Commentary

(d) The 'economic reality' test

Division AI Categories of Worker
| Commentary

(d) The 'economic reality' test

| Commentary

(d)     The 'economic reality' test

Sometimes the worker's status can be resolved by a process of elimination. If the choice is between employee and independent contractor, then, paradoxically, it may be easier to reach the negative conclusion that they are not an independent contractor than to say positively, that they satisfiy the test of employment. This approach is sometimes called the 'economic reality' or 'business reality' test. It can be seen as the converse of the organisational test. The organisational test enquires whether the individual is truly part and parcel of the organisation; the economic reality test, whether they are truly independent of it.

This test suggests that you consider—in addition to the degree of control—the opportunities of profit or loss, the degree to which the worker was required

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