Categories
The Employment Contract

The Domino’s Pizza Delivery Drivers High Court Case-Employees or Self-Employed?

Are pizza delivery workers employees or self-employed?

This is a question that the Irish High Court has addressed with a judgment in December 2019 in a case involving Domino’s Pizza delivery drivers.

It is an issue that has previously been addressed in the UK courts in cases involving Uber and Deliveroo delivery drivers. But this High Court case involving Karshan (Midlands) Limited (t/a Domino’s Pizza) v Revenue Commissioners [2019] IEHC 894 was the first time an Irish court had to decide the issue.

Background

The Revenue Commissioners had decided that the delivery drivers delivering pizza for the company trading as Domino’s Pizza were employees for tax purposes. The company insisted they were self-employed and therefore responsible for their own tax affairs and returns. The company trading as Domino’s Pizza appealed the decision of the Tax Appeal Commissioners to the High Court on a number of grounds, the most important of which was that the Revenue Commissioners had erred in law in applying some well-established principles to the case.

These principles are:

  1. Mutuality of obligation-that is, does the company have to provide work and does the delivery driver have to accept it? The company argued that the delivery drivers were not obliged to work, they could pick an choose their jobs, and therefore the necessary mutuality of obligation between the parties was absent.
  • Substitution-normally, if you are allowed to substitute someone else to do your job or carry out duties you are not an employee, you are self employed
  • Integration-were the delivery drivers integrated into the business? If they were then they were likely to be employees but the company argued that they were an “accessory” to the business, not integral
  • Contractual terms-the company argued that the Revenue Commissioners did not place enough weight on the actual terms and conditions between the parties and placed too much emphasis on how the contract was actually operated

The High Court Findings

The High Court found that once the drivers filled out an availability sheet they then had an obligation to be available. Because of this the High Court held there was mutuality of obligation.

The High Court also  found that the purported substitution clause only allowed the driver to nominate a replacement who would then be approved and paid by Dominos. This was not true substitution.

The Court, in looking at the question of integration into the business, found that the drivers were integral to and played a vital role in the business. It also noted the drivers were obliged to wear uniforms and take orders from Dominos, not the general public or end user.

When it looked at the contractual terms the High Court found that the Revenue Commissioners not made a mistake in looking at how the contract was actually performed, as opposed to the terms and conditions set out in the written contract.

For all of these reasons the High Court held that the delivery drivers were employees for tax purposes.

Takeaway (no pun intended)

One of the most important points to take from this case is the High Court’s observation that there is “no comprehensive statutory or common law definition”  of who is self-employed and who is an employee. For this reason each case will be decided on its particular facts and circumstances.

It also noted there was no box ticking exercise that you could complete to answer the question; each case must be looked at and a close scrutiny of the relationships between the parties must be carried out to be sure of the position.

This has important implications for employers who need to be aware of the emphasis that will be placed on the actual relationship between the parties, and not just on what is contained in the written contract.

Read the full decision in Karshan (Midlands) Limited (t/a Dominos Pizza) v Revenue Commissioners [2019] IEHC 894 

Categories
Employment Claims The Employment Contract

Was Doctor an Employee or Self Employed Contractor?

Employee or self employed?

This was the case of a medical doctor with his own practice who claimed he was an employee in respect of his work for a training provider.

This is a common issue: whether an individual was an employee or was self-employed, notwithstanding the statement in a contract that the individual was not an employee.

All employment claims will depend on the claimant being an employee. If the claimant falls at this hurdle any other claims-for example terms of employment or unfair dismissal-will not be heard.

This case involved a medical practitioner who provide training services for the respondent and brought a claim under the Terms of Employment (Information) Act, 1994 seeking a written contract of employment. He had received a contract dated April 1st 2006 which described his position as being ‘an independent contractor’ and stated that he ‘shall not be an employee’ of the respondent.

The first question that arose, therefore, was whether the complainant was an employee or an independent contractor.

The WRC Adjudication Officer noted that there is no one test to determine whether a person is engaged on a contract of employment (contract of service) or on a contractor contract (contract for services).

The AO referred to a UK case in which a number of tests were set out as follows:

1)      Does the person performing the services supply his own equipment?

2)      Can he hire his own helpers?

3)      Does he carry any financial risks and to what extent?

4)      What opportunity does he have to make a profit?

5)      To what extent does he carry the responsibility for investment/management.

He referred also to the Revenue Commissioners approach and their tests to determine employment or self-employment as follows:

1)      Is under the control of another person who directs as to how, when and here the work is to be carried out,

2)      Supplies labour only,

3)      Received a fixed wage

4)      Cannot subcontract the work

5)      Does not supply materials for the job

6)      Does not provide equipment other than small tools of the trade

7)      Is not exposed to personal financial risk in carrying out the work

8)      Works set hours or a given number of hours

The AO was satisfied that the complainant in this case, a medical doctor, satisfied the tests of the Revenue Commissioners. In short it was recognised that the complainant received a fixed and regular income, was fully integrated into the respondent’s activity, and satisfied the other tests of the Revenue Commissioners.

