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PREVIOUS SPEAKERS:
BRIAN LANGSTAFF QC

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27^th February 2002

Title:
WHO IS AN EMPLOYEE - AND WHO CARES?

1. Any experienced lawyer knows that the easiest matter to overlook is that which is the most obvious. More complex problems are solved by addressing the basics than by finessing existing subtleties. Yet more than a quarter of a century after Industrial Tribunals came into being, more than 40 years after the contract of employment was given specific statutory status and more than 20 years after EC Law required some certainty of definition of "EMPLOYEE OR EMPLOYMENT RELATIONSHIP" the Courts are still uncertain as to two of the most basic questions: what is a contract of employment? and who is a worker?
2. Recent cases suggest that as one question may be answered, the others are being made yet more elusive. The purpose of this paper is to examine recent developments, and suggest analyses of the questions, which may prove helpful in determining Employment Tribunal claims. A warning - I may on occasion be more provocative than analytical...
3. What Is a Contract of Employment?

You will tell me that far from there being any uncertainty about it, "employee" and "employment" are defined by statute. Well!....

By s.230 ERA 1996, an "employee " means:

" an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment"

That’s circular, unless the definition of "contract of employment" helps.

"a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing"

So "employment" equals "service". This is merely bringing terms up to date, but takes us no further forward in identifying the beast.

Nor does 230(5) help, save in one respect which is often overlooked:

".."employment" - (a) in relation to an employee means ..employment under a contract of employment, and (b) in relation to a worker, means employment under his contract"

So, "employment" and "a contract of employment" are not necessarily co-terminous, and "a contract of employment" is something that one can have without there being actual "employment" - this may help with some issues, such as that posed by Gunton v Richmond, but does not assist in defining the beast.

4. Does the definition of "worker" help? It is: (s.230(3)):

"..an individual who has entered into or works under...(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual..."

This does not even go so far as to say that a contract of employment is one under which a person undertakes to work personally for another - merely that a worker must be such a person, if he is not an employee.

5. Nor is the definition of "employer" any more revealing - in relation to an employee or worker it means "the person by whom the employee or worker is (or where the employment has ceased, was) employed."

6. These definitions create all sorts of problems - and they are not relieved when one considers the definition not of "worker" but of "employee" which is contained in the discrimination statutes:

" employment under...a contract personally to execute any work or labour"

7. A "worker" in the restricted sense of the Employment Rights Act definition has a significant number of rights. They include: the right to protection of wages (Sections 13 to 27 Employment Rights Act 1996); rights to be accompanied at grievance and disciplinary hearings under the Employment Relations Act 1999, the benefit of the Working Time Regulations 1998, the benefit of the National Minimum Wage.
8. A "worker" in the expanded sense is treated as an employee for the purposes of the Sex Discrimination Act 1975 , the Race Relations Act 1976 , and the DDA 95.
9. But an employee (and an employee alone) has the right to complain of unfair dismissal; ask for a redundancy payment; to claim paternity or maternity leave; (when the right is introduced) to take advantage of the fixed term worker provisions in the Employment Bill; to be protected by the Public Interest Disclosure Act provisions inserted in the Employment Rights Act; and (arguably) to take advantage of the Health and Safety protections which are conferred only on employees, whether under the common law obligations that cover an employer. And bear in mind social context - pensions, mortgage etc.
10. Moreover - I shall come back to it - the employee alone has the right to have the benefit of the implied term of trust and confidence.
11. The various statutory provisions differ, such that "employment" has a meaning that must be seen in its context. Given that the definition of "worker" in the Employment Rights Act 1996 is more restricted than the definition of "employee" in the SDA, the RRA, and the DDA, for the purpose of getting a grip on the concepts, and where they may lead, what are the similarities?
12. Contract

Each of the definitions depends upon there being a "contract". Not since Section 29(6) of the Trade Union and Labour Relations Act 1974 has "employment" simply been defined as a relationship, in the absence of contract (it was then: "any relationship whereby one person personally does work or performs services for another.") (On this definition, more later...).

