Employee v Contractor
Cases
Market Investigations Ltd v Minister for Social Security
[1969] 2 QB 173
Cooke J
‘The fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes’, then, the contract is a contract for service. If the answer is ‘no’, then, the contract is a contract of service. No exhaustive list has been compiled and, perhaps, no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.’
Ready Mixed Concrete SouthEast Ltd v Minister of Pensions
[1968] 2 QB 497, [1968] 1 All ER 433, [1968] 2 WLR 775, [1967] EWHC QB 3
MacKenna J
‘A contract of service exists if these three conditions are fulfilled. (i) The servant 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. (ii) 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 that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.’
As to (i): ‘There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill. Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be . . As to (ii). Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done. All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The right need not be unrestricted.’ and
”To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one may look no further. If the contract does not expressly provide which party shall have the right, the question must be answered in the ordinary way by implication.
The third and negative condition is for my purpose the important one, and I shall try with the help of five examples to explain what I mean by provisions inconsistent with the nature of a contract of service.
(i) A contract obliges one party to build for the other, providing at his own expense the necessary plant and materials. This is not a contract of service, even though the builder may be obliged to use his own labour only and to accept a high degree of control: it is a building contract. It is not a contract to serve another for a wage, but a contract to produce a thing (or a result) for a price.
(ii) A contract obliges one party to carry another’s goods, providing at his own expense everything needed for performance. This is not a contract of service, even though the carrier may be obliged to drive the vehicle himself and to accept the other’s control over his performance: it is a contract of carriage.
(iii) A contract obliges a labourer to work for a builder, providing some simple tools, and to accept the builder’s control. Notwithstanding the obligation to provide the tools, the contract is one of service. That obligation is not inconsistent with the nature of a contract of service. It is not a sufficiently important matter to affect the substance of the contract.
(iv) A contract obliges one party to work for the other, accepting his control, and to provide his own transport. This is still a contract of service. The obligation to provide his own transport does not affect the substance. Transport in this example is incidental to the main purpose of the contract. Transport in the second example was the essential part of the performance.
(v) The same instrument provides that one party shall work for the other subject to the other’s control, and also that he shall sell him his land. The first part of the instrument is no less a contract of service because the second part imposes obligations of a different kind: Amalgamated Engineering Union v Minister of Pensions and National Insurance [1963] 1 WLR 441, 451, 452.
I can put the point which I am making in other words. An obligation to do work subject to the other party’s control is a necessary, though not always a sufficient, condition of a contract of service. If the provisions of the contract as a whole are inconsistent with its being a contract of service, it will be some other kind of contract, and the person doing the work will not be a servant. The judge’s task is to classify the contract (a task like that of distinguishing a contract of sale from one of work and labour). He may, in performing it, take into account other matters besides control.’
Brook Street Bureau (UK) Ltd v Dacas
[2004] EWCA Civ 217
Lord Justice Mummery :
“The Authorities
The court was referred to a number of authorities on the issue of a contract of service in various contexts, including cases specifically involving employment agencies
The judgments of the Divisional Court in Construction Industry Training Board v. Labour Force [1970] 3 All ER 220 support the result in the Employment Tribunal that Mrs Dacas did not have a contract of service with Brook Street or the Council. The case was not, however, concerned with unfair dismissal or employment rights. It was an industrial training levy case in which there was an appeal on a point of law against the imposition of the levy on a company, Labour Force Limited, which was not an employment agency but was engaged in the supply of labour to contractors in the construction industry. The contractors paid Labour Force, who in turn paid the workers, but Labour Force exercised no control at all over the work done by them for the contractors, who had the right to terminate. As for the contractors, who took no part in the proceedings, it was simply said (at p 223c-d) that the Industrial Tribunal had come to the right conclusion in holding that there was no contract of any kind between the contractor and the workman. Implied contracts of service were not considered. As for Labour Force, it was held that the contracts between Labour Force, as principal, and the workers to do work for a third party, the contractor, were not contracts of service. They were described as contracts sui generis: see p225d-g.
McMeechan v. Secretary of State was not an unfair dismissal case. The applicant was a temporary worker on the books of an employment agency, which went into insolvent liquidation. He claimed that he had a contract of service with the agency. That formed the basis of his application to the Secretary of State under the relevant employment protection legislation for payment of money owing to him in respect of his last engagement. The Secretary of State disputed his entitlement on the ground that he was not an employee of the agency and was self employed. It was not contended that the client of the agency, to whom Mr McMeechan was specifically assigned for four days, was his employer. The end-user took no part in the proceedings. The case is helpful to Mrs Dacas to the extent that it held that, even if there was no umbrella contract of service, as was conceded to be the case here, a contract of service between the temporary worker and the employment agency could be inferred in respect of a single engagement or assignment of the temporary worker by the employment agency to an end user. Counsel for Mrs Dacas submitted that West Drive was a specific assignment or engagement-giving rise to a contract of service between Mrs Dacas and Brook Street.
The judgments of this court in Montgomery v. Johnson Underwood [2001] IRLR 264 support Brook Street on this appeal. The court held that the applicant was not employed by the employment agency, which exercised no control over the work to be done by the applicant as a part time receptionist/ telephonist for the end-user. Applying the criteria laid down in Ready Mixed Concrete the court held that, in the absence of a framework of control, direction or supervision by the agency, there was no contract of service with it. As for the client of the employment agency, it was joined as a party to unfair dismissal proceedings in the Employment Tribunal, which held that the applicant was an employee of the agency and not of the end-user. In the Employment Appeal Tribunal, the end-user, as well as the agency, took part and the appeal was dismissed. The end-user took no part in the appeal to the Court of Appeal, which was only concerned with the issue whether the applicant was employed by the agency. The appeal by the agency was allowed. It was held that the applicant had no contract of service with the agency, as there was no mutuality of obligation between her and the agency and there was no control of her by the agency. The question of an implied contract of service between the applicant and the end-user did not arise for consideration in the Court of Appeal.
The decision of the Employment Appeal Tribunal in Stephenson v. Delphi Diesel Systems Ltd supports the Council’s contention that Mrs Dacas had no express or implied contract of service with it. The applicant in that case was an agency worker with an employment agency. It was held that the end-user was under no legal obligation to pay the applicant and the applicant was under no legal obligation to work for the end-user. Control over the applicant by the end-user was explicable by virtue of the contract between the applicant and the agency, which made it unnecessary to imply a contract between the applicant and the end-user.
Munby J, whose judgment I have read in draft, quotes and relies on the key passages in paragraphs 12-14 of the judgment given on behalf of the Appeal Tribunal by Elias J. The judgment is certainly the most fully reasoned to be found in the authorities on this point. The reasoning supports the Council’s submission that it would be impossible in this case to imply a contract of service between the Council and Mrs Dacas. I do not, however, find all of the submissions of counsel (Mr Mansfield) for the end-user in that case as persuasive as the Employment Appeal Tribunal found them or as Munby J finds them.
Some of the Council’s arguments on this point, which are based on Stephenson, are clearly correct. The arrangements were not a sham. The parties would have realised that the triangular arrangements were not “normal” for a contract of service. Brook Street was acting as “an independent party” in incurring certain obligations and was not simply acting as agent finding work for Mrs Dacas or finding workers for the Council. As for the subjective intentions of the parties, it is probably correct to say that there was no intention on the part of the Council or on the part of Brook Street that the Council should enter into a direct contractual relationship with Mrs Dacas. I am not, however, persuaded without the benefit of relevant findings of fact made by an Employment Tribunal which has addressed the question of implied contract, that no contract of service can be implied between Mrs Dacas and the Council because such a contract is “simply not compatible with the documents” or because the fact of control by the Council is wholly explicable by virtue of the contractual obligation that exists between Mrs Dacas and Brook Street. Before reaching a conclusion on those points I would like to know what in fact went on between the Council and Mrs Dacas during the years when she was working at West Drive. What is lacking in this case is any finding by the Employment Tribunal about the facts of the daily contact between Mrs Dacas and the Council at West Drive and the nature and extent of the dealings between them. This information is lacking because the Employment Tribunal did not address the possibility of an implied contract, which it should have addressed and should have been asked to address.
Carmichael v. National Power Plc was not an employment agency case and did not deal with the question of an implied contract of service. The reasoning of the speeches is important, however, on two points of principle: first, on the point that, if mutuality of obligation is lacking, as it was held to be in a casual, “as required” arrangement, there could be no contract of service; and, secondly, even where there are documents evidencing the arrangements between the parties, if the documents were not intended to constitute an exclusive record of the agreement, the Employment Tribunal are entitled, in deciding whether there was a contract of service, to make inferences from what the parties said and did both at the time when the applicant was engaged and subsequently.
Franks v. Reuters [2003] IRLR 423, a decision of this court, was an employment agency case. The result in the Employment Tribunal, which heard the applicant’s claim against both the employment agency and the end-user, was that the applicant did not have a contract of service with either of them. The Employment Appeal Tribunal dismissed the appeal by the applicant. In the Court of Appeal the employment agency took no part as Mr Franks only pursued his appeal against the decision that he had no contract of service with the end-user, Reuters, for whom he had, through the employment agency, done work for six years. The case was remitted to a differently constituted Employment Tribunal to determine whether there was an implied contract of service between the applicant and the end-user.
Position of Brook Street
On Brook Street’s appeal I would hold that the Employment Tribunal correctly concluded that the express contract between the employment agency and Mrs Dacas was not a contract of service. Brook Street was under no obligation to provide Mrs Dacas with work. She was under no obligation to accept any work offered by Brook Streetto her. It did not exercise any relevant day to day control over her or her work at West Drive. That control was exercised by the Council, which supplied her clothing and materials and for whom she did the work. The fact that Brook Street agreed to do some things that an employer would normally do (payment) does not make it the employer. Nor am I able to find that although, as was conceded on behalf of Mrs Dacas, there was no “umbrella” contract of service between Brook Street and her, she had a contract of service with Brook Street governing the specific assignment at West Drive and separate from the Temporary Worker Agreement. There was only one contract. There was no basis in the documents or in the evidence for finding another contract between Brook Street and Mrs Dacas governing her work at West Drive and holding it to be a contract of service. The role of Brook Street was not that of an employer of Mrs Dacas. Rather it was that of an agency finding suitable work assignments for her and, so far as the Council was concerned, performing the task of staff supplier and administrator of staff services. The real control over the work done by Mrs Dacas at West Drive and over her in the workplace was not exercised by Brook Street. Although contractual labels are not, of course, conclusive, the Employment Tribunal did not err in law in taking account of the express provision in the Temporary Worker Agreement that the contracts between Brook Street and Mrs Dacas in respect of specific assignments were to be contracts for services. The Employment Tribunal found as a fact that there was no other contract between Brook Street and Mrs Dacas. I would allow the appeal by Brook Street.
Position of the Council
This court is not entitled to overturn the decision of the Employment Tribunal dismissing the claim by Mrs Dacas against the Council. She did not appeal against it. She is out of time for doing so. What I have already said about the position between Mrs Dacas and the Council can only be relevant to similar cases in the future.
To sum up: in holding that there was no contract between Mrs Dacas and the Council the Employment Tribunal failed to address the possibility of an implied contract of service between them. That possibility required consideration. She was working at West Drive as a cleaner under the day-to-day control of the Council. That pointed away from the probability of her employment by Brook Street and of her being a self-employed person.
I should state that Mr Swift argued strongly against a possible contract of service between the Council and Mrs Dacas, emphasising the unchallengeability of the finding of fact by the Employment Tribunal that there was no contract between them. There could not be a contract, let alone a contract of service, as there was no offer and acceptance. There was no mutuality of obligation: the Council had no right to require her to do work and no obligation to pay her for work done. She had no obligation to the Council to work for it. She had to look to Brook Street for payment, which was fixed by Brook Street. It was not conditional on payment by the Council to Brook Street. She also looked to Brook Street for sick pay and arrangements for holidays. She was not entitled to claim her pay from the Council. Any control over her by the Council was not free-standing, but was through and was explicable by reference to the contract with Brook Street, which required her to accept directions from the Council, not through any contract between the Council and her. There was no basis, he submitted, for the implication of a further contract between the Council and Mrs Dacas. It was not the intention of any of the parties that Mrs Dacas should have a contract of service with the Council. Such a contract could not be implied so as to re-write or re-define the obligations in the express freestanding contracts, which the parties had in fact made. If the case raised policy issues as to the working conditions of people in the position of Mrs Dacas, that was a matter for legislation by Parliament and not for the courts.
I recognise the force of Mr Swift’s submissions, but in future cases of this kind the Employment Tribunal should, in my judgment, at least consider the possibility of an implied contract of service. The result of the consideration will depend on the evidence in the case about the relationship between the applicant and the end-user and how that fits into the other triangular arrangements. In general, it would be surprising if, in a case like this, the end-user did not have powers of control or direction over such a person in such a working environment. The end-user is the ultimate paymaster. The arrangements were set up and operated on the basis that the end-user was paying the agency. What was the Council paying for, if not for the work done by Mrs Dacas under its direction and for its benefit?”
James v London Borough of Greenwich
[2008] EWCA Civ 35
Lord Justice Mummery :
“The state of the authorities
The citations to the court on agency workers provide a welcome opportunity to make a few comments on the state of the authorities. I agree with Mr Cohen that there is no significant difference between the law stated and applied in the decisions of this court and in those of the EAT. It is apparently thought in some quarters that they are in conflict. I do not think so. As for the judgment of the EAT in this case I agree with it. I have been unable to find conflict in any of the other cases.
Dacas was the first case in this court to confront head on the question whether a contract of service with the end user could be implied in the tripartite setting of an agency worker under contract with an agency, which also has a contract with the end user. I agree with Mr Cohen that there was no appeal before the Court of Appeal in that case against the decision of the ET that the claimant was not an employee of the end user. I also agree with him that the majority judgments raised the possibility, which had not been considered by the ET in that case when holding that the claimant was not an employee of the agency or of the end user, whether a contract of service might by necessary inference be found to exist with the end user. I did not expand on the possibilities, let alone decide the implied contract issue, in the absence of the relevant findings of fact. Dacas is not authority for the proposition that the implication of a contract of service between the end user and the worker in a tripartite agency situation is inevitable in a long term agency worker situation. It only pointed to it as a possibility, the outcome depending on the facts found by the ET in the particular case. I would add that, having regard to the nature and constitution of the proceedings before the Court of Appeal in that case, it was not the most suitable occasion for offering more detailed guidance on the circumstances in which a contract of service could be implied.
Muscat was a case in which a contract of service was implied, but it was not a tripartite agency case. Its importance is in the extent of approval given to the legal analysis in the majority judgments in Dacas and in the guidance given on the applicable legal principles, in particular emphasis on the requirement that the implication of a contract of service must be necessary to give effect to the business reality of a relationship between the worker and the end user.
The decision of the House of Lords in Carmichael v. National Power [1999] ICR 1226 was cited by Mr Cohen for the proposition that, for a contract of service to exist, mutuality of obligation must be found. The ET found that there was no such mutuality of obligation between Ms James, who was under no obligation to the Council to do work for it, and the Council, which was under no obligation to Ms James to provide her with work and therefore no employment relationship between them. Mr Cohen accepted that in Carmichael the issue was different from the tripartite agency worker cases. No employment agency was involved. There was a direct express contract between the workers and the user of their services and the dispute was whether or not it was a contract of service or whether they were casual workers working under a contract of another kind, there being periods in the relationship when no work was being performed or paid for. In the agency worker cases the issue is whether a third contract exists at all between the worker and the end user. The relevant question in such cases is whether it is necessary, in the tripartite setting, to imply mutual contractual obligations between the end user to provide the worker with work and the worker to perform the work for the end user.
The EAT added observations (paragraphs 53 to 61) which are intended to assist tribunals in the task of deciding whether a contract of employment with the end user should be implied. ETs would be well advised to follow the guidance given by the EAT, which I would expressly approve.
In conclusion, the question whether an “agency worker” is an employee of an end user must be decided in accordance with common law principles of implied contract and, in some very extreme cases, by exposing sham arrangements. Just as it is wrong to regard all “agency workers” as self-employed temporary workers outside the protection of the 1996 Act, the recent authorities do not entitle all “agency workers” to argue successfully that they should all be treated as employees in disguise. As illustrated in the authorities there is a wide spectrum of factual situations. Labels are not a substitute for legal analysis of the evidence. In many cases agency workers will fall outside the scope of the protection of the 1996 Act because neither the workers nor the end users were in any kind of express contractual relationship with each other and it is not necessary to imply one in order to explain the work undertaken by the worker for the end user.
I have already expressed my agreement with the EAT that, in this case, the mutuality of obligation approach in the Carmichael case and adopted by the ET in this case is not particularly helpful. As I have explained the issue in Carmichael, which was not a tripartite situation, was whether there was an overarching employment contract or a series of contracts that were not contracts of employment. This case presents a tripartite situation with two express contracts, which are not contracts of employment, (1) between Ms Jamesand the agency and (2) between the agency and the Council. The issue here is whether, having regard to the way in which the parties have conducted themselves, it is necessary to imply (3) a contract of employment between Ms James as worker and the Council as the end user.”
Carmichael and Another v. National Power Plc
1999] UKHL 47; [1999] 1 WLR 2042; [1999] 4 All ER 897 HOUSE OF LORDS
LORD IRVINE OF LAIRG L.C.
My Lords,
he tribunal made this finding on the basis of (a) the language of the March 1989, documentation; (b) the way in which it had been operated; and (c) the evidence of the parties as to how it had been understood. For reasons I will amplify later, this was in my judgment the correct approach. In substance it held that the documents did no more than provide a framework for a series of successive ad hoc contracts of service or for services which the parties might subsequently make; and that when they were not working as guides they were not in any contractual relationship with the C.E.G.B. The parties incurred no obligations to provide or accept work but at best assumed moral obligations of loyalty in a context where both recognised that the best interests of each lay in being accommodating to the other.
The decision therefore was: that by accepting an “offer of employment as a station guide on a casual as required basis,” Mrs. Leese and Mrs. Carmichael were doing no more than intimate that they were ready to be invited to attend for casual work as station guides as and when the C.E.G.B. required their services. Just as the C.E.G.B. was not promising to offer them any casual work, but merely intimating that it might be offered, so also they were not agreeing to attend whenever required.
