prior to commencing legal proceedings that the status of the
employed be determined. The entitlement of workers depends heavily on their
employment status, for this reason it is necessary to distinguish between an
employee and a contractor at an early stage.
Tests developed to identify distinction
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Control Test

There are a number of tests which have been developed over the years in order
to assist in the determination of the relationship between the employer and
worker. The control test (also known as the traditional test) is the oldest test,
developed as a judgment in regards to the case related to Yeren v Noakes
(1880), which examines the extent of which the employer exercised control on
the worker. It was stated by the judge of the case of Yeren v Noakes (1880) that
an employee is subject to the command of his master as to the manner in which
he shall do his work.
For the sake of the argument, it is said that the higher amount of control
observed would suggest that the worker is an employee and not a contractor,
despite the claims of the contract.
An example of where the control test has been used can be observed in the case
of Performing Rights Society v Mitchell & Booker Ltd (1924). The defendants in
this case were being sued for breach of copyright laws in relation to intellectual
property of a jazz band. The defendant was the legal owner of a music venue and
had arranged for a band to perform at the venue on the condition that they did
not breach any copyright laws as a result of the music they chose to use in their
performance. It came to light that the band had used copyrighted material
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without the express permission of the plaintiff. The defendants were summoned
to court by the plaintiff as they were considered responsible for the performers
actions. This however was dependent on it being proved that the band members
were employed by the music venue. After analyzing the facts regarding the case
it transpired that regular hours had been worked by the band, that there had
been a fixed period of employment and that the band had been directed where
they had to work. In essence, the court examined the nature and degree of
control over the alleged servant. It was established that the band was in fact an
employee of the music venue.
The ideology behind this statement is that the worker could be considered an
employee if the employer exerted a considerable amount of control over the
worker and how the work was carried out. There is a major flaw due to the fact
that in the majority of cases, the employer may in fact not exert a small amount
of control over the day-to-day tasks of the worker, but the worker would still be
classified as an employee. The nature of control over the years has evolved and
therefore it is considered that in contemporary employment, the assumption that
tight inspection and surveillance is present is somewhat out of date. As a result
of this, the control test is now rarely used.
Over time, the control test has developed into a series of tests indicating control.
The courts would look into the following aspects regarding a case such as (a) the
power to select the employee; (b) the right to control how the work is undertaken
and (c) rights of suspension and dismissal. Subsequently, this developed into the
two tests that courts commonly use in modern cases; the integration test and
the multiple test. (Thornes, 2002)
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Integration Test

The integration test, developed in the 1940s is essentially, an extension to the

control test with the distinction being that control of circumstances relating to
performance should be considered instead of solely the control regarding
performance.
During the case of Jordan and Harrison Ltd v. MacDonald and Evans (1952), it
was stated by Denning, L.J. (1952) that it is often easy to recognise a contract
of service when you see it, but difficult to say wherein the distinction lies, under
a contract of service, one is employed as part of a business and his work is
carried out as an integral part of the business; whereas under a contract for
services, work, although done for the business, it is not integrated into it but
only accessory to it.
In light of this statement, it is clear to see that it is essentially a summary of the
integration test. Essentially, it states that if the work being carried out is an
integral, crucial part of an organisation, then the worker can be classified as
employee. On the contrary, if the work is auxiliary to the integral activities of the
business, the worker is an independent contractor. The test is especially useful in
determining the position of professionals where there is evidently no right of
control over the level of performance (B. Marsh, J. Soulsby, 2002)
An example of where the test has been applied can be seen in the case of
Whittaker v. Ministry of Pensions and National Insurance (1967) where there was
a requirement for the existence of a contract of employment in order for a social
security claim for a wrist injury to be valid. The claimant had worked at a circus
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as a trapeze artist, however was also required to work as an usherette. The court
held that the nature of her work was integral to the business and therefore was
entitled to compensation.
The main issue of this test is the fact that a certain level of ambiguity exists over
what constitutes integrity to an organisation. In the case of Sunday Tribune
(1984) a journalist employed under a contract for services had received a
commission advance, however was under no obligation to publish her work.
Contrarily, a staff member working over 50 hours a week could be considered an
integral part of the organisation, therefore working under a contract for services.
This case illustrates the limitations of the test as the nature of employment is not
always significant due to the fact that both workers had the same
responsibilities, however their employment statuses were different. The fact that
there is no interpretation over the meaning of integrity adds to the difficulty of
applying this test.
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Multiple Test

