Market Investigations v Minister of Social Security
QUEEN'S BENCH DIVISION COOKEJ 24, 29 YnY 1968
National Insurance -Employed person -Part-time employment -Series of contracts of employment -nether contract of service or for services -Interviewer working for market research company -Extent and degree oJ control -Nature and provisions of contracts -National Insurance Act 1965 (c 51), s ](2)- National Insurance (Industrial Injuries) Act 1965 (c 52), s ](2), Sch 1, Pt 1, para 1.
A company engaged in market research employed a number of persons as interviewers for short periods of time. Mrs I was employed by the company on several occasions in this way. Before she was engaged to undertake a particular survey Mrs I agreed with the company, in consideration for a fixed remuneration, to provide her own work and skill in the performance of a service for the company. The company might specify the persons to be interviewed, the questions to be asked, the order in which questions should be asked and recorded, how answers were to be recorded and how she should probe for answers. She might be required to attend the company's office for instructions or might receive these from a supervisor. Within the period specified for completion of a survey, however, she was normally free to work when she wanted, could undertake similar work for other organisations, and could not be moved by the company from the area in which she had agreed to work. Furthermore, when she was working in the field the supervisor would have no means of getting into touch with her, and the company's officers were of the opinion that she could not be dismissed in the middle of a survey. No provision was made in the agreements between Mrs I and the company for time off, sick pay or holidays. On the question whether, whilst working under agreements with the company, Mrs I was included in the class of "employed persons"(i.e., persons employed under a contract of service) for the purposes of the National Insurance Act 1965 s 1(2) ', and was employed in "insurable employment" within the meaning of the National Insurance (Industrial Injuries) Act 1965s 1(2)b, and para 1 of Pt 1 ofSch 1 1, a For s 1(2) of the National Insurance Act 1965, and para I of Pt I of Sch I to the National Insurance (Industrial Injuries) Act 1965, so far as material, see p 734, letters, post. b For s 1(2) of the National Insurance Act 1965, and para I of Pt I of Sch I to the National Insurance (Industrial Injuries) Act 1965, so far as material, see p 734, letter c, post.
Held - Mrs I had been employed by the company under a series of contracts of service and hence was within the terms "employed persons" and persons in "insurable employment" in those Acts, because- (i) the extent and degree of control exercised by the company, no other factors being taken into account, were consistent with her being employed under a contract of service (see p 73 8, letter d, and p 73 9, letter c, post); and (ii) in particular, it not having been shown that Mrs I was in business on her own account, the nature and provisions of the contracts as a whole were consistent, rather than inconsistent, with their being contracts of service (see p 73 7, letter i, p 73 8, letter e, and p 740, letters f and h, post). Appeal dismissed.
Notes As to the nature of contracts of service, see 25 Halsbury's Laws (3rd Edn) 447-449, paras 871, 872; and as to the distinction between contracts of service and contracts for services, see ibid, p 452, para 878; and Supplement thereto. For cases on the subject, see 34 Digest (Repl), 16-18, 1-20, 27, 65 67, 30, 31, 82, 87 90, 32-34, 97 107. As to the classification of "employed persons" for the purposes of national insurance, see 27 Halsbury's Laws (3rd Edn) 711, 712, para 1295. q@ 732 For the National Insurance Act 1965 s 1, see 45 Halsbury's Statutes (2nd Edn) 952; and for the National Insurance (Industrial Injuries) Act 1965 s 1 and Sch 1, Pt 1, see ibid, 1097, 1172.
Cases referred
to in judgment Amalgamated Engineering Union v Minister of Pensions and
National Insurance [1963] 1 All ER 864,[1963] 1 WLR
441, Digest (Cont Vol A) 1133, 2632a. Bank Voor Handel en ScheepvaartNVv
Slatford [1952] 2 All ER 956,[19531 1 QI3 248,
revsd sub nom Bank Voor Handel en
Case Stated This was an appeal by way of Case Stated by Market Investigations ("the company") against the decision of the Minister of Social Security given on 16 February 1967, under s 64(l) of the National Insurance Act 1965, and s 35(l) of the National Insurance (Industrial Injuries) Act 1965, that Mrs Ann Florence Irving while working as an interviewer in association with the company during certain weeks in 1964 and 1965 was: (i) included in the class of employed persons for the purposes of the National Insurance Acts, 1946 and 1965; and (ii) was employed in insurable employment within the meaning of the National Insurance (Industrial Injuries) Acts, 1946 and 1965. The facts are set out in the judgment.
