TABLE OF CONTENTS There are two main types of employment.
An employee has a contract of service.
A self-employed person has a contract for services.
The distinction is important for the following reasons.
Only employees are given statutory protection against unfair dismissal, redundancy, etc.
Only employees have implied into their contract certain common law duties of employer and employee.
Only employees can make their employers vicariously liable for their torts (i.e. for any damage caused by their acts or omissions).
Only employees are entitled to certain state benefits.
Employees'tax is deducted through PAYE and assessed under Schedule E.
An employer must pay National Insurance contributions in respect of every employee.
As it is not always easy to determine the difference, the courts have developed a number of tests to distinguish between workers who are employed and workers who are self-employed.
The test was set out in Yewens ? Noakes 1880: "a servant is a person subject to the command of his masters as to the manner in which he shall do his work".
This test (also called the organisation test) applies if the person's work is integrated into the business of the employer. If so, he is an employee (Cassidy ? Ministry of Health 1951).
This test looks at a number of different factors to decide on the economic reality of the working relationship. The leading case on the matter is Ready Mixed Concrete ?
