Submitted by: Aoife McConnell
Question: Critically discuss the approach of the UK courts to determining whether someone should be treated by the law as an ‘employee’, a ‘worker’ or a self-employed person.
The idea that the current legal tests for classifying employment status are “unsuited to the analysis of increasingly diverse... employment relationships” is a common contention today. This concern has spurred the government’s plan to codify the current case-law system under the Good Work Plan. It is undeniable that the courts initially struggled with the diversity of the casual labour market. However, in the past decade, an improvement in judicial approach is evident: the adaptation of traditional status tests and alertness to exploitation tactics are now testimony to the merits of the court approach.
After outlining the law for employment status, a discussion of the court’s holistic approach will provide reassurance that the judicial system is more than capable of providing justice to a dynamic workforce.
There are three types of employment status: employee, worker and self-employed. The circular statutory definitions of ‘employee’’3 and ‘worker’ and the lack of a statutory definition of ‘self-employed’, means that the determination of employment status is governed by the common law.
The court takes a multi-factor approach: they consider all factors and weigh them against each other.5 Today, the judgment in Ready Mixed Concrete6is often the starting point for decisions. It outlines three requirements for employee status. First, ‘the servant agrees that in consideration of a wage ...he will provide his own work’. Second, 'that in the performance of that service he will be subject to the other's control’ and third, ‘the other provisions of the contract are consistent with its being a contract of service.’ The core tests established in this case are called the ‘irreducible minimum’ which has developed into the following considerations: whether the right to control exists, whether the individual is personally obliged to act and whether mutual obligations exist between the parties.8 Importantly, there is no ‘tick list’, the court will consider these factors alongside the entire circumstances of the case.9
For many years, the Ready Mixed Concrete formula provided an effective strategy for the courts to distinguish between employees and self-employed individuals. However, it is well-documented that the “law is not keeping pace with the diversity of working practices” which have recently evolved. Admittedly, the surge in working arrangements which require ‘worker’ status has exposed the ineffectiveness of the statutory framework. The blurred boundaries between ‘worker’ and ‘self-employed’ has meant that individuals engaging in atypical arrangements, such as zero-hour or ‘gig’ contracts, are being falsely labelled as self-employed. This is problematic because unlike workers, self-employed individuals do not have statutory rights.
Ambiguity in Approach
The ambiguity between ‘worker’ and ‘self-employed’ can be attributed to the judicial confusion on the test for a worker. Initially, this test was provided by Byrne Brothers (Formwork) Ltd v Baird12 which stated that the factors which arise when distinguishing between employed and self-employed are equally used when finding the worker category, albeit with a lower threshold.13 This test was discarded in Bates Van Winkelhof which stressed that whether individuals are workers is a “different question from whether they can be employees” and thus, the distinction between employee and worker is one of kind and not degree.16 Significantly, the narrow Byrne position was reinforced in Windle v Secretary of State for Justice17, despite that this contradicted both the Supreme Court in Van Winkelhof and furthermore, undermined the parliamentary intention “to extend the benefits of protection” which is facilitated by the distinct worker category.
This disagreement is driven primarily by the ‘mutuality of obligations’ criterion which was historically the ‘sine que non’ for employee status. The Van Winkelhof position contends that this requirement is inappropriate for modern workers. Indeed, it would be contradictory that casual work, which is attractive by its commitment-free nature, would require proof of obligation. However, a government-led study revealed that most casual workers were satisfied with their circumstances. Moreover, to increase entitlements within casual arrangements may deter employers from creating jobs and consequently impede the economy’s growth. Thus, broadening the worker category may be equally detrimental, which is reflected in the application of Byrne in Windle.
Therefore, although the inconsistency in the court’s approach may cause confusion, both arguments are valid. Clearly, the flexibility of the court’s approach is favourable to a rigid framework where one of the above-named harms would materialise invariably. The creation of a statutory test is within the government’s Good Work Plan. Fortunately, a test has not yet been forthcoming and so, it is likely that the current approach will remain.
Advantage of the Court's Holistic Approach
The court’s approach requires that the status is “gleaned from all the circumstances of the case.” This haphazard approach is criticised by the Taylor Review as being unpredictable and vulnerable to exploitation. However, the court has consistently stressed the fact-sensitive nature of this area, particularly among the modern market where there are limitless variations on employment models. Arguably, the consolidation of a test would create more opportunities for exploitation, as employers would manipulate their agreements accordingly and the court would be unable to respond to this given their duty to apply the law as it stands. Thus, the versatility of the approach is essential.
This problem of ‘sham contracts’ is now effectively solved by the court’s approach.24 After the failure to recognise this issue in Express & Echo v Tanton , Autoclenz v Belcher  demonstrates the maturity of the law in the last decade and its alertness to manipulation tactics. This decision enables courts to override the written agreement where it fails to reflect the reality of the arrangement.Autoclenz demonstrates that the court’s approach already mirrors the objectives of the Good Work Plan as by scrutinising the imbalance of bargaining power between the parties, the Autoclenz approach prevents exploitation of the worker.
The Holistic Approach in Practice
The judicial ‘common sense’ approach has recently brought clarity to the casual work arena. This is most notable within the ‘gig-economy’ jurisprudence. The ‘gig-economy’ is a specific arrangement characterised by short-term contracts which are formed through digital technology. Although these arrangements are atypical, the courts have adapted the mainstream ‘irreducible minimum’ approach to assert that individuals working in this area are workers. These decisions have centred on the ‘personal service’ and ‘mutuality of obligation’ elements.