Peter
Cur adv vult
COOKE J read
the following judgment. The appellants in this case, Market Investigations are
a company engaged in the field of market research. In addition to their
permanent staff at the headquarters office, they employ interviewers for about
eight thousand to ten thousand interviews annually to provide information for
the company's customers about the habits and opinions of members of the
general public, retailers or other people in commerce, industry and the
professions. The company employ a small number of interviewers who work
full-time, but for the most part they draw from a panel of about 470
interviewers, mostly married women wishing to earn 14. 733
@a pin money. Between
"(ii) A small
number of the interviewers, whom the Company direct to work anywhere at any
time, are employed full time, but for the most part the Company draw from a
panel of about 470 interviewers, mostly married women wishing to earn pin
money: the Company have only 39 male interviewers. The Company prefer to draw
from a large number of interviewers infrequently rather than from a small
number frequently as from the nature of the work, it is important to diminish
the effect of any personal prejudice on the part of the interviewer.
Interviewers are recruited either by advertisement or through personal
contacts. (iii) All interviewers are issued with or have access to a copy of
the Company's 'Interviewer's Guide', a copy whereof is annexed hereto, marked
'A' and may be read as part of this case. This is a 26 page document outlining
the techniques of interviewing and on page 1 states 'The value and success of
any survey depends primarily on the care taken over interviewing, the accuracy
of recording information and the absence of bias. Any errors in interviewing
can be carried through analysis to the final report and may lead to totally
misleading results' and proceeds to give detailed examples of various types of
surveys, methods of interviewing, recording of information and classification
of persons interviewed into social grades. (iv) Before
each survey goes into the field the questionnaire is piloted to make sure that
it is unambiguous in that questions will be asked, and answers recorded, in
the best possible way. The final questionnaire, samples and interviewing
instructions are then compiled by the Company's research executives who are
also able to estimate the time a given number of interviews should take. % 734
@a (v) The Company's field office staff organise the allocation of assignments
and the Area Organiser is responsible for selecting the interviewers she
thinks can cope with each assignment; she then telephones them to enquire
whether they are free to work on a given number of days within a given period,
say two or three day's work during a ten to fourteen day period. There is no
obligation on a member of the panel to accept offers of work, but if there
were frequent refusals that member would not be offered any further
assignments. An interviewer is free to work for other firms doing similar work
during the same period, provided he or she submits work within the deadline
required by the Company. (vi) Each interviewing
assignment is a distinct and separate arrangement and once a member of the
panel has indicated that he or she is available, he is sent particulars of the
assignment and instructions. (vii) The Area Organiser is also responsible for
collecting and checking work carried out by the interviewers. (viii) The
Company check with approximately 10 per cent. of
the people stated by the interviewers to have been seen to ensure that they
have been interviewed. (ix) The Company do not allow interviewers to send a
substitute without prior permission of the Company. (x) Interviewers are sent
so many days' work based on the number of interviews the research executives
determine can properly be done in a 7 hour day, including travelling time.
