Isle of Man: What Is The Difference Between A Lap Dancer And A Taxicab Driver

Last Updated: 29 April 2013
Article by Leanne McKeown

The question of employment status is a vexed area of the law; it is often far from easy to accurately determine the employment status of an individual. We will all be familiar with the following definitions:

"Employee" | "Self Employed" | "Worker"

The aim of this article is to explore what these different definitions actually mean to businesses and individuals offering services on the Isle of Man.

Statutory Definitions

Section 173(1) of the Isle of Man Employment Act 2006 sets out the definition of employee and worker as follows:

"Employee" means an individual who has entered into or works under (or where the employment has ceased, worked under) a contract of employment.

"Worker" (except in the phrase "Shop Worker") means an individual who has entered into or works under (or, where the employment has ceased, worked under) –

a) a contract of employment, or

b) any other contract, whether expressed or implied and (if it is expressed) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual,
And any reference to a Worker's contract shall be construed accordingly.

A "contract of employment" is defined within the legislation as being "a contract of service or apprenticeship, whether expressed or implied, and (if it is expressed) whether oral or in writing." This should be distinguished from a contract for services which, while not defined in statute, is taken from the case law to govern the provision of services from one party to another, e.g. a self employed contractor.

Contract v Reality: "Sham" Arrangements

When determining the nature of the relationship enjoyed between the parties, the Courts will look to establish "what the true legal relationship is between the parties" (Protectacoat Firthglow Ltd v Szilagyi [2009] EWCA CIV 98; [2009] IRLR 36).

In the English Court of Appeal case of Autoclenz Limited v Belcher and Others ([2009] EWCA CIV 1046), Lady Justice Smith provided guidance on how Employment Tribunals should address disputes over the genuineness of a written term of a contract. This case arose after a number of individuals, who were contracted to valet cars for Autoclenz, brought an Employment Tribunal action seeking a declaration that they were employees (not self employed contractors as per their contracts), and an order for Autoclenz to pay them the national minimum wage and unpaid holiday pay due and owing. This case revolved around the question of whether the contractual documentation entered into by the parties was a "sham", in place to obscure the true nature of the relationship enjoyed.

The leading decision of Lady Justice Smith offered the following guidance for identifying "sham" employment arrangements:

  • The focus of the Tribunal's enquiry must be to discover "the actual legal obligations of the parties". This involves examining all the relevant evidence, including the written terms, evidence of how the parties conducted themselves in practice and what their expectations of each other were.
  • In this case, the fact that the day to day practice was one whereby the valetors were expected to turn up for work unless they had given appropriate notice, was evidence of there being a mutuality of obligation. While there was a right of substitution clause within the contract, in reality this was not genuine.
  • Lady Justice Smith interestingly noted that individuals should not be estopped from contending that they are employees simply because they have been content to accept the tax benefits of self employed status for many years.

This case is of significance as it highlights that the Tribunal will not be blindly persuaded by the contract between the parties, where the day to day reality suggests a different relationship is in fact enjoyed. The same arguably applies to any third body commissioned with determining the "real" relationship enjoyed between two parties to an agreement, be that for the purposes of establishing employment rights, or for matters involving income tax or VAT arrangements.

So who is an "Employee" anyway?

A satisfactory definition of "employee" has proved elusive (Harvey on Industrial Relations & Employment Law/Division AI Categories of Worker/1. Categories of Workers/B. Employees/1 Definition). However, over the years, the Courts have attempted to clarify the salient information required to determine an individual's employment status. A well cited authority in this area is the decision of Ready-Mixed Concrete (South East) Limited v the Minister of Pensions and National Insurance ([1968] 2 QB 497). This case determined that the question of whether there is a contract for services in existence should be decided upon the consideration of a number of factors. This "multiple test" established the key tests as being:

1. Whether there is an agreement to provide the servant's own work or skill in the performance of service for the master ("Personal Service") in return for a wage or remuneration ("Mutuality of Obligation").

2. Whether there is control of the service by the master ("Control").

3. Whether the other provisions in operation are consistent with a contract of service ("Other Factors").

Further case law development has held that in the area of professional services, mutuality of obligation and control are "the irreducible minimum". While a Tribunal will make its final decision on employment status based on all of the facts in a particular case, it is suggested that some factors will be more important than others.

Recent Case Law

1. Is a lap-dancer an employee?

No, said the English Court of Appeal in Stringfellow Restaurants Limited v Quashie ([2012] EWCA CIV 1735).

Miss Quashie was a lap-dancer at Stringfellows. She claimed that she had been unfairly dismissed. The preliminary issue in the case was whether Miss Quashie was an employee of Stringfellows or self employed. The Court of Appeal held that whilst Miss Quashie worked under a contract, and there were mutual obligations of a kind in place when she was actually working, there was no obligation on Stringfellows to pay her anything at all. Miss Quashie negotiated her own fees with the clients. This lead Elias LJ to conclude that "it would, I think, be an unusual case where a contract of service is found to exist where the worker takes the economic risk and is paid exclusively by third parties."

2. Was a minicab driver an employee where, under his contract, he could work as and when he liked?

No, said the UK Employment Appeals Tribunal ("EAT") in Knight v Fairway and Kenwood Car Service (UKEAT/0075/12).

The Claimant worked as a minicab driver. His written terms provided that, as long as he made weekly rental payments and sent appropriate notifications to the company, he was allowed to work as and when he pleased. He paid his own tax and national insurance. He left after a disagreement and claimed damages for wrongful dismissal. The EAT said that it was "likely" that the Claimant was employed either throughout a particular shift or from the beginning to end of an individual job, and that there was an overarching umbrella contract. This umbrella contract was not however considered an employment contract given the absence of mutual obligations.

3. Does an employer have to exercise actual day to day control over an employee for there to be an employment relationship?

No, said the UK EAT in White and Todd v Troutbeck SA ([2013]AU ER (D) 266 (JAN)), as the contractual right to control is sufficient. The Claimants in the case were caretakers/managers of a small estate in Surrey on behalf of "absentee owners", who visited once or twice a year. They were engaged under an agreement which set out various duties and responsibilities; however there were no fixed hours.

The EAT considered that the test from Ready-Mixed Concrete remains the "classic description of a contract of employment", and that it is a multi-factorial test, rather than a control test. The fact that the owners had abdicated themselves of day to day control was not conclusive, and instead the key question was whether there was a contractual right of control.

Employment Status: The Implications for Employees and Employers

  • Employers and employees have implied obligations inferred into their contract (e.g. the mutual duty of trust and confidence).
  • The right not to be unfairly dismissed and the right to receive a statutory redundancy payment are legal protections only afforded to employees.
  • The disciplinary and grievance practice and procedures set out in the Code of Practice on Disciplinary and Grievance Procedures 2007 only apply to employees.
  • Employers can be vicariously liable for the acts of employees; this means that the employer is liable for the wrongs committed by an employee where there is a sufficient connection with the employment. It arises even if the employer has committed no wrong.
  • Employers owe employees statutory duties relating to health and safety. Self employed contractors may not be covered under these duties although they will be covered under the employer's common law duty of care in respect of occupier's liability.
  • An employer is required to take out employer's liability insurance to cover the risk of employees injuring themselves at work.

There exists a considerable volume of case law on this topic and consequently there are no simple rules which determine the employment status of an individual.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Leanne McKeown
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions