Employment Status and Sick Pay Entitlement

The issue in this problem scenario is whether Jackie has the status of an employee in the company, which would allow her to access sick pay leave after meeting with an accident. This advice is based on the statutory as well as case law related to employment status.

The first point of discussion here is the zero hours contract that Jackie has with the company. There is no legal definition of a zero-hours contract, but key characteristics of such contracts is the absence of any guarantee of work and reduced employment protections. Also relevant is Section 27A of Employment Rights Act 1996, which makes exclusivity terms unenforceable in zero hours contract. Moreover, the courts have also allowed certain employer obligations even for zero hours contract under the concept of mutuality of obligations. This can be seen in the case of Wilson v Circular Distributors, where the EAT held that the employer had an obligation to provide work to the zero hours contract worker when such work is available and the employee had an obligation to undertake this work because there is mutuality of obligations which also gives other rights to the employees like the right against constructive dismissal (Wilson v Circular Distributors Ltd [2006] IRLR 38., 2006). Similarly, zero hours workers have also been held to be entitled to annual leave pay calculated under the Working Time Regulations 1998 and Employment Rights Act 1996 based on the hours that they have worked (The Harpur Trust v Brazel [2019] EWCA Civ 1402., 2019). In the present case, Jackie is an IT Support Staff for Ashcroft Techno Ltd and is hired on a ‘zero-hour contract’. The contract specifically mentions that there is no mutuality of obligation between the employer and Jackie. However, even if Jackie is considered to be not an employee under the meaning of the Employment Rights Act 1996 For comprehensive insights into this particular complex legal landscape, then consider seeking law dissertation help. and is considered to only be a zero hours worker, she may still be entitled to claim sick leave. Nevertheless, it may yet be established that she is an employee within the meaning of the Employment Rights Act 1996.

It is now an established principle of employment law that the terminology used in the contract between the employer and worker is not the only method for establishing the status of the employee. With regards to zero hours contract, despite of the terminology used by the employer to describe the status of the worker (as an employee or zero hours worker), the court may still be able to establish a relationship of employment was done by the court in the case of Autoclenz, wherein despite being mentioned in the contract itself that the worker is on a zero hours contract, the Court considered the reality of the working relationship of the individual and held that it amounted to employment because the employee had regular working hours (Autoclenz v Belcher, [2011] UKSC 41., 2011). Therefore, the important point to note is that irrespective of how a worker is defined in the contract, the court may establish a status of employee based on the reality of the working relationship.

Different tests have been evolved by the courts to establish the status of employee, including control test and integration test (Honeyball, 2016). These can be discussed here and then applied to the situation involving Jackie to establish whether Jackie can be considered to be an employee of the company and not just a zero hours worker, in which case she will be able to claim greater protections as an employee.

The legal definitions of ‘employee’ and ‘worker’ are provided in Section 230 of the Employment Rights Act 1996; the former is an individual who works under a contract of employment (Section 230(1)), while the latter is a person who works under a contract of employment and undertakes to perform personally any work or services for the other party (Section 23(3)) (Painter & Holmes, 2015). As mentioned above however, the status of an employee does not depend on the terms of the contract but is to be decided based on the reality of the working relationship. Thus, courts have even allowed outworkers to be defined as employees if that is depicted in the reality of the working relationship (Netheremere Ltd v Taverna & Gardiner [1984] ICR 612, CA, 1984). Coming to the control test, this is one method by which the court may establish the status of employee, based on whether the employer exercises the kind of control that sees him dictate the work to be performed, and also control the method by which the work is to be performed (Ready Mixed Concrete (South East) Ltd v Minister of Pensions [1968] 2 QB 497., 1968). In Ready Mixed Concrete, the court held that if a worker provides his own work and skill in consideration of remuneration or wage and the exercise of a degree of control of the employer can be seen in the work relationship (Ready Mixed Concrete (South East) Ltd v Minister of Pensions [1968] 2 QB 497., 1968, p. 515 ). The important point is the degree of control that is exercised by the employer. In Montgomery v Johnson Underwood, control was also described as a situation where the employer is determining the manner, time and place for the performance of tasks (Montgomery v Johnson Underwood Ltd [2001] IRLR 269., 2001). Importantly, such control need not be established as a day to day control so that only some kind of control is exercised (White and Todd v Troutback SA [2013] UKEAT 0177/12., 2013).

