ESM0554 - Guide to determining status: intention of parties

What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters. Nevertheless the intention of the parties has to be taken into account. The intention can be decisive where the relationship is ambiguous and where the other factors are neutral.

For example, tour couriers were found to be independent contractors because this was the declared intention of the parties, and the other factors were neutral. [W F and R K Swan (Hellenic) Ltd v The Secretary of State for Social Services, QBD (1983) (unreported).]

Lord Denning summarised the position in the Court of Appeal in Massey v Crown Life Insurance (see ESM7070) when he said:

The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it ….. on the other hand, if their relationship is ambiguous and is capable of being one or the other (either service or agency), then the parties can remove that ambiguity by the very agreement itself that they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.’

This view was adopted by Lord Justice Stephenson in Young and Woods Limited v West (1980) IRLR201 to show that a false label had been used in Mr West’s engagement as a sheet metal worker.

As a general rule the Courts have attached greater significance to an expression of intention where they have confidence in the bona fides of the parties than they have where there is suspicion of concealment or misrepresentation.

When you have gathered all the facts, you should stand back and look at the bigger picture. If you consider that the case is borderline, you should then, and only then, look at the intention of the parties. Where there is mutual intention for a contract of employment or for a contract for services, that will determine the status of the worker.

Mutual intention of the parties does not need to be considered where the relationship between the parties is not ambiguous.