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Sources And Scope Of Labour Law Notes

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Labour 1 Law


Sources and Scope of Labour

Abbreviations: EE Employee ER Employer COE Contract of Employment EAT Employment Appeal Tribunal ET Employment Tribunal TU Trade Union D&M Deakin & Morris' textbook FT Fixed term (contract)



ISSUES Sources of Labour Law







Partly made by common law, partly by social legislation. Legislation is in practice superior, but much of legislation is borrowed from common law. 3 key statutes:

1. TULRCA 1992 on collectivism

2. ERA 1996 on indiv rights

3. EA 2010 on discrimination Collective agreements also set out terms and conditions of employment - if incorporated into COE, can be said to produce law (societal source). Also have international sources
International Labour Organisation: a UN agency setting international standards

But note the Conventions are not direct domestic law - must first be legislated as UK statute.
EU Charter, elevated in standing by Lisbon Treaty, has both indiv and collective labour rights

Note that labour law is an area of shared competence
ECJ judgments too - Demir and Baykara

Viking also recognised certain rights as general principles of EU law.
International Convention on Economic and Social Rights Common law concept of contract of employment, as well as the law of tort. Thus labour law is not only created by the state, but also by social groups (collectively)

Classification of Labour Statutory applications to the different categories

Most rights under ERA 1996 and TULRCA 1992 are limited to employees - require stable employment relationship.

ERA s230(1): EE = an indiv who has entered into or works under a contract of employment
Core notion of dependency/subordination.
As opposed to one who is self-employed or independent (though might still be a worker)
Defining characteristic is the contract of employment! Substantively, left to courts to determine what COE means.

Cf ERA s230(3): worker = indiv who has entered into or works under a CoE or any other contract whether express/implied whereby indiv undertakes to do/perform personally any work/services for another party whose status is not by virtue of the contract that of a client or customer of any profession/business carried out by the indiv.
So excludes cases where indiv is providing services to client/customer!

In contrast, anti-discrimination legislation has a wider scope - "employment" taken to include employees, apprentices, or those under contract personally to do work
Looks to workers instead...
Not limited to contracts of employment. But excludes those which are independent/doing business on their own account/professional supplying services.
But must have contract = first level of mutuality

Labour 1 Law

Sources and Scope of Labour

Genuine obligation to supply services, no shams!
Relationship must be one of subordination...

Jivraj v Hashwani, 2011: appointment of arbitrator on basis of race - did equality legislation apply? No! Sup ct said he was in position of professional supplying commercial service, cos not in position of subordination.

But notion of subordination usually applies to EEs, not self-employed. EA clearly applies to people who contract to provide personal services - not an entire exclusion of the self-employed.

Sup ct had referred to ECJ decision of Allonby, but Allonby did not limit scope of Directive to only subordinate workers.

But although unsatisfactory cos Parlt did not intend to limit protection and exclude selfemployed, the result was correct, probably, since the discrimination was for a genuine occupational reason.

Dependent/subordinate vs independent/autonomous

Dependent: employees; independent: self-employed/independent contractors. Dependent labour comes under employer's common law powers of direction and control, but also benefit from employment protection and social security legislation

But classification not that straightforward today:

1. Uncertainty over criteria for categorisation. Tension: formal subordination vs economic subordination. Latter allows wider scope, but modern test of mutuality of obligation seems to reemphasis formality.

2. No universal divide - depends on the statutory context! Also, no uniform terminology "employee", "employed earner" etc are used in different Acts.
For EU directives, ECJ permits national courts to use national definitions of employment status when applying directives on employment protection; but when talking about freedom of movement/equal opportunities, ECJ imposes broad definitions and EU-level conformity for the term 'worker' (latter are 'fundamental rights' of EU law)
For income tax/social security legislation, they adopt different definition too.
Decision in one area of law will not necessarily impact another area - eg. If courts deciding on status for employment law, findings under tax/social security law will be largely irrelevant
Should there be a single, common status? Might be good not to! Employment law can involve third party rights - less weight should be placed on parties' wishes. Though this assumes balance of bargaining power and a conscious weighing of pros and cons by employees. Determining if there is a CONTRACT: Can parties themselves effectively decide to waive employee status?