The multiple test is essentially fills the gap that is not covered by the control and
integration test. Despite the fact that the extent of integration and right of
control are very important, neither of the two aspects provide answers to the
issue. Recently, courts have attempted to consider the wider picture, taking into
account other factors related to employment. These factors have included
aspects such as the method of payment, tax affairs, degree of independence,
whether the worker had received sick pay and the economic implications of the
case. It is not conclusive evidence to imply that a worker is an employee or a
contractor even if this is stated on a contract.
This test was applied in the case of Ready Mixed Concrete Ltd v. Minister of
Pensions and National Insurance (1968). This case was analysing the issue
regarding whether an owner-driver of a vehicle used exclusively for the delivery
of a companys ready mixed concrete was engaged under a contract of service
or a contract for services.
Conclusion
To conclude, it is evident that the tests that have been developed are useful in
determining employment status. The way in which cases are analysed has
evolved over the years, since the development of the control test used in the
early cases since 1880. Even with the use of tests as an aid to determine
employment status, it is ultimately the decision of the court and all cases must
be considered on a realistic basis looking at the case in context. Due to the
complexity of cases, no theory would be able to completely provide the answers
to an issue. It is therefore up to the courts to make an informed decision, using
the tests and reviewing the case, analysing all the areas in context.

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Question 2
Sunrita, Annabelle and Akash work at a local school. Sunrita teaches
maths, Annabelle teaches music and Akash is the deputy headmaster.
Sunrita has been teaching for 10 years and is keen to be promoted. She
recently attended a promotion interview but the job was given to her
colleague Adrian. Adrian has fewer qualifications than Sunrita and he
has only been teaching for three years. Sunrita asked her department
manager why she did not get the job and he said that the interview
panel had thought it better to put a man into a top job.
Annabelle gave evidence four months ago in the Employment Tribunal
for her colleague Susan. Susan was bringing a claim under the Equality
Act 2010 because she felt that she had been discriminated against
because she is disabled. Annabelle recently applied to go on a training
course but her line manager refused her request. He told her that it
was payback time for her involvement in Susans claim.
Akash is 55 years old. He is aware that a vacancy is due to arise for a
headmaster at a neighbouring school. Yesterday he telephoned the
school to ask about the vacancy. The current headmaster told him that
he was too old to apply and that they were really looking for someone
a bit younger, someone around 40 years old, and definitely not
someone over the hill.
Advise Sunrita, Annabelle and Akash on any claims that they may have
at the Employment Tribunal. Would their employer/prospective
employers have any defence to any claim made?
50 marks
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In order to advise Sunrita, Annabelle and Akash regarding any discrimination
claims that they may have against their employer, it is important to first
understand the legislation that is in place to protect employees from
discrimination.
The Equality Act 2010 was introduced in October 2010 following a government
review in 2005 aimed at replacing out-dated statutes with the intention to create
a simpler framework of legislation in regards to discrimination in the work place.
Prior to the implementation of the Equality Act in 2010, a number of separate
acts were in existence that covered the areas relating to discrimination such as
the Race Relations Act (1976), the Disability Discrimination Act (1995) and the
Sex Discrimination Act (1986). These acts ceased to apply following the
introduction of the Equality Act.
The introduction of the Equality Act was partly as a result of pressure applied to
the UK government by the European Union to introduce legislation that is
uniform throughout and includes new protected characteristics. The legislation
covers protected characteristics including; age, sex, disability, pregnancy, race,
sexual orientation, religion, marriage and gender reassignment.
There are a limited number of occupations which would reasonably require a
specific candidate of a certain protected characteristic. In this case, direct
discrimination can be justified under s.13 of the Equality Act if it can be proven
that there are genuine circumstances relating to the occupational requirement.
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Sunritas claim