The contrary, however, was argued by Mr. Langstaff Q.C. He maintained that, once appointed, they became employees under contracts of employment which obliged the C.E.G.B. to provide them with such guide work as might become available in future, which they in turn were obliged to undertake when made available.
This submission construes the words, “Employment will be on a casual as required basis,” as empowering the C.E.G.B. to require Mrs. Leese and Mrs. Carmichael to undertake guide work as need for it arose.
If the issue were to be determined solely by reference to the documentation, I would, as a matter of construction, reject it. The words imposed no obligation on Mrs. Leese and Mrs. Carmichael, but intimated that casual employment on the pay terms stated could ensue as and when the C.E.G.B.’s requirements for the services of guides arose. Thus, the documents provided no more than a framework for ad hoc contracts of service or services which Mrs. Leese and Mrs. Carmichael might make with C.E.G.B. in the future.
The decision of the majority of the Court of Appeal to allow their appeals turned on two constructions of the documents which gave them immediate contractual effect.
Ward L.J. declined to hold that there was a contract in terms that Mrs. Leese and Mrs. Carmichael were obliged to provide their casual labour as guides as and when required, with the C.E.G.B. under no obligation to provide any casual work at all. He was, however, of the opinion that that might be the ordinary and natural meaning of the words; that is, that the C.E.G.B. would not be required to make any work available except as and when need arose; and that “whenever such a need arises the guide will be required to meet that need and perform the services as a guide” (p. 1187D). That imbalance of obligation, however, he avoided by holding that these obligations were subject to implied terms imposing “an obligation on the company to provide a reasonable share of work for each (guide) whenever the company had . . .work available” and “on the (guides) to take a reasonable amount of work once they have agreed to act as (guides) for the company . . .” (p. 1187E)
Chadwick L.J., however, was more restrictive. The words, “as required” meant that the guide’s duties were “to be performed when there is a need for the services of a guide.” Subject only to reasonable notice, the C.E.G.B. could “require the appointee to attend and to carry out the duties for which she has been engaged.” ( p. 1194D). Chadwick L.J. further held: “There is no basis upon which it could be held that the C.E.G.B. were under any obligation to arrange tours in order that the station guides should have work to do.” (p. 1195D); but they were, in order to give the contract business efficacy, obliged “to ensure that work of the nature described in the notice of 15 November 1988, when available and in so far as it cannot be performed by full time employees of the C.E.G.B., will be offered to those who have been recruited and trained as part-time station guides before being offered to anyone who has not been so trained.” (p. 1196D). The contract therefore obliged “the C.E.G.B. and the applicants to offer and to undertake the work which was available.” (p. 1196H).
If this appeal turned exclusively – and in my judgment it does not – on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the C.E.G.B. to provide casual work, nor on Mrs. Leese and Mrs. Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service (Nethermere (St. Neots) Ltd. v. Gardiner [1984] I.C.R. 612, 623C-G per Stephenson L.J., and Clark v. Oxfordshire Health Authority [1998] 1.R.L.R. 125, 128 per Sir Christopher Slade, at paragraph 22).
In my judgment it would only be appropriate to determine the issue in these cases solely by reference to the documents in March 1989, if it appeared from their own terms and/or from what the parties said or did then, or subsequently, that they intended them to constitute an exclusive memorial of their relationship. The industrial tribunal must be taken to have decided that they were not so intended but constituted one, albeit important, relevant source of material from which they were entitled to infer the parties’ true intention, along with the other objective inferences which could reasonably be drawn from what the parties said and did in March 1989, and subsequently.
The documents contained no provisions governing when, how, or with what frequency guide work would be offered; there were no provisions for notice of termination on either side; the sickness, holiday and pension arrangements for regular staff did not apply; nor did the grievance and disciplinary procedures. Significantly, as Kennedy L.J. in his dissenting judgment with which I agree emphasised, in 1994, for example, Mrs. Carmichael was not available for work on 17 occasions nor Mrs. Leese on 8. (p. 1174D). No suggestion of disciplining them arose. The objective inference is that when work was available they were free to undertake it or not as they chose. This flexibility of approach was well suited to their family needs. Just as the need for tours was unpredictable so also were their domestic commitments. Flexibility suited both sides. As Mrs. Carmichael said in her application form, “the part-time casual arrangement would suit my personal circumstances ideally!” The arrangement turned on mutual convenience and goodwill and worked well in practice over the years. The tribunal observed that Mrs. Leese and Mrs. Carmichael had a sense of moral obligation to the C.E.G.B., but would infer no legal obligation. Mr. Lovatt also gave evidence for the C.E.G.B. that “neither ladies are required to work if they do not wish to do so.” In my judgment, therefore, the industrial tribunal was well entitled to infer from the March 1989, documents, the surrounding circumstances and how the parties conducted themselves subsequently that their intention neither in 1989 nor subsequently was to have their relationship regulated by contract whilst Mrs. Leese and Mrs. Carmichael were not working as guides. The industrial tribunal correctly concluded that their case “founders on the rock of absence of mutuality.” I repeat that no issue arises as to their status when actually working as guides.
Thus, even if the words, “employment will be on a casual as required basis” in the March 1989 documentation were, as Mr. Langstaff Q.C. contends, capable of imposing an obligation to undertake guide work when required – and in my judgment they are not – that interpretation is negated by the findings of the industrial tribunal. So also, even if the March 1989 documentation were capable of bearing the primary constructions which found favour with Ward L.J. and Chadwick L.J. – and in my judgment they are not – the terms which each implied, by invoking business efficacy may not be implied because there may be no implication on that ground unless into a relationship itself contractual.
For all these reasons I would allow this appeal and reinstate the industrial tribunal’s reserved decision of 11 September 1995.”
Minister for Agriculture & Food -v- Barry & Ors
[2008] IEHC 216 (07 July 2008)
“The EAT adopted a two stage process in reaching its decision as to the nature of the relationship between the parties. In the first instance the tribunal applied a mutuality of obligation test, and thereafter it applied the so-called enterprise test. The appellants have no difficulty with the fact that the mutuality of obligation test was applied but they vehemently dispute the purported finding of mutuality of obligation on the evidence that was before the tribunal. They also say that the EAT was incorrect to apply the so-called enterprise test as it is not determinative of the issue, and the EAT’s belief to the contrary is grounded in a misconstruction of Keane J’s judgment in Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1998] 1 IR 34.
Mutuality of Obligation
Although it has been conceded by the appellants that the EAT correctly identified that the requirement of mutuality of obligation has to be satisfied if a contract of service is to exist, I think that it is appropriate nonetheless to elaborate just a little on what this test involves, having regard to the fact that the purported finding of mutuality of obligation is disputed.
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. It was characterised in Nethermere (St Neots) Ltd v Gardiner,[1984] ICR 612 as the “one sine qua non which can firmly be identified as an essential of the existence of a contract of service”. Moreover, in Carmichael v. National Power PLC, [1999] ICR, 1226 at 1230 it was referred to as “that irreducible minimum of mutual obligation necessary to create a contract of service.” Accordingly the mutuality of obligation test provides an important filter. Where one party to a work relationship contends that that relationship amounts to a contract of service, it is appropriate that the court or tribunal seized of that issue should in the first instance examine the relationship in question to determine if mutuality of obligation is a feature of it. If there is no mutuality of obligation it is not necessary to go further. Whatever the relationship is, it cannot amount to a contract of service. However, if mutuality of obligation is found to exist the mere fact of its existence is not, of itself, determinative of the nature of the relationship and it is necessary to examine the relationship further.
The EAT’s ruling on the issue of mutuality of obligation was in the following terms:
“…in the case herein the five TVI’s have an implied agreement reached with the Department of Agriculture & Food and the TVI’s to carry out inspection of meat and certification of same on behalf of the Department of Agriculture & Food on an ongoing basis, hence the majority finds there is mutuality of obligation.”
The appellant contends that there was no evidence before the EAT upon which it could conclude that any “implied agreement” had been reached between the appellant and the respondents to carry out inspection of meat and certification of same on the appellant’s behalf on an ongoing basis. Nothing in the arrangements that existed as between the parties, which had been reduced to writing, indicates that this was in fact the case. Moreover they say there was significant and uncontested evidence to the contrary before the EAT which it inexplicably chose to overlook. This was to the effect that the appellant had no control over the level of work that was available for TVI’s as this was a matter entirely within the control of the processing plants, here Galtee. The appellant was thus unable to give, and did not give, a commitment to the respondents at any stage as to the level of work available to them, and the respondents were at all times well aware of this. Furthermore, the uncontested evidence concerning the arrangements entered into between the appellant and the respondents was that the latter were entitled to decline to work at the very least 16% of the shifts offered to them without that refusal having any consequences for their contracts.
In the Court’s view these points are well made. Moreover, the tribunal’s belief as to the nature of the contractual arrangements between the parties is wholly unclear. The determination speaks not of the implication of a term into a clearly indentified contract (whether that contract be one of service or for services), but rather of “an implied agreement” which could either connote such a contract or, alternatively, an overarching umbrella contract. The case of O’Kelly and others v Trust House Forte Plc, [1983] I.C.R.728 provides an example of where the latter type of contract was contended for. In that case the banqueting department of a hotel company kept a list of some 100 casual catering staff who were known as “regulars” because they could be relied upon to offer their services regularly and in return were assured of preference in the allocation of available work. These workers claimed to be entitled to unfair dismissal compensation on the basis that they had been employees employed under a contract of service but the hotel disputed this and contended that they were independent contractors supplying services and not employees. The issue went before an industrial tribunal and the claimants lost on the basis that the important ingredient of mutuality of obligation was missing. The claimants appealed successfully to an appeals tribunal. The appeals tribunal’s decision was in turn appealed to the Court of Appeal. In the course of his judgment Sir John Donaldson M.R. said
“Although I, like the appeal tribunal, am content to accept the industrial tribunal’s conclusion that there was no overall or umbrella contract, I think that there is a shorter answer. It is that giving the applicants’ evidence its fullest possible weight, all that could emerge was an umbrella or master contract for, not of, employment, It would be a contract to offer and accept individual contracts of employment and, as such, outside the scope of the unfair dismissal provisions.”
Even if the Court were certain (which it is not) that the EAT considered that a single contract existed, said to be a contract of service, and that a term was to be implied into that contract committing the appellant to offer, and the respondents to accept, work on an on-going basis, one would have to query the basis for implying such a term. The classical situation wherein a term may be implied at common law was identified in the well known Moorcock case (1889) 14 PD 64 as being one in which a term not expressly agreed upon by the parties is to be inferred on the basis of the presumed intention of the parties. The proposition received a somewhat wider formulation in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 wherein McKinnon J said at p227:
“Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common ‘Oh, of course’.”
The Irish Courts have approved the so called “official bystander test” many times and McKinnon J’s formulation has been interpreted so that a term may be implied if it is necessary to give business efficacy to the contract. However, there was nothing in the evidence before the EAT that would have entitled it to presume an intention on the part of the parties that the appellant should be obliged to offer, and the respondents should be obliged to accept, work on an on-going basis, so as to justify the implication of the term contended for on the basis of the presumed intention of the parties. Neither would implication of the term be regarded as necessary to give business efficacy to the agreement. In the circumstances I cannot see how the term contended for might legitimately have been implied.
Moreover, if as is possible, the EAT’s ruling were to be interpreted as supporting the implication of an overarching umbrella agreement in a situation where individual contracts, either of service or for service, also existed, it is difficult to see how in any case the tribunal could ultimately reach a conclusion other than that arrived at by Sir John Donaldson MR in the O’Kelly case.
In all the circumstances I regard the EAT’s finding that there was an implied agreement reached between the Department of Agriculture & Food and the TVI’s to carry out inspection of meat and certification of same on an ongoing basis to be untenable. Their finding of mutuality of obligation was predicated on the existence of this implied agreement and, accordingly, must be regarded as flawed.
The so-called Enterprise Test
Having decided that there was mutuality of obligation the tribunal proceeded to what it characterised as “the second stage in the process” and stated:
“The second stage of the test in the process requires a determination as to whether the contract binding the parties is one of service or one for service. The fundamental test for determining this question was set down in the English decision of Market Investigations v. Minister for Social Welfare (1969) 2 QB 173. Here it was held that the Court should consider if the person was performing the service as a person in business on his own account. If the answer to that question is yes then the contract is one for service. If the answer is no then the contract is one of service.
This approach was adopted in this jurisdiction by the Supreme Court in the case of Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare, [1998] 1 IR 34”
At a later stage in its ruling the Tribunal further stated:
“Following the decision in the Supreme Court in the case of Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare and Tierney v. An Post there is now a single composite test for determining if a person is engaged on a contract of service or a contract for service. It involves looking at the contract as a whole and asking is the person in business on his or her own account? If the answer is yes then the contract is one for service. If the answer is no then the contract is one of service.
The question of control and integration should no longer be regarded as conclusive tests in themselves but as elements to be taken into account in applying the enterprise test.”
(The Tierney case is reported at [2000] 1 IR 536.)
It is clear from a consideration of the case law cited to the Court by the parties that the summary statement of principle as formulated in the latter quotation did not originate with the tribunal, but rather was borrowed without attribution from an earlier determination of the Labour Court in a case of Western People Newspaper v. A Worker, EDA047, 24th May 2004 and reproduced verbatim by the EAT.
The appellant contends that the EAT misconstrued Keane J’s judgment in Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare. It is therefore necessary to scrutinise that judgment with great care with a view to identifying precisely what is the ratio decidendi of it. It may also be of assistance in that regard to examine how it was applied by the Supreme Court in the Tierney case in 1999, and again in 2004 in the case of Castleisland Cattle Breeding Society Ltd v. The Minister for Social and Family Affairs [2004] 4 IR 150, and also most recently by Gilligan J in the High Court in Electricity Supply Board v The Minister for Social Community and Family Affairs & Others [2006] IEHC 59.
The principal judgment in the Supreme Court appeal in the Henry Denny case was delivered by Keane J with whom Hamilton C.J. and Murphy J agreed. The ratio decidendi of the case (about which I will say more in a moment) is to be found in the following passages from that judgment.
“The criteria which should be adopted in considering whether a particular employment, in the context of legislation such as the Act of 1981, is to be regarded as a contract “for service” or a contract “of services” have been the subject of a number of decisions in Ireland and England. In some of the cases, different terminology is used and the distinction is stated as being between a “servant” and “independent contractor”.However, there is a consensus to be found in the authorities that each case must be considered in the light of its particular facts and of the general principles which the courts have developed: see the observations of Barr J., in McAuliffe v. Minister for Social Welfare [1995] 2 I.R. 238.
At one stage, the extent and degree of the control which was exercised by one party over the other in the performance of the work was regarded as decisive. However, as later authorities demonstrate, that test does not always provide satisfactory guidance. In Cassidy v. Ministry of Health [1951] 2 K.B. 343, it was pointed out that, although the master of a ship is clearly employed under a contract of service, the owners are not entitled to tell him how he should navigate the vessel. Conversely, the fact that one party reserves the right to exercise full control over the method of doing the work may be consistent with the other party being an independent contractor: see Queensland Stations Property Ltd. v. Federal Comissioner of Taxation [1945] 70 C.L.R. 539.
In the English decision of Market Investigations v. Min. of Soc. Security [1969] 2 Q.B. 173, Cooke J., at p. 184 having referred to these authorities said:-
“The observations of Lord Wright, of Denning L. J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’. If the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”
It should also be noted that the Supreme Court of the Irish Free State in Graham v. Minister for Industry and Commerce [1933] I.R. 156, had also made it clear that the essential test was whether the person alleged to be a”servant” was in fact working for himself or for another person.
It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”
(For cross referencing purposes, the passages just recited are reproduced at paras 5.1 and 5.2 of the appellant’s written legal submissions, and on pages 10 and 11 of the respondents’ written legal submissions)
In the course of their written legal submissions, amplified by oral submissions in court, Counsel for the appellant submitted (at paras 7.6 to 7.8 thereof):
“7.6 … at what it described as the second stage of the process, the EAT applied an incorrect test to establish the existence of a contract of service/contract for services.
7.7 Contrary to what is expressly stated in its decision, the so-called enterprise test is not determinative of the issue. That conclusion appears to be grounded in a misconstruction of the passages from the judgment of Keane J in Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1998] 1 IR 34 set out at paragraph 5.2, above. Moreover it is incorrect to assert that questions of control and integration are to be regarded merely as elements to be taken into account in applying the enterprise test.
7.8 Far from relying principally upon what the EAT describes as “the enterprise test”, that described by Keane J contains the following four elements at least:
· “each case must be determined in the light of its particular facts and circumstances,”
· “…in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself.”
· “The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive.”
· “The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”
In their submissions Counsel for the respondents did not engage directly with the appellant’s contention that the EAT was incorrect to apply the so-called enterprise test as it is not determinative of the issue, and that the EAT’s belief to the contrary is grounded in a misconstruction of Keane J’s judgment in the Henry Denny case. Rather, their written submissions are primarily addressed to the merits of the substantive issue as to whether the respondents were employed under contracts of service or contracts for services. In so far as they seek to address at all the issue as to what precisely is the state of the law post Henry Denny, they rely on recently published views of the eminent Solicitor, Dr Mary Redmond, a renowned employment law specialist. They state:
“Redmond, in her book, ‘Dismissal Law in Ireland’, 2nd Edition, 2007, sets out at Page 35 that “In Ireland the criterion traditionally applied by the Civil Courts to determine the relationship of employee was that of control, whereby the subordinate nature of the relationship is regarded as central to the contract of employment: Roche. v. Kelly & Co., Limited, [1969] I.R. 100”.
Redmond sets out that the ‘control test’ then gave way to the so-called ‘integration test’ which asked “Did the servant form part of the alleged master’s organisation?”. She sets out that likewise, this failed to provide a clear answer and a ‘mixed test’ was then developed. Redmond sets out that “This is applied in two stages. The first question to ask is whether there is control. This is a necessary but not a sufficient test. It must then be determined whether the provisions of the contract are consistent with it’s being a contract of service. There may be indications, for example, that a worker is an entrepreneur rather than an employee. In this event the fundamental test to be applied is whether the person who has engaged himself to perform particular services is in business on his own account”. Having reviewed the case law, Redmond concludes at Page 40, that “Each case must depend on its own facts”.
