Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance
| Jurisdiction | England & Wales |
| Judgment Date | 1968 |
| Date | 1968 |
| Court | Queen's Bench Division |
Master and Servant - Contract of service - Service of, or for services - Owner-driver - Payment on mileage basis - Provision of exclusive use of vehicle for company's deliveries - Vehicle to be driven by owner - Power to hire competent driver with company's consent - Vehicle and driver to wear company's livery - Company's rules to be complied with - Freedom of owner in performance of obligations - Whether sufficient control to create master and servant relationship - Whether contractual terms inconsistent with contract of service - Relevance of ownership of assets and bearing of financial risk - Declaration that owner-driver independent contractor - Whether conclusive - Whether “employed person” - Whether independent contractor -
A written contract between a company marketing and selling concrete and L., which declared L. to be an independent contractor, provided, inter alia, that for payment at mileage rates L. at his own expense would carry concrete for the company and make available throughout the contract period a vehicle bought by him from a finance organisation associated with the company. He was to obtain an A carriers' licence and was to maintain, repair and insure the vehicle (which was to be painted in the company's colours) and an attached mixing unit belonging to the company, and to drive the vehicle himself, but might with the company's consent hire a competent driver if he should be unable to drive at any time. L. was obliged to wear the company's uniform and to comply with the company's rules and was prohibited from operating as a carrier of goods except under the contract. The company had control over major repairs to the vehicle and power to ensure that L.'s accounts were prepared by an accountant in a form approved by the company.
The Minister of Pensions and National Insurance determined that L. was within the class of employed persons under section 1 (2) of the National Insurance Act, 1965, F1 as being an “employed person” under contract of service with the company under section 3 (a).
On appeal, on the contentions that the contract was not a contract of service, and that L. was an independent contractor:—
Held, allowing the appeal, (1) that the inference that parties under a contract were master and servant or otherwise was a conclusion of law dependent on the rights conferred and duties imposed by the contract and if the contractual rights and duties created the relationship of master and servant, a declaration by the parties that the relationship was otherwise was irrelevant (post, pp. 789A–B).
(2) That a contract of service existed if (a) the servant agreed in consideration of a wage or other remuneration to provide his own work and skill in the performance of some service for his master, (b) the servant agreed expressly or impliedly that, in performance of the service he would be subject to the control of the other party sufficiently to make him the master, and (c) the other provisions of the contract were consistent with its being a contract of service (post, pp. 790H–791A); but that an obligation to do work subject to the other party's control was not invariably a sufficient condition of a contract of service, and if the provisions of the contract as a whole were inconsistent with the contract being a contract of service, it was some other kind of contract and the person doing the work was not a servant (post, p. 792D); that where express provision was not made for one party to have the right of control, the question where it resided was to be answered by implication (post, p. 791E); and that since the common law test of the power of control for determining whether the relationship of master and servant existed was not restricted to the power of control over the manner of performing service but was wide enough to take account of investment and loss (post, p. 797C), in determining whether a business was carried on by a person for himself or for another it was relevant to consider who owned the assets or bore the financial risk (post, p. 795G–H).
(3) That the rights conferred and the duties imposed by the contract were not such as to make it a contract of service, and that L. had sufficient freedom in the performance of the obligations to quality him as an independent contractor.
APPEAL against a decision of the Minister of Pensions and National Insurance.
The following case was stated by the Minister of Social Security (formerly the Minister of Pensions and National Insurance) under section 65 of the National Insurance Act, 1965 and
1. On November 15, 1965, a company, Ready Mixed Concrete (South East) Ltd., applied for determination by the Minister under section 64 of the National Insurance Act, 1965, of the question whether Thomas Henry Latimer was by virtue of a contract between himself and the company dated May 15, 1965, an employed or self-employed person for the purposes of the National Insurance Act, 1965, during the week commencing November 8, 1965: and also whether the company was liable for payment of flat rate contributions in respect of Mr. Latimer for the purposes of section 3 of the Act, during that week.
2. The Minister appointed Mr. M. W. M. Osmond, Barrister-at-Law and member of the Legal Department of the Ministry of Pensions and National Insurance to hold an inquiry into questions arising on the application and to report to her thereon. Mr. Osmond accordingly held an inquiry in London on January 11 and 12, 1966, and both Mr. Latimer and the company were represented at the inquiry by Mr. G. Slynn, of counsel.
3. Subject to all questions of relevance and admissibility the Minister accepted the evidence led at the inquiry as establishing the following facts.
(1) Ready Mixed Concrete (United Kingdom) Ltd. (hereinafter referred to as “Ready Mixed”), carried on the business of making and selling ready mixed concrete and similar materials, and operated through a number of wholly or partly owned subsidiary companies, one of which was the company.
(2) The company was incorporated in 1963 and operated at eight plants at various places in the South East of England one such plant being at Crayford, Kent.
(3) It was, and always had been, the policy of the Ready Mixed Group that the business of making and selling concrete should be carried on as far as possible separately from the business of delivering the concrete to customers, and in furtherance of that policy, on commencing trading some ten years ago, Ready Mixed entered into a contract for the delivery of concrete with an independent company of haulage contractors. In 1959, being dissatisfied with the operations of the independent company, Ready Mixed determined the contract and introduced a scheme of delivery by drivers (hereinafter referred to as “owner-drivers”) working under contracts similar to, but not identical with, a form of agreement known as agreement “D” (a copy whereof was annexed to the case). It was considered that not only would the scheme further the policy of keeping the making and selling of concrete separate from its delivery, but that the scheme would benefit the Ready Mixed Group by stimulating speedy and efficient cartage, the maintenance of trucks in good condition, and the careful driving thereof, and would benefit the owner driver by giving him an incentive to work for a higher return without abusing the vehicle in the way which often happened if an employee was given a bonus scheme related to the use of his employer's vehicle.
(4) In a letter dated September 6, 1962, addressed to Ready Mixed, the Ministry of Pensions and National Insurance expressed the opinion that agreements in the form of agreement “D,” being one of a series of agreements by which the owner-driver scheme was given legal effect, did not constitute contracts of service between members of the Ready Mixed Group and owner-drivers, who were accordingly to be regarded as self-employed persons for the purposes of the
(5) It was, and always, had been, since the introduction of the owner-driver scheme in 1959, the intention both of the Ready Mixed Group and of the owner-drivers that the latter should be treated as independent contractors, and not servants of member companies of the Ready Mixed Group. Some owner-drivers had, in addition to delivering concrete in pursuance of contract with such members, carried on other remunerative occupations. A few owner-drivers had an interest in more than one truck, themselves employing drivers to work for them, and the company was willing to allow suitable owner-drivers to own more than one truck.
(6) Notices under the
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