Sagicor Insurance Company v Carter et Al
| Jurisdiction | Barbados |
| Judge | Simmons, C.J. |
| Judgment Date | 12 October 2007 |
| Neutral Citation | BB 2007 HC 19 |
| Docket Number | 1050; 1051; 1052; and 1053 of 2006 |
| Court | High Court (Barbados) |
| Date | 12 October 2007 |
High Court
Simmons, C.J.
1050; 1051; 1052; and 1053 of 2006
Mr. P.K.H. Cheltenham Q.C., Mr. Africk Scott and Ms. Karen Perreira for the plaintiff.
Mr. Roger Forde Q.C. and Mr. Brian Barrow for the defendants Livingstone Carter, Charles Ishmael and Margaret Audain.
Mr. C. E. Lashley Q.C., Mrs. Fidelis St. Hill and Ms. Shaunita Jordan for the defendant Patrick Hill.
Industrial law - Contract of service — Whether relationship of employer/employee existed between the plaintiff and the defendants — Application of Control Test — Sufficient degree of control and supervision reserved by plaintiff — Application of the Organisation and Integration Test — Work of defendants not merely an accessory to organisation — Application of the Economic Reality Test — Facts showed that the defendants were in business on plaintiff's account — Application of the Multifactor Test — Court examined situation as a whole — Terms of Contract construed — Terms not inconsistent with contract of service — Mutuality of obligations — Defendants paid for word done and obliged to provide work for plaintiff — Defendants engaged under contracts of service.
Simmons, C.J. These consolidated originating summonses seek a free-standing declaration as to the nature of the employment relationship between the plaintiff (Sagicor) and four categories of its workers, designated variously as ‘canvassers’, ‘senior financial services representatives’, ‘sales representatives’, and ‘representatives’. In these proceedings, the defendants (sometimes referred to as Mr. Carter, Mr. Ishmael, Mr. Hill and Mrs. Audain) are joined and sued as representatives of workers in the various categories. The issue for determination raises the perennial question: are the workers engaged under a contract of service or under a contract for services? It is an issue which has been the subject of voluminous judicial and academic exegesis. Sagicor says that the workers are engaged under the latter type of contract whereas the workers contend that they are employees engaged under contracts of service.
Sagicor is the oldest surviving indigenous insurance company in the Caribbean. It was not always known as Sagicor. It began its business as an insurer on 20 October 1840 under the name The Barbados Mutual Life Assurance Society (‘the Mutual’). Cecelia Karch and Henderson Carter contextualise this successful non-bank financial institution in the economy of Barbados in theft extremely illuminating work “The Rise of the Phoenix – The Barbados Mutual Life Assurance Society in Caribbean Economy and Society 1840 to 1990” (1997). The authors record at p.17 that an Act of Parliament was passed on 16 July 1851 to provide for incorporation of the Society “instead of having funds vested in Trustees” under the original Deed of Settlement.
In paragraph 2 of an affidavit deposed to on 21 June 2006, the Executive Vice President, General Counsel and Secretary of Sagicor, Ms. Sandra Osborne, explains that Sagicor was re-incorporated under the Companies Act, Cap. 308 of the Laws of Barbados. In fact, Sagicor is now an amalgamation of Sagicor Life Inc. and another company, the former Life of Barbados Limited (LOB). Mr. Hill is a former ‘representative’ of LOB and, since the amalgamation, continues to work under a ‘representative's agreement’ concluded with LOB. The other defendants are long-standing workers who began their contractual relationship with ‘The Mutual’, although they are now under the Sagicor brand.
It is convenient at an early stage of this decision to discuss the legal principles or the tests which the common law has developed to determine whether a person is employed under a contract of service or a contract for services. A determination has to be made as to whether the worker is ‘a servant’ or ‘an independent contractor’, in the traditional vocabulary of the law. All counsel have generously placed before me a wealth of decided cases from many jurisdictions to assist in my resolution of the issue. I am grateful to them.