The ratio decidendi in any particular case consists of the general reasons given for the decision or the general grounds upon which it is based, detached or abstracted from the specific peculiarities of the particular case which gives rise to the decision. I have considered with great care the judgments in the Henry Denny case and I consider the ratio decidendi of it to be encapsulated in the statement of Keane J that in considering whether a particular employment is to be regarded as a contract “for service” or “of service” …“each case must be considered in the light of its particular facts and of the general principles which the courts have developed”. I believe that the general principles referred to are those which have been identified as potentially being of assistance to a court or tribunal in the drawing of appropriate inferences.
In the course of his judgment Keane J sought to elucidate some of the general principles that the courts have developed, of particular relevance to the case then before him. It was in the course of him doing so that the oft quoted passage (which for identification purposes bears reiteration) appears. He said:
“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”
This particular passage was subsequently quoted, and relied upon, in the judgments in the Tierney, Castleisland, and ESB cases respectively. However, although it represents an important summary of some of general principles that the courts have developed, it cannot be said to fully encapsulate the ratio decidendi of the Henry Denny case. It doesn’t do so it because it omits one very important general principle developed by the courts which assumed a significant importance in that case and also, coincidentally, in the Tierney, Castleisland, and ESB cases respectively. A very important “particular fact” common to the Henry Denny, Tierney, Castleisland, and ESB cases, respectively, was that in all of those cases there existed a contractual document which purported to contain the expression of an agreed intention of the parties that their relationship should be governed by a contract for services. The existence of that particular fact brought into play the “general principle” that a characterisation or description as to the status of a party contained in a contract intended to govern a work relationship is not to be regarded as decisive or conclusive of the matter. That principle was uncontroversial in the Henry Denny case, having been accepted by parties from the outset. Although it was referred to by Keane J elsewhere in his judgment, it is not referred to in the passage under consideration. It is in fact dealt with in greater detail in the judgment of Murphy J who points out that the principle in question was first enuciated in the judgment of Carroll J in In re Sunday Tribune Ltd [1984] IR 505. Accordingly, the celebrated passage from the judgment of Keane J contains only part of the ratio for the court’s decision. However, the earlier statement that “each case must be considered in the light of its particular facts and of the general principles which the courts have developed” can be regarded as the true ratio, though admittedly it lacks specificity with respect to identification of the general principles referred to.
Contrary to a misapprehension held in some quarters, I do not believe that it is a correct interpretation of the passage in question to regard it as the formulation by Keane J of “a single composite test” either for determining the nature of the work relationship between two parties, or even for determining whether a particular employment is to be regarded as governed by a contract for service or a contract of service which is a somewhat narrower issue. To the extent that this passage from his judgment has given rise to a degree of confusion, I believe that this confusion derives primarily from misguided attempts to divine in the judgment the formulation of a definitive, “one size fits all”, test in circumstances where the learned judge was not attempting to formulate any such test. In relation to the rush to discern a test, and to label it, it seems to this Court that this is a classic example of the type of situation where a particular approach that has been advocated is subsequently labelled conveniently, but mis-characteristically, as the “such and such test”, a step that is taken with the intention that it should be helpful, but which proves to be ultimately unhelpful, because the so called test turns out to be insufficiently discriminating. Put simply, such loose labelling can often create more problems than it solves. In the context of trying to correctly characterise the nature of a work relationship between two parties I think it can sometimes be unhelpful to speak of a “control test”, or of an “integration test”, or of an “enterprise test”, or of a “mixed test”, or of a “fundamental test” or of an “essential test”, or of a “single composite test” because, in truth, none of the approaches so labelled constitutes a “test”, in the generally understood sense of that term, namely, that it constitutes a measure or yardstick of universal application that can be relied upon to deliver a definitive result.
Although it is true that various Courts, both here and in England, have from time to time characterised as “tests” a variety of approaches to be employed as aids to discerning the nature of the work relationship between two parties, there has in recent years been a move away from this. It is, I think, telling that Keane J did not at any stage seek to characterise any of the general principles identified by him as tests. However, the seeds of confusion may well have been sown by the reference to “the fundamental test” in the passage from the judgment of Cooke J in Market Investigations v. Min. of Soc. Security cited by Mr Justice Keane, and then watered in by his subsequent reference to the judgment of the Supreme Court of the Irish Free State in Graham v. Minister for Industry and Commerce, wherein that Court spoke of what it characterised as “the essential test”.
In Market Investigations v. Min. of Soc. Security, Cooke J, advocated applying what he characterised as “the fundamental test” by posing the question ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ He contended that if the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. (This is in fact the so-called enterprise test, although Cooke J did not use that label.) The characterisation of this approach as “the fundamental test” was subsequently criticised by Stephenson L.J in the Court of Appeal in Nethermere (St Neots) Ltd v Gardiner. In that case the Court of Appeal was involved in reviewing the decision of an appeal tribunal that had, in turn, upheld the earlier decision of an industrial tribunal that certain home workers were employed by the appellant company under contracts of service. Referring to the conclusion reached by the industrial tribunal Stephenson L.J. said:
“This conclusion is open to criticism. It adopts what Cooke J in Market Investigations v Minister of Social Security, (1969) 2 QB 173, 184G had called ‘the fundamental test’. Megaw and Browne L.JJ had found that test ‘very helpful’ in Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213. In Young & Woods Ltd v. West [1980] IRLR 201 I adopted it and Ackner L.J., at p.208, obtained much assistance from it. But to accept it as the ‘fundamental’ test is I think misleading, for it is no more than a useful test. Furthermore, it can only be applicable at all where there is nothing but a choice between the two kinds of contract, of service or for services. Here the form of the preliminary issue made the test apposite, though not fundamental; but, as I have indicated, it ruled out the question whether on the evidence there was a third kind of contract or even no contract at all, which would be as effective to deprive the industrial tribunal of jurisdiction as a contract for services.”
Dillon L.J. agreed with Stephenson L.J in the Nethermere (St Neots) case and had this to say in his judgment (at p.633):
“I do, however, for my part, find the use of the word ‘fundamental’ somewhat misleading. In some cases, as for instance, with a jobbing gardener or a carpenter or a music teacher, who is found to be carrying on the activities in question for several customers or clients as part of his or her own business, the test may be very helpful indeed, but in many other cases the answer to the question whether the person concerned is carrying on business on his or her own account can only come as the corollary of the answer to the question whether he or she was employed under a contract of service. I note that in the Market Investigations case Mr Justice Cooke had referred to a statement by Lord Wright in Montreal v. Montreal Locomotive Works Ltd, (1947) 1 D.L.R. 161, 169 that
‘ . . . 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’.
It is important to have in mind that each case must depend on its facts, and the same question, as an aid to appreciating the facts, will not necessarily be crucial or fundamental in every case.”
This Court finds itself in complete agreement with the criticisms articulated by Stephenson L.J. and Dillon L.J respectively. Moreover, I am satisfied that it was not Keane J’s intention to endorse Cooke J’s approach as being “the fundamental test”. That is quite clear from his statement that:
“…., while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself.” (my emphasis)
The words “in general” constitute a caveat that the approach in question is not one of universal application. By definition they contemplate the possibility of exceptions to what is generally true, even when the issue for determination is the narrower one represented by a choice between a contract of service and a contract for services. Quite apart from that, the approach advocated cannot treated as being of universal application where the issue for determination involves the broader question as to what is the nature of a particular work relationship between two parties, because in certain cases a work relationship is not capable of being defined in terms of a simple choice as to whether it is governed by a contract of service or a contract for services, for example in the case of a statutory office holder. As Stephenson L J has correctly pointed out, the relationship may be governed by a third kind of contract or even by no contract at all.
Having said all of that, once it is recognised that the approach advocated by Cooke J in Market Investigations v. Min. of Soc. Security does not represent a fundamental or definitive test, it may be considered apposite to use it in the circumstances of a particular case as an aid to drawing the correct inferences. In that situation a court or tribunal should not be criticised for doing so. As Stephenson L.J said, that approach has been found helpful and useful in many cases. It is likely to be particularly helpful and useful in most cases that come down to a choice between a contract of service and a contract for services. The important thing to remember, however, is that every case must be considered in the light of its particular facts and it is for the court or tribunal considering those facts to draw the appropriate inferences from them by applying the general principles which the courts have developed. That requires the exercise of judgment and analytical skill. In my view it is simply not possible to arrive at the correct result by “testing” the facts of the case in some rigid formulaic way, and I do not believe that the Supreme Court ever envisaged, or intended to suggest, that it could be.
In the circumstances, I find myself in agreement with the applicant that the tribunal misdirected itself on the law in the following respects:
1. They were incorrect in their belief that the Supreme Court in Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare approved “a single composite test”;
2. They were incorrect in regarding the so-called enterprise test as determinative of the issue. It was not necessarily going to be determinative of the issue, and they were wrong in proceeding on the assumption that it would be. In the circumstances of the case it might legitimately have been applied as an aid to the drawing of appropriate inferences, and it was likely to be useful in that regard, but they were incorrect to apply it in a formulaic way for the purpose of determining the issue;
3. It was incorrect to assert that questions of control and integration are to be regarded merely as elements to be taken into account in applying the enterprise test. They are not. Like the question of enterprise, questions of control and integration may also provide a court or tribunal with valuable assistance in drawing the appropriate inferences. All potential aids to the drawing of the appropriate inferences from the primary facts as found stand in their own stead, and no one is subsumed by another. Moreover, those mentioned do not represent an exhaustive list. There could be other factors that might also assist. However, depending on the circumstances of the particular case, some aids may prove more helpful or more useful than others. In the words of Dillon L.J., “the same question, as an aid to appreciating the facts, will not necessarily be crucial or fundamental in every case”. It is for a court or tribunal seized of the issue to identify those aids of greatest potential assistance to them in the circumstances of the particular case and to use those aids appropriately.
Conclusion
In my view the EAT fell into error from the very outset in formulating the preliminary question in the way that it did, and in failing to have regard to all possibilities in determining the nature of the work relationship between the parties. That initial error was compounded by a finding of mutuality of obligation on a flawed and untenable basis. Further, the EAT misdirected itself in law in the manner outlined at some length above, based upon a misinterpretation of Keane J’s judgment in Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1998] 1 IR 34. in all the circumstances I must allow the appeals under s. 40 of the Redundancy Payments Acts 1967-2003 and s. 11 (2) of the Minimum Notice and Terms of Employment Act 1973 – 2001, respectively. I will hear submissions as to what orders may be appropriate in the circumstances.
Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare
[1998] IR 49
Keane J. S.C.
The criteria which should be adopted in considering whether a particular employment, in the context of legislation such as the Act of 1981, is to be regarded as a contract “for service” or a contract “of services” have been the subject of a number of decisions in Ireland and England. In some of the cases, different terminology is used and the distinction is stated as being between a “servant” and “independent contractor”.However, there is a consensus to be found in the authorities that each case must be considered in the light of its particular facts and of the general principles which the courts have developed: see the observations of Barr J., in McAuliffe v. Minister for Social Welfare [1995] 2 I.R. 238.
At one stage, the extent and degree of the control which was exercised by one party over the other in the performance of the work was regarded as decisive. However, as later authorities demonstrate, that test does not always provide satisfactory guidance. In Cassidy v. Ministry of Health [1951] 2 K.B. 343, it was pointed out that, although the master of a ship is clearly employed under a contract of service, the owners are not entitled to tell him how he should navigate the vessel. Conversely, the fact that one party reserves the right to exercise full control over the method of doing the work may be consistent with the other party being an independent contractor: see Queensland Stations Property Ltd. v. Federal Comissioner of Taxation [1945] 70 C.L.R. 539.
In the English decision of Market Investigations v. Min. of Soc. Security [1969] 2 Q.B. 173, Cooke J., at p. 184 having referred to these authorities said:-
“The observations of Lord Wright, of Denning L. J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’. If the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what
…..
“It should also be noted that the Supreme Court of the Irish Free State in Graham v. Minister for Industry and Commerce [1933] I.R. 156, had also made it clear that the essential test was whether the person alleged to be a”servant” was in fact working for himself or for another person.
It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.
The question remains as to whether the appeals officer, in the light of the legal principles to which I have referred, was entitled to arrive at the conclusion he did on the facts as found by him. I have no doubt that he was. Obviously, having regard to the nature of the work for which she was employed, there was no continuous supervision of Ms. Mahon by the appellant. That cannot be regarded as a decisive factor, any more than it was in the case of the market researcher, the nature of whose employment was in issue in the case decided by Cooke J. On the other side of the equation are the facts that Ms. Mahon was provided by the appellant with the clothing and equipment necessary for the demonstration and made no contribution, financial or otherwise, of her own and that the remuneration she earned was solely dependent on her providing the demonstrations at the times and in the places nominated by the appellant. The amount of money she earned was determined exclusively by the extent to which her services were availed of by the appellant: she was not in a position by better management and employment of resources to ensure for herself a higher profit from her activities. She did not as a matter of routine engage other people to assist her in the work: where she was unable to do the work herself, she had to arrange for it to be done by someone else, but the person in question had to be approved by the appellant.
The written agreement was undoubtedly drafted with understandable care with a view to ensuring, so far as possible, that Ms. Mahon was regarded in law as an independent contractor. However, as I have already pointed out, although this was a factor to which the appeals officer was bound to have regard, it was by no means decisive of the issue. When he took into account all the circumstances of her employment, he was perfectly entitled to arrive at the conclusion, as he did, that she was employed under a contract of service.
As to the submission that the appeals officer should have treated himself as bound by the unreported decision of the Circuit Court in Cronin , it is sufficient to say that, since it was a decision on different facts in another statutory context and no written judgment appears to have been available, the appeals officer was entitled to adopt the approach he did,i.e. of applying to the facts as found by him the legal principles laid down in decisions of the High Court and this Court. This he clearly did and, for the reasons I have already given, I am satisfied that the High Court Judge was entirely correct in holding that his conclusions could not be disturbed.
I would dismiss the appeal.
Castleisland Cattle Breeding Society Ltd. v. Minister for Social and Family Affairs
[2004] IESC 40
THE SUPPRME COURT
Mr. Justice Geoghegan
“This appeal has its origins in a classic type of dispute between one Michael Walsh, a cattle inseminator, and the plaintiff/respondent (“Castleisland”) his employer, as to whether his contract was a contract of service or a contract for services or in other words as to whether he was a “servant” of the respondent or an independent contractor providing services to it. A deciding officer in the Department of Social and Family Affairs determined that Mr. Walsh was employed under a contract for services. Mr. Walsh appealed that decision to an appeals officer under the provisions of the Social Welfare (Consolidation) Act, 1993 and the decision was overturned. The appeals officer had conducted an oral hearing in Tralee, Co. Kerry. Under the provisions of s. 263 of that Act “the Chief Appeals Officer” may, at any time, revise any decision of an appeals officer, if it appears to him that the decision was erroneous by reason of some mistake having been made in relation to the law or the facts. I would comment in passing that s. 263 does not appear by its terms to be conferring a double appeal. What seems to be envisaged is that the Chief Appeals Officer may go through the materials which were before the appeals officer and check whether there was any error in law or on the facts. If he were to find that the appeals officer did not have enough facts or the facts which were before him or her were ambiguous there may be circumstances in which the Chief Appeals Officer would require additional evidence, but essentially it is a revising rather than an appellate procedure.
Accordingly, I intend to address now the fundamental question raised by the notice to vary, that is to say, as to whether the evidence before the appeals officer clearly established that the contract was one for services and not of service. Although the court was referred to different authorities it is clear that the principles to be applied are those set out in the judgments of Keane J. (as he then was) and Murphy J. in the decision of this court in Henry Denny and Sons (Ireland) Limited v. Minister for Social Welfare [1998] 1 IR 34. That case related to the employment of a demonstrator whose job it was to offer passing shoppers free samples. There was a written contract which had been deliberately structured (as of course is the case here) by the employer so as to create an “independent contractor” relationship rather than a “servant” relationship. The written contract had contained the following sentence “for the avoidance of all doubt, I am obliged to point out to you that you will not be an employee of …, you will be providing it with your services as an independent contractor as and when they are required during the term of the contract.”
Keane J. and Murphy J. with whom Hamilton C.J. agreed made it clear that while obviously the terms of the written contract had to be examined, the appeals officer was nevertheless bound to examine and have regard to what the real arrangement on a day to day basis between the parties was. Indeed, Murphy J. pointed out that a sentence of the kind as set out above is not a contractual obligation at all but is merely a statement which may or may not be correct of what the legal relationship between the parties is. Keane J. referred to and adopted the well known statement of principle enunciated by Kenny J. in his Supreme Court judgment in Mara (Inspector of Taxes) v. Hummingbird Limited [1982] 2 I.L.R.M. 421 at 426:
“A case stated consists in part of findings on questions of primary fact … these findings on primary facts should not be set aside by the courts unless there was no evidence whatever to support them. The Commissioner then goes on in the case stated to give his conclusions or inferences from these primary facts. These are mixed questions of fact and law and the court should approach these in a different way. If they are based on the interpretation of documents, the court should reverse them if they are incorrect for it is in as good a position to determine the meaning of documents as is the Commissioner. If the conclusions from the primary facts are ones which no reasonable commissioner could draw, the court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusion shows that he has adopted a wrong view of the law, they should be set aside. If, however, they are not based on a mistaken view of the law or a wrong interpretation of documents they should not be set aside unless the inferences which he made from the primary facts were ones that no reasonable commissioner could draw.”
Keane J., after reviewing a number of authorities dealing with the question of contract of services as distinct from contract for services concluded as follows at p. 50 of the report.
“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.
The question remains as to whether the appeals officer, in the light of the legal principles to which I have referred, was entitled to arrive at the conclusion he did on the facts as found by him. I have no doubt that he was. Obviously, having regard to the nature of the work for which he was employed there was no continuous supervision of Miss Mahon by the appellant. That cannot be regarded as a decisive factor, any more than it was in the case of the market researcher, the nature of whose employment was in issue in the case decided by Cooke J. On the other side of the equation are the facts that Miss Mahon was provided by the appellant with the clothing and equipment necessary for the demonstration and made no contribution, financial or otherwise, of her own and that the remuneration she earned was solely dependent on her providing the demonstrations at the times and in the places nominated by the appellant. The amount of money she earned was determined exclusively by the extent to which her services were availed of by the appellant: she was not in a position by better management and employment of resources to ensure for herself a higher profit from her activities. She did not as a matter of routine engage other people to assist her in the work: where she was unable to do work herself she had to arrange for it to be done by someone else but the person in question had to be approved by the appellant.”