13. A contract demands a contracting party. A person whose work is performed personally, but not under contract to the ultimate recipient, does not work under a contract (whether of employment, for services, or for anything else) with the person for whom he works. Thus in Hewlett Packard Limited v. O’Murphy [2002] IRLR 4, where O’Murphy worked for HP providing computer services personally, but did so by creating a limited company, Circle Technology, which in turn entered into a contract with an employment agency, Eaglecliff, which in turn had a contract with HP to provide the services of Circle Technology to them, he was not an employee. Nor could he have been a worker, without a constructive approach to the legislation as the headnote says:

"If the individual fails to satisfy a Tribunal that there was a contract of some kind, that is the end of a claim based on the assertion that he entered into or worked under a contract of employment within the meaning of Section 230 of the Employment Rights Act."

14. So far, so good - but is Hewlett Packard v. O’Murphy necessarily right? This may depend entirely upon the scope to be given to the word "personally". One of the great forgotten cases of recent years is that of Loughran and Kelly v. Northern Ireland Housing Executive [1998] IRLR 593. However, although this raises the question it seems to answer in a way that suggests that O’Murphy is correct.
15. How, then, does this square with Tansell v. Abbey Life ...or is it simply the question of the social context?
16. If there is a contract, then there is a need to classify it - is it a contract of employment, or some other beast?
17. My suggested approach begins by appreciating that any contract (of employment or otherwise) must necessarily involve reciprocal obligations. There cannot be a global contract without any such reciprocal obligations. (Note that I am avoiding, for the moment, the word "mutual"). Unless there is a "bargain", there is no contract at all, and therefore there can be no contract of employment, or even for employment. It may be merely an arrangement, such as there was in the O'Kelly v. Trusthouse Forte plc case [1983] IRLR 369, C.A.
18. Reciprocal obligations may depend upon the happening of a further event, but nonetheless constitute a contract. For instance, if a worker has to apply to be included upon a list or rota for work when available, and the proprietor of the business agrees that when work is done it will be remunerated at £5 per hour (or whatever), there is a contract.
19. The next issue, however, is to determine what the nature of the contract is. It is not enough (see the Hong Kong Golf Club case) for there to be a straight choice between contract of employment/for services. It may be a contract "for employment" (per Donaldson M.R. in O'Kelly); a licence (Royal Hong Kong), or even a contract of carriage (Ready Mixed Concrete). Here the statutory definition is vital.

Can a contract be construed from the fact of personal work?

