Part C Employment law 8: Contract of employment 125
Ferguson v John Dawson & Partners 1976
The facts: A builder's labourer was paid his wages without deduction of income tax or National Insurance
contributions and worked as a self-employed contractor providing services. His 'employer' could dismiss
him, decide on which site he would work and direct him as to the work he should do. It also provided the
tools which he used. He was injured in an accident and sued his employers on the basis that they owed
him legal duties as his employer.
Decision: On the facts taken as a whole, he was an employee working under a contract of employment.
Where there is some doubt as to the nature of the relationship the courts will then look at any agreement
between the parties.
Massey v Crown Life Assurance 1978
The facts: The claimant was originally employed by an insurance company as a departmental manager; he
also earned commission on business which he introduced. At his own request he changed to a self-
employed basis. Tax and other payments were no longer deducted by the employers but he continued to
perform the same duties. The employers terminated these arrangements and the claimant claimed
compensation for unfair dismissal.
Decision: As he had opted to become self-employed and his status in the organisation was consistent with
that situation, his claim to be a dismissed employee failed.
It can still be unclear whether a person is an employee or an independent contractor. Historically, the tests
of control, integration into the employer's organisation, and economic reality (or the multiple test) have
been applied in such cases.
The fundamental prerequisite of a contract of employment is that there must be mutual obligations on the
employer to provide, and the employee to perform, work.
1.1 The control test
The court will consider whether the employer has control over the way in which the employee performs
their duties.
Mersey Docks & Harbour Board v Coggins & Griffiths (Liverpool) 1947
The facts: Stevedores (dockworkers) hired a crane with its driver from the harbour board under a contract
which provided that the driver (appointed and paid by the harbour board) should be the employee of the
stevedores. Owing to the driver's negligence a checker was injured. The case was concerned with whether
the stevedores or the harbour board were vicariously liable as employers.
Decision: It was decided that the issue must be settled on the facts and not on the terms of the contract.
The stevedores could only be treated as employers of the driver if they could control in detail how he did
his work. But although they could instruct him what to do, they could not control him in how he operated
the crane. The harbour board (as 'general employer') was therefore still the driver's employer.
Another example of this test is in Walker v Crystal Palace FC 1910 where it was held that a professional
footballer was employed because he was subject to the control of his club in the form of training,
discipline and method of pay.
1.2 The integration test
The courts consider whether the employee is so skilled that they cannot be controlled in the performance
of their duties. Lack of control indicates that an employee is not integrated into the employer's
organisation, and therefore not employed.