The principles applied by Keane J. ought to have been applied by the appeals officer in this case and, in my view; if they had there would have been a different result.
Tierney v. An Post
[1999] IESC 91; [1999] ELR 293
Supreme Court Keane J.
“The nature of the contract
The question as to whether a particular agreement is in law a contract of service as distinct from a contract for services, has been considered in a number of cases both in our courts and the English courts. In a recent case of Denny & Sons (Ireland) Limited T/A Kerry Foods v The Minister for Social Welfare (unreported; Supreme Court, 1 December 1997), in a judgment with which Hamilton CJ and Murphy J agreed, I suggested that the following approach should be adopted:-
“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”
A sub-postmaster such as the applicant provides the premises necessary for the carrying on of the business of the post office. He or she is also entitled to employ others to assist in the carrying on of the post office business, as is made clear by Article 2.1(b) of the Postmaster’s Manual which provides that:-
“The Emoluments of Postmasters are considered sufficient to provide for the efficient performance of the duties, for the adequate remuneration of any Assistants who may be employed by the Postmaster, for the cost of providing office accommodation . . .
It is true that, under Article 2.25, the authority of the head postmaster is required for the employment of any person at a sub-office. It is not surprising to find that the respondent has, as it were, a right of veto over the appointment of persons who for any reason it might not be appropriate to employ in a post office: the fact remains that it is not normal to find in a contract of service that the employee can hire assistants to perform the work which he or she is employed to do.
Counsel for the applicant relied on Clause 2.5 of the Postmaster’s Manual which provides that:-
“Postmasters are under the control and direction of the Regional Manager and are also subject to the immediate direction of their respective Head Postmaster, to whom in case of doubt arising on any point, reference should be made for instructions.”
In his judgment, the learned trial judge laid stress on this provision and also on the undoubted fact that the applicant must carry on the same business as the respondent carries on at numerous other locations throughout the country and that, in that sense, his business was part of the business of the respondent. While that approach is understandable, it seems to me, that, on the whole, it does not have sufficient regard to the fact that the post office business is carried on in the same premises as the applicant’s own business. No doubt the extent to which the applicant could maximise the profit which he derived from carrying on the post office business was relatively modest, but that cannot affect the legal principles applicable. Monies expended by him on improving the premises or employing assistants which had the effect of increasing the volume of the post office business would increase his own profit from that business as well as the profits of the respondent. As to the right of the respondent to control and direct his operations, it has frequently been emphasised in the authorities that, while the degree of control exercised by the other party is always a factor to be taken into account, it has long since ceased to be regarded as the only factor to be taken into account.
It is of interest to note that in Hitchcock v Post Office ICR 100 the English Employment Appeals Tribunal concluded that, in circumstances closely resembling those with which we are concerned, the contract was one for services and not of service. Slynn J, as he then was, delivering the judgment of the appeal tribunal said that at pages 108-109:-
“We accept, as Mr Carr quite rightly has accepted, that there is here a substantial measure of control which relates to the conduct of the Post Office’s business. It might be, if there were no other factors present, that that control would be sufficient to make the contract one of service rather than for services. But there are other factors present. The question in this case, it seems to us, is really whether the control which does exist is such that it prevents the contract from being one for services rather than of service. Accordingly we must look at the matter as a whole. We consider here that great importance has to be attached to the fact that the applicant provided the premises and a certain amount of the equipment at his own expense. The sub-post office came into what was his general store. It was a part of his own business. Moreover it is clear that even though, apparently, he chose to spend a great deal of his working week doing the sub-post office work at this particular premises himself he had the right to delegate, and did in fact delegate . . .
Moreover it seems to us that even though there may be less chance of making profit, or risk of loss than in many businesses, there was still here the chance of profit and the risk of loss . . .
It seems to me that the reasoning in that passage, which is clearly in accordance with the principles of law established in the many authorities on the point, is entirely applicable to the facts of this case.
I am satisfied, accordingly, that the conclusion of the learned High Court judge that this was a contract of service was wrong in law and should not be upheld.
Conclusions
There remains the question as to whether the contract, although a contract for services, should be construed as containing an implied term that the respondent was obliged to conduct the disciplinary machinery provided for in the contract in accordance with fair procedures.
Barry & ors -v- Minister for Agriculture & Food
Speedking Couriers Limited t/a Fastway Couriers Midlands v John Read:
UDD225
Labour Court
8 February 2022
[2022] 33 E.L.R. 92
Background
The employee appealed the Decision of the Adjudication Officer to the Labour Court on 17 April 2020 in accordance with s.8A of the Unfair Dismissals Act *94 1977 to 2015. A Labour Court hearing took place on 13 January 2022. The following is the Determination of the court.
Determination
Background to the appeal
This is an appeal by Mr John Read (“the complainant”) from a decision of an Adjudication Officer (AO) (ADJ-00021612, dated 9 March 2020) under the Unfair Dismissals Act 1977. Neither the complainant nor his legal representative were in attendance at the hearing before the Adjudication Officer due to “an administrative oversight”.
The AO, having satisfied himself that all parties had been duly notified of the arrangements for the hearing, proceeded to hear and decide the complaint. He found that the complainant had not been unfairly dismissed by SpeedKing Couriers Ltd T/A Fastway Couriers Midlands (“the respondent”). The complainant’s Notice of Appeal was received by the court on 17 April 2020.
The court heard the appeal in a virtual courtroom on 13 January 2022.
Preliminary issue
The matter at issue in this appeal is whether the complainant, tasked with delivering parcels to the respondent’s customers, was working under a contract of service or whether he was working under a contract for services.
It is submitted on behalf of the respondent that the complainant was at all material times an independent contractor, engaged pursuant to a contract for services. The burden of establishing that the complainant was, in reality, engaged pursuant to a contract of service – and therefore having locus standi to maintain the within proceedings – rests on the complainant.
The complainant’s evidence
The complainant gave the court a brief outline of his working life as a professional driver.
He drove articulated and rigid lorries for many years before establishing his own business providing school transport services and tours, including tours to the United Kingdom. For health reasons, he decided to discontinue this business. In October 2017, the complainant became aware of an opportunity to drive for the respondent. He had an initial series of telephone calls with a representative for the respondent and thereafter attended for a brief interview with a Mr Ryan. He was advised that he would have to supply his own van and be registered for VAT.
The complainant’s recollection is that he signed a document at the interview confirming both of those matters.
The complainant commenced driving as a deliver courier for the respondent in late October 2017. He invoiced the respondent weekly in arrears at the rate of €190.00 plus VAT per day. This rate was determined by the respondent, he says. He used his own van, paid for whatever fuel he used and for the insurance *95 on his vehicle (including goods in transit insurance), he had a mobile phone, the tariff on which he paid himself. He was provided with a scanning device (and trained in its use) by the respondent.
He was required to wear a company-supplied uniform and to display an A4- sized company logo on the front screen of his vehicle. The complainant’s evidence is that he did not pay the respondent for the uniform or for the use of the scanner.
The complainant says that he was assigned to three different delivery areas over the course of his engagement with the respondent.
At all times, he attended between 5am and 6am each morning to collect items for delivery from the respondent’s depot and finished his daily round of deliveries normally between 3pm and 4pm.
At busy times – for example in advance of Christmas – he says he worked up to 15 hours per day. He often had to take telephone calls in the evenings from customers or from the respondents in relation to parcels that may have gone missing.
The complainant told the court that his understanding was that he was required to give personal service at all times and could not substitute another driver in circumstances where he needed to take time off. He also stated in evidence that he was not able to avail himself of annual leave during the entire period of his employment nor was he paid for public holidays.
The only days on which he didn’t work were days when he was sick or on which his vehicle broke down and needed repairs. He did not invoice for those days. On a number of occasions, he was compelled to attend meetings, along with other drivers, at the respondent’s depot, where issues such as health and safety were addressed. He recalled Mr Billy Kehoe (the respondent’s representative at the within hearing) addressing a number of those meetings.
The complainant also told the court that he proceeded on the basis that he was working exclusively for the respondent.
His evidence was that it would have been completely impractical for him to consider taking on additional work elsewhere having regard to the time of the day that he normally finished his delivery round for the respondent. Also, he would have had to change out of his uniform and remove the sign with the respondent’s logo from his van were he to undertake work elsewhere.
On or around 15 February 2019, the complainant was out in his van making deliveries when he received a telephone call from Mr Mattie Ryan inviting him to return to the respondent’s depot.
The complainant declined as it was located at a considerable distance from where he was then located. He asked Mr Ryan what the purpose was of the proposed meeting at the depot. Mr Ryan informed him that he was to be let go as there was no more work for him. Shortly, after that conversation, Mr Ryan contacted the complainant that another route, in the Templemore area, had become available starting the following Monday and the respondent would be willing to *96 pay him an extra €30.00 per day to work that route.
The complainant began training with the outgoing driver on the new route the following Monday but was informed by the respondent on the Wednesday of that week that the route was being sold and his contract was being terminated. That was his last working day with the respondent.
The complainant said that he picked up some work from different sources between mid-February and Christmas 2019 but it was intermittent and irregular.
He obtained continuous work in 2020 on a self-employed basis.
He estimated that his loss was in the region of €20,000 gross for 2019.
The complainant did not furnish the court with any paperwork to substantiate his claimed loss nor did he produce any documentary evidence of his efforts to mitigate his loss. Mr Kehoe, for the respondent, declined to cross-examine the complainant.
In response to questions from the court, the complainant said that he was not familiar with a form entitled “Interim Couriers Contract”, a blank unsigned copy of which was exhibited in his papers submitted to the court. He said that this had been included in the respondent’s submission before the Workplace Relations Commission but he hadn’t seen it before then.
Mr Kehoe’s evidence
Mr Kehoe outlined in some detail the Fastway business model. He stated the model is based on selling franchises to individuals in respect of designated areas. However, the respondent engages interim couriers on a self-employed basis pending the sale of a franchise. Interim couriers are required to sign a copy of the Interim Couriers Agreement exhibited in the complainant’s papers before the court.
The respondent’s preference, he said, is to encourage and assist such interim couriers to purchase a franchise for the territory that that they have been covering as they are already familiar with the routes and aware of the potential to grow the business in that area. However, where this doesn’t happen and a franchise for that area is sold to a third party, the interim courier’s temporary engagement ceases.
According to the witness, an interim courier is not required to put a full set of decals on their van; they are simply required to place an A4-sized logo in the windscreen to identify themselves to members of the public (particularly in rural areas) as couriers working for the respondent.
Mr Kehoe confirmed to the court that he was not in a position to produce a copy of the Interim Couriers Contract signed by the complainant. He confirmed that that contract provided that a contractor would be required to rent the scanner from the respondent and pay the respondent for the uniform supplied. He was not, however, in a position to rebut the complainant’s evidence that he was not required to pay for either of these items. Mr Kehoe said he disagreed with the complainant’s assertions that he was not free to provide services other than to *97 the respondent and not free to substitute another driver on occasion.
He said this happens regularly but that the substitute driver had to be approved in advance by the respondent and had to be given some basic training in relation to dealing with customers, etc.
He agreed that Mr Ryan most likely did contact the complainant in mid- February 2019 to inform him that there would be no more work for him as the business was struggling financially at that time.
The witness said that he had given instructions to Mr Ryan to review all costs in the business, including those associated with the engagement of couriers, in order to reduce overheads.
Finally, he said it was his understanding that the complainant was paid the equivalent of one week’s payment in lieu of notice when his contract was terminated.
The complainant’s submission
In his closing submission to the court, counsel for the complainant submitted that the court should find that the complainant was engaged by the respondent on contract of service basis and was therefore qualified to proceed with the within appeal for the following reasons: (i) the complainant was required and expected to provide personal service at all times and, the submissions of the respondent notwithstanding, he had no realistic possibility of substituting somebody else to drive on his behalf if he needed to take time off; (ii) the respondent exercised considerable control over the complainant in terms of the routes he was required to drive and the means and methods by which he completed the work assigned to him; (iii) the respondent provided essential equipment (such as the scanner) to the complainant at no cost to him and the complainant was required to wear the respondent’s uniform and to display the respondent’s logo on his van; and (iv) having regard to the number of hours per day the complainant was required to work in order to complete the work assigned to him by the respondent, his employment with the respondent can only be regarded as full-time in nature, one on which the complainant was entirely dependent to make a living as there was no realistic prospect of him being able to undertake additional work elsewhere on top of the work he did for the respondent.
Counsel further submitted that should the court find in the complainant’s favour in relation to his employment status, that it should follow that his claim of unfair dismissal under the 1977 Act succeeds in the absence of any fair procedures on the respondent’s part prior to the termination of the complainant’s employment. Finally, counsel advised that the complainant’s preferred remedy should the court uphold his complaint under the Act was compensation having regard to his claimed financial loss of €20,000.
*98
The respondent’s submission
Mr Kehoe, in summing up, said that the court should have regard to the fact that the complainant had run his own business before the commencement of his engagement by the respondent and conclude that the complainant, therefore, entered into an agreement with the respondent “with his eyes open” and was “fully aware of what he was getting into”.
The law
The question of a worker’s employment status is a mixed question of fact and law.
A considerable body of jurisprudence – both of the superior courts in this, and in other common law, jurisdictions and of expert employment, taxation and social welfare tribunals – has developed over the years in which those bodies have elucidated the correct legal principles to be applied to the determination of disputes of this nature. However, the judgment of the Supreme Court in Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare[1998] 1 I.R. 34; [1998] 9 E.L.R. 36 continues to be the leading authority on the issue in this jurisdiction in so far as it identifies the prevailing approach adopted by the superior courts here when required to determine issues of employment status.
In that case, the Supreme Court adopted an approach sometimes referred to as the “mixed test” or “reality test”. This approach reflects the complex and varied nature of contemporary employment relationships and requires a decision- maker to consider a variety of factors including, but not limited to, the degree of control exercised by the party for whom work is being done over the party doing the work, the level of integration of the latter into the former’s business, whether or not the party doing the work has the marks of an entrepreneur in the way he carries out the work in question such that he can be said to be in business of his own account.
The emphasis to be placed, according to the court, on any one or more of the foregoing factors, was to be determined by the particular facts of the case, in the light of the applicable legal principles:
“The criteria which should be adopted in considering whether a particular employment, in the context of legislation such as the Act of 1981, is to be regarded as a contract ‘for service’ or a contract ‘of services’ have been the subject of a number of decisions in Ireland and England. In some of the cases, different terminology is used and the distinction is stated as being between a ‘servant’ and ‘independent contractor’. However, there is a consensus to be found in the authorities that each case must be considered in the light of its particular facts and of the general principles which the courts have developed: see the observations of Barr J, in McAuliffe v Minister for Social Welfare[1995] 2 I.R. 238.” (Keane J at p.49)
The court also emphasised that while it should have regard to the terms of any written agreement in place between parties to an employment arrangement, the terms of such an agreement cannot be regarded as determinative of the true nature of their relationship: *99
“Whether Ms Mahon was retained under a contract of service depends essentially on the totality of the contractual relationship express or implied between her and the appellant and not upon any statement as to the consequence of the bargain. Certainly, the imposition of income tax and the manner of its collection falls to be determined in accordance with the appropriate legislation and the regulations made thereunder as they impinge upon the actual relationship between parties and not their statement as to how liability should arise or be discharged.” (Murphy J at p.53)
This court, in applying the relevant legal principles to the particular facts of the within case, is also guided by the decision of the High Court in Karshan (Midlands) Ltd t/a Dominos Pizza v Revenue Commissioners[2019] IEHC 894; [2020] 31 E.L.R. 142. In that case, the High Court upheld, in a case stated, a decision of a Tax Appeals Commissioner (23TACD2018, October 2018) that pizza delivery drivers engaged by the appellant company were employed pursuant to a contract of service and not a contract for services as the appellant had contended for.
The High Court confirmed that, in arriving at her decision, the Tax Appeals Commissioner had correctly applied the law to the facts as found by her. A number of the material facts in Karshan are notably similar to those in the within case: in both cases the workers were required to provide their own vehicles and insurance to make deliveries on behalf of the party who had engaged them; the workers were deemed by their employer to be responsible for their own tax affairs and social insurance affairs; the rates at which they were remunerated were pre-determined by the employer and the workers lacked any bargaining power in respect of negotiating higher individual rates of pay; the workers in both cases were required to give personal service, albeit the possibility of a driver with the prior approval of the employer was not disputed in Karshan and the Tax Appeal Commissioner found on the facts that such a substitute driver would not become a sub-contractor of the worker as he was paid directly by the employer on foot of an invoice; again in both cases, the drivers were required to wear a company uniform, identifying the organisation by which they were engaged and, finally, they were both supplied with company logos to display in their respective vehicles.
The Tax Appeal Commissioner determined that the drivers in Karshan were subject to a degree of control consistent with a contract of service, they were intimately integrated into the employer’s business and did not exhibit any significant entrepreneurial characteristics that would mark them out as being in business of their own account and they were not per se in a position to make a profit by carrying out the work in a more efficient manner; on very rare occasions, an individual driver might be in such a position but this was for reasons outside of his/her control, e.g. when the demand for deliveries was proportionally higher than the number of drivers rostered. She, therefore, concluded that the relationship between the drivers and the appellant company was one of a contract of service.
Discussion and decision
Personal service and substitution
The complainant’s uncontested evidence was that he provided personal service during the entire period of his engagement with the respondent. He told the court that he never been informed that he could substitute another driver if he needed to take time off or avail himself of annual leave. He missed a day very seldom and for reasons beyond his control, e.g. when his vehicle broke down or when he was ill.
The respondent, on the other hand, stated that it was open to the complainant to provide a substitute driver subject to that person having been trained in relation to the respondent’s systems, etc.
There may be a large element of truth in the position as outlined by both parties. However, as there was no evidence before the court that the complainant ever received or signed a copy of the written terms of engagement exhibited by Mr Kehoe, the court has to prefer the complainant’s evidence in this regard.
The court notes, based on the evidence of Mr Kehoe, that in the event that the complainant provided a substitute driver, that substitute driver would be required to invoice the respondent directly and would be paid by the respondent. Such a substitute, therefore, did not become a subcontractor of the complainant. This tends to undermine the respondent’s assertions regarding the complainant’s employment status: clearly, he was not free to sub-contract his work to another driver.