20. If A works for B, it will almost always be pursuant to some contract, unless it is purely voluntary. The contract may be with a third party (as in the Hewlett Packard v. O’Murphy case). It may, on the other hand, be a direct contract, or one which is made through an agency which is truly an agent of one party or the other so as to bring them into contractual relations. If there is no writing which can be relied upon, does the fact of personal work imply a contract to that effect? Until the late 1990s, the law seemed to be moving in this direction. Since then, there has been something of a retrenchment against finding a contract of employment from the fact of personal work.
21. In Carmichael v Nationmal Power [1999] ICR 1226, HL, an arrangement under which tour guides worked at a power station, following an exchange of letters referring to "employment" and training was not regarded as telling the whole story. It was open to the Industrial Tribunal to find that the parties did not intend the letters to be the sole record of their agreement, but intended that it should be contained partly by those letters, partly in oral exchanges at interview or elsewhere, and partly left to evolve by conduct as time went on (Lord Hoffmann at [1999] ICR 1226, 1234). Although the words "casual as required" in the documentation were thought by the House of Lords not to impose any mutual obligation, in any event the Tribunal were entitled to find as a fact from these other sources that there was no mutual obligation - in this case upon the company to provide work, and the tour guides to do it. Accordingly, there was no contract of employment.
22. Note that what was at issue there was an over-arching contract of employment (or an "umbrella" contract). This was the context in which "mutuality of obligation" arose.
23. A similarly restrictive approach was taken in Cheng Un Yuen v. Royal Hong Kong Golf Club [1998] ICR 131 (PC). A caddie at a Hong Kong Golf Club, which had trained him and equipped him with a uniform and locker, which exercised disciplinary powers over him and established the system by which he was allocated to individual members to carry their clubs, was allocated to players on a rotating basis. He was paid in cash by the club for each round he worked, with the club debiting the member concerned for the amount paid. However, the caddie was free to attend for work as and when he pleased, and received no sick pay nor holiday pay nor did he have the benefit of a pension scheme. The claimant sought wages in lieu of notice and a long service payment when he was told that his services were no longer required (he was by then 82!) The Labour Tribunal in Hong Kong determined that he was an employee of the club rather than an independent contractor to them. Essentially, the rival arguments were that he was employed by the club (his case); or that the club were simply agents for the member, who had the right of control over the caddie (the club's case). Although the High Court Judge upheld the decision of the Labour Tribunal, the Court of Appeal in Hong Kong allowed the club's appeal. The Privy Council upheld that decision. The fault of the Labour Tribunal was that they did consider with care the authorities on the test to be adopted in drawing a distinction between a contract of employment, and one for the provision of services, in the light of the authorities, but did not consider "sufficiently or at all the question as to whether the contract (if any) between the club and the claimant was of a different nature and whether, if there was a contract of employment (whether of service or to provide services), it was with individual golfers rather than with the club." The only reasonable view of the facts, as it appeared to the Privy Council, was that the arrangements between the club and the claimant went no further than to amount to a licence by the club to permit the claimant to offer himself as a caddie for individual golfers on certain terms dictated by the administrative convenience of the club and its members. He was not obliged to work for the club, and he had no obligation to attend in order to act as a caddie - there was thus between him and the club "no mutual obligation that the club would employ him and that he would work for the club in return for a wage."
24. Unusually in the Privy Council, there is a dissenting judgment by Lord Hoffmann. He described the "licence" argument as "quite unreal".
25. The restrictive approach in general, and Carmichael in particular are, reflected in recent decisions about casual workers, agency workers, and "implied terms".
26. Clark v. Oxfordshire Health Authority [1998] IRLR 125 (a case of a bank nurse) preceded Carmichael, but shows the same retrenching against finding a contract of employment from the fact of personal work.
27. Sir Christopher Slade said ([1998] IRLR 125, @ 127, para. 15):

"The present case is the most recent of a series of cases, where sporadic and temporary tasks have been performed at the behest of another pursuant to the terms of a general engagement."

28. He went on to take the view that Nethermere (St. Neots) Limited v. Gardiner [1984] IRLR 240, C.A. and McLeod v. Hellyer Brothers Limited [1987] IRLR 232 were binding authority for the proposition that no contract of employment can exist in the absence of mutual obligations subsisting over the entire duration of the relevant period. However, he was prepared (para. 41) to accept that the mutual obligations required to found a global contract of employment

".. need not necessarily and in every case consist of obligations to provide and perform work. To take one obvious example, an obligation by the one party to accept and do work if offered and an obligation on the other party to pay a retainer during such periods as work was not offered would in my opinion, be likely to suffice."

Nonetheless some mutuality of obligation is required to found a global contract of employment.

