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EVERYDAY LAW: Employee vs contractor

Cecil McCarthy

EVERYDAY LAW: Employee vs contractor

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In some cases, it will be necessary for the Employment Rights Tribunal to decide the issue of whether a particular worker is an employee or independent contractor.
A feature of protective legislation such as the Employment Rights Act, the Severance Payment Act and the Safety And Health At Work Act is that they all apply to employees. For this reason, in some circumstances, it will be necessary as a preliminary issue to determine whether a worker is an employee or independent contractor.
As with the other pieces of legislation cited above, there is a definition of “employee” in the Employment Rights Act, 2012.
Section 2 of the act stipulates that “employee” means an individual who has entered into or works under, or, where the employment has ended, worked under, a contract of employment.
Section 3 of the act says that “contract of employment” means a contract of service or apprenticeship, whether express or implied, and if it is expressed, whether oral or in writing.
Unlike the other pieces of legislation mentioned above, the act goes on to list the factors that must be considered in determining, in any particular case, whether a contract of employment exists.
However, at the bottom of the list of factors, there is a cautionary note which reads: “This list is not exhaustive and the factors outlined are all elements in a balancing exercise to determine the nature of the contract. No one factor, therefore, is by itself conclusive, and the weight to be attached to any one of the factors is a matter for adjudication.”
The factors, although not so stated, are in fact distilled from the cases decided by the courts.
It is for this reason and because it is impossible to define with precision what constitutes a “contract of service” that it will be necessary to have regard to the tests that have been developed by the courts to resolve the issue of whether a person is an employee or self-employed (that is, an independent contractor).
Perhaps, the best summary of the tests developed by the courts is that of former Chief Justice Sir David Simmons in the local case of Sagicor v Carter el al (2007 WIR). It is certainly the best summary that I have read!
The case concerned whether four insurance agents were employees or independent contractors.
In his judgment Sir David began by discussing the legal principles developed by the courts to determine whether a person is employed under a contract of service (that is, an employee) or a contract for services (that is, an independent contractor).
Sir David set out the background to the tests and then began by discussing the first test developed by the common law, namely, the control test.
He observed:
[5] The tests adumbrated by the courts have to be understood against the background of the social and economic conditions which prevailed at the times when the tests were developed. These tests have an existence stretching back over 170 years of the common law. Since the second half of the last century, the law has embraced the more egalitarian nomenclature of ‘employer’ and ‘employee’ and left behind the Victorian and somewhat demeaning classification of ‘master’ and ‘servant’, although the latter designations still have some applicability in various areas of the law e.g. vicarious liability in the law of torts.
“(a) The Control Test
“[6] In the nineteenth century the prevailing test was the control test.
This test holds that a worker is in law an employee (servant) if his employer can control or has the right to control not only what the worker does, but also the manner in which he does it. In Yewens v Noakes (1880) 6 QBD 530 at 532 Bramwell LJ expressed the control test in these words: ‘A servant is a person subject to the command of his master as to the manner in which he shall do his work.’
“Professor K.W. Wedderburn (as he then was) at page 53 of his book The Worker And the Law (second edition, 1971) put the socio-economic rationale for the origins of the control test in this passage: ‘The development of the law was here again greatly influenced by propositions established in the cases dealing with agricultural or manual labourers and domestic servants.’”
Sir David concluded his discussion of the control test by observing that in modern times “controlling the manner of doing work is only one indicium to which the courts will look in determining the status of a worker. It is fair to say that the control test is no longer decisive but is still of importance.”
I may add that the concept of “control” has evolved over time to take account of the different ways a contract of employment may manifest itself.
• Cecil McCarthy is a Queen’s Counsel.