It is evident from the information provided that Sunrita has been discriminated
on the grounds of sex and may be entitled to compensation if she took the claim
to an Employment Tribunal. In order for a claim to be valid, she must conform to
the time limits imposed and notify ACAS under the Early Conciliation scheme
within 3 months of the discriminatory act taking place.
It is clear that she has been directly discriminated as a result of her sex and was
treated unfavourably in her application for a promotion at work. Under the
Equality Act (2010) it is unlawful to directly discriminate an individual by treating
them less favourably to those of the opposite sex. An example of this is
publishing a job advertisement and stating that it is better suited to male
applicants. (ACAS, 2016)
s.39 (2) Equality Act 2010 states that an employer (A) must not discriminate
against an employee of As (B) (a) as to Bs terms of employment ; (b) in the
way A affords B access or by not affording B access to opportunities for
promotion, transfer or training or for receiving any other benefit, facility or
service.
This section clearly relates to Sunritas case as she was directly discriminated on
the grounds of her sex. The employer was in breach of the Equality Act as they
offered a promotion to a male colleague of Sunrita after going through the
interview process stating that it was better to put a man into a top job. This is
clear, direct discrimination and in breach of the Equality Act 2010. s.39 (2) (B).

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The case of Wallace v. South Eastern Education and Library Board (1980)
illustrates the breach of the Equality Act (2010) which can be related to the
possible claim of Sunrita. This case has particular similarities in the fact that an
existing part-time female employee had applied for a promotion to a full-time
position. She was interviewed believing that the interview process was a
formality and that she would get the position. It was later discovered that a male
was appointed to the position however his qualifications were inferior to those of
the female employee. The Northern Ireland Court of Appeal held that in cases
involving access to employment or promotion, the appointment of a less
qualified man over a more qualified women or vice versa raises is to be accepted
as correct unless proved otherwise. In other words, the employers were required
to prove that no discrimination took place in order for the ruling to be in their
favour.
In light of the example case which has similar characteristics to Sunritas claim, it
could be advised that Sunrita took her employer to an Employment Tribunal and
seek compensation for the discrimination act which took place. It is likely that
she would win her claim as her employer would not have any defence to the
claim, especially due to the fact that the male candidate that they appointed
instead of her held less qualifications. It is envisaged that the courts would take a
prima facie approach to the claim as seen in previous examples.
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Akashs claim

Age is another protected characteristic which is covered under the provisions of

the Equality Act (2010). Before the introduction of the Employment Equality Age
Regulations (2006) which was later incorporated into the Equality Act 2010, there
was limited legislation in place to protect workers from discrimination on the
grounds of age apart from legislation relating to child labour and exploitation.
According to Wiley (2009) experience, know-how, educational qualifications,
decision making capabilities, emotional maturity and almost any other neutral
criterion that may be applicable in an employment context could put persons of
a particular age at a disadvantage.
While it is an inevitability that age discrimination is likely to occur at any age,
certain factors as stated by Wiley provide for the likely occurrence of age
discrimination particularly against the young and aged.
It is clear that Akash has been discriminated against on the basis of his age from
the information provided. During an informal phone call inquiry regarding a
vacancy, the employer had stated that they were looking for someone a bit
younger, someone around 40 years old & definitely not someone over the hill.
By applying the full definition of the Equality Act 2010. s.39(1) an employer,
during recruitment is not permitted to discriminate against protected
characteristics in the way of which it decides to whom it offers employment; on
the terms of which employment is offered and by not offering a candidate
employment.
In the case of Rainbow v. Milton Keynes Council (2008) the council had placed an
advertisement for a teaching position with the intention of attracting applicants.
The advertisement stated that applicants should be in the first 5 years of their
career. Generally speaking, this would be interpreted as implying that they are
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looking for younger candidates. The claimant held 34 years of teaching
experience and felt that the publication indirectly discriminated her on the
grounds of age. The defendants justified the advertisement claiming that the
requirement was in place due to cost saving measures. The court rejected the
argument and stated that it is not a valid justification for indirectly discriminating
against age.
The employer in Akashs situation has breached the law by indirectly
discriminating Akash on the grounds of age, being the basis of their decision not
to progress with Akashs application. It is recommended that Akash proceeds
with his legal claim, as the employer does not have any justification for not
proceeding with Akashs application and would have little defence in court.
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Annabelles claim