29. The problem in Clark v. Oxfordshire Health Authority was the absence of any mutual obligation during the "rest periods" between engagements (just as was the case in McLeod v. Hellyer Brothers, between voyages). When working, of course Clark was occupied in a single engagement, and capable of working under a contract of service at that time.
30. The Court of Appeal also allowed the appeal on the basis that the Industrial Tribunal were entitled to come to the conclusion which they did, as a matter of mixed fact and law - and were not restricted to having to analyse the documents relating to the contract as an issue of law.
31. In McMeechan v. Secretary of State for Employment [1997] IRLR 353, C.A., an employee was able to claim arrears of wages against an insolvent employer relating to a single engagement which, as one of many, he had performed for an employment agency. Although the Employment Appeal Tribunal had decided that there was a global contract of employment, the Court of Appeal did not deal with the issues that arose in relation to that. Instead, they dealt with the issue in the context of the single engagement.
32. In Stevedoring & Haulage Services Limited v. Fuller [2001] IRLR 627, the Court of Appeal overturned an Employment Tribunal which might be thought to have taken the "Hoffmann" approach. Faced with a written document saying: "..the services you are to provide the company are on an ad hoc and casual basis. This means..there is no obligation on the part of the company to provide such work nor for you to accept any work so offered... the Employment Tribunal did not simply stop there, but went on to consider the way in which the parties conduct themselves since the inception of the agreement. That showed that the employers offered the employees a reasonable amount of work as and when it was available and offered that work in priority to other casual workers, in return for an implied agreement by the employees to make themselves available for work on at least a reasonable number of occasions when the work was offered to them.
33. Unfortunately, they did so by implying terms - and the essence of the Court of Appeal decision is that the Employment Tribunal could not imply terms into a contract which was "no contract".
34. However it is easy to see that on the facts a different conclusion might have been reached if it had been expressed differently by the Tribunal. Perhaps - as suggested in the March 2002 ILJ. by finding a "variation" of contract.
35. The Court of Appeal in Fuller were not referred to the earlier decision of the Court of Appeal in Montgomery v. Johnson Underwood [2001] ICR 819. That is a decision to the effect that someone who worked for 2 ½ years, every weekday afternoon, for a hirer, being supplied by an employment agency, was employed neither by the hirer nor by the agency!
36. The reasoning for this extraordinary result was that it is an absolute requirement for a contract of employment to have both (a) mutuality of obligation and (b) control. The suggestion is made by Buckley J. that Carmichael required both control, and mutuality of obligation to be considered and established. I query that it had anything to say about "control" - and query that "mutuality of obligation" may have been misunderstood in Montgomery. However, once again, it is an illustration of the problems caused by Employment Tribunals’ findings of fact: the Tribunal found that there was "little or no control" over Mrs Montgomery by the employment agency. Accordingly, in the absence of control, there could be no contract of employment. This, however, may demand a consideration of exactly what "control" means.
37. Is it also necessary for a contract of employment to be one which requires personal service by the employee on his own? The wording of the definition would not suggest that this is so. Yet Express and Echo Publications Limited v. Tanton [1999] ICR 693 suggested so.
38. The President in McFarlane v. Glasgow City Council [2001] IRLR 7 finessed this. The question was whether a contract which provided for gym instructors working in sports centres operated by the Council who were unable to take a class were to arrange for a replacement from the register maintained by the Council prevented the contract that they had of being one of employment. The right to arrange for a substitute was held not necessarily inconsistent with a contract of employment: there were four distinctions which were identified. Reference was had to the Ready Mixed Concrete case, permitting some power of delegation.
39. This case has now been followed by Byrne Brothers v. Baird [2002] IRLR 96. It considered a contract which provided:

The Sub-contractor is free to employ at his own cost whatever suitably trained additional labour which may be necessary to fulfil the requirements of the Agreement. Where the Sub-contractor is unable to provide the Services the Sub-contractor may provide an alternative worker to undertake the Services but only having first obtained the express approval of the Contractor"

40. EAT considered that the authorities were wholly consistent with the conclusion which it reached. They clearly established that a limited power to appoint substitutes is not inconsistent with an obligation of personal service. It cited Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and National Insurance [1968] 2QB497, 515.
41. In neither case, however, was there reference to Loughran v. Kelly [1998] IRLR 593. That seems to be to the effect (see paras. 12 and 70) that a contract to do work personally may not intend that the worker should do every bit of the work personally - "but is a contract which seeks to secure his particular individual participation as the principal and major contribution to its performance... The engagement of a portrait painter personally to paint a portrait would fall within the definition even if it was contemplated that some minor work would be carried out by an assistant in his studio. The work need not be intended to be performed exclusively by the contracting party. But an arrangement with the painter that the portrait will be painted by one of his assistants would not be a contract with the painter personally to paint a portrait."
42. If Byrne Brothers goes further, it may yet clarify the law.

