Business and Employment Law Lecture 2 Week Beginning 28th January 2019

1. Business and Employment LawLecture 2Week Beginning 28th January 2019 Barriers to Employment Rights

2. Identifying the Status of WorkersFour categories of ‘Workers’ • Employee • Statutory workers • Self Employed • More recently - Employee Shareholder

3. Employee • S230 Employment Rights Act (ERA) 1996 defines status • BUT the section itself is confusing which is why it is often left to the Court to decide who is and who is not an ‘employee’ • Why is this important? • Only an employee has full employment protection

4. IDENTIFYING CONTRACT OF EMPLOYMENT [II]: STATUTORY WORKER S.230 (3) (b) ERA 1996 • Any other contract (other than a contract of employment) …whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not ….that of a client or customer of any profession or business undertaking carried on by the individual

5. Implications for Workers • Subordination of the worker created by the desire to change relationship:- • Avoid complaining • Tendency to over work because of a fear of non engagement • Higher incidence of work related stress • Less job satisfaction • Low morale • Less security • Flexibility??

6. Employee • Does work personally – cannot ‘turn work down’ • Enjoys additional ‘protection/perks’ – company car • Enjoys all statutory rights • Tax is paid at source • Employer is vicariously liable

7. Workers • Does work personally • Often ‘employed’ on casual basis • May be temporary workers • May be zero hours contract • Tax is paid at source • No security of tenure • Employer is vicariously liable

8. EMPLOYEES v. WORKERS EMPLOYEES + WORKERS EMPLOYEESONLY • Equal pay for equal work • Non discrimination • Right not to have unauthorised deductions from pay • Statutory health and safety rights • Minimum wage • Working time regulations • Data protection rights • Time off to care for dependants • Part-time workers are protected • Right not to be unfairly dismissed • Right to redundancy payment • Right to be given a statement of principal terms and conditions of employment • Statutory maternity pay • Statutory sick pay • Security of employment after maternity leave • Protection of the right to belong, or not belong, to a Trade Union • Time off rights

9. Self Employed • In business of their own account • Able to make a profit or loss of their own • More than one client • Protected from discrimination • Protected by Health and Safety Legislation • Must keep own accounts • Pay for premises/vehicles

10. Self Employed …. • May also be responsible for others as he may sub contract work out • Probably a contract for service but will be liable re: • Discrimination • Health and safety • Etc • Stringfellow Restaurants Ltd v Nadine Quashie [2012] EWCA Civ 1735

11. EMPLOYEES v. SELF-EMPLOYED EMPLOYEES SELF-EMPLOYED • Working under a contract of service. • Income tax and social security payments deducted by employer. • Vicarious liability of employer. • Extensive duty of care by employer. • Working under a contract for services. • Responsible for paying income tax and social security contributions. • No vicarious liability of employment. • Limited duty of care by employer.

12. Employee Shareholders • S31 Growth and Enterprise Act 2013 inserts s205A into the ERA 1996 • Employee, in return for (minimum of £2000) shares in the business now able to contract out of some employment protection:- • gives up the right to • Request study or training leave • Flexible working • Not to be unfairly dismissed • Redundancy payment • Increased notice of intention to return from adoption or maternity leave

13. Employee/Shareholder • S31 Growth & Enterprise Act 2013 • Allows employees to opt out of unfair dismissal protection – minimum £2,000 shares • Opt out of redundancy protection • Does this defeat the intentions of the ERA? • What is the true intention of the employer?

14. Problems with s230 ERA 1996 • As is evident, courts are often left to decide who is and who is not an employee. Over the years they have developed ‘tests’ to help them • Control test – now rather outdated • Integration Test – also less relevant but still useful • Mixed and Multiple test – pulls the other areas together and is generally used today alongside • Economic Reality Test – what is actually happening in the business – what is the ‘intention’ of the parties?

15. Control Test • How much control does the employer have over the work of the employee? • Flexible working/skilled workers – • Bramwell LJ – Yewens v Noakes(1880) ‘A servant is a person subject to the command of his master as to the manner in which he shall do his work’ • How realistic is this in 21st Century? Does a football manager tell his player how to play football or does he rely on the footballer’s skill?

16. Integration of Organisational Test • Integration is a useful test for professional people however, • The test is only really useful for permanent or core workers when in fact even outsourced work might be integral to the employer's business.

17. Mixed/Multiple Test • Ready Mixed Concrete SE Ltd v Minister of Pensions [1968] 2 QB 497 • Mackenna J:”A contract of service exists if three conditions are fulfilled”

18. Ready Mix Concrete • Thomas Latimer worked for RMC from 1959 to 1963. • He took up an opportunity to start to drive lorries on behalf of the company – RMC set up a hire purchase to allow employees to buy their own lorry. • His new contract described him as an independent contractor even though he wore company uniform and painted the lorry with company markings.

19. Three conditions • The servant agrees that, in consideration of a wage ...he will provide his own work and skill in the performance of some service for his master • He agrees expressly or impliedly... He will be subject to the other’s control • The other provisions of the contract are consistent with its being a contract of service

20. Factors the Court will examine will include: • Provision of equipment or tools • Ability to work for other people/companies • Ability to control eg does the worker determine when to take holidays or does he need permission • Who markets the work done. • In RMC – they were small business men, able to make a profit or loss of their own

21. What is happening in the Firm? • Is there:- • Mutuality of Obligations • Does the individual provide personal service or is he able to substitute his labour? • What is actually happening in the firm – what is the intention of the parties, what is the Economic Reality?

22. Other Cases to Consider • Market Investigations v Minister for Social Security (1969) 2 QB 173 • O’Kelly v Trusthouse Forte Ltd (1983) ICR 728 • Carmichael v National Power plc (2000) IRLR 43 • Lee v Chung and Shun Shing (1990) IRLR 236 • The Economic Reality Test

23. Status as a Strategic Management Tool • Associated with Risk: • An employer will choose the most appropriate “employment” contract to suit the needs of the firm • Consider the function of the worker, its importance, the risk to the business if done less well, how easily staff-turn-over can be managed. • Core workers – employees • Non core/low skilled - workers

24. Strategic Management Tool • The Employer will structure his business according to his needs. • He may use core workers, zero hours contract workers, self employed. • He may also use the device of probation periods

25. Agency Workers • Agency Workers Gaining rights in line with employees • Some rights gained from day one • Rights to facilities and amenities • Right to be informed of vacancies

26. Agency Workers • Some rights acquired after 12 Weeks • Same basic pay as if they were permanent • Same holiday entitlement • Same bonus and commission - but only if paid on a personal basis – eg not profit schemes • Paid time off for ante natal care