This is an extract of our Classification Of The Relationship document, which we sell as part of our LAWS 363 Employment Law Notes collection written by the top tier of University Of Canterbury students.
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3 - Classification of the Relationship. A) Three CL tests have ben applied to differentiate between independent contractors (IC) and employees (EEs): the control test, economic reality test, and the integration test. i) Control test: looks at the extent to which EE is working under control of ER. TNT Express Worldwide v Cunningham - Court noted that control is not the sole determining factor but does have some weight. Concerned a courier driver. Contract gave extensive control to the ER:
Specified type of vehicle, uniform and policies and procedures for courier service.
Driver prohibited from working for any other goods and services company. Other relevant considerations included: the driver had to pay for the vehicle's insurance and licence, was responsible for employing a relief driver if he was ill and the company referred to him as a contractor. EC HELD that C was an EE due to the extensive control held by the ER. CA held that while there were factors of control, that these were outweighed by the other evidence suggesting that C was an IC. It was also noted that the alleged control factors were to the benefit of both parties and were not control factors in the traditional sense (e.g. the branding helped C's business). The CA distinguished: Challenge Realty v CIR - concerned real estate agents who had to wear uniform and pay business costs. S 54 of the Real Estates Agents Act required that employing agents must exercise control over all agents. Held that because of this requirement of control nobody could operate as an IC. Cooke P in TNT distinguished this case on the basis that there was a statutory obligation for control in Challenge Realty, additionally the agents didn't need to buy licences or insurance or employ relief workers. Koia v Carlyon Holdings - purchased a courier vehicle, there was an unsigned contract where the parties were described as agent and principle. K would buy stock from CH and sell it at a profit to supermarkets and dairies. BUT CH controlled the uniform, working routines, sales to supermarkets and price that the supermarkets paid. EC HELD that the control only concerned financial aspects and things necessary for efficient running of the IC business. Also noted that an absence of supervision suggested IC - odd as this was not previously the test and sometimes EEs have very little supervision. Curlew v Harvey Norman Stores - C employed through a trust to manage an HNS store. Contract provided that C was not an EE. C was dismissed for poor performance, and wanted to show that he was an EE to bring a grievance. Control factors held by HNS: Presentation/uniform, terms of sale, control over credit, hours of work, HNS owned the vehicle, Mr C couldn't employ anybody else to do his job. HELD uniformity was to the benefit of both parties. Mr C had the benefit of the brand and could compete with others to maximise his profit - NOT EE of HNS. Smith v Practical Plastics - S was a shareholder and director of the company. Judge Travis noted that recent English cases have held that where sufficient control to constitute an employment relationship was lacking and a director has a controlling interest, then the director may not necessarily be an EE. On the facts S was held to be an employee.
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