Mutuality of Obligation

43. Most contracts involve mutual obligations. These cases which have emphasised mutuality of obligation as constituting an irreducible minimum for a contract of employment have, as we see it, concentrated upon the nature of the obligations concerned, which in the context of those cases was likely to be determinative. Yet the phrase itself is as likely to obscure as it is to aid meaning unless the nature of the obligations referred to are clear. There are different formulations of it: see Waite L.J. in McMeechan v. Secretary of State for Employment, at paragraph 9 (the obligation on one party to provide work, and the other party to do it); and Sir Christopher Slade in Clark v. Oxfordshire Health Authority [1998] IRLR 125 (a wage on one side, and the servant’s own work and skill on the other. The House of Lords in Carmichael v. National Power [1999] ICR 1226 viewed the obligations as being one the one hand to provide work, and on the other to do it if provided (per Lord Irvine of Lairg L.C. at 1230 G; Lord Hoffmann at 1233 A-B). In Montgomery the mutuality was also expressed (by reference to Chadwick v Pioneer Private Telephone Co. [1941] 1 All ER 522 as being the obligation to serve, with the corresponding ability in the master to control.
44. The context in which this approach has been taken must be borne in mind. In any case in which there is no doubt that work is provided, and done, or (adopting the other view of mutual obligations) that work is provided in return for pay or other remuneration, the requirement that there be mutual obligations of a type described in the cases we have referred to will be satisfied, but will not be determinative of whether there is a contract of employment, or some other form of contract. The test has been applied in cases in which there has been a casual engagement, or a series of pieces of work, in which the issue has been whether or not the overall contract, whether of a general engagement or employment agency type constitutes a contract of employment or not. The approach has helped to distinguish factors in such cases which McKenna J. in Readymix would have regarded as inconsistent with a contract of employment.

Current Approach to Distinguishing a Contract of Employment from one for Services

45. In Lee Ting Sang v. Chung Chi-Keung [1990] 2 AC 374, Lord Griffiths when delivering the advice of the Privy Council described the question of what was the appropriate English common law standard by which to determine whether a workman was working as an employee or as an independent contractor as one which:-

"...has proved to be a most elusive question"

He added that

"...despite a plethora of authorities the Courts have not been able to devise a single test that will conclusively point to the distinction in all cases."

46. Various tests have been described in a variety of cases, the perspective of which has differed. In some, the question has been whether a worker was liable for tax or national insurance. In others, it has been whether his principal was alleged to be in breach of an employer’s duties in respect of health and safety, whether there was a succession of pieces of work which might arguably be linked to form one employment under an overall "umbrella" arrangement, or indeed whether the simple choice presented as between employee or independent contractor masked the fact that the essential contract with which the case was concerned was not one of service or for services, but of a different character altogether. The perspective from which the question "employee or not" has been addressed may have to be kept in mind in appreciating how far each case advanced the search for the decisive criteria which Lord Griffiths termed elusive.
47. In Ready-Mixed Concrete (South East) Limited v. Minister of Pensions and National Insurance [1968] 2 QB 497, MacKenna J. said (@515C):-

1. The servant agrees that, in consideration of wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
2. He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.
3. The other provisions of the contract are consistent with it being a contract of service."

48. So far as (i) was concerned he said:-

49. As to (ii) he said:

50. Mr Justice McKenna continued to examine the third and negative condition which was, for his purpose in that case the important one. He provided five examples, contrasting situations in which the proper conclusion would be that a worker was an independent contractor and those in which the proper conclusion would be that he was an employee.
51. MacKenna J. continued (@ 516G-517B):

52. MacKenna J. supported his view that the test of "control" was not necessarily decisive, even though without it there would be no contract of service at all, by citing Lord Wright’s opinion from Montreal v. Montreal Locomotive Works Limited [1941] 1 E.L.R. 161, P.C. where he said:-