Taken at its height, the respondent’s position – had it been established – is that there are arrangements in place whereby an interim courier can, for example, take leave if they can nominate a substitute driver to cover their routes subject to such a driver having met the respondent’s training and other requirements and that driver entering into a contract – ostensibly – for services with the respondent for the period of the interim courier driver’s absence. It does not appear to the court that such an arrangement is incompatible with a requirement for personal service.
Control
In Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare[1998] 1 I.R. 34; [1998] 9 E.L.R. 36, at p.50, Keane J. stated:
“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive.”
Therefore, the question of control, though not determinative, is a factor to be taken into consideration in the analysis.
There are a number of facts that suggest that the respondent exercised a high *101 degree of control over the complainant. The respondent dictated the terms of engagement and set the daily rate of pay.
The complainant had to undergo a period of training to ensure that he met the respondent’s standards and understood its way of doing business.
The complainant was obliged to deliver only on the routes determined in advance by the respondent. He was further obliged to wear a uniform emblazoned with the respondent’s logo and to display that logo on his vehicle when providing services for the respondent. Although a person engaged under a contract of service isn’t ordinarily required to provide an asset necessary for his work as substantial as a vehicle, it is significant in this case that the respondent had very strict requirements in relation to the colour and type of vehicle that the complainant should have available to him.
In conclusion, it is clear that the respondent exercised a significant degree of control over work done and the manner by which work was to be done by the complainant and control of this nature is indicative of the existence of a contract of service.
Integration
In Stevenson, Jordan and Harrison Ltd v McDonald and Evans[1952] 1 T.L.R. 101, Lord Denning, at p.111, stated;
“One feature which seems to run through the instances is that, under a contract of service a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.”
In Re Sunday Tribune Ltd[1984] I.R. 505 at 509, Carroll J. cited the judgment of Ungoed-Thomas J. in Beloff v Pressdram Ltd[1973] 1 All E.R. 241 who described the integration test at p.250 of that judgment as follows:
“The test which emerges from the authorities seems to me, as Denning LJ said, whether on the one hand the employee is employed as part of the business and his work is an integral part of the business, or whether his work is not integrated into the business but is only accessory to it.”
In Autoclenz Ltd v Belcher[2011] 4 All E.R. 745, the UK Supreme Court considered whether car valeters were “workers” for the purposes of the relevant UK legislation.
It found that the integration test was satisfied on the basis that the valeters were fully integrated into the respondent’s business and that they had no other real source of work.
In order to ascertain to what extent an individual who works for a business is integrated into that business, one must identify the core activity of the business.
Having carefully considered the evidence before it, the court finds that the respondent’s core business relates to delivery of small to medium parcels via courier service. Mr Kehoe, in his evidence, sought to attach considerable *102 weight to the respondent’s ultimate objective as being to sell franchised delivery routes. However, even if that is the respondent’s preferred business model, it doesn’t change, in the court’s view, the respondent’s core business which is the provision of courier delivery services, the very activity which the complainant was engaged to perform.
The court, in this context, finds that the complainant’s submission to the effect that he was not in a position to take on additional work over and above that he performed for the respondent credible and convincing having regard to his uncontested evidence in relation to the actual number of hours he worked daily for the respondent company.
Even if court is incorrect in this regard, Mr Keogh told the court several times that the respondent’s ideal was to facilitate interim couriers purchasing a franchise for the delivery route they had worked and helped to develop. Mr Kehoe further stated that the split between interim courier drivers and franchisees was approximately 50:50 at any given time.
It follows that the respondent viewed a period of service as an interim courier driver as intimately connected to the potential purchase of a franchise by that driver. Furthermore, both the complainant and Mr Kehoe, in their evidence, told the court that complainant was required to identify and develop potential sales leads as part of his work for the respondent.
Conclusion
Having regard to the foregoing, the court, in summary, finds that the complainant was subject to considerable control by the respondent in the manner in which he performed his work.
The complainant was required to give personal service in so far as he could not sub-contract the work. Finally, the work done by the complainant was part and parcel of the respondent’s core business. He was, therefore, an integral part of that business.
The court concludes that the complainant was in reality, and notwithstanding appearances to the contrary, engaged at all material times by the respondent under a contract of service.
Finding of unfair dismissal and redress
It is accepted by Mr Kehoe that the complainant’s employment was unilaterally terminated by the respondent with one week’s pay in lieu of notice and that the respondent did not engage in any procedures before dismissing the complainant as the respondent at all times regarded the complainant as an independent contractor outside the scope of the Act.
The court, having found that the complainant was in fact engaged under a contract of service must also find, having regard to the foregoing, that the complainant’s dismissal was an unfair dismissal for the purposes of the Act. *103 The court finds the complainant’s evidence in relation to loss and mitigation deeply unsatisfactory.
No documentary evidence was produced to the court that demonstrated that the complainant made the necessary efforts to obtain alternative employment as mandated by the Act. That being the case, the court determines that the maximum compensation that can be awarded to the complainant in respect of his unfair dismissal is four weeks’ gross pay. The court, accordingly, awards him €3,800.
The court so determines.
Tony McAuliffe v. Minister for Social Welfare
1994 No. 78 Sp
High Court
19 October 1994
[1995] 1 I.L.R.M. 189
(Barr J)
BARR J
delivered his judgment on 19 October 1994 saying: The appellant is a wholesale distributor of certain daily and Sunday newspapers. He employs a number of persons to deliver the papers to retail shops and other such outlets. The area of his business includes the province of Leinster and two of the persons with whom he has contracted to deliver newspapers in that area are Mr Patrick Plunkett and Mr John Weir.
The appellant’s claim is by way of appeal pursuant to s. 271 of the Social Welfare (Consolidation) Act 1993 against the decision of the appeals officer made on 3 December 1993 and notified to the appellant on 7 December 1993.
The essential facts are not in dispute and are as follows.
1. Mr Plunkett and Mr Weir contracted with the appellant to deliver newspapers on his behalf in the Leinster area.
2. Mr Plunkett and Mr Weir were engaged by the appellant, six or seven days per week in the case of Mr Plunkett and five days per week in the case of Mr Weir and were paid monthly against invoices submitted by them to the appellant. The agreed rates of remuneration were between £34 and £50 per run per day.
3. Messrs Plunkett and Weir each owned their own delivery vehicles and were responsible for all outgoings including tax, insurance, repairs, fuel and depreciation in respect of them.
4. It was envisaged by the respective contracts that Messrs Plunkett and Weir would act as drivers of their respective vehicles, but with a right to provide substitute drivers acceptable to the appellant when necessary. In that event the *191 payment of relief drivers was the responsibility of the contractors. Mr Plunkett has in fact provided substitute drivers on a few occasions.
5. The appellant was not obliged to provide Messrs Plunkett and Weir with any particular deliveries or with deliveries on any particular days but in fact both were provided with regular deliveries.
6. Messrs Plunkett and Weir were free to carry goods for any other person, both when not engaged on deliveries for the appellant and in conjunction with the delivery of newspapers for him, subject only to an embargo on the delivery of newspapers for any other supplier while engaged in deliveries for the appellant.
7. Mr Plunkett is registered for value added tax and invoiced the appellant for and was paid and remitted value added tax on his charges. Mr Weir is not registered for such tax as his turnover is less than the statutory threshold. Messrs Plunkett and Weir both made income tax returns as self-employed persons.
8. Messrs Plunkett and Weir are responsible for damage, destruction or loss of goods carried for the appellant and for losses caused by any delays.
9. The relationship between the appellant and Messrs Plunkett and Weir was regulated orally until 12 February 1993 and thereafter by agreements in writing which confirmed the terms of the oral arrangements.
10. Mr Weir was in the direct employment of the appellant until 30 March 1991 on which date his employment was terminated. He had driven the appellant’s vehicle until his employment was ended and after that date he used his own vehicle which he purchased from the appellant. The latter paid value added tax on the sale of this vehicle to Mr Weir.
11. The appeals officer decided that Mr Plunkett was from 30 April 1990 and Mr Weir from 1 April 1991 employed by the appellant pursuant to contracts of service.
12. The appellant claims that that decision was erroneous in point of law and seeks a determination that Messrs Plunkett and Weir were at all times material hereto engaged by the appellant as independent contractors pursuant to contracts for services.
The law
Having regard to the wide range of particular circumstances from case to case, it is not possible to devise any hard and fast rule as to what constitutes a servant and what constitutes an independent contractor. Each case must be considered on its own special facts in the light of the broad guidelines which case law provides. Many of the authorities in this area relate to whether or not the employer is liable for the negligence of the employed person and most turn upon the degree of control exercised over the latter by the former. In the case under review there is a special circumstance which touches upon the element of control to which I have referred. The appellant, being a wholesale distributor of *192 newspapers over a wide area, time and reliability are of the essence in the performance of that service and, whatever the nature of the contract between the distributor and the deliverer, one would expect to find stringent terms regarding the time factor.
A wholesale newspaper distributor such as the appellant might decide on, for example, one or other of two alternatives in setting up a delivery system. He might employ an independent haulage company to perform the service for him. Conversely, he might decide to operate the service himself and provide vehicles and personnel from within his own organisation. How would one expect, on the balance of probabilities, that these alternate methods would be structured? If a haulage company were employed by the wholesaler then, undoubtedly, it would be a contract for services and not of service. One would expect it to contain the following distinctive features:
(a) The carrier company would provide and maintain its own transport.
(b) It would be remunerated on the basis of a sum per vehicle per run, or perhaps a mileage charge would be agreed. In either case the remuneration would be structured to cover the wages of the company driver together with the cost of fuel, maintenance, insurance and depreciation of the vehicle, and also to provide an acceptable net profit.
(c) The carrier would not be inhibited by contract from delivering for reward goods from other suppliers to the employer’s customers or to other outlets in the area served — though a restriction on delivery of newspapers to the employer’s customers from rival suppliers might form part of the contract.
(d) It would be usual for such contracts to provide an indemnity to the employer in respect of any loss he might sustain through the negligence or breach of contract of the carrier.
On the other hand, if the wholesaler decided to provide a delivery service from within his own organisation, the following major differences would arise as to the employer’s contract with his driver:
(a) The driver’s employment would be a contract of service with the employer.
(b) The employer would provide the requisite vehicle and pay for all overheads relating to it.
(c) The driver might be remunerated on the basis of a sum per run, but more likely he would receive a weekly wage and overtime.
(d) The employer would be liable to pay his share of the worker’s PRSI contributions and also would have an obligation to collect and remit to the State the driver’s PAYE income tax.
(e) The driver would have statutory entitlement to holiday remuneration from his employer and other benefits such as redundancy and pension rights.
(f) The driver would not be allowed to use his employer’s vehicle for carrying on a delivery business of his own either with the employer’s customers or others.
(g) In the ordinary course it would be for the employer to provide a substitute driver if the regular person was not available.
In determining whether the appellant’s contracts with Messrs Plunkett and Weir are contracts of service or for services, it seems to me that the crucial question is how do they compare with the other two types of delivery contracts to which I have referred. It will be noted that none of the distinguishing features of the postulated contract of service are to be found in the Plunkett-Weir contracts, but both have much in common with the form of delivery contract which the appellant probably would have entered into with a haulage company if he had taken that course. I appreciate that there is the practical distinction that the Plunkett-Weir contracts are with individuals and it is envisaged that in the ordinary course the delivery vehicles are to be driven by them, but with a right to substitute an acceptable relief driver. It seems to me that such a provision does not affect the nature of the contracts. All in all, I have no hesitation in concluding that they are both contracts for services and that the appeal should be allowed.
McKayed -v- Forbidden City Ltd t/a Translations.ie
[2016] IEHC 722 (16 November 2016)
Judgment by:
Ní Raifeartaigh J.
Issue addressed in this judgment
1. The issue addressed in this judgment is whether or not the plaintiff was an employee of the defendant in the context of a claim by the plaintiff that he was unfairly dismissed and is entitled to certain compensation pursuant to the Unfair Dismissals legislation. The defendant is an Arabic translator, and the defendant was and is a company in the business of providing interpretation and translation services, including interpretation services for suspects being interviewed while in Garda detention and persons being interviewed in the context of asylum applications. It is a necessary precondition to the plaintiff’s claim that he was unfairly dismissed that he was, at the relevant time, an employee of the defendant, and this preliminary issue is the sole issue addressed in the judgment.
Procedural History
2. The matter was originally dealt with by a Rights Commissioner, who found in favour of the plaintiff by a determination dated the 3rd August 2011. The matter was subsequently dealt with by the Employment Appeals Tribunal (the EAT), in a decision dated the 14th January 2015, which came to the conclusion that the plaintiff was not an employee of the defendant. The EAT, applying the approach set out in Minister for Agriculture v. Barry [2009] 1 IR 215, decided that there was insufficient ‘mutuality of obligation’ in the arrangements between the plaintiff and defendant for there to be a contract of employment. The plaintiff appealed to the Circuit Court in accordance with section 10(4) of the Unfair Dismissals Act 1977, and by a decision dated 4th February 2016, the President dismissed his appeal against the determination of the EAT.
3. The Master of the High Court by order on consent, dated the 5th April 2016, extended the time for serving and lodging a Notice of Appeal against the Circuit Court order, and the plaintiff appealed to the High Court in respect of the decision of the Circuit Court. The matter having come on for hearing before this Court on the 24th October 2016, I heard argument at that stage on the preliminary point as to whether the plaintiff was an employee of the defendant. The defendant was represented by counsel and the plaintiff represented himself.
Facts
4. It was not in dispute that the plaintiff started doing work for the defendant company in July 2008. Evidence was called at the hearing before me, on behalf of the respondent company, to prove that the Plaintiff had signed a document on the 8th August 2008, which set out the terms of the working arrangements between them. The witness called was one Ms. Li, who was managing director in the respondent company, and she said that this document was a standard form document signed by all their interpreters/translators. She produced a document dated the 8th August 2008. The Plaintiff objected that this particular copy produced was not the document he signed; however, he accepted that he had signed a different document on the same date which was identical in its terms except that he had written the word ‘none’ at the bottom of the document. This document was entitled ‘Memo re Declaration of Interests’ and provided as follows:
“I hereby re-affirm my agreement that I represent FC translations in court, Garda stations and in similar and related areas of operation of FC translations. Including visits to new commercial customers introduced to me through the company.
I agree to not work for another company operating competitively in the same area as FC Translations. Unless I have declared this fact to company management, and I will consider at all times the sensitive and trustworthy area in which I am engaged. And so, in doing, I prioritise work for FC Translations and I do not represent any competitor parties operating in the same areas. Especially where that work could lead to confusion or is likely to be considered a conflict of interest, howsoever arising,
I will abide by the rules, standards, codes of conduct and the methods of operation adopted by the company and that may be adopted in the future and communicated directly to me, or, written. I will not engage in any dishonest practice regarding any aspect of the company’s work, or conduct my business or behaviour in any manner possibly resulting in negative reaction, while representing FC translations,
In return, the company will prioritise me for work in these fields to ensure that it is in my interest and benefit to remain part of FC translations. The company will maintain good relations and will place a high level of trust in me knowing that I not only represent myself but also many others working with the company on sensitive public and legal matters. The company will arrange appointments for me and endeavour to maintain sufficient work for me, and promptly pay me on receipt of correctly submitted invoices or time sheets.”
5. The Declaration of Interests also contained a declaration of conflicts of interest, which read as follows:
“According to the terms of our agreement, I declare here, so as to highlight potential conflicts of interest, or situation arising, that, I work for these ompanies/groups/individuals etc. listed below, operating in the same area as FC translations, whether or not I am providing interpreting/translation, freely or for reward, howsoever trivial.”
The plaintiff said that he had handwritten the word ‘none’ under this paragraph.
6. Mr. McKayed did not call evidence as such, but made certain factual assertions while he was on his feet making submissions. He also relied on certain additional documents handed in to the court.
7. One of these documents was a Code of Conduct which he had been required to sign and did sign on the 8th August 2008. I do not set out here all of the Code, but Mr. McKayed drew attention to the following passages within it in the course of his submissions:
“Procedure
You will:
• Not enter into discussion, give advice or express opinions or give reactions to any of the parties;
• Intervene only:
o To point out that a party may not have understood something
o To alert the parties of a possible missed cultural inference
o To ask for the interpreting process to be accommodated and inform all parties present of the reason for the intervention;
o To ask for clarification
o To advise the court that there is no equivalent term in the language concerned to the term being used.
o To advise the court that you require a break due to lapses in your concentration occur during lengthy periods of simultaneous or consecutive interpreting
• Not delegate work, nor accept delegated work, without the consent of the company and the client.
• Convey the exact meaning of what has been said without adding, omitting or changing anything; making explanation only where a cultural misunderstanding may be occurring, or where there is no direct equivalent for a particular term. Only in exceptional circumstances should a summary be given (if this is consented to by all parties) provided the meaning of what is being summarised is not distorted.
• Be reliable and punctual at all times.
• Must state (in a criminal trial) if you were involved in interpreting at the police station on the same case.
• Not have discourse with any client or defendant at any time.
• Not be interviewed by the media.
• Not accept offers or lifts or to share taxis or other means of transport with any client, defendant, accused or solicitor before or after any appointment.
• Not disclose any information learnt in the course of any interview, to anybody.
• Not permit any questioning or interview by solicitors except in court on foot of a court order.
• You will not allow the distribution of your phone number or that of any co-worker to any defendants, clients or solicitors. All such queries should be directed to the company’s office. Give the company business card if requested.
• Be required to make an oath or affirmation in court in the presence of a judge.
• Be required to make statements to gardai concerning the accuracy of the information you translate.” (emphasis added)
8. The following was also contained in the code in a section entitled ‘ethical and professional rules’:
“You will:
• Respect confidentiality at all times and not take advantage of any information gained during your work.
• Act in an impartial and professional manner;
• Not discriminate against parties, either directly or indirectly, on the grounds of race, colour, ethnic origin, age, nationality, religion, gender, sexuality or disability;
• Not give advice, legal or otherwise, to an accused or witness in the case, nor enter into discussion with them (other than to confirm language/dialect match) or have any discourse with them outside of the interview or court sitting.
• Not be left alone with any defendant or accused at any time.
• Disclose any information, including any criminal record, which may make you unsuitable in any particular case.
• Disclose immediately if the interviewee or immediate family is known or related to you.
