Previously known as the master in a contractual relationship known to the common law as a master-servant relationship.
In Ready Mix v Minister of Pensions, the English court stated that an employer is one who agrees to a contract for services and in such an arrangement:
".. the servant (employee) agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master (employer). He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make the other master."
In Jowitt's 1977 Dictionary of English Law, employer is defined as follows:
"The test ... seems to be ... that the servant is bound to obey the reasonable commands of his master to do all acts falling within the scope of his employment and secondly, that the master has the power of dismissing the servant on neglecting his duty, or for incompetence or gross misconduct or on giving notice of dismissal in accordance with the express or implied terms of the contract."
In order to determine whether a person is an employer, as the characterization may have ominous consequences in terms of vicarious liability for the torts of an alleged employee, or in regards to taxation or the payment of statutory benefits, the law generally turns towards the distinctions between an employee and an independent contractor or an agent or such other control tests as have been developed by the relevant jurisprudence.
For example, in City of Montreal, a 1946 Canadian case, which was appealed all the way to the Privy Council of England (such appeals to the court of a foreign jurisdiction have since been disallowed), Justice Wright of the Privy Council wrote:
"In earlier cases a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues of tortious liability on the part of the master or superior.
"In the more complex conditions of modern industry, more complicated tests have often to be applied.
"t has been suggested that a fourfold test would in some cases be more appropriate, a complex involving control, ownership of the tools, chance of profit (and) risk of loss.
"Control in itself is not always conclusive. Thus the master of a chartered vessel is generally the employee of the shipowner though the charterer can direct the employment of the vessel.
"Again the law often limits the employer's right to interfere with the employee's conduct, as also do trade-union regulations. In many cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. In this way it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or, in other words, by asking whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior.">
A year later, the Privy Council, in Mersey Docks added:
"Many factors have a bearing on the result.
"Who is paymaster, who can dismiss, how long the alternative service lasts, what machinery is employed -- all these questions have to be kept in mind.
"The expressions used in any individual case must always be considered in regard to the subject matter under discussion, but among the many tests suggested I think that the most satisfactory by which to ascertain who is the employer at any particular time is to ask who is entitled to tell the employee the way in which he is to do the work upon which he is engaged.
"If someone other than his general employer is authorized to do this, he will, as a rule, be the person liable for the employee's negligence.
"But it is not enough that the task to be performed should be under his control, he must also control the method of performing it. It is true that in most cases no orders as to how a job should be done are given or required. The man is left to do his own work in his own way, but the ultimate question is not what specific orders, or whether any specific orders, were given, but who is entitled to give the orders as to how the work should be done."
- City of Montreal v Montreal Locomotive Works 1 DLR 161 (1947)
- Mersey Docks v Coggins and Griffiths 1947 AC 1
- Ready Mix Concrete v Minister of Pensions 1968 2 QB 497 (1968)