For there to be dependent labour, need to have both contract and employment.

Courts will look to the reality of the situation, even if different from the express terms of the contract.

Also, public policy: Ferguson v John Dawson & Partners (Contractors) Ltd, 1976: contractual declaration should be ignored if it doesn't reflect reality - statutory regulation should override common law, and parties should not be able to contract out of statutory protection.

BUT Calder v H Kitson Vickers & Sons (Engineers) Ltd, 1988: if arguments for both views are almost equally strong, parties' intentions can tip the scales in one direction! Look to honest intentions.

Subtle-r forms:
Use of standard forms by employer: include 'no obligations' and 'substitution' clauses

Express and Echo Publications Ltd v Tanton, 1999: substitution clause allowing C to nominate another to provide service persuaded CA that C wasn't an employee.

Subsequent cases said not only was C not an employee, but C also wasn't a selfemployed 'worker' contracting to provide personal services, because the clause negatived the 'irreducible minimum of obligation' necessary for a contract for provision of such services.

Stevedoring & Haulage Services v Fuller, 2001: example of an "obligations clause", where ER included clause in CoE disclaiming any obligation to provide work and any obligation on EE to accept work.

But EAT said despite this clause, it can imply an obligation.

CA overturned EAT! Said illegitimate to imply such clause.

Labour 1 Law

Sources and Scope of Labour




Court doesn't have power to strike out/modify unfair terms for standard form employment agreements (unlike consumer contracts) but can go beyond written text in construction. Also, can find that an unusual term doesn't form part of standard form agreement if D didn't bring it to P's attention
Sham agreements

Consistent Group Ltd v Kalwak, 2008: both parties must intend the terms to misrepresent the true contractual relationship at the time of contract. Strict!!

Cf Redrow Homes (Yorkshire) Ltd v Buckborough, 2009: possible for term to be sham as long as parties never genuinely intended it as an accurate representation. More flexible!
Confirmed in Autoclenz Ltd v Belcher, 2011, where Sup Ct rejected 'common intention to mislead' test in Kalwak, deeming it inappropriate in employment context given parties' imbalance of bargaining power. Must look to all the circumstances of the case (written agreement is only one part).

Court might also find contractual terms to be varied by subsequent agreement based on conduct Statutory employment rights under ERA 1996 and TULRCA 1992 cannot be waived - agreement will be void (circular argument? Need to first establish that C is employee - naturally sham term irrelevant) s203 ERA and s288 TULRCA. Personal service company: vehicle set up with aim to avoid contract between worker and user/employment status. But tax advantages have been removed by reform. Still, courts can 'lift the corporate veil' and still find a contractual nexus between the worker and end user. Illegality: arises where there's unlawful agreement to evade tax/NI contributions - employee won't have statutory employment rights cos void ab initio
But if employee was in good faith and made a mistake/wasn't aware of employer's intentions, he might still be able to enforce the contract 'tainted with illegality'
Deakin and Morris: shouldn't we still offer statutory protection to employees who, though aware, are powerless to insist on change without losing their job? Suggests tribunals should consider the relative power balances between the parties.
Later cases show courts are reluctant to exclude all claims on basis of illegality.

Leighton v Michael, 1996: distinguished claims for unfair dismissal/redundancy compensation under ERA 1996, for which the contract is fundamental to, from claims of sex discrimination under EA 2010, which are not founded upon contract since they don't require proof of deprivation of contractual rights. So even if contract is void, can still claim protection of anti-discrimination law.

Questionable whether the contractual nexus is really unnecessary here, but in any case, can be explained alternatively on grounds of HR influence.

Hall v Woolston Hall Leisure Ltd, 2000: CA held that employment contracts involving an unlawful method of payment, rather than unlawful purpose, probably won't be void employee didn't participate sufficiently in the illegality

Determining if there is EMPLOYMENT: the four tests (chronological order) NB: all depend on a number of factors.