• Disclose any business, financial, family or other interest which you might have in the matter being handled.
• Not accept any form of reward, whether in cash or otherwise, for interpreting work other than payment by FC Translations.
• Not accept commissions or rewards for work done from clients or defendants.
• Not pass on your appointed work to others; all appointments are scheduled by the office.
• Declare immediately any previous involvement in the assignment and any involvement or relationship with the accused or any witness in the case.
• Not engage in any behaviour that may reflect poorly on FC Translations and by default your co-workers.
• Disclose any information, including any criminal record, which may make you unsuitable for any particular assignment
• Be excluded from work on discovery of breaches of the codes of conduct or if found to have a criminal conviction or if you fail any security checks.
• Declare any difficulties you have with dialect or technical terms and if these cannot be satisfactorily remedied, withdraw from the assignment.
• Dress neatly and professionally at all times, Casual clothing, jeans, trainers, t-shirts, work uniforms, leathers, etc, must not be worn in court.
• Arrive at least 10 minutes before the starting time of your appointment. If you cannot get there on time, you should inform the company.
• Turn your mobile phone/pager to silent before entering court rooms or beginning an assignment in hospitals.” (emphasis added)
9. To this Code was attached a statement of confidentiality which read as follows:-
“Any information you obtain in the course of your assignment is confidential and is not to be given by you to anyone outside the company, whether during the assignment or after it has been finished, unless we give you written permission to do so. You must also comply with the provisions of the Data Protection legislation.
You will not use any information you obtain in the course of your assignment for any purpose other than as authorised by the company. The right to all such information rests with the client or the company as appropriate and permission to access and use this information can only be given by the company and it is required to seek the permission from the relevant clients concerned.
You must keep safe any document provided to you in the course of an assignment; you must make sure they are not copied, in whole or in part, and you must return them to us, at the end of the assignment.
FC Translations will not be responsible for any claims made against you, on the grounds (for example) of incompetent interpreting or unprofessional conduct, or any action you take that could be considered aiding or abetting criminal activity.
I accept this assignment, having read and understood the terms and conditions set out above. I understand that if I breach any of these terms and conditions, particularly those relating to confidentiality, criminal or civil proceedings may result.”
10. The plaintiff also asserted a number of facts which he said were features of his arrangement with the defendant company, including (a) that he had received work over a period of approximately two and a half years, which was evidenced by certain time sheets submitted to the court; (b) that the company provided training for him, evidenced by a certificate of attendance at a one-day training course on the 27th March 2010; (c) that he was paid hourly, at a rate that was reduced over time; (d) that the company told him where to attend and what to do there; (e) that he was not registered for VAT; (f) that the name and logo of the company were displayed on his identification badge when doing the work; (g) that he was to provide the company details and phone number when working, and not his own; (g) that he submitted invoices at the request of the company; (h) that sick pay, holiday pay and pension were not covered; (i) that he could be called at any time, 24 hours, 7 days a week, which he described as a requirement that he be ‘on call’ for the company. I did not hear evidence from Ms. Li on these matters because the position of the defendant company on the preliminary issue was that the contract between the parties clearly demonstrated the absence of the mutuality of obligation which was necessary to an employment contract, and that it was not necessary in those circumstances to enter into a detailed consideration of all the features of his working arrangement with the defendant company.
The legal submissions
11. Counsel on behalf of the defendant argued that the situation was governed by Minister for Agriculture v. Barry [2009] 1 IR 215, and that the first issue to be addressed by the Court was whether there was ‘mutuality of obligation’ between the parties. It was argued that the requisite mutuality of obligation was lacking in circumstances where the defendant company had no control over the hours of interpreting work that might become available as a result of suspects being arrested or persons seeking asylum, and had not in any regard guaranteed any particular volume or hours of work to the plaintiff or that there would necessarily be work on an ongoing basis. Emphasis was laid on the precise terms of the written contract signed by the plaintiff. In those circumstances, it was argued, it was not necessary for the Court to proceed to any further examination of the remaining features of the arrangement between the parties, because the High Court in Barry had described the ‘mutuality of obligation’ principle as a ‘filter’ for, or ‘sina qua non’ of, an employment contract.
12. Without summarising all of the plaintiff’s oral and written arguments in detail, the following is, I hope, a fair summary outline of his arguments. The plaintiff contended that the decision of the High Court in Barry v Minister for Agriculture [2009] 1 IR 215 was wrong and should not be applied to his case. He challenged the appropriateness of the mutuality of obligation principle described in the Barry case. He said that there was no reference to the ‘mutuality of obligations’ principle in the leading Supreme Court decision of Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1998] 1 IR 34. He cited various authorities (including Cornwall County Council v Prater [2006] EWCA Civ 102; Stephenson v Delphi Diesel Systems [2003] ICR 471; and James v Greenwich Case C-256/01) to suggest that the definition of mutuality provided in Barry is not universally accepted. He further directed the Court’s attention to a decision of the Indian Supreme Court, Harjinder Singh vs Punjab State Warehousing Corp (Civil appeal No. 587 of 2010) and a decision of the ECJ, Allonby v Accington and Rosendale Community college [2004] ECR 1-873, again to support his argument that the cogency of the mutuality of obligations test has not been universally accepted. The plaintiff also made reference to the ‘Report of the Employment Status Group- PPF’, prepared by the Employment Status Group, set up under the Programme for Prosperity and Fairness, noting that the mutuality of obligation test was not afforded a prominent role or quoted as a sine qua non to establish employment status in that document. He also referred to an academic article by Nicola Countoris, entitled “Uses and Misuses of ‘Mutuality of Obligations’ and the Autonomy of Labour Law”, published by the UCL Labour Rights Institute (UCL Labour Rights Institute On-Line Working Papers – LRI WP 1/2014) which was a critique of the way in which the ‘mutuality of obligation’ concept, originally developed by M. Freedland, had been implemented in English court judgments. The plaintiff argued the mutuality of obligations principle should not be applied and/or dominant and that, having regard to all the factors in his case, the Court should find that there had been a contract of employment in his case.
13. The plaintiff also argued that, in any event, the evidence available to the court did support the existence of mutuality of obligations within the accepted meaning of that concept. In particular, he suggested that mutuality of obligations subsisted in an implied agreement for future work on an ongoing basis between the parties, as well as in the terms of the written document, the ‘Declaration of Interest.’ He argued that over the course of dealings between the parties, a mutual obligation had built up whereby the applicant was paid for the work done and was obliged to provide his own work and skill in the performance of a service for the employer, and the employer had an obligation into the future to provide him with work.
Discussion of the authorities
14. The question of whether the arrangements between the parties amounted to a contract ‘of service’, or to put it another way, whether he was an employee, is a question which falls to be determined with reference to Irish authority, that is to say, decisions of the Irish courts which are of binding effect upon me.
15. The question of how to approach the question of whether the relationship between two parties is one of employment has been the subject of many authorities. A leading case in modern Irish law is the decision of the Supreme Court in Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1 I.R. The decision in Denny arose in the context of an individual, S.M., who worked as a shop demonstrator, and whether she was an ‘insurable person’ under the Social Welfare Acts. The features of the working relationship were as follows. S.M. was interviewed and placed on a panel. When a store requested a demonstration for a product, a demonstrator on the panel was contacted, sent to the store and carried out a demonstration. The demonstrator submitted an invoice to the appellant which was signed by the store manager. The demonstrator was paid a daily rate and given a mileage allowance. Under her contract with the appellant company, she was not eligible to become a member of a trade union or the appellant’s pension scheme. She was employed under yearly renewable contracts from 1991 to 1993. Her written contact of employment for 1993 described her as an independent contractor and purported to make her responsible for her own tax affairs. She worked an average of 28 hours a week for 48-50 weeks a year, carrying out approximately 50 demonstrations a year. She was required to comply with any reasonable directions given by the owner of the store, but the demonstrations were not supervised by the appellant. She was supplied with written instructions as to how to carry out her work. She was furnished with the materials for carrying out the demonstrations. She required the consent of the appellant before sub-contracting any of the demonstrations assigned to her. At first instance, a deciding officer decided that she was an employee and an appeals officer affirmed the decision. A review was refused by the Chief Appeals Officer. The High Court (Carroll J.) refused to set aside the decision of the Appeals Officer on appeal pursuant to provisions of the social welfare legislation. The Supreme Court dismissed the appeal. In a judgment delivered by Keane J., it was held that in deciding whether a person was employed under a contract of service or under a contract for services, each case must be considered on its own facts and the general principles developed by the courts. It is worth quoting the relevant passage from the judgment of Keane J., which is as follows:-
“The criteria which should be adopted in considering whether a particular employment, in the context of legislation such as the Act of 1981, is to be regarded as a contract “for service” or a contract “of services” have been the subject of a number of decisions in Ireland and England. In some of the cases, different terminology is used and the distinction is stated as being between a “servant” and “independent contractor”. However, there is a consensus to be found in the authorities that each case must be considered in the light of its particular facts and of the general principles which the courts have developed: see the observations of Barr J., in McAuliffe v. Minister for Social Welfare [1995] 2 I.R. 238.
At one stage, the extent and degree of the control which was exercised by one party over the other in the performance of the work was regarded as decisive. However, as later authorities demonstrate, that test does not always provide satisfactory guidance. In Cassidy v. Ministry of Health [1951] 2 K.B. 343, it was pointed out that, although the master of a ship is clearly employed under a contract of service, the owners are not entitled to tell him how he should navigate the vessel. Conversely, the fact that one party reserves the right to exercise full control over the method of doing the work may be consistent with the other party being an independent contractor: see Queensland Stations Property Ltd. v. Federal Comissioner of Taxation [1945] 70 C.L.R. 539.
In the English decision of Market Investigations v. Min. of Soc. Security [1969] 2 Q.B. 173, Cooke J., at p. 184 having referred to these authorities said:-
‘The observations of Lord Wright, of Denning L. J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’. If the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.’
It should also be noted that the Supreme Court of the Irish Free State in Graham v. Minister for Industry and Commerce [1933] I.R. 156, had also made it clear that the essential test was whether the person alleged to be a “servant” was in fact working for himself or for another person.
It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.
The question remains as to whether the appeals officer, in the light of the legal principles to which I have referred, was entitled to arrive at the conclusion he did on the facts as found by him. I have no doubt that he was. Obviously, having regard to the nature of the work for which she was employed, there was no continuous supervision of Ms. Mahon by the appellant. That cannot be regarded as a decisive factor, any more than it was in the case of the market researcher, the nature of whose employment was in issue in the case decided by Cooke J. On the other side of the equation are the facts that Ms. Mahon was provided by the appellant with the clothing and equipment necessary for the demonstration and made no contribution, financial or otherwise, of her own and that the remuneration she earned was solely dependent on her providing the demonstrations at the times and in the places nominated by the appellant. The amount of money she earned was determined exclusively by the extent to which her services were availed of by the appellant: she was not in a position by better management and employment of resources to ensure for herself a higher profit from her activities. She did not as a matter of routine engage other people to assist her in the work: where she was unable to do the work herself, she had to arrange for it to be done by someone else, but the person in question had to be approved by the appellant.
The written agreement was undoubtedly drafted with understandable care with a view to ensuring, so far as possible, that Ms. Mahon was regarded in law as an independent contractor. However, as I have already pointed out, although this was a factor to which the appeals officer was bound to have regard, it was by no means decisive of the issue. When he took into account all the circumstances of her employment, he was perfectly entitled to arrive at the conclusion, as he did, that she was employed under a contract of service.”
16. The defendant in the present case relied heavily upon the judgment of the High Court (Edwards J.) in Minister for Agriculture and Food v. Barry and Ors [2009] 1 IR 215 for the proposition that a sina qua non of any employment relationship is what is known as ‘mutuality of obligation.’ It was argued, further, that such mutuality of obligation was absent in the present case and that this was determinative of the issue, without the necessity for the Court to address any remaining matters.
17. The case of Barry concerned the position of temporary veterinary inspectors who carried out work at meat processing plants and whether they were employees of the Minister for the purposes of statutory payments under the Redundancy Payments Acts and the Minimum Notice and Terms of Employment Acts following the termination of their retainer with Galtee Meats plant in Mitchelstown, Co. Cork on the closure of that plant in 2004. The EAT ruled that they were employees. The appellant Minister appealed to the High Court on the basis that the EAT had misdirected itself in law. Edwards J. engaged in a detailed analysis of the authorities and ultimately allowed the appeal and remitted the case to the EAT for decision. Having set out the facts of the case, including the features of the work undertaken by the veterinary inspectors, he addressed the relevant legal principles. In the first instance, he held that the EAT had erred in limiting the issue before it to a binary question as between a contract of service and a contract for service, when there were other possibilities. The EAT should have questioned whether there was one contract or more than one contract, and, if more than one, the scope and nature of each. He said that one possibility to be considered was that each time the inspectors worked, they entered a separate contract governing that particular engagement, and by virtue of a course of dealing over a lengthy period of time that course of dealing “became hardened or refined into an enforceable contract, a kind of over-arching master or umbrella contact” which itself might be either a contract of service or a contract for services, or perhaps a different type of contract altogether.
18. He then noted that the EAT had adopted a two-stage process in reaching its decision; (1) it applied a mutuality of obligation test; and (2) it applied the ‘enterprise’ test. He observed:
“The appellants have no difficulty with the fact that the mutuality of obligation test was applied but they vehemently dispute the purported finding of mutuality of obligation on the evidence that was before the tribunal. They also say that the Employment Appeals Tribunal was incorrect to apply the so called enterprise test as it is not determinative of the issue, and the Employment Appeal Tribunal’s belief to the contrary is grounded in a misconstruction of Keane J’s judgment in Henry Denny & Sons (Ireland) Ltd. v Minister for Social Welfare [1998] 1 IR 34.”
19. It is clear from this introduction to his section on mutuality of obligation that there was no dispute between the parties in that case that the principle did apply as a fundamental precondition to a finding of an employment relationship. Unlike the present case, the point was not argued, it had in effect been conceded.
20. The Court then went to address the issue of ‘mutuality of obligation’ in the following passage: –
“[46] Although it has been conceded by the appellants that the Employment Appeals Tribunal correctly identified that the requirement of mutuality of obligation has to be satisfied if a contract of service is to exist, I think that it is appropriate nonetheless to elaborate just a little on what this test involves, having regard to the fact that the purported finding of mutuality of obligation is disputed.
[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. It was characterised in Nethermere (St Neots) Ltd. v. Gardiner [1984] I.C.R. 612 at p. 632 as the “one sine qua non which can firmly be identified as an essential of the existence of a contract of service.” Moreover, in Carmichael v. National Power plc. [1999] ICR 1226 at p.1230 it was referred to as ‘that irreducible minimum of mutual obligation necessary to create a contract of service.’ Accordingly the mutuality of obligation test provides an important filter. Where one party to a work relationship contends that that relationship amounts to a contract of service, it is appropriate that the court or tribunal seized of that issue should in the first instance examine the relationship in question to determine if mutuality of obligation is a feature of it. If there is no mutuality of obligation it is not necessary to go further: whatever the relationship is, it cannot amount to a contract of service. However, if mutuality of obligation is found to exist, the mere fact of its existence is not, of itself, determinative of the nature of the relationship and it is necessary to examine the relationship further.”
21. He then proceeded to examine the facts of the case and concluded that the EAT’s finding of mutuality of obligation was flawed. The EAT had decided that an ‘implied agreement’ was reached that the inspectors would carry out the inspection and certification of meat ‘on an ongoing basis’ and on this basis there was mutuality of obligation. The Minister argued before the High Court that that there was no evidence of any such ‘implied agreement’ and that, on the contrary, the evidence was that the Minister “had no control over the level of work that was available for temporary veterinary inspectors, as this was a matter entirely within the control of the processing plants” and that the appellant was “thus unable to give, and did not give, a commitment to the respondents at any stage as to the level of work available to them, and the respondents were at all times well aware of this.” In addition, they were entitled to decline work at the very least 16% of shifts offered to them without any consequence to their contracts. Edwards J considered these points ‘well made.’ He referred with approval to the decision in the English case of O’Kelly v. Trusthouse Forte plc [1983] ICR 728, which concerned an ‘umbrella contract’ with regard to casual catering staff used by the banqueting department of a hotel company. The claimants lost their claim for unfair dismissal compensation on the basis the important ingredient of mutuality of obligation was missing. The matter ultimately arrived before the Court of Appeal, in which it was held that even if there was an umbrella contract, it was one ‘for’ not ‘of’ employment. Edwards J said that it was difficult to see the EAT could reach a conclusion other than that arrived in the O’Kelly case, in the present case. He considered the finding of the EAT in relation to an implied agreement to be untenable and therefore the finding of mutuality of obligation, which was predicated upon it, flawed.
22. He then went on to consider what he described as the second stage of the process, and the EAT’s approach to this. He examined the decision in the Denny case and concluded that the EAT had misdirected itself in law in believing that the Supreme Court had approved ‘a single composite test’; that the ‘enterprise test’ was determinative in its approach to the issues of control and integration.
23. He referred to Denny for the proposition that every case had to be considered in light of its particular facts by reference to the general principles developed by the courts, and that it was unhelpful to speak of ‘tests’ as no one test could constitute a measure or yardstick of universal application. All potential aids to the drawing of the appropriate inferences stood in their own stead, and the general principles such as ‘enterprise’, ‘control’ or ‘integration’ did not represent an exhaustive list.
24. It may be noted that the Barry case returned to the EAT for a second examination in light of the judgment of Edwards J., and that further evidence was heard in January 2009. Having heard the evidence, the EAT reached a second determination. Regarding the mutuality of obligation principle, the EAT took the view that, notwithstanding the view of Edwards J., there was sufficient mutuality of obligation to allow the veterinary inspectors to be classified as possible employees. However, as regards the remaining factors, it interpreted the judgment of Edwards J. as ‘directing’ the EAT to find that the veterinary inspectors were self-employed and not employees. This second determination of the EAT was in turn appealed to the High Court (Hedigan J.), but the matter was then appealed to the Supreme Court, which set aside the High Court decision on the basis that the central question on the appeal had not been addressed (Barry v. Minister for Agriculture and Food [2015] IESC 63). Accordingly, it cannot be said that the Barry case has reached a stage where there is a definitive and final ruling as to whether there was mutuality of obligation on the facts of that case. The Supreme Court did not comment on the ‘mutuality of obligation’ aspect of the judgment of Edwards J.