The respondent in this case sought to connect the fact that the complainant was also involved in other self-employed work-as a GP in his own general practice-and was paid a locum allowance to undermine the argument that he was an employee. However, the Adjudication Officer did not accept this argument and said it had ‘no merit’.

“I do not accept therefore that the payment of a locum allowance, whatever the recipient chooses to do with it, affects or alters the substance of the employment relationship between an employee and an employer which must be considered by reference to the tests set out above.”

He also found

In Hall (Inspector of Taxes v Lorimer [1994] IRLR 171 the court endorsed an explanation approved by the lower court (whose judgement was on appeal to it);

‘In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details.’

The Adjudication Officer had no hesitation in finding that the complainant was an employee and was entitled to be given a written statement of his terms of employment, in accordance with the Terms of Employment (Information) Act 1994.

However, the Adjudication Officer did not consider it ‘just and reasonable’ to make any order for compensation retrospectively as the ‘current respondent whose breach of the Act arises for the first time as a consequence of the finding in this case’. He did order that a statement of terms of employment be given to the complainant.

This decision was issued on 18th December 2019 and you can read the whole decision here. It is a useful reminder of the tests which will be applied to determine the issue of employee versus independent contractor.

Categories
Employment Claims

Independent Contractor or Employee-the Crucial Significance in an Unfair Dismissal Case

independent-contractor-employee

When a person brings a claim for unfair dismissal under the unfair dismissal legislation, there is one essential proof that they must establish at the outset: they must prove they were an employee.

In most cases this is clear and is not a problem.

But if the employer can show that the person was an independent contractor and not an employee, then is is “game over” and the case cannot go ahead as an unfair dismissal case.

You would imagine by now that the law surrounding whether someone was an employee or independent contractor, that is self employed, or not would be clear.

But this question continues to be litigated in the Employment Appeals Tribunal and the Courts.

This occurred again in a High Court case in May, 2014-Murphy -v- Grand Circle Travel [2014] IEHC 337 .

Sabina Murphy had been dismissed from her job with Grand Circle Travel and brought a case for unfair dismissal to the EAT. It decided that she was not an employee but an independent contractor and found against her.

Murphy appealed her case to the Circuit Court and was awarded compensation of €50,900 plus costs.

Grand Circle Travel appealed this decision to the High Court and central to their case was an independent contractor agreement signed by both parties.

Murphy claimed she was pressured into signing this agreement without independent legal advice but the High Court judge found it difficult to believe that someone who had conducted her case so well as a lay litigant could have been cowed into signing the agreement:

I do not readily see a lady who has sturdily asserted her rights before the Defendant and the legal system meekly assenting to the signed endorsement of a document expressly purporting to commit her to a regime fundamentally at variance with her perception of her engagement already then over several months.

Justice Moriarty, in coming to his decision, stated:

I have carefully considered all the matters which seem to me to throw light upon the nature of the relationship between the parties, including any documentation purporting to record that nature, in addition to correspondence and memoranda relating to daily dealings during the three seasons of engagement, and documentation recording renumeration and other financial dealings between them. It is well settled from the Irish and English case-law cited that controversies of this nature can rarely be resolved by an aggregation of documentation all pointing utterly unequivocally to one conclusion or the other.

I have come to the view that the overall probabilities, including my feeling that the Plaintiff’s work over the three years involved a degree of engagement by tourism entities other than the Defendant in excess of the small incidence she referred to in evidence, warrant a finding that the relationship was that of an independent contractor.

Read the full decision of the High Court here.

Comment

Whether someone is an employee or independent contractor is, therefore, not a simple academic argument: it is vital in determining the outcome of many unfair dismissal cases.

Factors to Consider

Factors which will be taken into account in deciding whether someone is an independent contractor or an employee will include:

  • Control-what is the degree of control over the independent contractor/employee?
  • Can he set his own holidays?
  • Can he get someone else to stand in for him?
  • Can he sub-contract the work?
  • Must he do the work? Has he a choice?
  • Has he more than one client?
  • Who is responsible for the tax affairs of the person doing the work?

These are the types of questions that will be looked at when a decision maker-WRC, Labour Court, Civil Court-will look at in making a decision.

Clearly, the decision has major consequences for both the “employer”/person who engaged the services, and the person who performs the work/service.

Do you need an independent contractor agreement/contract? If so, contact me.

Update-July 2019 Decision

A WRC decision issued in July 2019 is one worth reviewing because the adjudicator looked at all the issues which will determine the question of a worker being an employee or self employed contractor.

In this case the decision turned on one thing: the absence of mutuality of obligation.