The tests adumbrated by the Courts have to be understood against the background of the social and economic conditions which prevailed at the times when the tests were developed. These tests have an existence stretching back over 170 years of the common law. Since the second half of the last century, the law has embraced the more egalitarian nomenclature of ‘employer’ and ‘employee’ and left behind the Victorian and somewhat demeaning classification of ‘master’ and ‘servant’, although the latter designations still have some applicability in various areas of the law e.g. vicarious liability in the law of torts.
In the nineteenth century the prevailing test was the control test. This test holds that a worker is in law an employee (servant) if his employer can control or has the right to control not only what the worker does but also the manner in which he does it. In Yewens v Noakes (1880) 6 Q.B.D. 530 at 532 Bramwell, L.J., expressed the control test in these words:
“a servant is a person subject to the command of his master as to the manner in which he shall do his work.”
Professor K.W. Wedderburn (as he then was) at p.53 of his book “The Worker and the Law” (Second Edition 1971) put the socio-economic rationale for the origins of the control test in this passage:
“The development of the law was here again greatly influenced by propositions established in the cases dealing with agricultural or manual labourers and domestic servants”.
In a seminal Note in Vol.14 of the Modern Law Review (1951), the late Professor Otto Khan-Freund also explained the philosophy underpinning the control test and the distinction between a servant and an independent contractor. Discussing the decision in Cassidy v. Ministry of Health [1951] 1 All E.R. 574, Professor Kahn-Freund wrote (p.505):
“This distinction was based upon the social conditions of an earlier age: it assumed that the employer of labour was able to direct and instruct the labourer as to the technical methods he should use in performing his work…. The control test was well suited to govern relationships like those between a farmer and an agricultural labourer (prior to agricultural mechanisation), a craftsman and a journeyman, a householder and a domestic servant; and even a factory owner and an unskilled ‘hand’.”
In a telling sentence he exposed the weaknesses implicit in the control test at p.506.
“To say of the captain of a ship, the pilot of an aeroplane, the driver of a railway engine, of a motor vehicle, or of a crane that the employer ‘controls’ the performance of his work is unrealistic and almost grotesque.”
In contemporary times, controlling the manner of doing work is only one indicium to which the Courts will look in determining the status of a worker. It is fair to say that the control test is no longer decisive but it is still of importance.
Because of the limitations of the control test as revealed by changes in social and economic conditions and in industry, the Courts searched for a different test. Cases in which hospital authorities were held vicariously liable for the negligence of their professional staff accelerated the search for a new test. The test which emerged was a response to the difficulties in making Bramwell, L.J.'s test applicable to skilled, professional workers. In Stevenson Jordan and Harrison Ltd v. MacDonald and Evans [1952] 1 T.L.R. 101, Denning, L.J., (as he then was) mentioned that, in Cassidy, Somervell, L.J., had pointed out that the control test was not universally correct. There are many contracts of service where the employer cannot control the manner in which the work is to be done. Denning, L.J., said (p. 111):
“It is almost impossible to give a precise definition of the distinction. It is often easy to recognise a contract of service when you see it, but difficult to say wherein the difference lies. A ship's master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship's pilot, a taxi-man, and a newspaper contributor are employed under a contract for services.
One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it” (Emphasis supplied).
In his desire to extend employee status to certain professionals, Lord Denning propounded a new test. It came to be known as the organisation or integration test. And in Bank Voor Handel en Scheepvaart v. Stafford [1953] 1 Q.B. 248 at 295 Lord Denning referred to an employee as being “part and parcel of the organisation”. But the organisation/integration test did not escape criticism. In Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 1 All E.R. 433 MacKenna, J., was unsure of the meaning and import of the organisation/integration test. He asked at p.445:
“What is meant by being “part and parcel of an organisation”? Are all persons who answer this description servants? If only some are servants, what distinguishes them from the others if it is not their submission to orders?”
If the organisation/integration test is applied to determine the nature of the employment relationship, a Court has to find those indicia which point to the worker's being ‘part and parcel of the organisation’ or those which point to integrated work. The organisation/integration test has not gained much ground in the common law. Having said that, the organisation/integration test, like the control test, may still be of relevance in some cases but the...
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