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Tort: Vicarious Liability

The economic reality test and the modern multiple test

  • 3 things to know
  • Components 2 and 3

Overview

Economic reality test and three conditions in Ready Mixed Concrete.

What you need to know

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Key term

State the three conditions in Ready Mixed Concrete.

Numbers

What is the economic reality test?

Key term

Which factors point towards employment?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is the economic reality test?

    Model answer

    The economic reality test weighs several factors instead of relying on one. Ready Mixed Concrete v Minister of Pensions and National Insurance [1968] gave the leading formulation.

  2. 2

    State the three conditions in Ready Mixed Concrete.

    Model answer

    The worker must agree to provide personal work in return for a wage. The worker must agree to be subject to a sufficient degree of control. The other terms of the contract must be consistent with a contract of service.

  3. 3

    Which factors point towards employment?

    Model answer

    Payment of a regular wage with tax and national insurance deducted points to employment. Provision of tools, paid holiday and sick pay point the same way.

  4. 4

    Which factors point towards self-employment?

    Model answer

    A worker who supplies tools, sends a substitute and bears the financial risk is likely to be self-employed. Service to several clients at once also suggests a contract for services.

  5. 5

    What question did Market Investigations v Minister of Social Security [1969] ask?

    Model answer

    The court asked whether the person was in business on their own account. A person carrying on a business of their own is an independent contractor.

  6. 6

    Why is a right of substitution important to status?

    Model answer

    An obligation to do the work personally is a hallmark of employment. A genuine and unrestricted right to send a substitute is inconsistent with a contract of service.

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