53. In Hall v. Lorrimer [1992] ICR 739, at 744 F-H, Mr Justice Mummery observed, in relation to Cooke J.’s test that:-

54. In Lee Ting Sang v. Chung Chi-Keung and Another [1990] 2 A.C. 374, Lord Griffiths, for the Privy Council observed that the matter had never been better put than it had been by Cooke J. in the passage we have cited above. The Privy Council adopted the test for the purposes of evaluating the facts found by the District Judge in Hong Kong. That was a case in which a mason, working for a building sub-contractor, fell from a high stool and suffered injury. His claim for compensation was resisted on the ground that he was an independent contractor, not an employee. The evidence established that the mason had been told to work at the construction site by the sub-contractor; that the sub-contractor gave him a plan showing him where to chisel, but did not thereafter supervise his work, although the foreman of the main contractor did check it from time to time; that his tools were provided by the sub-contractor; that he had worked at the site some 20 days before his accident; that he was normally paid in accordance with the amount of concrete he chiselled but on occasions, when the concrete was difficult to chisel or the work involved only a small area, he received a wage for an 8 a.m. to 5 p.m. day; that when he completed his work before 5 p.m. he would assist the sub-contractor to sharpen chisels and would, after so doing, be paid for that work on an hourly basis, and that he worked from time to time for other contractors but would, when the work of the sub-contractor was urgent, give priority to him, telling any other employer, for whom he was then working to engage another to finish the work. The uncontradicted evidence of the mason was that he would be sacked if he disappeared from site.
55. The proper application of the fundamental test proposed by Cooke J. in Market Investigations Limited v. Minister of Social Security, and the individual indicia referred to in the passage cited above, compelled Lord Griffiths to observe (at p.383) that:-

"Upon these findings of fact their Lordships would have had no hesitation, in sitting as a Court of first instance, in concluding that the Applicant was working for the [sub-contractor] as an employee and not as an independent contractor. All the tests, or perhaps it is better to them indicia, mentioned by Cooke J. in Market Investigations Limited point towards the status of an employee rather than an independent contractor. The Applicant did not provide his own equipment, the equipment was provided by his employer. He did not hire his own helpers; this emerged with clarity in this evidence when he explained that he gave priority to the First Respondent’s work and if asked by the First Respondent to do an urgent job he would tell those he was working for that they would have to employ someone else: if he was an independent contractor in business on his own account, one would expect that he would attempt to keep both contracts by hiring others to fulfil the contract he had to leave. He had no responsibility for investment in, or management of, the work on the construction site, he simply turned up for work and chipped off concrete to a required depth upon the beams indicated to him on a plan by the First Respondent. There is no suggestion in the evidence that he priced the job which is normally a feature of the business approach of a sub-contractor; he was paid either a piece-work rate or a daily rate according to the nature of the work he was doing. It is true that he was not supervised in his work, but this is not surprising, he was a skilled man and he had been told that the beams upon which he was to work and the depth to which they were to be cut and his work was measured to see that he achieved that result. There is no question of him being called upon to exercise any skill or judgment as to which beams required chipping or as to the depths that they were to be cut. He was simply told what to do and left to get on with it as for example would a skilled turner on a lathe who was required to cut a piece of metal to certain dimensions.

Taking all the foregoing considerations into account the picture emerges of a skilled artisan earning his living by working for more than one employer as an employee and not as a small businessman venturing into business on his own account as an independent contractor with all its attendant risks. The Applicant ran no risk whatever save that of being unable to find employment which is, of course, a risk faced by casual employees who move from one job to another..."

Lord Griffiths went on to say that the case was so clearly one of an employee that the decision at first instance was plainly wrong, and could properly be reversed on appeal.