It would appear that Annabelle has been subject to victimisation by her employer
as a result of her involvement in a separate claim by another member of staff.
Legislation protecting workers from victimisation is defined under s.27(1) of the
Equality Act (2010). Victimisation could have taken place if (1) A person [an
employer] (A) victimizes another person [a worker] (B) if A subjects B to a
detriment because (a) B does a protected act, or (b) A believes that B has
done, or may do, a protected act.
A protected act could include; bringing proceedings under the Equality Act;
giving evidence or information in connection with proceedings under the act;
doing any other thing for the purposes of or in connection with the act and
making an allegation that A or another person has contravened this act. Equality
Act 2010. s.27(2).
A detriment in the context of victimisation could take various forms. Generally
speaking, victimisation takes place where an employee places a worker at a
disadvantage as a direct result of the individuals involvement in a protected act;
this could include rejection for promotion, exclusion from training opportunities
or denied performance related incentives.
Based on the facts surrounding Annabelles claim, it is likely that she would stand
a good chance of succeeding at an Employment Tribunal as it can be proved that
the employer has subjected her to a detriment as a result of the fact that she
committed a protected act.
In the case of Bouabdillah v Commerzbank AG (2013) an employee was
dismissed as a result of a character reference from a previous employer where it
was disclosed that the employee had alleged discrimination claims against the
previous employer. The court upheld the case, dismissing claims by the
defendants that the dismissal had been on grounds of dishonesty as it was not
necessary for the employee to disclose the information.
In this case, the dismissal could be considered the detriment to the individual as
a result of the protected Act.
Conclusion
To conclude, it appears that each of the claimants in each scenario would stand a
good chance of having a successful claim at an Employment Tribunal. After
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comparing their situations to previous cases with similar characteristics, it is fair
to suggest that the courts would rule in their favour. It must be said, that despite
previous similar cases being successful, the outcome of the case would rely on
the judgement of the panel, which inevitability varies at every hearing. The
claimants however would have the option to appeal any decision made at an
Employment Tribunal.

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Bibliography
ACAS, 2016. Acas Advice and Guidance. Available at:
<http://www.acas.org.uk/index.aspx?articleid=1814> [Accessed 1 July 2016].
Bouabdillah v Commerzbank AG [2013] EqLR 651.
Equality Act. 2010. (c.s.13 s.27(1) s.27(2). s.39(1) s.39(2)). Statute Law
Database.
Harrison Ltd v. MacDonald and Evans [1952] 1 TLR 101.
Market Investigations v Ltd v The Minister of Social Security [1969] 2 QB 173.
Marsh, S.B. and Soulsby, J., 2002. Business law. 8th ed. Cheltenham: Nelson
Thornes.
Performing Right Society v Mitchell & Booker Ltd [1924] 1 KB 762.
Rainbow v. Milton Keynes Council [2007] 1200104/2007.
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National
Insurance [1968] 2 QB 497.
Re Sunday Tribune [1984] HC.
Wallace v. South Eastern Education and Library Board [1980] IRLR 193. 101.
Whittaker v. Ministry of Pensions and National Insurance [1967] 1 QB 156.
Willey, B. and Murton, A., 2012. Employment law in context: An introduction for
HR professionals. 4th ed. Harlow, England: Pearson Longman.
Yewens v Noakes [1880] 6 QBD 530.

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