Courts have stressed that substitution clauses will not automatically negate personal service, to mitigate against ‘sham’ contracts where substitution clauses are inserted to prevent worker status. This was the approach in Uber v Alsam and in Dewhurst v Citysprint. In Citysprint, the substitution clause was so prescriptive that it would only allow another Citysprint courier to fill in. Therefore, worker status was granted as the express substitution clause term was irreflective of reality. In contrast, in the Deliveroo case 33 the unfettered power to substitute negated personal service and ‘worker’ status was not found.
The Taylor Review contended that the current approach is unpredictable34 , however, this jurisprudence demonstrates a clear view on substitution clauses. This is further demonstrated in Stuart Delivery Ltd where the EAT maintained the Uberposition despite that this was still under appeal to the Supreme Court. Once more, the court’s approach has proved crucial to achieving clarity in this area where an outright provision that provides that substitution clauses are compatible with worker status would be too liberal and would do nothing to solve the status question.
The casual work cases decided on the ‘mutuality of obligations’ requirement have been more controversial. First, in Windle v Secretary of State for Justice 36, the absence of an umbrella contract operating between assignments was a considerable factor in proving that the individual was self-employed. In Pimlico Plumbers v Smith , the existence of an umbrella contract was again important. Here, the contract stated that the individual should work 40 hours per week but that there was not an obligation on either party to accept. The court decided that despite the ability to refuse, in reality the individual was still obliged to at least be available for 40 hours per week and thus, this pointed towards worker status.
These cases demonstrate that the court has achieved a balance when applying the obligations requirement. The Windle decision goes against the grain of recent jurisprudence however, this is welcomed to mitigate against the significant expansion of the ‘worker’ category of late. Undoubtedly, increased protection of genuine workers is warranted because although casual work in theory promotes workers’ autonomy, it may in reality cause ‘a higher degree of subordination, with workers required to tend to their employers’ every whim for fear of losing their next shift.’ Indeed, the court in Citysprint were alert to this dynamic and recognised the ’inequality of bargaining power at work’ before attributing worker status.
However, in Windle the court recognised that this dynamic was not present and instead, considered that the individual had previously accepted the self-employed status. It may also be the case that self-employed individuals may exploit the court's sympathy for genuine workers’ powerlessness. It would be equally wrong if these individuals could demand protection when until this point, they had benefitted from the liberal arrangement and had no intention of formalising it. In this instance, the imposition of responsibilities onto the employer would be as unfair as denying rights to genuine workers.
Evidently, the distinction made between Windleand Pimlico  is an important one. Even when the individual is unable to refuse work out of fear that they will not be offered work again, it is not the duty of the court to intervene. Instead, this unequal dynamic should be remedied by statute. A recommendation for a statutory right, of zero-hours workers to request a fixed-hours contract after a period of consistent work, has been made under the Taylor Review. This provision would be welcomed, to provide protection in an area where the court is unable to act.
Undoubtedly, a statutory status test would provide much-needed clarity. However, considering that the courts have been unable to pinpoint a single formula to date, it is unsurprising that a test has not been forthcoming within the Good Work Plan. Evidently, the fact-sensitive ‘worker’ litigation demands the flexibility of the judicial approach. It will only be through the maintenance of the current approach that a correct balance may be struck between protecting genuine workers from unscrupulous employers and protecting genuine clients from equally exploitative self-employees.
 P. Leighton and M. Wynn, "Classifying Employment Relationships—More Sliding Doors or a Better Regulatory Framework?" (2011) 40 I.L.J..  HM Government, Good Work Plan (Command Paper, CM 9755, 2018) 3 Employment Rights Act 1996, s230(1).  Ibid (n3), s230(3).  G. Pitt ‘Pitt’s Emploment Law’ (10th Ed, Sweet & Maxwell, 2016) 100. Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance  12 WLUK 33.  Ibid.  Department for Business, Energy and Industrial Strategy, Employment Status Consultation (Feb 2018). Ibid.  B. Langstaff, "Changing Times, Changing Relationships at Work … Changing Law?" (2016) 45 I.L.J. 131 at 131.  The Working Time Regulations 1998.  Byrne Brothers (Formwork) Ltd v Baird  UKEAT 542_01_1809 Ibid.  Bates Van Winkelhof v Clyde & Co LLP  UKSC 32.  Ibid. 1617 J. Prassl, ‘Who is a Worker?’ (2017) L.Q.R. . Windle v Secretary of State for Justice  EWCA Civ 459.  Ibid (n12) at [17(4)].  Nethermere v Gardiner  ICR 612 .  Department for Business, Energy & Industrial Strategy, ‘The Characteristics of Those in the Gig Economy’ (February 2018).  Ibid (n2).  Autoclenz Ltd v Belcher  UKSC 41 .  HM Government, ‘Good Work: the Taylor Review of Modern Working Practices‘ (July 2017) 24 Uber BV v Aslam  EWCA Civ 2748.  Express & Echo v Tanton  3 WLUK 216.  Ibid (n23).  Autoclenz at   S. Omeri, ’Uber-careful‘ (2019)  J.P.I.L. .  Ibid (n8).  Ibid (n25).  Dewhurst v Citysprint Uk Ltd  1 WLUK 16.  ‘Employment status: cycle courier establishes "worker" status’ IDS Emp. L. Brief 2017, 1062, 8. 33 Independent Workers' Union of Great Britain v RooFoods Limited (2017) TUR1/985(2016) 34 ibid (n24).  Stuart Delivery Ltd v Mr Warren Augustine: UKEAT/0219/18/BA 36 Ibid (n18).  Pimlico Plumbers Ltd v Smith  EWCA Civ 51  Ibid (n16).  Ibid (n31) .  Ibid (n18).  Ibid (n38).  Ibid (n2).