25. However, the mutuality of obligations test was addressed again in Ahktar Mansoor v. Minister for Justice, Equality and Law Reform [2010] IEHC 389, where it was applied by the High Court (Lavan J.). The plaintiff was a doctor who attended a Garda station to obtain a blood or urine sample from an individual charged with driving under the influence of alcohol. The detainee threw the contents of a urine sample over his head and face. The plaintiff contended that the defendant owed him a duty to take reasonable care for his safety as an employee, while the defendant denied this duty, arguing that the plaintiff was providing medical services as an independent contractor. Delivering judgment, Lavan J said: –
“Given the significance of the distinction it is unfortunate that no definitive line of authorities, or indeed legislation, can be identified so as to provide a clear test. There is no, as Edwards J. described it in Minister for Agriculture and Food v. Barry [2009] 1 IR 215 ” ‘one size fits all’ test”. This uncertainty was eluded to by Keane J. in the leading Irish case of Denny (Henry) & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1 IR 34 where he observed that ‘each case must be considered in the light of its particular facts and of the general principles which the courts have developed’. Having said this, a number of important factors can and have been distilled from the case law which assist in determining whether or a person is an independent contractor or an employee. These include, but are importantly not limited to, (a) whether the person is engaged in business on his or her own account; (b) whether they are referred to as an employee under the contractual arrangement; (c) whether the person is responsible for their own tax affairs; (d) whether the person is free to engage people as substitutes when he or she is not available; (e) the level of control exercised by the employer who engaged him or her; and (f) whether he or she is entitled to payments that normally accrue to employees, such as pension contributions, sick pay, maternity leave, annual leave etc.
Although important, I do not believe it is necessary for me to consider all of these factors in this case. Before a tribunal is required to consider the above factors an important filtering mechanism must first be traversed; a task that is not completed here. This mechanism has been described recently by Edwards J. as the ‘mutuality of obligations test’. Simply put the test requires the employer to provide work for the employee and that the employee is obliged to complete that work. The following passage from his judgment in Minister for Agriculture and Food v. Barry [2009] 1 IR 215 is worth quoting in detail:-
‘the mutuality of obligation test provides an important filter. Where one party to a work relationship contends that that relationship amounts to a contract of service, it is appropriate that the court or tribunal seized of that issue should in the first instance examine the relationship in question to determine if mutuality of obligation is a feature of it. If there is no mutuality of obligation is not necessary to go further. Whatever the relationship is, it cannot amount to a contract of service.’ [Emphasis added]
In that case the respondents worked as temporary veterinarian inspectors at a meat processing plant. When the plant closed they sought redundancy payments on the basis that they were employed on a contract of service basis. On appeal to this Court on a point of law it was concluded that there was no mutuality of obligation. Critical factors that influenced the Court included the fact that the respondents had no control over the amount of work they would be given, this was entirely at the discretion of the meat plant. In addition, their contracts provided that they could opt out of at least 16% of the work offered to them and that this would have no effect on their contracts of engagement.
In my view the mutuality of obligation test is not satisfied in this case and that it is not required to decide anything further on this matter. It is clear that the defendants were not obliged to give the plaintiff work. Nor could the defendants possibly predict the number of drink driving offences that may occur on any given night. In addition, it was open to the defendants to call a number of general practitioners to assist them and although the plaintiff, along with a number of other G.Ps. may have been on a contact or duty list, were the plaintiff to declare that he were unavailable for work, he could face no sanction or rebuke from the defendants. He simply would not be paid. The plaintiff performed a set task for a fixed sum. Likewise, if the defendants elected to engage a different G.P. on any given occasion, the plaintiff would have had no reasonable grounds for objecting to this. I therefore find that the plaintiff was at all materials times an independent contractor, engaged by the defendants under a contract for services.”
26. It is clear, therefore, that the High Court in the Ahktar case applied the approach described by Edwards J. in the Barry case, namely that the ‘mutuality of obligation’ issue should be addressed in the first instance, and that it serves the function of a ‘filter’ for cases which may fail in limine.
27. Further, in Brightwater Selection (Ireland) Ltd. v. Minister for Social and Family Affairs [2011] IEHC 510, the High Court (Gilligan J.) again engaged in a thorough review of the authorities as to when a contract of employment exists and examined the role of the ‘mutuality of obligations’ concept in such an analysis. In the course of his review, he cited the Barry case with approval and, expressing his conclusions on the issue of mutuality of obligation, he said:-
“48. Mutuality of obligation exists where there is an obligation on a body to provide work to an individual, and a corresponding obligation on the individual to perform the work. It is clear from a perusal of the authorities that no definitive test has been set out by the courts to be used in the context of determining whether a person is engaged under a contract of employment and it follows that a court or tribunal, in making such determination, should have regard to all relevant considerations. It is quite straightforward to derive from the case-law, and set out in the abstract, a non-exhaustive list of considerations that should be taken into account, such as inter alia: whether one party has the power of deciding what work is to be done and the manner in which it is to be done; whether the work of the engaged person is an integral part of the business; whether the person provides their own work or skill in the performance of some service; how the person is engaged and dismissed; how the person is remunerated; who chooses the times of work; who provides the workplace and so forth. As a tribunal should take into account all the relevant circumstances, mutuality of obligation is undoubtedly a consideration that regard should be had to, and indeed, is an important factor in determining the employment relationship.
49. The mutuality consideration is by no means a determinative test, but is an irreducible minimum of a contract of service. Although the existence of mutuality of obligation is not determinative, without mutuality no contract of service can exist. It would be logical, therefore, for a court or tribunal to begin their analysis of the employment relationship by determining whether such mutuality exists and then inquire further into the relationship.
50. In the case at hand, although the Appeals Officer did mention the phrase ‘mutuality of obligation’, he did not engage in a substantive appraisal of whether the appellant was under any duty to provide work to Ms. Keenan, nor whether Ms. Keenan was under any duty to perform work given to her by the appellant. I am of the opinion that, in the circumstances, mutuality was a highly relevant consideration and that regard should have been had to the existence or otherwise of mutuality in the relationship in question. In failing to address the issue, the Appeals Officer erred in law.”
28. The approach that the High Court should adopt to previous decisions of the Court should be noted at this juncture, because the plaintiff has invited the Court to depart from the Barry decision. The appropriate approach has been made clear in a number of cases, including In the Matter of Worldport Ireland Limited (in Liquidation) [2005] IEHC 189 and Kadri v Governor of Wheatfield Prison [2012] IESC 27.
29. In In the Matter of Worldport Ireland Limited (in Liquidation) [2005] IEHC 189 Clarke J outlined the proper approach of the High Court when dealing with previous decisions of that Court:
“It is well established that, as a matter of judicial comity, a judge of first instance ought usually follow the decision of another judge of the same court unless there are substantial reasons for believing that the initial judgment was wrong. Huddersfield Police Authority -v- Watson [1947] K.B. 842 at 848, Re Howard’s Will Trusts, Leven & Bradley [1961] Ch. 507 at 523. Amongst the circumstances where it may be appropriate for a court to come to a different view would be where it was clear that the initial decision was not based upon a review of significant relevant authority, where there is a clear error in the judgment, or where the judgment sought to be revisited was delivered a sufficiently lengthy period in the past so that the jurisprudence of the court in the relevant area might be said to have advanced in the intervening period. In the absence of such additional circumstances it seems to me that the virtue of consistency requires that a judge of this court should not seek to second guess a recent determination of the court which was clearly arrived at after a thorough review of all of the relevant authorities and which was, as was noted by Kearns J., based on forming a judgment between evenly balanced argument. If each time such a point were to arise again a judge were free to form his or her own view without proper regard to the fact that the point had already been determined, the level of uncertainty that would be introduced would be disproportionate to any perceived advantage in the matter being reconsidered.”
30. In Kadri v Governor of Wheatfield Prison [2012] IESC 27, Clarke J, sitting as a member of the Supreme Court, again considered the issue of the binding nature of consistent High Court case law, confirming his earlier decision in Worldport, finding that,
“2.1 The jurisprudence of the High Court regarding the proper approach of a judge of that Court when faced with a previous decision of another judge of that Court is consistent. The authorities go back to the decision of Parke J. in Irish Trust Bank v. Central Bank of Ireland [1976-7] I.L.R.M. 50. Similar views have been expressed in my own judgment in In Re Worldport Ireland Limited (In Liquidation) [2005] IEHC 189, by Kearns P. in Brady v. D.P.P. [2010] IEHC 231, and most recently by Cross J. in B.N.J.L. v. Minister for Justice, Equality & Law Reform [2012] IEHC 74 where Worldport was expressly followed.
2.2 It seems to me that that jurisprudence correctly states the proper approach of a High Court judge in such circumstances. A court should not lightly depart from a previous decision of the same court unless there are strong reasons, in accordance with that jurisprudence, for so doing.”
31. These authorities make it clear that it is only in exceptional circumstances that this Court would choose not to follow an earlier decision of the High Court. The exceptional circumstances identified were: (1) where it is clear that the initial decision was not based upon a review of significant relevant authority; (2) where there is a clear error in the judgment, or (3) where the judgment sought to be revisited was delivered a sufficiently lengthy period in the past so that the jurisprudence of the court in the relevant area might be said to have advanced in the intervening period. It is clear that the judgment in Barry was based upon a detailed review of relevant authorities and that it is also a relatively recent decision of the Court. It has been followed in two subsequent High Court cases, as described above. The only possible ground on which the plaintiff can be said to be advancing his case is (2), namely that there was a ‘clear error’ in the judgment. The plaintiff relies, for example, on a journal article in an academic publication which argues that the ‘mutuality of obligation’ concept is not a useful one in such cases. He refers to decisions in other jurisdictions to suggest that a different view should be taken. At its height, the plaintiff’s argument is that there are differences of opinion in the common law authorities and among academics as to the usefulness of the ‘mutuality of obligations’ issue as part of the overall consideration of whether there is an employment relationship between two parties. This is very far from being a ‘clear error’ of the sort envisaged by Clarke J. in the Worldport case. The issue of how to determine whether a contract of employment exists has been before many courts on many occasions, and while there have been many differences of opinion at different times and in different places, the position today in this jurisdiction is that the approach identified in Barry, and applied in Ahktar and Brightwater, is appropriate. While the Supreme Court in the Denny case did not refer to the ‘mutuality of obligations’ test, presumably because of the facts of the case, there is nothing in that case which indicates that the test may not usefully be used as a filtering mechanism to identify clear cases of a relationship other than an employment relationship.
Application of the Mutuality of Obligations test
32. On the assumption that I am correct that the Court should follow the approach in the Barry case, it is necessary to examine whether there was mutuality of obligations in the arrangements between the plaintiff and defendant in the present case.
33. I have set out above the arrangements between the parties as set out in a number of documents. These documents deal in considerable detail with the obligations of the plaintiff. Considerably less is said about the obligations of the defendant. Indeed, the only relevant written terms concerning the defendant’s obligations are the following statements in the ‘Declaration of Interests’ document:
“In return, the company will prioritise me for work in these fields to ensure that it is in my interest and benefit to remain part of FC translations. The company will maintain good relations and will place a high level of trust in me knowing that I not only represent myself but also many others working with the company on sensitive public and legal matters. The company will arrange appointments for me and endeavour to maintain sufficient work for me, and promptly pay me on receipt of correctly submitted invoices or time sheets.” (emphasis added)
34. The reference to prioritisation in the highlighted extract above is simply a promise that, as between translators, priority would be given to the plaintiff. The second highlighted extract uses the term ‘endeavour’. Whether one substitutes other words or phrases such as ‘try’, ‘attempt’, to ‘use efforts’, ‘strive’, or ‘exert oneself’, it is clear that the concept of ‘endeavouring’ can be contrasted with words or phrases such as ‘guarantee’ or ‘shall provide work’. The word ‘will’ in the phrase ‘will arrange appointments for me’, upon which the plaintiff laid emphasis, applies only to the arrangement of individual appointments but does not, in my view, override the plain words of the ensuing phrase ‘endeavour to maintain sufficient work for me’. Accordingly, it is in my view plain that the defendant’s side of the bargain was merely to try to give the plaintiff work but that there was no guarantee of work, in circumstances where the defendant itself had no control over the amount of work that might come to it from the Garda Siochana or other State entities.
35. The plaintiff relied upon the fact that he had written the word ‘none’ under the last paragraph of the ‘Declaration of Interests’ document which required a declaration of the names of other companies, groups or individuals for which the plaintiff was providing translation services. He said that this indicated that he had an exclusive arrangement with the defendant company and therefore was their employee. I do not accept this argument. The fact that the defendant in fact had no other arrangement with any other interpretation or translation company does not mean that he was not legally entitled to have such an arrangement and the very fact that there was such a clause in the contract underlines the fact that, from the defendant’s point of view, he was entitled to work for others as well as the defendant; all that was being required here was that he disclose those names in order to prevent potential conflicts of interest in the actual work of interpreting/translating.
36. The plaintiff asserted that the same document required him not to work for any other company in the first line of the second paragraph which says: ‘I agree to, not work for another company operating competitively in the same area as FC Translations’. However, the next line of the document is ‘Unless I have declared this fact to company management’. The punctuation is poor but the meaning is clear.
37. Later in the same paragraph, it says:
“And in so doing, I prioritise work for FC Translations and I do not represent any competitor parties operating in the same areas. Especially where that work could lead to confusion or is likely to be considered a conflict of interest, howsoever arising.”
38. There is some inconsistency in the wording of the document here, but again, it seems to me that the overall meaning is that priority was to be given to work for the defendant company, but work for other companies was not prohibited provided there was no conflict of interest.
39. Further, I am not convinced by the argument on behalf of the plaintiff that an obligation to provide work to the plaintiff arose from the fact that work had in fact been given to him on a regular basis for a particular period by the defendant. If this approach were determinative of the issue, none of the previous authorities in which this issue had arisen could have reached any conclusion other than that the individuals in question were employees, be they veterinary inspectors, shop demonstrators, casual hotel workers, or home-workers for a clothes company, as they had all carried out work on a regular basis for a period of time; but that is not how those cases were approached by the various courts which examined them. In other words, the fact that work was given regularly for a period of time is not determinative of whether one party had a legal obligation to provide the other party with work.
40. Finally, the plaintiff asserted that he was ‘on call 24/7’. In reality, what seems to me to be the position is that he was liable to receive a telephone call requesting that he carry out some work at any time of day or night. However, he was free to refuse that work if he chose to do so. No person could ever be ‘on call 24/7’ on a permanent basis, in the normal sense of the phrase ‘on call’, which means that the person has an obligation to work if so required. It may well be that if he had been telephoned, the plaintiff would in fact have responded affirmatively on every occasion because he needed the work. However, his factual dependence on the defendant company does not transform the working arrangements between them, legally speaking, into a contract of service.
41. In the circumstances, I am of the view that the defendant company was not under a contractual obligation to furnish the defendant with any, or any particular, volume of work into the future and that the requisite mutuality of obligation for an employment contract was therefore absent. Accordingly, the plaintiff’s situation vis-à-vis the defendant company was not one of an employee and in light of that conclusion, the plaintiff’s claim must be dismissed and no further determinations are required in this case.
Michael Hogan v United Beverages Sales Limited
2004 No.8721
Circuit Court
14 October 2005
[2006] 17 E.L.R. 274
(Smyth J.)
This is an appeal from a determination of the Employment Appeals Tribunal of June 8, 2004. The reliefs sought by the appellant are, inter alia: *276
(1) Re-instatement, re-engagement and compensation under the Unfair Dismissals Acts 1977–2001,
(2) Compensation under the Organisation of Working Time Act 1997,
(3) Interest pursuant to the Courts Act 1981 and
(4) The costs of this application.
The issue at the heart of this case is whether the appellant was a person engaged to work for the respondent in return for payment as an employee under a contract of service or as a self-employed contractor under a contract for services.
The background to the case
Prior to 1989 the appellant had been employed by Savage Smyth and Company Limited as a driver pursuant to a contract of service. The undertaking known as Savage Smyth became Finches, and then United Beverages Sales Limited (hereinafter referred to as the respondent).
Apparently, in or about 1988, Savage Smyth was loosing business and was anxious to cut costs. The company’s predicament at the time and its preferred solution, is set out in a notice to all transport employees dated January 12, 1989, which had been preceded by an earlier notice of August 18, 1988.
After intensive negotiations between the union and the company, a redundancy package was agreed under which the appellant was paid the sum of £19,500 a figure significantly in excess of what his statutory entitlement would have been, i.e. £2,009.63, and the appellant was made redundant on February 10, 1989.
Shortly afterwards, the appellant exercised the option of purchasing a lorry from the respondent on terms that some £2,250 would be retained out of the redundancy package and the balance of the cost of the truck, around £4,500, would be paid thereafter by instalments under some form of leasing agreement. It appears that similar arrangements were made with some other drivers as well. After this, the appellant was left with about £17,000 out of his total package. Thereafter, Mr Hogan as the owner of the truck taxed it himself, and in December 1989, he applied for, and obtained, a National Road Freight Carrier’s license as a contractor, for which purpose he had to produce a tax clearance certificate as a self employed person. While it is not entirely clear from the evidence whether obtaining this particular license was an optional or mandatory requirement for his work, nevertheless, he apparently had not required such a license when he worked for the respondent before his redundancy. Insurance was arranged for Mr Hogan by the respondent pursuant to a group policy, for which the applicant reimbursed the respondent.
In addition to the arrangement for the purchase of the truck from the respondent, and in or about the same time, the appellant entered into a written contract with the respondent. The written contract covered the period from *277 February 1989 to February 1992. There was a further three-year written contract entered into covering the period of March 1996 to February 1999 and finally, there was a written contract covering the period from July 1, 2000 to June 31, 2003. During the periods which were not the periods covered by a written contract, Mr Hogan, the appellant, continued to work on the same basis as he had worked under the written contracts. In early July 2003 the appellant was informed by the respondent that his services were no longer required and he ceased working for the respondent on August 8, 2003.
The terms of the respective written agreements are broadly similar, and it seems to me that they were undoubtedly drawn up by the respondent, with a view to ensure, as far as is possible, that the appellant would be regarded in law as an independent contractor.