Thus it is known how much an interviewer will be paid, less expenses, when she
receives a particular assignment. (xi) When an interviewer is first engaged a
supervisor accompanies her to see that the techniques the Company like for
interviewing are understood. (xii) On some of the more difficult assignments,
a briefing meeting for interviewers is held at one of the Company's centres or
at other times the supervisor meets the interviewer and gives the interviewer
a personal briefing and might even accompany her on the first one or two
interviews to make sure that the interviewing is carried out correctly. (xiii)
Once the interviewer is actually working in the field, the supervisor has no
means of contacting her as the Company have no record of where or when she
will be working." The Case Stated then describes how Mrs Irving came to be
included in the panel of interviewers and finds that between
"(xvii) For the most part Mrs. Irving was paid on a daily basis as outlined in paragraph 4 (x) hereof (at first the daily rate was 30s. increased to 35s. and latterly to 40s. daily): at other times she was paid 5s. or 10s. per interview. She also received a meal allowance and travelling expenses. (xviii) One of the Company's supervisors accompanied Mrs. Irving during the first few interviews on her first assignment. (xix) The terms and conditions of each assignment varied. The Company through their officers issued instructions in writing relating to the way in which each assignment was to be carried out and issued variously record sheets (a specimen copy is enclosed between pages 6 and 7 of the said 'Interviewer's Guide'), quota sheets (a specimen copy is enclosed at page 7 of the said 'Interviewer's Guide'), blank questionnaires on which to record informants' answers, prompt cards (a specimen copy is enclosed at page 17 of the said 'Interviewer's Guide'), recruitment sheets, samples of products, expense sheets, labels and return envelopes. For the purpose of some of the surveys Mrs Irving was given lists of the persons to be interviewed, the precise questions to be asked, the order in which they were to be asked and recorded and how to probe if she received a vague answer. For other surveys she had discretion to interview various persons in diverse specified age or income groups. 'la 735 @2 In all cases the answers had to be recorded in the form required by the Company. (xx) On some assignments it was suggested that interviews should be conducted in the afternoons or evenings, but provided the assignment was completed within the specified deadline, Mrs Irving could work as and when she chose and did not necessarily have to complete seven hours' work during one day. (xxi) Mrs Irving was required to forward the completed questionnaires to the Company's Head Office at the end of each day's interviewing, the object being to facilitate internal Organisation and to avoid swamping the Company's processing department. (xxii) On occasion, when there was a complicated survey, Mrs Irving was required to attend the Company's briefing sessions in London and on at least one occasion (in April 1965) she was paid L2 for attending such a meeting plus travelling expenses. (xxiii) The Company's officers were of the opinion that they could not have dismissed Mrs Irving in the middle of an assignment, but if they had been dissatisfied with her work they would have sent her no further assignments." The authorities on the distinction between a contract of service and a contract for services have been extensively reviewed in a number of recent cases, and in particular I refer to the judgment of Mocatta, J in "ittaker v Minister ofPensions and National Insurance, and the judgment of MacKenna J in Ready Mixed Concrete (South East) v Minister of Pensions and National Insurance. With these and other recent decisions before me, I do not myself propose to embark on a lengthy review of the authorities. I begin by pointing out that the first condition which must be fulfilled in order that a contract may be classified as a contract of service is that stated by MacKenna J in the Ready Mixed Concrete case ([ 1 968] 1 All ER at pp 439, 440.), namely that A agrees that, in consideration of some form of remuneration, he will provide his own work and skill in the performance of some service for B. The fact that this condition is fulfilled is not, however, sufficient. Further tests must be applied to determine whether the nature and provisions of the contract as a whole are consistent or inconsistent with its being a contract of service. I think it is fair to say that there was at one time a school of thought according to which the extent and degree of the control which B was entitled to exercise over A in the performance of the work would be a decisive factor. However, it has for long been apparent that an analysis of the extent and degree of such control is not in itself decisive. Thus in Collins v Hertfordshire County Council it had been suggested that the distinguishing feature of a contract of service is that the master can not only order or require what is to be done but also how it shall be done. The inadequacy of this test was pointed out by Somervell LJ in Cassidy v Ministry ofHealth ([ 1 95 1 ] 1 All ER 574 at p 5 79; [ 1 9 5 1] 2 KI3 3 43 at p 3 5 2.) when he referred to the case of a certified master of a ship. The master may be employed by the owners under what is clearly a contract of service, and yet the owners have no power to tell him how to navigate his ship. As Lord Parker CJ pointed out in Morren v Swinton and Pendlebury Borough Council ([ 1 9651 2 All ER 349 at p 3 5 1.), when one is dealing with a professional man, or a man of some particular skill and experience, there can be no question of an employer telling him how to do the work; therefore the absence of control and direction in that sense can be of little, if any, use as a test. Cases such as Morren's case ([ 1 965] 2 All ER 349.) illustrate how a contract of service may exist even though the control does not extend to prescribing how the work shall be done. ,1@ 736 @a On the other hand, there may be cases when one who engages another to do work may reserve to himself full control over how the work is to be done, but nevertheless the contract is not a contract of service. A good example is Queensland Stations Pty v Federal Comr of Taxation ((1945), 70 CLR 539 at p 552.), the "drover" case, when Dixon J said:
"In
considering the facts it is a mistake to treat as decisive a reservation of
control over the manner in which the droving is performed and the cattle are
handled. For instance, in the present case the circumstance that the drover
agrees to obey and carry out all lawful instructions cannot outweigh the
countervailing considerations which are found in the employment by him of
servants of his own,the provision of horses,
equipment, plant, rations, and a remuneration at a rate per head delivered."
