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  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.