What is a Common Law Test?
The common law test is a judicial approach used to determine the existence of legal relationships, often in the context of employment, agency, or partnership. It assesses whether certain criteria have been met to establish a particular legal connection, which in turn can affect the application of laws and legal rights and obligations. The significance of the common law test lies in its ability to provide clarity and predictability in situations where these relationships are subject to legal scrutiny . In the realm of employment law, for instance, the common law test may be applied to determine whether an individual is an employee or an independent contractor in the absence of a written contract. This kind of analysis is essential for establishing various legal protections and obligations that are tied to specific legal statuses. The application of the common law test can vary depending on the specific legal context in which it is employed, but its fundamental purpose remains the same: to identify the existence of legal relationships and the extent of the rights and responsibilities that follow from such determinations.
Origins and History of Common Law Test
The common law test for employee status has its origins in the common law (as opposed to statutory provisions) that applied to both employees and workers before the advent of the more recent tests for employment status that are contained in legislation such as the Employment Rights Act 1996 and the Equality Act 2010. In Gonex International Co Ltd v El Azazi the Court of Appeal stated that there were broadly speaking two tests for employment status: namely "that of control, by the master over the servant" and "the economic reality test".
The common law test considers an employment relationship based on a number of criteria that must all be satisfied before an individual can be said to be an employee. Key criteria taken into account when establishing the test include: Whilst this is not an exhaustive list of all the elements taken into account when establishing the common law test, it is a list of some of the main ones that the courts have considered in a number of landmark cases (including Autoclenz Ltd v Belcher [2011] IRLR 820, Microsoft Corp v BAE Systems PLC & Ors [2012] EWHC 305 (Ch) and EAT/0081/07). Another important case is Ready Mixed Concrete v Michael [1968] 1 WLR 499. In this case the claimant was an owner driver who was said to be in a position of self-employment or a worker instead of an employee. It was held that the claimant was an employee, however all of the conditions of the common law test must be fulfilled in order for someone to be deemed to be an employee.
How is Common Law Test Applied?
The common law test is employed in an array of contexts. In the realm of employment law, for instance, the common law test is used to determine whether a worker is entitled to certain employee benefits and protections. If a worker is an employee, and not an independent contractor, they are entitled to more extensive benefits, including minimum wage, breaks, overtime pay, and health insurance benefits. The common law test has grown in importance, as the gig economy has secured a foothold in the workplace. Currently, Uber drivers are suing Lyft on the ground that they are entitled to minimum wage, overtime pay, and health benefits.
The common law test is also applied in the area of family law. In California, the common law test is used to determine whether the presumption of paternity under Family Code section 7540 can be rebutted. (See Kyle Golden v. Jason L. (California Court of Appeal, 2013).) Jason L. had a sexual encounter with Mary H. in 2004. After that encounter, Mary H. had a sexual relationship with another man, right before their child was conceived. Hence, when the child was born, the father was unknown. About two years later, Jason L. and Mary H. had sexual encounters. Six months later, Mary H. gave birth to another child. The biological father was unknown, as was the date of conception. About two years after the second child was born, Mary H. sued for paternity. Jason L. voluntarily took a blood test, which showed that he was not the father of the first child. The court held that the presumption of paternity was rebutted, because Jason L. had refrained from having sexual relations with Mary H. for a significant portion of the possible conception window. Thus, unless there was other evidence to prove he was the father, Jason L. could not be pursued for child support.
Notably, the common law test has also been applied in contract disputes. In Griffith v. Georgetown University, (D.C. Court of Appeals, 2023), a researcher brought a complaint against a university after it terminated him a year before his contract expired. When all administrative appeals were exhausted, the plaintiff brought a lawsuit in the D.C. Superior Court, on May 4, 2017. In response to the plaintiff’s lawsuit, the defendant moved to dismiss the complaint, citing the contract’s grievance procedure. In light of the plaintiff’s failure to utilize the grievance procedure, the defendant argued that the plaintiff’s claims should be dismissed. The plaintiff countered, by asserting that because he filed his complaint within 90 days of the contract’s termination, he was not obligated to complete the grievance procedure. The Court of Appeals held that the grievance procedure did not create a series of conditions for filing a lawsuit but merely constituted an alternative form of dispute resolution. Accordingly, the appellate court reversed the trial court’s ruling, mandated the trial court to evaluate the factors of the common law test, and then dismissed the complaint on the ground of forum non conveniens.
The Differences Between Common Law and Statutory Law
Common law tests and statutory law do not occupy the same status. Statutory laws are created by either federal or state legislatures and are generally intended to apply broadly to many situations. They tend to evolve slowly, as an entire legislature must agree on approval, and then each state must adopt the new law. Statutory law covers things such as: Common law tests, on the other hand, are not created by a legislative body. Instead, they rely on legal precedents handed down through the judicial system. These precedents are not static, either, as they can be influenced by new case law that is handed down. Therefore, it is possible for a common-law test on a given issue to vary dramatically from its statutory counterpart. While statutory tests can be used in certain areas of employment law, they can also conflict with common law tests. In other cases, a statutory test may outright supersede a common-law one. For example, the definition of an independent contractor can vary between the IRS and the Department of Labor. A worker can be considered an independent contractor by one agency and not the other. When attempting to define the type of employment relationship an individual has with a business, it is essential that employment lawyers evaluate all relevant tests to ensure the client is in compliance with all applicable laws.