If control is not a decisive test, what then are the other considerations
which are relevant? No comprehensive answer has been given to this question,
but assistance is to be found in a number of cases. In Montreal Locomotive
Works v
,,In
earlier cases a single test, such as the presence or absence of control, was
often relied on to determine whether the case was one of master and servant,
mostly in order to decide issues of tortious liability on the part of the
master or superior. In the more complex conditions of modem industry, more
complicated tests have often to be applied. It has been suggested that a
fourfold test would in some cases be more appropriate, a complex involving (i)
control;(ii) ownership of the tools;(iii) chance of
profit;(iv) risk of loss. Control in itself is not always conclusive. Thus the
master of a chartered vessel is generally the employee of the shipowner though
the charterer can direct the employment of the vessel. Again the law often
limits the employer's right to interfere with the employee's conduct, as also
do trade union regulations. In many cases the question can only be settled by
examining the whole of the various elements which constitute the relationship
between the parties. In this way it is in some cases possible to decide the
issue by raising as the crucial question whose business is it, or in other
words by asking whether the party is carrying on the business, in the sense of
carrying it on for himself or on his own behalf and not merely for a
superior." In Bank voor Handel en
"...
the test of being a servant does not rest nowadays
on submission to orders. It depends on whether the person is part and parcel
of the Organisation ... " In
work and skill in the performance of a service for the company. I therefore proceed to ask myself two questions: First, whether the extent and degree of the control exercised by the company would, if no other factors were taken into account, be consistent with her being employed under a contract of service. Second, whether when the contract is looked at as a whole, its nature and provisions are consistent or inconsistent with its being a contract of service, bearing in mind the general test I have adumbrated. As to the first question: The facts found by the Minister show that the control of the company is exercised at two stages. Before the interviewer engages herself for the particular survey, she will probably have seen the company's "Interviewer's Guide". This document contains detailed instructions on the technique of interviewing, and much of it is couched in imperative language. It would be tedious to cite examples at length, and I quote only a few. On p 3 1 read:
-call several times if you cannot contact your informant at the first ... it will always be necessary to re call. It is only after you have done this that you will be allowed to take a substitute name from your list." On p 8: "No interviews may be taken with children under sixteen without the prior consent of a parent or guardian." On p 13, under "Factual Questions": "This type of question must be asked in strict order as shown on your questionnaire." On p 16,under "Open Ended Questions":
"You must (a) record all your informant says verbatim and not attempt to summarise or paraphrase even a very vague and/or wordy reply;(b) Probe until you are satisfied that you have obtained the fullest answer possible." On the Minister's findings, I have no doubt that the instructions in the "Interviewer's Guide", after having been seen by the interviewer, are incorporated into the terms of any contract which the interviewer may thereafter make with the company to participate in a particular survey. The second stage of control comes after the interviewer has agreed to take part in a particular survey, that is to say, after the contract has been made. The interviewer is then sent instructions which according to the guide (p 1) give details of whom to interview, what to say to informants, how to handle the questionnaire and other forms, and also deal with contact with the office. In addition to that, the interviewer might in particular cases be required to attend the office of the company for instructions, or might receive instructions from a supervisor. The control which the company had the right to exercise was, however, limited in various ways. They had no right to instruct Mrs Irving as 14. 738 U to when she should do the work. The only requirement imposed on her was that the worl should be completed within a specified period. During that period Mrs Irving was free to do similar work for other organisations, so that the company had no right to prohibit her from doing that. No doubt it would be agreed before Mrs Irving accepted the assignment that her work would be in a given area; if so, the company would have no right to send her to another area. In addition to those limitations on the right of the company to give instructions to her, there was a practical limitation on the possibility of giving instructions to her while actually working in the field, because, as found in Para 4 (xiii) of the Case Stated, the supervisor would then have no means of getting into touch with her. It is apparent that the control which the company had the right to exercise in this case was very extensive indeed. It was in my view so extensive as to be entirely consistent with Mrs Irving's being employed under a contract of service. The fact that Mrs Irving had a limited discretion when she should do the work was not in my view inconsistent with the existence of a contract of service. For examples of a servant having such a discretion, see Hobbs v Royal Arsenal Co-operative Society Ltd and Amalgamated Engineering Union v Minister ofPensions and National Insurance. Nor is there anything inconsistent with the existence of a contract of service in the fact that Mrs Irving was free to work for others during the relevant period. It is by no means a necessary incident of a contract of service that the servant