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The Employment Relationship Notes

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Labour Law

The employment relationship Identifying dependent labour Classifying labour as 'dependent' or 'independent' All systems of labour law draw a fundamental distncton between employment which is categorised as 'dependent' or 'subordinate', or that which is independent or autonomous.
= employees v self-employed or independent contractors. Employees are subject to the employer's common law powers of directon and control which, if they do not take the form of express contract terms, tend to be read into the contract as implied terms (e.g. Sim). In return employees come under the scope of employment protecton and social security legislaton: they may beneft from statutory rights to wage protecton, limits of working tme, income maintenance and compensaton for loss of employment. By contrast, few of the burdens or benefts of dependent status apply to a relatonship in which the worker is self-employed. Qualifcatons to this basic picture: 1) there is lack of consensus on the appropriate criteria for identfying dependence or subordinaton. The English courts have had occasion to use many diferent and potentally contradictory tests for this purpose including "control", "integraton", "economic reality", and "mutuality of obligaton". This problem is unique neither to English law nor to the common law in general. In most systems there is a confict or tension between the use of criteria of formal or personal subordinaton, and those of economic subordinaton as the principal tests of dependence. The use of economic criteria tends to result in a widening of the scope of statutory protecton, encompassing relatonships in which the worker retains extensive discreton over the manner and tming of performance of the work but is nevertheless bound to the employer through dependence on wages or salary for subsistence. In English law, a move towards the adopton of economic criteria occurred when the courts used the integraton test to extend employee status to certain professionals such as doctors or accountants who were employed within large organisatons (Stevenson, Jordon and Harrison, and Belof) and also when they invoked the 'economic reality; test to extend the scope of protectve legislaton to include certain part-tme workers and homeworkers (Market Investigations, and Airfix Footwear). But in general it cannot be said that economic criteria have successfully displaced rival tests: although control 'can no longer be regarded as the sole determining factor' (Cooke J in Market Investigations), it must stll be taken into account and the more modern test of mutuality of obligaton has led to a renewed emphasis on formality of commitment between the partes (O'Kelly) which has placed the status of many casual workers in doubt 2) the boundary between dependent and independent labour shifs according to the partcular statutory context which is being considered. There is no universal dividing line of general applicaton between employees who are protected by legislaton, and the rest who are not.

Labour Law

Thus, while it is the case that only employees may qualify for most rights under ERA 1996, other statutes explicitly cover certain categories of the self-employed. In partcular, protectve legislaton may be applicable to individuals who are independent contractors without having an identfable business of their own. Some provisions of health and safety legislaton apply to this group, as do equal pay and ant-discriminaton legislaton and legislaton for basic labour standards in relaton to minimum wages and working tme. Moreover, although the self employed have no protecton against dismissal in the context of industrial acton, a dispute between self-employed workers and their employer may form the basis for a legitmate trade dispute which may enable the individual organisers of industrial acton and their trade union to avoid liability in tort. Thus the self employed are very far from being excluded completely from labour law regulaton. The growing inclusion within protectve labour statutes of certain categories of the self-employed, together with the difcultes faced by the courts in applying the distncton between employment and self-employment, led Freedland to argue for a unifed concept of the "personal employment contract" in place of the existng scheme of classifcaton of employment relatonships. 3) the process of classifcaton is complicated by the lack of a uniform terminology in the diferent Acts of Parliament which regulate the employment relatonship. In ERA 1996 the term 'employee' is used to describe dependent labour, but the equivalent term for most of the benefts provided by SSCBA 1992 is 'employed earner'. Employees and employed earners Under ERA 1996, an employee is defned as an "individual who has entered into or works under...a contract of employment" and "contract of employment" is defned to mean "a contract of service or apprentceship, whether express or implied, and (if it is express) whether in oral or in writng. No further defniton is ofered: the scope of the legislaton, in efect, rests upon the common law tests as developed and applied over tme by the courts. The principal rights which are thereby confned to employees concern unfair dismissal protecton, redundancy compensaton, minimum notce upon terminaton, guaranteed pay, the right to maternity, paternity and parental leave, and the right to return to work afer taking such leave. EU directves in the employment protecton feld are mostly stated to apply to employees: this is the case, for example, with Directve 2001/23 on the protecton of acquired rights in relaton to transfers of undertakings, and Directve 91/533 on informaton concerning terms and conditons of employment. The ECH has decided that natonal courts are enttled to apply their own natonal defnitons of employment status when transposing these employment protecton directves, even if this results in some inconsistency in the implementaton of directves in the diferent Member States. By contrast, the Court has insisted on widely-phrased defnitons and greater conformity to a single standard throughout the Member States for the term 'worker' set by EU law in cases concerning freedom of movement (Levin) and equal opportunites (Allonby), on the grounds that these two areas are concerned with fundamental rights contained in the EC Treaty and recognised as such by the jurisprudence of the Court.

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