Determining Employment Status

Improved Essays
Determining the worker’s status as being either employed or self-employed plays a significant role in employment law. This is due to the range of statutory rights that is bestowed upon only to employees. However, whilst employment law draws a distinction between the two categories of workers; employed and self-employed, the courts had been fraught with difficulties in creating a single test that determines workers status of employment. This is exacerbated by the increasingly emerging different types of workers; zero hour contractors, agency, home and casual workers. This is evident due to the courts’ inconsistent application of the tests when deciding on the worker’s status of employment. This essay will argue why determining employment status …show more content…
Secondly, analyze the case law and the common law tests that have been developed by the judiciary to determine employment status. Thirdly, examine the issue of parties own classification: their intention and statement regarding employment status. Fourthly, discuss the impact of sham contractual terms or delegation clauses and its impact on deciding workers’ status of employment.

The question as to ‘who is an employee?’ is a reoccurring dispute in employment tribunals. The distinction is between an employee who works under a 'contract of service ' and a self-employed working under a 'contract for services '. As aforementioned, this is because many fundamental rights such as the right not to be unfairly dismissed , redundancy , protection under TUPE , maternity leave and other social security benefits is reserved only for employees. It should also be noted that employees will not automatically be granted statutory rights, as they need to prove they have been in ‘continuous employment’ on a full-time basis by the employer. The difference of protection offered to self-employed is much more limited than the rights afforded to employees. There is also a distinction between how employees and self-employed
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In Yewens v Noakes, Bramwell LJ expressed the control test as a servant subjected to the command of his master as to the manner in which he shall do his work. However, shortcomings of the control test were highlighted as it failed to apply to skilled workers where workers exercised more freedom in conducting their work but were still bound by the contract of employment. Subsequently, in Stevenson Jordan & Harrison Ltd v McDonald and Evans, Lord Denning looked at whether the worker was fully integrated into the business or if the worker merely worked for the business, was not integrated, and only served as an accessory to it. Lord Denning considered employees as ‘part and parcel’ of an organisation, however, the integration test also proved to be insufficient and was subjected to criticism by the judiciary. The shortcomings of the integration test led to the development of the economic reality test in Market Investigations Ltd v Minister of Social Security. Cook J, in this case, stated that when determining employment status, the court should ask whether the person in question is performing the services as ‘a person in business on their own account,’ or not. If the answer is “Yes”, then the contract is a contract for services. If the answer is “No”, then the contract

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