is prohibited from serving any other employer. Again, there is nothing inconsistent with the existence of a contract of service in the master having no right to alter the place or area within which the servant has agreed to work. So far as concerns practical limitations on a master's power to give instructions to his servant, there must be many cases when such practical limitations exist. For example, a chauffeur in the service of a car hire company may, in the absence of radio communication, be out of reach of instructions for long periods. I therefore turn to the second question, which is whether, when the contract is looked at as a whole,its nature and provisions are consistent or inconsistent with its being a contract of service. Counsel for the company points first to the fact that Mrs Irving was appointed on each occasion to do a specific task at a fixed fee. He points to the fact that the company's officers were of the opinion that they could not have dismissed Mrs Irving in the middle of an assignment. He says that these factors are more consistent with the conception of a contract for services than a contract of service. As to the first factor, appointment to do a specific task at a fixed fee, I do not think that this is inconsistent with the contract being a contract of service. See, for example, Sadler v Henlock. As to the right of dismissal, it is necessary to distinguish between a right of dismissal for breach and a right of dismissal irrespective of breach. It is noticeable that as regards the right of dismissal for breach, the Minister's finding' is somewhat cautiously worded; it relates to what the company's officers thought and not to what the provisions of the contract were. In the absence of some special term either expressed in the contract or to be implied from particular circumstances, I should have thought that certain types of breach might well justify dismissal of an interviewer, even in the middle of an assignment. I cannot see on what ground the right to dismiss in the middle of an assignment is said to be entirely excluded in this case; but assuming that it is, that fact does not in my view assist the company in establishing that the contract is a contract for services and not a contract of service. Even in a contract for services a breach by one party which goes to the root of the contract will entitle the other party to terminate it. In this respect, there is 14. 739 @2 no difference between a contract for services and a contract of service, except that in the latter case the master's right is spoken of as a right of dismissals peculiarity of words which makes no difference to the substance. So far as concerns dismissal irrespective of breach, it is of course clear that the interviewer in this case could not, in the absence of a breach, be dismissed in the middle of an assignment. There is, however, nothing in this which is inconsistent with the contract being a contract of service. It is quite common for contracts of service to be entered into for fixed periods with no provision, express or implied, for dismissal during the specified period.
Then counsel for the company says that the fact that the contract makes no provision for time off, sick pay and holidays, suggests that it is not a contract of service. I cannot accept that this is a test which is of great assistance in the present case. The fact that the contract makes no provision for time off is merely a reflection of the fact that there are no specified hours of work. I have already dealt with this. The fact that there is no provision for sick pay and holidays is merely a reflection of the fact that the contract is of very short duration. If a man engages himself as an extra kitchen hand at a hotel for a week in the holiday season, there will be no provision for sick pay and holidays, but the contract will almost certainly be a contract of service. The company then refer to the fact that Mrs Irving's work was performed under a series of contracts, each for a specific survey. They say that the relationship of master and servant is normally conceived of as a continuous relationship, and that the fact that there is a series of contracts is more consistent with those contracts being contracts for services than contracts of service. For my part, I doubt whether this factor can usefully be considered in isolation. It must, I think be considered in connexion with the more general question whether Mrs Irving could be said to be in business on her own account as an interviewer. In considering this more general question I take into account the fact that Mrs Irving was free to work as an interviewer for others, though I think it is right to say that in this case there is no finding that she did so. I also take into account the fact that in her work as an interviewer Mrs Irving would, within the limits imposed by her instructions, deploy a skill and personality which would be entirely her own. I can only say that in the circumstances of this case these factors are not in my view sufficient to lead to the conclusion that Mrs Irving was in business on her own account. The opportunity to deploy individual skill and personality is frequently present in what is undoubtedly a contract of service. I have already said that the right to work for others is not inconsistent with the existence of a contract of service. Mrs Irving did not provide her own tools or risk her own capital, nor did her opportunity of profit depend in any significant degree on the way she managed her work. Taking all the factors into account and giving full weight, I hope, to the persuasive arguments of counsel for the company, I am clearly of opinion that on the facts of this case the Minister was right in concluding that Mrs Irving was employed by the company under a series of contracts of service, and the appeal accordingly must fail.
Appeal dismissed.
Solicitors: P R Kimber (for the company); Solicitor, Ministry ofSocial Security.
K Diana Phillips Barrister.