56. Subsequently, in Lane v. Shire Roofing Company (Oxford) Limited the Court of Appeal came to a similar conclusion, although the authoritative judgment of the Privy Council in Lee Ting Sang does not appear to have been cited to them. The worker there was a builder/roofer/carpenter who had since 1982 traded as a one-man firm. He had obtained self-employed fiscal status, with a right to the 714 tax exemption certificates issued by the Inland Revenue. As a one-man firm he solicited work through advertisements, and when engaged by clients would of course be responsible for estimating, buying in materials, and matters of that kind. But that work dried up. His public liability insurance lapsed. He answered an advertisement issued by the Respondent, seeking men to work on a large roofing sub-contract. When that job was nearly over, he left it at the Respondent’s request to carry out building works involving the re-tiling of a porch roof of a house in Sonning Common. While he was doing that work, alone, he fell and was injured. He claimed a breach of the statutory duties imposed upon an employer. The Respondent denied employment.
57. The Judge at first instance found that the Appellant was an independent contractor, and not an employee. His reasons for doing so appear, from the extracts cited by Lord Justice Henry in his judgment when the matter came to appeal, to have been that the Appellant had his own genuine roofing business, so that he was a roofing specialist, and had the benefit of 714 certificates so that he could pay his own tax and was thus paid gross; that he had continued with that system whilst working for the Respondents; that he could work without supervision and was relied upon to do so; that there was no guarantee of continuing work, and that there was no provision for notice or dismissal. On this basis he was found to be an independent contractor.
58. Reviewing - and differing from - the Judge’s conclusions, Lord Justice Henry (with whom Lords Justices Nourse and Auld agreed) said, in relation to the distinction between employees and independent contractors that:-

"...all depends on the facts of each individual case. Certain principles relevant to this case, however, emerge.

First, the element of control will be important: 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? Who provides (i.e. hires and fires) the team by which it is done, and who provides the material, plant and machinery and tools used?

But it is recognised that the control test may not be decisive - for instance, in the case of skilled employees, with discretion to decide how their work should be done. In such cases the question is broadened to whose business was it? Was the workman carrying on his own business, or was he carrying on that of his employer’s? The American Supreme Court, in United States of America v. Silk [1946] 331 US 704, asks the question whether the men were employees "as a matter of economic reality". The answer to this question may cover much of the same ground as the control test (such as whether he provides his own equipment and hires his own helpers) but may involve looking to see where the financial risk lies, and whether and how far he has an opportunity of profiting from sound management in the performance of his task (see Market Investigations)."

59. Lord Justice Henry returned, against the background of those principles, to consider the reasons given by the Judge. He noted that the reasons would apply equally to work being done under a short term single job contract of employment. It was argued that there was a distinction between a situation where an employer engaged men on "the lump" to do labouring work - as to which Lord Justice Henry observed that "the men are clearly employees, whatever their tax status may be" - and that where a specialist sub-contractor was employed to perform some part of a general building contract. Lord Justice Henry dealt with the argument, and the evaluation of the facts by the Court of Appeal by saying that he:-

Although it can be misleading to reason by analogy, it is instructive to note that, apparently independently, both the Privy Council and the Court of Appeal concluded that the proper application of an appropriate test - whether the "fundamental test" as to whose business it was (Lee Ting Sang), or the "narrow question of control first, but in the case of a skilled employee the broader question whose business it was" (Lane) produced an emphatic answer in favour of the employee.

60. Where does this leave us, once control - if it is indeed that vital - and if it is properly understood - and mutuality of obligation (if it is not to be regarded as obvious) - have been established, and the contract classified as one of service or services: the danger is that a Tribunal will simply go through the check list without considering the context.

61. What is a worker?

" " worker" means an individual who has entered into or worked under...

( a) ...

62. This approach is about to be followed by a lesser recorder who shall be nameless - you thus have EAT authority. But is it right?
63. Discussion Points

• Is there a consistent approach to the definition of employee ?
• Is the law too easy to circumvent by contractual arrangements, interposing an intermediary agent or company?
• Ought we to go back to the definition in TULRA 1974, for all purposes? (Given the employment is treated more as a status by legislation, but more as a contract by the Courts)
• Will piecemeal reform achieve the necessary results?
• What of the future of the implied term (of trust and confidence)
• How is "worker" to be understood?
• What is the true scope of "personal service"?
• Has substance been sacrificed for form, eg in "umbrella" arrangements?
• Is an answer, perhaps, to make greater use of Hoffmann in Carmichael - and of questioning the genuine nature of the apparent contract (see, eg, Bottrill v SoS).

No responsibility is taken by the author for any reliance upon the views expressed above: if, however, the reader wishes advice, the author would be only too happy to provide it for his usual fees (or, in a good cause, for none) in the course of his professional practice. Clerks at 0207-827-4000!

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