Another test that may be applied to assess whether a person is an employee is the dominant purpose test. This test relates to the situation where the employee gives his personal services to the employer as the dominant feature of the contract, then the absence of mutuality of obligations will not impede the determination of status of employee (James v Redcats (Brands) Ltd [2007] ICR 1006, 2007). In other words, the court can assess the relationship to be one of contract of employment even if the actual contract uses a different kind of terminology (Byrne Brothers (Formwork) Limited v Baird [2002] IRLR 96, 2002).

The third test is the integration test, which can be used to assess the relationship of employee, where the individual is is working as an integral part of the business, and is not even advertising their services to other potential clients. The question is whether the work provided by the individual is integral to the main business and is not just accessory service (Hittaker v MPNI Ministry of Pensions & National Insurance [1967] 1 QB 156, 1967). The recent Uber v Aslam case exemplifies this because the Employment Tribunal held that the drivers were "workers" within Section 230(3)(b) (Uber BV v Aslam [2018] EWCA Civ 2748 , 2018).

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In the present situation, Jackie can claim that the employer exercises control over her work, because she is required to work as per the specifications of the employer. Jackie is required to wear a uniform with the company logo when attending clients, and wear her work ID which are provided by the company. This can be seen as control exercised by the company over her. Moreover, there is also dominant purpose served here because Jackie is providing her services as dominant purpose of the contract. Therefore, even if the contract does not specify mutuality of obligations, it can still be a contract of employment. Integration is also seen in this case as the work appears to be integral to the business of the employer. The IT support service of the company is to be available to the clients of the employer at their convenience and that Jackie can be asked for support at a time of the client’s choosing any time between 9am to 5pm. She is also allocated set clients to serve in a given geographical location. She is required to go for scheduled appointments by car, which is also seen to be control of the employer. Although, she must use her own car, she also claims mileage and parking as expenses from the company. She is also required to submit a time sheet and her expenses on a weekly basis. All these aspects point to a working relationship that is more akin to employment. The company also deducts income tax and national insurance contributions, which also signify a degree of control. Another important factor is that Jackie’s weekly hours have never dropped below 37 hours per week and there is an unspoken rule, that if workers refuse too many offers for work, they will not be asked again as they will be seen as unreliable. This signifies a mutuality of obligations between the employer and Jackie in this situation because of which she can claim that there is a contract of employment between her and the company. It can be argued that the use of terminology ‘zero hours contract’ does not signify that this is the true reflection of her relationship with the company. Instead, using the control, dominant purpose and integration test, she can claim that she is an employee of the company and is entitled to sick pay.

Continue your journey with our comprehensive guide to Employee Dismissal and Legal Grounds.

Bibliography

Autoclenz v Belcher, [2011] UKSC 41. (2011).

Byrne Brothers (Formwork) Limited v Baird [2002] IRLR 96 (2002).

Hittaker v MPNI Ministry of Pensions & National Insurance [1967] 1 QB 156 (1967).

Honeyball, S. (2016). Honeyball & Bowers' Textbook on Employment Law. Oxford University Press.

James v Redcats (Brands) Ltd [2007] ICR 1006 (2007).

Montgomery v Johnson Underwood Ltd [2001] IRLR 269. (2001).

Netheremere Ltd v Taverna & Gardiner [1984] ICR 612, CA (1984).

Painter, R., & Holmes, A. (2015). Cases and Materials on Employment Law. Oxford University Press .

Ready Mixed Concrete (South East) Ltd v Minister of Pensions [1968] 2 QB 497. (1968).

The Harpur Trust v Brazel [2019] EWCA Civ 1402. (2019).

Uber BV v Aslam [2018] EWCA Civ 2748 (2018).

White and Todd v Troutback SA [2013] UKEAT 0177/12. (2013).

Wilson v Circular Distributors Ltd [2006] IRLR 38. (2006).