1. Control

Earliest expression - Bramwell LJ in 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'

But meaning of servant doesn't equate to employee today! It included manual workers, but not higher-status paid employees like professionals/managers (test of status!)

Connotes high degree of personal/formal subordination, and close monitoring and control. Not the case for many employees today.

Today, better understood as test of whether employer can give orders/direct general nature of the employee's work, deciding what is to be done, deadlines and the means etc ( supervision) Ready Mixed Concrete Ltd v Minister for Pensions and National Insurance, 1968.

Still, this test has been largely discarded! BUT control is still important element, just less personal and more bureaucratic than in the past

Pretty anachronistic cos much less direct personal subordination today

2. Integration

Arose from late 1940s, to explain why skilled workers with autonomy over manner of work were still EEs if working within large bureaucratic organisations (eg. Journalists/lecturers)

Labour 1 Law

3. 4.

Sources and Scope of Labour

Employee's subjection to rules and procedure of an organisation (vs to a person's command)

i.e. Disciplinary/grievance procedures, and inclusion in occupational benefit schemes

Covers more categories of workers than the control test:

Beloff v Pressdram Ltd, 1973: the more highly skilled, the less significant control will be. Integration becomes a more crucial test.

Also includes outworkers/workers of a sub-contractor: work may be integral without them being employees of the ultimate user of labour. Economic reality

Whether worker is in business on his own account as entrepreneur, or works for another who takes ultimate profit risk. Just cos employer pays on basis of performance/profits doesn't mean workers are taking on profit risk.

Premised on assumption that these legal tests work to define the coverage of protective statutory rules - arose against backdrop of greater social legislation.

Also, to impose certain legal liabilities on ER instead of EE is more cost effective, since ER in better position to minimise risks/spread risk through insurance or pricing policies, or work with state through social insurance and tax.

Relevant factors: method of payment, freedom to hire others, providing own equipment, investing in own business, method of payment of tax and NI, coverage of sick/holiday pay.

There are workers who are self-employed, but still not entrepreneurs!

Hall v Lorimer, 1994: skilled television technician worked for 20 firms, with short-term engagements for each. Court held he was self-employed, though without an evident business of his own. Short term contracts!
Mutuality of obligation

Mutuality is necessary for all bilateral contracts - but cannot just take the broad meaning of the word as criteria for employment status since it won't help to differentiate contracts of employment from contracts of supply of personal services.

Rather, we are looking for mutual commitments to maintain the employment relationship over a period of time - 2nd tier of obligations of future promise/stability of arrangement

ER must agree to make work available, and EE must agree to be available to do it

Relevant factors: duration/regularity of employment, right to refuse work, custom in the trade.

O'Kelly v Trusthouse Forte plc, 1983: tribunal did not imply term for mutuality, cos arrangement worked perfect well without it.

Wine waiters hired on casual basis with names kept on list, and ER picking hirees from list every few days. EEs became unhappy about casual nature of employment, joined TU, and ER took them off list upon finding out - would be auto unfair dismissal but ER said workers were self-employed not employees - no commitment to hiring beyond each shift, nor did workers make commitment to come back. ER won! CA said it was daily contract for independent contractors

Cf Nethermere Ltd v Taverna and Gardiner, 1984: court acknowledged arrangements for regular placing of work with homeworkers had some legal force - employer obliged to find work!

But Carmichael v National Power plc, 2000: tour guides working on 'casual as required basis' = no mutuality of obligation. Suggests that if employer clearly refuses to commit to give certain amount of work in advance, it will be hard to establish mutuality! Especially cos in this case, tour guides themselves were free to refuse work when offered.

Note it is possible for hiring for a particular purpose/assignment to be a contract of employment
- some employment protection rights don't require continuity of services.

Re-focusing on formality, after the economic reality test?

Looking for formal evidence of an obligation to work/accept work within the contract terms (but can be implied - very fact specific!)

So 3 possible outcomes for intermittent work:

1. O'Kelly: no CoE at all

2. Carmichael can be read as saying there is only CoE while workers are working, but not between hirings - hard to show continuity

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