Ready Mixed Concrete v Minister of Pensions 1968: who is an employee?

Areas of applicable law: Tort law – Vicarious liability – Employment law.

Main arguments in this case: Who is an employee and who is a self-employed person?

The Ready Mixed Concrete Ltd v Minister of Pensions and National Insurance (1968) is a key case that established the distinctions between a contract of service, and a contract for services. The difference between the two is that a contract of service exists in the contract of employment, whereas a contract for services means self-employment.

The fact of the case: The Ready Mixed Concrete delivered concrete. To do that the company had hired lorry drivers and the contract between the two parties was a contract for services, i.e. self-employment. The lorries used in delivering concrete were bought by the drivers on hire purchase. The vehicles were painted in company colours and the drivers had to look after and ensure the vehicles themselves. The lorries could not be used for any other purposes other than to deliver the concrete. The drivers had to wear a uniform and were required to work when needed and were paid on the mileage and the load they would carry for the company.

The Ready Mixed Concrete was not paying the National Insurance contribution for its lorry drivers as it regarded them as independent contractors, but the Minister of Pensions and National Insurance considered the drivers as employees and therefore wanted the company to pay the National Insurance contribution under the National Insurance Act 1965.

This case set out three conditions to decide if someone was an employee or an independent contractor. The rules are also known as the economic reality test.  The test states that a person is an employee if:
a) the person agrees to provide work in return for a wage for the skill and work that he provides in return.
b) The person has given express or implied willingness to be under the control of the employer.
c) The other terms and conditions are consistent with a contract of employment.
If a person pays his own tax, brings his own help (people, etc.) and tools to do the job, and pays for his own material, then it is likely that he is an independent contractor.

The court, in this case, decided that because the drivers owned the vehicles themselves, and were paying their own taxes, the drivers were self-employed.