The Court of Appeal has overturned the decision of the High Court in the case concerning whether Domino’s Pizza delivery drivers were employees or self-employed, independent contractors.
The Revenue Commissioners had determined that the pizza delivery drivers were employees. This decision was appealed in a case stated by way of appeal by the employer to the High Court.
The Tax Appeals Commissioner had determined in October 2018 that the delivery drivers were employees.
The employer appealed this decision to the High court who dismissed the appeal (Read this blog post about the High Court decision). The employer then appealed this decision to the Court of Appeal.
Domino’s Pizza is a business name and the employer manufactures and delivers pizza to customers. The company wished to subcontract the delivery of pizzas to its customers and provided agreements which stated the delivery work was undertaken “strictly as an independent contractor”.
The driver was to provide his own vehicle and was paid per delivery and the driver could subcontract the work by providing a substitute delivery person. The company did not warrant that it will utilise the contractor’s services at all and the company recognised the delivery person’s right to make himself available on days and at time of his choosing.
The drivers also had to sign a form form Social Welfare to the effect that they were “independent contractors”.
Nevertheless, the Revenue Commissioners determined that the drivers were employees as it claimed that the written agreement did not reflect the true agreement between the parties and the day to day operations were different from the terms set out in the contract.
The High Court decision
The High Court appeal looked at four core issues:
- Mutuality of obligations
- Terms of the written contract
Mutuality of obligation: the High Court referred to the judgment in Barry:
The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service. …Accordingly, the mutuality of obligation test provides an important filter.
The High Court held that mutuality of obligation was present for the duration of the individual contracts, having applied the usual tests of integration, substitution, control etc.
The Court of Appeal
The Court of Appeal noted that
55.The parties agreed that “mutuality of obligation” is a sine qua non of an employment relationship.
It noted the Barry case and J. Edwards observation that
47. The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service
The Court of Appeal reiterated that each case must be determined in the light of its own facts and circumstances.
The Court of Appeal held that the Revenue Commissioner erred in holding that the mutuality of obligation test was satisfied in this case. The written agreement between the parties did not oblige the drivers to work and therefore they were not required to initiate any agreement with the appellant.
Interestingly the Court of Appeal held:
In Barry,Edwards J. identified the relevant obligations as the obligation of the employer to provide work for the employee and the corresponding obligation on the employee to perform work for the employer. These are the obligations which are at issue in assessing mutuality of obligation.They are not to be confused with the obligation to perform the work once undertaken and to pay for the work so undertaken. Counsel for the appellant submitted that the test must be applied before the workers actually “do the work”. One must ascertain whether the employer has an obligation to provide work to the employee prior to actually reaching agreement to provide and to perform that work.
The questions of integration and substitution were looked at closely by the Court of Appeal. The court of appeal held that the Revenue Commissioner was entitled to reach the conclusion she did with respect to substitution and integration.
However, the Court of appeal went on to say
The findings on substitution and integration are not determinative of the status of the drivers as the want of mutuality of obligation precludes them from being employees of the appellant.
The court of appeal allowed the appeal and set aside the decision and order of the High Court and the decision of the Appeal Commissioner. It made a declaration that the pizza delivery drivers were self employed independent contractors.