Factors Involved in the Common Law Test
When it comes to the common law test, various primary factors and criteria are taken into consideration. It is believed that these factors will bear a significant influence on the outcome of the common law test. Principal factors are things such as intention, the right to control and context of the hiring. It is important to note that the factors examined in the traditional common law tests, though originating from the USA, have been well accepted in South Africa. The principle intention factor is carried out in the belief that what the parties intended during their negotiations of contract will be what drives the factors of the test. In this way, the parties’ process of negotiation is what influences the final outcome. Essentially, it is believed that once the parties have decided on their terms of agreement, it will translate into some form of identity that will create the guidance for examination . However, for it to be of sufficient substance to have an effect, it must be sufficiently consistent with other factors to be classified as meaningful. This is because parties’ intentions are generally only seen by looking at the contract. The next primary factor in the common law test is the degree of control, or right of control, that the employee has over the employment. The third and final main factor is that of context. The present factors and criteria could be anyone of the aforementioned three or could be a combination thereof. By looking at several factors, the result of the test is more likely to be accurate. When making the decision on which factors to include in the common law test, the court must apply its mind to the facts of that particular test. Context is vital and should take all matters into account to finalise the common law test. Thus, situation matters and there are no pre-determined, set factors to include in the common law test.
Challenges and Variations in Common Law Test
Despite its widespread use, the common law test for employment status is not without its detractors. There is a perception (particularly from those who sit on the other side of the fence) that it is too ambiguous and lacks clarity, particularly in its detail. The second limb of the test requires an examination of the control exercised over the worker. Control is often seen as a out-of-date concept that bears no relation to the actual working relationship. The question whether the parties intend to enter into a contract of service or a contract for services also poses problems to tribunals. The intention of the parties has always been an unreliable indicator solely in itself. It does not take into account the reality of how the worker is engaged on the ground. The common law test also has the potential to deliver inconsistent answers to what are essentially the same problems. For example, a comprehensive written contract may be considered an indicator of self-employment, but the same contract may actually override how the parties do business. As a result, a tribunal may have to choose between deciding the case on the written terms and making a decision based on the reality of the situation. There will be clear problems when two different tribunals hear the same arguments and arrive at opposite conclusions. Subjectivity plays a large part in the application of the common law test, particularly when the final determination may be influenced by the skills and persuasiveness of the advocates involved. Finally there may be an element of mischief-making in the application of the common law test. Employment status is an important concept and obtaining this status may have a dramatic effect on how the relationship is considered. An employment, as opposed to a self-employment contract, may give rise to a greater level of rights, obligations and protections.
Recent Cases and the Future of Common Law Test
The long-time dogma that the common law test is only relevant when distinguishing whether a worker is an employee or non-employee has been challenged. The Supreme Court’s decision in 2016 (On Call Interpreters) and the more recent construction of the on-call arrangements in Workers’ Compensation Principal v Erbes (MW & Associates) [2019] SAIRC 2 further highlights the high-risk nature of the common law test in today’s advance technology economy. Specifically, the threshold for determining an employment relationship now extends to whether the terms and conditions of an individual’s engagement or mandate confer them with the power or ability to influence the work system, which is no longer limited to the question of control through supervision by the principal. It indicates a move away from determining whether workers are employees or otherwise to a much wider test that includes considerations of how power is allocated within an engagement.
The pillar concept of the common law test has also come under significant challenge through the decision in Construction, Forestry, Mining and Energy Union v Personnel Contracting Pty Ltd & Ors [2019] FCAFC 100. The decision brought into question the proper construction of the key elements of the common law test as defined in the High Court of Australia in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 (Vabu) and repeated in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd & Anor [2015] FCA 315 (Quest).
Of note is a tentative return to the application of the label of "employee" or "independent contractor" applied to a person who performs work.
Notably, there is the recent increase in legislation intended to uphold and protect workers’ rights and entitlements as a response to the changing nature of the workforce. Examples include the Fair Work Amendment (Protecting Vulnerable Workers) Act 2018 (Cth) which introduced significant sanctions to deter serious non-compliance with workplace laws, including record keeping and pay slip obligations for franchisors and holding companies; the Fair Work Legislation (Secure Jobs, Better Pay Place) Bill 2019 (Cth) which seeks to again broaden considerations of the common law test so as to require consideration of any element of "control" – both direct and indirect – in situations where it is suggested that the person was not an employee; the establishment of the Australian National Employment Standards and minimum employment standards in various states; and Queensland’s new legislation to improve job security and safety protections for workers in certain industries.
The combination of these developments will in all likelihood require further refinement of the common law test, its interaction with legislation and how the decision in Quest should be interpreted. At least in the short/medium term, the common law test will continue to apply – but it will have wider ramifications than in the past.
Practical Applications for Attorneys
For cases that require the application of the common law test, it is important that a thorough factual assessment be prepared as early as possible and that a practice direction be followed when drafting pleadings. In the event that a claim has the potential to satisfy the statutory test but also the common law test, the statement of claim should specifically outline which test the plaintiff intends to rely upon and which passage in the plaintiff’s statement of claim each aspect of damages are grounded upon. This will assist any future judge who is asked to consider the correct test in the event that case law is invoked and the correctness of the application of the common law test is put into dispute .
Further, in cases where (the hypothetical) plaintiff expects to require his or her claim against the defendant be brought for loss of earning capacity and loss of past, present and future medical expenses, it is advisable to ensure the defendant is properly notified as to the fact it is the plaintiff (rather than the plaintiff’s employer) who is pursing the claim. This notice will be especially important when the plaintiff has yet to reach his or her maximum or final degree of recovery.
Any conscientious personal injury practitioner ought to consider the appropriateness of the statutory test to certain types of soft tissue injuries. For example, if in a particular matter, the degree of restriction on bending and reaching has not resulted in much of an impact upon the plaintiff’s gainsful employment, it is questionable whether it is necessary that a claim for pain and suffering damages be prosecuted pursuant to the statutory test when the common law test is also available.