Contract of Service and Contract for Service

Topics: Employment, Contract, Employment contract Pages: 8 (2054 words) Published: July 19, 2013
Why is it important to distinguish between persons that are employed and self-employed? How do the relevant bodies approach the problems of distinguishing between the two?

It is important to Employment law to know who is an employee and who is an employer for the purposes of claiming unfair dismissals and statutory redundancy. The Employment Rights Act (ERA) of 1996 defines an employee as “an individual who has entered or works under (or, where the employment has ceased, worked under). The ERA defines ‘contract of employment’ as “a contract of service or apprenticeship, whether express or implied, and (if expressed) orally or in writing. The variance between the two is Contracts of Service and Contracts for Service.

To begin with, the difference a Contract of Service is, where an employer and an employee have a relationship that is continuous. The employer has a duty of care to its employees, for example to, work in a healthy and safe environment. The employer is liable for the vicarious acts of employees. There is protective legislation that applies to the contract and which the employers have to follow or the employer could be prosecuted if not followed.

Secondly, a Contract for Service is where the employer is an independent contractor, and the relationship is organised around the completion of a once off piece of work. The duty of care arising from Occupiers Liability Act 1995 “is to ensure that a visitor employee does not suffer injury or damage by reason of any possible that exists upon the premises which the person is working”. The employer is generally not liable for the vicarious acts of the independent contractors. In each of these contracts both parties have specific rights and responsibilities, which differ according to the contract in place.

It is not always easy to define who is an employee or an independent contractor and has frequently come under legal consideration. The courts will look at the factual situation and deicide as a matter of law what type of contractual relationship exits. In O’Coindealbhain, (Inspector of Taxes) v Mooney (1990), the written contract is the one which influenced the Judge. The written document will not change the relationship but it could influence the outcome of a court or tribunal as to the status of the person carrying out the work.

These tests have been used to establish the status of employment:

* The Control Test
* The Integration Test
* The Mutual obligation Test
* The Mixed Test

* The Control Test

This test is based on the master and servant relationship and relic of common law. One of the first tests to be developed by the courts which the employer has control over the employee is Yewens v Noakes ((1880)6 QBD 530 at 532 per Bramwell LJ). Bramwell stated that

“{a} servant is a person subject to the command of his master as to the manner in which he shall do his work”

The test has been used in the twentieth century with Lane v Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493, 495 (Henry LJ) The Court of Appeal suggested that the test to apply in determining whether an individual was an employee or self-employed was

‘who lays down what is to be done, the way in which it is to be done, the means by which it is to be done, and the time when it is done?’

In practice this test, especially in the case of skilled professionals the employer exercises very little actual day to day control over the work being done. This has proven hard to due to the jobs and the freedom that is needed to carry out the work for example, Journalists (In Re Sunday Tribune (1984)IR 505), hospital doctors (O’Friel v St Michael’s Hosptial (1990)IR LM 260) and university lecturers (Cahil v DCU (2007) ELR 113 (HC): (2009) LESC 80 (SC).

* The Integration Test

The integration test looks at whether the person performing the services is an integral part of the company or whether they conduct business similar to someone performing services...
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