Economic reality or multiple test

One of a number of tests developed by the courts to test the employee's status.

For vicarious liability to arise there must be a relationship of employer and employee for the employer to be liable for the tortfeasors's act.

A number of tests were developed by the courts to test the employees status and this includes the economic reality or multiple test.

The test was put forward by Mackenna. J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions (1968).  According to Mackenna J three conditions must be satisfied if the wrongdoer is to be properly considered an employee:

The employee has agreed to provide skill in return for a wage;

A degree of control is exercised by the employer;

Any terms found to exist are not inconsistent with employment as such.

The courts have found it necessary to take into account numerous factors when considering whether the tortfeasor is an employee, such factors are not conclusive in themselves but help in the process.

Factors such as whether the individual owns the tools of his trade, his liability for tax and National Insurance,(as this is dealt with differently depending on whether the persons is employed or self employed). Also taken into account is the method of payment, does the individual receive a regular payment or wage or does he receive a one off payment once his work is complete?

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