Question:
Discuss about the Minister of Pensions and National Insurance.
Firstly the common law agency test or the control test. According to the provisions of this test if an employer have the right to control the employee in a manner through the kind of work which was done by him but also the way in which the work was done by him he is an employee. This test was provided by the case of Yewens v Noake (1881) 6 QBD 530 where it was stated by the judge that “A Servant is a person subject to the command of his master as to the manner in which he shall do his work.”
A more realistic approach has been developed towards determining employment in the case of Cassidy v Ministry of Health [1951] 2 KB 343, in this case the test which was developed was known as the integration test. Through the application of this test employment is determined by analyzing whether the person is a primary part of the business are an integral part or only are secondary accessory to the business.
The latest develop test in order to identify the status of employment is known as the multi factor test. As the name suggests the test is the combination of the above two tests. This test is a threefold test in order to determine employment. The test was used in the landmark case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. The judge identified three factors which had to be considered in order to determine whether a person is an independent contractor or an employee. Firstly the person agrees to provide his own skills to the employer in exchange of remuneration or wages. Secondly there is agreement between the person and the employee that this services would be significantly controlled by the employer. Finally the other terms of the contract are in accordance with a contract of employment.
In relation to the first requirement there has to be remuneration and wages in order to create a consideration for the contract. The own work and skill of the employee has to be provided to the employer. There must be no freedom to do the job by the employee himself or by some other person unless in a very limited circumstances if provided by the employer. A lot of room for interpretation is left by the multiple test in relation to the final condition where no fixed list of factors are provided which may be consistent or inconsistent. These factors are derived through the matter of common sense.
In the case of Market Investigations Ltd v Minister for Social Security [1969] 2 QB 173 it had been provided by the Cooke J that the basic issue was to determine whether a person who had been appointed to carry in the services are doing so on the account of the business or his own account. In case it is provided that the person is doing it for the business and not his personal account the person in an employee. The case listed a few factors related to the contract of employment which are the extent of risk upon the worker, the extent of control of the employer on the worker, who is the owner of the equipment and tools, the way in which payment is made, obligations towards each other and the capacity of providing substitutes.
The flexibility which is provided through the multi-factor test was also used in a successful way to determine the issue in the case of Lee v Lee’s Air Farming Ltd [1960] UKPC 33. In this case it as found by the court that a sole owner (plaintiff) of the company was an employee as an incorporated company was a separate entity and had control over the way in which the plaintiff carried out his work.
A notice of termination has to be provided not only through common law according to which an employee has to be provided with a notice period before he is terminated in order to find others mode of employment but also through the FWA section 117. According to the section an employer is not allowed to end the employment of an employee unless the employee is provided by the employer a written notice with respect to the day of termination. The notice should not be provided after the termination has been made.
Section 358 of the FWA expressly provides that an employer is not allowed to dismiss or threatened to dismiss and employee so that the employee can be engaged in form of an independent contractor to do the same or comparatively same job with respect to a contract of services.
In the case of Fair Work Ombudsman v Happy Cabby Pty Ltd & Anor [2013] FCCA 397 record fine had been imposed by the court on the shuttle company with respect to the violation of provisions related to sham contracting as provided by the FWA which included the offences of failing to provide pay slips and underpayment.
In the case of Fair Work Ombudsman v Northern Enterprises Pty Ltd [2013] FCCA 216 it was held by the court that even where the employee was made to enter under a contract of services, as the employer had control over the employee it accounted to sham contracting.
The control test and the integration test are not very effective alone to determine the employment status of a person. Therefore in relation to the scenario the multifactor test would be used to analyzing the position of Davy in relation to ABC.
In the provided situation it has been given that Davy was not clear to be he was contracted to after he was purported to be terminated from his position as an employee and ask to work for DEF. Although Davy was not mandatorily required to wear his uniform but he used to wear his uniform at work. In addition Davy used to use the Van provided by ABC in order to carry out his work. The work allocation of Davy was still provided by ABC along with the materials and tools required to complete his work. Therefore, through the application of the multi factor test as discussed above it can be provided that as Davy worked for ABC in exchange of remuneration, as work allocations and tools are provided by ABC to Davy it can be said that ABC had significant control over his work and as he used the van of ABC and mobile phone these also account to the terms of an employment contract. Therefore it can be provided that Davy is an employee of ABC not an independent contractor according to the provision of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance case.
In addition through the application of the provisions provided through the case of market investigations ltd v minister of social security, in relation to the multi-factor test it can further be strengthened that Davy is an employee of ABC and not a contractor. This can be said by referring to the factors provided by the case and the facts given in the situation of Davy. The case provides the person doing the work as an essential factor, where as it is provided that Davy had to do the cleaning work by his own. In addition the case provided whether the employee worked for the business or on his own account, in the given situation it is clear that Davy worked for the business and not his own account. Moreover Davy was provided the tools and equipment to carry n his duty by ABC which according to the principles of the case is a factor of being an employee. Although it was not mandatory for Davy to war his uniform one factor also is not enough to determine employment.
In addition, according to common law and provisions of 117 of the FWA, ABC is required to give Davy a notice of termination before he can be dismissed from his employment.if not a notice as per section 117 Davy is entitled to a payment by ABC in lieu of the notice of termination.
According to the above discussed section and cases on sham contracting it can be said that by asking Davy to and his employment and contract with DEF while doing the same job ABC have violated the provisions of section 358 of the FWA in relation to Sham contracting.
Conclusions
Davy is the employee of ABC and not a contractor has been determined through the application of the multifactor test provided by common law cases. ABC must give Davy a notice of termination in accordance to both the provision of common law as well as section 117 of the FWA. Action of ABC to engage Davy as a contractor to DEF by terminating his employment also accounted to sham contracting according to the provisions of section 358 of the FWA.
References
Cassidy v Ministry of Health [1951] 2 KB 343
Fair Work Act 2009 (Cth)
Fair Work Ombudsman v Happy Cabby Pty Ltd & Anor [2013] FCCA 397
Fair Work Ombudsman v Northern Enterprises Pty Ltd [2013] FCCA 216
Lee v Lee’s Air Farming Ltd [1960] UKPC 33
Market Investigations Ltd v Minister for Social Security [1969] 2 QB 173
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
Yewens v Noake (1881) 6 QBD 530
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