The definition of the “employee” is now broadening out to
encompass the notion of, and give rights to, the “worker”

Employment law is abandoning its reliance on employment
status with recent legislation linking employment protection rights to “worker”
status. This means that rights are not limited to those who fulfil the narrow
definition of an employee.

Many of the reported cases explore whether someone is
self-employed or an employee. In Ready Mixed Concrete (South East) v Minister
of Pensions, 1968, 1 All ER 433, for example, a key issue was the degree of
control of the employer over the worker. Other tests of whether someone is an
employee include whether the individual is an integral part of the business and
“economic reality”, as well as mutuality of obligation.

Giving rights to “worker” status side-steps these issues.
Under the National Minimum Wage Act 1998, the Public Interest Disclosure Act 1998
and Working Time Regulations 1998, rights are conferred on anyone who works
under a contract and is not genuinely self-employed. It is no answer to an
employment tribunal claim for employers to contend that the worker was not an
employee.

Section 23 Employment Relations Act 1999 gives the Secretary
of State power to confer other employment rights on non-employees, and the
Government is currently consulting on the exercise of powers under this
section.

The Scottish Employment Appeal Tribunal has now entered this
debate with its decision Motorola v Davidson and Melville Craig, 2001, IRLR 4.
Davidson worked for Motorola as a mobile telephone repairer.  His contract was with Melville Craig, who
assigned him to work for Motorola.

Motorola paid Melville Craig for his services, and Melville
Craig paid Davidson. Davidson was largely subject to Motorola’s control. They
gave him instructions, provided tools, and he arranged his holidays with them.
He also wore their uniform and badges, and obeyed their rules.

If Davidson chose not to work for Motorola, that might have
breached his contract with Melville Craig but not a contract with Motorola. The
agreement between Motorola and Melville Craig gave Motorola the right to return
Davidson to them if they found him “unacceptable”.

The employment tribunal concluded that there was a
sufficient control to make Motorola the employer, so that Davidson could claim
unfair dismissal against Motorola alone. The EAT agreed.

The Motorola case has potentially profound implications for
outsourced employment. In outsourcing, the worker’s employment protection
rights are often constrained. A customer decides the worker is no longer
acceptable, and returns him to his employer, the contractor. The contractor has
no other work, and terminates employment. 

The worker used to be denied the opportunity of an effective
challenge to the customer’s decision, and effective employment protection
rights.  Under Motorola that picture has
now changed, putting the customer in the firing line. In the light of this case
all employers using outsourced or agency labour need to examine their contracts
and their practices very carefully.

Key points

·       
Recent legislation gives rights to “workers”. A
“worker” is anyone who works under a contract and is not genuinely
self-employed.

·       
Under the Employment Relations Act 1999 employment
rights can be given to non-employees.

·       
In Motorola v Davidson and Melville Craig the Scottish
EAT allowed an agency worker to claim unfair dismissal against the customer he
worked for.

·       
All employers using outsourced or agency labour need to
examine their contracts and practices carefully.

By Nicholas Moore is national head of employment with
Osborne Clarke OWA