The most recent agreement setting out the terms and conditions of the working relationship between the parties is that of July 1, 2000. That agreement recites that the respondent is drawing up and maintaining a register of contractors who are available to carry out deliveries within the area covered by the respondent and that the haulier, i.e. Mr Hogan, has been accepted as a contractor for registration with the respondent.
In the course of submissions and during examination of witnesses counsel drew attention to various clauses in this contract. Counsel for the respondent submitted that the clauses to which he referred are wholly consistent with the categorisation of the relationship between the parties as a contract for service and not of service. Whereas, counsel for the applicant submitted that the terms of the contracts are wholly inconsistent with Mr Hogan being an independent contractor. In considering this issue, I have had regard to the contracts as a whole and in particular to the most relevant contract that of July 1, 2000. Furthermore, in considering the significance of the contract in this matter I am conscious that the Supreme Court, in Henry Denny and Sons (Ireland) Limited v Minister for Social Welfare [1998] I.R. 34 pointed out, that in determining whether an new contract is one of service or for services the decider must look at how the contract is worked out in practice, as mere wording cannot determine its nature. Each case must be decided in the light of its own particular facts and circumstances. While a contract may describe someone as an independent contractor (and that is factor to which the court must have regard), it is by no means decisive of the issue as a whole. In Castleisland Cattle Breeding Society Limited v Minister for Social and Family Affairs, unreported, Supreme Court, July 15, 2004 Geoghegan J. at p.16 of his judgement stated:
“Nevertheless, the wording of a written contract still remains of great importance. It can, however, emerge in evidence that in practice the working arrangements between the parties are consistent only with a different kind contract or at least are inconsistent with the expressed *278 categorisation of the contract. In this case, apart from matters of minor detail the written contract seems to have been the contract that was actually worked.”
In support of their arguments both counsel referred to clauses from the written agreements and I have recited these hereunder.
In the first agreement of February 1989 clause 2 deals with the method of payment. Clause 3 requires the independent contractor to carry out the instructions of Savage Smyth in relation to customer requirements and to comply with all documentation and checking procedures as required by them, and to comply with delivery instructions as required by the dispatch supervisors, and furthermore, in the event of any disagreement or conflict arising with the customers, the contractor is obliged to phone the dispatch supervisor for instructions and to carry out these instructions. Clause 4 of that agreement provided that the independent contractor may employ a helper provided that Savage Smyth approved of such helper before his employment commenced and there was provisions in clause 5 of that agreement that the contractor’s truck must be kept in Savage Smyth colours and kept clean at all times.
The clauses in the agreements of February 1996 and June 2000 to which counsel referred are set out as follows:
Clause 4 of the agreement of June 2000 provides:
“The haulier providing the service is totally responsible for all expenses incurred in the provision of the service, which shall include:
(a) delivery truck/motor vehicles,
(b) protective clothing, footwear and any equipment required which shall comply with cleanliness and hygiene requirements. To protect and promote the image of UBS the hauliers truck must be kept in the UBS colours and kept clean at all times,
(c) all expenses incurred in the preparation and postage of work sheets/invoices to UBS for fee collection and payment,
(d) in any circumstances, which require the hire of specialised equipment, the haulier will be responsible for same.”
Clause 5 of the agreement provides:
“It is agreed between the parties that the haulier should be free to engage the assistance of other persons for whom he is totally responsible if he so desires. For the avoidance of doubt, any employees so employed by the haulier is an employee of the haulier and the haulier hereby indemnifies UBS against claims whatsoever made by any such employee against UBS arising out of any injury or loss sustained by him during the course of the contract.”
*279 Clause 6 of the said agreement provides:
(a) It is the intention of the parties that the haulier shall have the status of self-employed person and this contract is one for services and the haulier has no right to sick pay or holiday pay arising out of providing these services to UBS.
(b) The haulier is responsible for his own income tax, V.A.T., national insurance and other liabilities and the haulier must be registered for V.A.T. and as self-employed for income tax purposes, and shall produce, if required, a certificate of registration as a self-employed person and the contractor hereby indemnifies the client in respect of any claims made in respect of income tax or national insurance or similar contributions in relation to services provided.
(c) The haulier will arrange at his own expense an all risk insurance policy to cover public liability, employer liability, motor insurance, risk and loss of UBS products whether by theft or otherwise, if required, and should indemnify UBS against any claim that may arise and shall produce to UBS a certificate of Insurance on an annual basis if required.
(d) The haulier will arrange at his own expense and shall keep and maintain in full force and effect any license, which may be required by the State for the haulage of goods. If any alterations or modifications are required they should be carried out by haulier at his own expense and the company shall not be responsible in any way for expenses or expenditure, thus incurred.”
Clause 8 of the said agreement provides:
“It is agreed between the parties that this contract shall not be exclusive and that the hauliers shall have the right to engage in other forms of activities and have other sources of remuneration.”
Clause 9 of the agreement provides:
“(a) The haulier will carry out the customers requirements as advised by UBS maintaining the excellent customer relationship existing to the best of his ability.
(b) UBS does however require that the haulier will comply with the agreed documentation and checking procedure of UBS Limited and the agreed delivery procedure.
(c) In the event of a conflict/ dispute arising with a customer, the haulier shall carry out the operations manager’s instructions. *280
(d) To protect and promote USB’s image, the haulier and any helpers employed by him shall dress well, behave well and be polite at all times to customers.”
Clause 10 of the agreement provides:
“In the event of any disagreement or a conflict arising with a customer, the haulier should phone the operations manager and shall in the event of conflict carry out the manager’s instructions.”
Counsel for the appellant also drew attention to the appendix to the contract of June 2000 which provides, inter alia:
“(i) The collection of the haulier of the load (hereinafter called ‘the load’) of products (being bottled or otherwise and hereinafter called ‘the products’) from the depot as instructed to him by UBS and the delivery of the products in good and undamaged condition to the designated customer.
(iii) Ensuring at all times that the customer signs USB’s delivery docket (failing which the haulier will be liable to UBS for the value of the products and not entitled to payment for the delivery).”
The contract as worked
In his evidence the plaintiff drew attention to and laid some emphasis on a number of factors which can be summarised as follows:
The appellant claimed he was nervous when signing the original contract and that Peter Wall, the operations director for the respondent in charge of negotiations at the time, told him in words to the effect that, “it’s only a bit of paper”. The appellant maintained that he had no choice in the matter of the contract because he could not have returned to work again as the employee. The appellant described how the working arrangements after February 11, 1989 were much the same as they had been before the written contract, i.e. he made the same calls to customers using the same routes and he was told which customers to deliver to. The deliveries were mainly to hotels and pubs. He said that his normal hours were from 6.30 a.m. to 2.30 p.m. and that he would usually leave his lorry in Finches yard, and it would be loaded for him, although sometimes he would load it himself. He said that the lorry had Finches logo on it, as did the uniforms which he said he was obliged to wear. He said that he made deliveries “early” and “late”. He said that he was not permitted to take his lorry home after work and that the nature of the job was such that you could not really work for anyone else. As to the manner of payment, Mr Hogan said he would put in delivery dockets and that he was paid per case on the basis of *281 the amount of cases appearing on the spreadsheet which the respondent gave him every week. He said that he paid his own tax and VAT, etc., and that he had a helper whose wages he paid himself. He said that from time to time meetings were held between the drivers and the respondent to negotiate improved rates and he agreed that he attended some of these meetings himself. He said that a Mr Bob Doyle of the respondent decided the rates. He recalled changing his truck in 1999 at the suggestion of the respondent, because it did not have a taillift on it. He said that he kept the lorry in the respondent’s colours and continued to wear their uniform. He also mentioned, that, at his own expense, he purchased an electric pallet truck.
In the course of his cross-examination the appellant was asked about the type of accounts he kept and he agreed that he kept the same type of accounts going back to 1989 and that during this time he had managed his business as best as he could. He agreed that when he took holiday breaks or other breaks he paid the substitute driver and helper himself. He said that he had used an accountant from time to time to draw up accounts on the information that he, the appellant, had provided for the accountant, and that he had got a tax clearance certificate as a self-employed person. He also agreed with the suggestion from counsel for the respondent that he had not required a haulage license before 1989, and that his truck was his to sell as he wished. The appellant described the break-down of his relationship with the respondent in some detail and was obviously upset that a working relationship of long standing had come to an end. The appellant explained that after the expiration of his contract in June 2003 he was informed by the manager that he was not wanted anymore, and that his truck would be taken off his routes and his work distributed to other drivers. On enquiring why this was happening, he said that he was told that he had not come up to scratch under a points appraisal system utilised by the respondent to assess the performance of drivers. He was never given any advance indication or warning that such a system was in use nor was he informed as to the criteria adopted for its use. All he was told at the time was that people on the floor had not given him enough points. He estimated his net loss as a result of losing his employment, at €110,350.
Mr Tim O’Connor, a colleague of the appellant who worked under a similar contract, said that it was the supervisor who decided where the drivers went and that when your lorry was loaded you had to tell the supervisor when you were leaving. He said that the drivers had no input into the price fixed per case and that in his opinion it was not possible to work for anyone other than the respondent. However, he agreed with counsel for the respondent, that if he got back in time from his first load and if the customers were “handy” there would be time to do a second load. He agreed that his helper was his employee and that he had accepted and signed the contract and honoured the contract and that he was paid in accordance with the contract.
*282
The evidence on behalf of the respondent
Mr Robert Doyle became operations director for the respondent in 2000 having held a similar position in New Ross between 1992 and that year. He said that the respondent had meetings with the drivers to discuss rates in 2000 and that the appellant had attended these meetings when rates were agreed for the period July 2000 to June 2001. He said that there were similar meetings in 2001, 2002 and 2003. He denied that uniforms were compulsory for the drivers but he said that delivery teams looked well in uniform and that the contractors wanted to wear them. He explained the context in which drivers were not re-engaged in 2003, in that there had been a drop in volume of sales between 2000 and 2003, to the extent that whereas the respondent had sold 4.3 million cases in 2000, the volume dropped to 2.5 million cases by 2004. Mr Doyle said that between December 2002 and 2003 12 contractors were let go and that the appellant was the tenth in that group. In effect, his evidence was that the respondent had too many drivers for too little work at that time.
Mr Doyle maintained that truck drivers were always allowed to bring their trucks home but that it may have suited some of them to use the depot for loading and for their own convenience. He said that drivers could get diesel where they wished and obtain insurance at their own choice. He maintained that the accounts produced by the appellant were in line with accounts used by self-employed persons. He said that customer service is the key to success in the business.
As to the work practices adopted by the contractors, he said that it was the drivers who told staff where to putt the pallets on the truck and that there was no rule that the trucks had to be kept in the depot overnight. He described how the route planner would schedule orders and roster these orders for the contractors and that if certain customers wanted deliveries at certain times, and on certain dates, then that would be the sequence of the deliveries, but that a contractor could deliver to other customers in the order he wished. He said that in his opinion, the contractors were not over-burdened and could have made a second load if they wished. He said that the reason the dispatch supervisor would be contacted if there was a difficulty with a customer was so that the row could be defused. He said that the agreed delivery procedures referred to in Clause 9 of the contract is there to meet the wishes of the customers otherwise they would go else where.
Mr Peter Wall was operations director with the respondent company until 2000. He had been the person directly involved in the negotiations leading to the enhanced package in 1989 and he had dealt directly with the drivers in relation to the written contract at that time. The redundancy package had apparently come about after long discussions with the unions. The redundancy package had apparently come about after long discussions with the unions. The offer to drivers to come on board as independent contractors was one which *283 could be accepted or rejected by them. Mr Doyle said he arranged a seminar in 1989 to explain to the drivers what was involved in being an independent contractor and that Mr Hogan the appellant, was free to chose whether to join up or not, as he wished. Mr Wall said the yard was made available for the drivers to leave their trucks because a lot of them could not leave their trucks where they lived. He was adamant that the respondent did not order anyone to leave their trucks in the yard. Furthermore, Mr Wall was also quite adamant that he would never have used words to the effect, that “the contract was only a bit of paper”, or “it was not worth the paper it was written on”, particularly after all the trouble he said he had gone to, to negotiate the contract in the first place. He was surprised, that Mr O’Connor suggested this, as Mr Wall maintained that Mr O’Connor was not there at the time of the original negotiations.
Mr Wall also explained the reason why a driver might continue with the same customers who he had delivered to before 1989. He said that this would be because the driver would have built up a good relationship with those customers and that is why he would have been left on the same route after 1989. Mr. Wall described the routes as being “customer led”. Mr Wall said that the appellant’s income would have gone from approximately £25,000 to £50,000 as a result of being an independent contractor. Mr. Wall also felt that a driver could do two runs in a day.
Mr Wall said that he had some dealings with the appellant in July 2003 and that he had explained to him why his working relationship with the respondent was not continuing. He said that he told Mr Hogan that there had been a significant drop in the volume of business and for that reason the respondent had to reduce the number of contractors so that the remaining contractors would be able to earn a reasonable living. He said that 11 or 12 independent contractors had been let go between December 2002 and September 2003 and the appellant was the third or fourth last in that group.
Mr Wall said that he had spoken to the warehouse staff and the customer service manager as to how the independent contractors were performing and he said that in their opinion, the appellant was more to the bottom than at the top in performance terms. Mr Wall agreed that he did not tell the appellant that he was going to do an appraisal on him. He said he took the opinion of others into consideration, together with the drop in volume of sales when deciding not to renew contracts with contractors. He summarised the position, that in his view, the business required the best people going forward and that the only way to achieve this was to reduce the number of contractors.
As pointed out earlier in this judgment, each case must be decided in the light of its own particular facts and circumstances and in the light of the general principles which the courts have developed.
In considering these particular circumstances and principles, it seems to *284 me, that it is of relevance to look at the sort of business the respondent was engaged in and what were the requirements of the business. The respondent supplies products, mainly alcoholic drinks and beverages to premises such as hotels and public houses. I accept the respondent’s contention, that this is a customer driven business, and that if the respondent is not in a position to satisfy customers’ requirements, they will go elsewhere. In this context, it is important to bear in mind that the customers we are talking about here, are the customers of the respondent and not the customers of their employees or contractors.
It seems to me therefore, entirely reasonable, that if particular customers want deliveries at particular times and on particular days, it makes obvious sense for the respondent to try and accommodate the convenience of these customers as best they can. It would surely be unlikely, that the respondent would seek to engage drivers, whether as employees or as independent contractors, who are not in a position to satisfy the reasonable requirements of customers. For that reason also, it would not be unreasonable that the respondent would provide in a written contract, such as the instant one, that the contractors would have to carry out their instructions. After all an employer, would surely be reluctant to hire, an employee or an independent contractors who was unwilling to carry out the reasonable instructions for the job that he was hiring them to do in the first place. Equally, in a customer driven business an employer would surely be entitled to expect from his employees or contractors, that they would endeavour to maintain a good commercial relationship with his customers. If, for any reason, there was to be a row or a conflict with customers, would it not be common sense that the person whose customers they were in the first place would be the person who would try to sort out the problem.
I mention this issue of direction, control and other similar issues which have arisen in this case, because counsel for the appellant submits that the particular type of control and direction which the respondent exercised in this case is indicative of a contract of service and is inconsistent with a contract for services. In Denny and Sons (Ireland) Limited v Minister for Social Welfare [1998] 1 I.R. 34 at p.49 Keane J. states:
“At one stage, the extent and degree of the control which was exercised by one party over the other in the performance of the work was regarded as decisive. However, as latter authorities demonstrated that test does not always provide satisfactory guidance. In Cassidy v Ministry of Health [1951] 2 K.B. 343, it was pointed out, that although the master of a ship is clearly employed under a contract of service, the owners are not entitled to tell him how he should navigate the vessel. Conversely, the fact that one party reserves the right to exercise full control of the method of doing the work, may be consistent with the other party being an independent *285 contractor: see Queensland Stations Property Limited v Federal Commissioner of Taxation [1945] 70 C.L.R 539.”
In this case, it seems to me that the degree of direction and control exercised by the respondent over the method and the requirements of the work to be performed by the appellant was no more than would be normal in a customer driven business where customer requirements have to be met if the business is to be retained. In that context the requirement set out in clause 4(b) of the contract, that the truck must be kept in the respondent’s colours is simply consistent with promoting the image of the respondent in the delivery of the business. Likewise, the wearing of the respondent’s uniform, whether optional (as claimed by the respondent) or mandatory, as suggested by the appellant, can be seen in this light as well.
In my judgment, the parts of the evidence and of the contract which undoubtedly point to some degree of control or direction by the respondent over the work of the contractor are not sufficient of themselves to be decisive of the issue whether this is a contract of service or for services, although they are, of course, a factor to be considered.
The appellant has placed particular reliance on the Denny case, it maybe helpful to quote from part of the head note of the report of the case.
“The appellant was contacted in 1988 by S.M. (“the demonstrator”) who offered to work for the company as a shop demonstrator. The demonstrator was interviewed, placed on a panel and signed a written 12-month contract of employment. The manner in which a demonstrator was employed was that when a store requested a demonstration for a product a demonstrator on the panel was contacted, sent to the store and carried out the demonstration. The demonstrator then submitted an invoice to the appellant which was signed by the store manager. The demonstrator was paid at a daily rate and was given a mileage allowance. As a shop demonstrator under her contract of employment the demonstrator was not eligible to become a member of the appellant’s pension scheme or a trade union.
The demonstrator was employed by the appellant under yearly renewable contracts from 1991 to 1993. Her written contract of employment for 1993 describes her as an independent contractor and purported to make her responsible for her own tax affairs. The demonstrator worked an average of 28 hours a week for 48 to 50 weeks a year and carried out approximately 50 demonstrations a year. The demonstrations were not carried out under the supervision of the appellant, however, she was required to comply with any reasonable directions given by the owner of the store and she had been provided with written instructions as to how she was to carry out her work. She was supplied by *286 the appellant with the materials for performing the demonstration and required the consent of the appellant prior to sub-contracting any of the demonstrations assigned to her.”
In considering the various legal issues which arose in that case, and the application of various principles of law by the deciding officer, under s.111 of the Social Welfare Consideration Act 1981, the Supreme Court did not interfere with the original decision that the demonstrator had been employed under a contract of service.
I have already referred to the remarks of Keane J. in relation to the extent and degree of the control which might be exercised by one party over the other in the performance of work. However, these remarks cannot be taken in isolation because Keane J. went on to quote the English decision of Market Investigations v Minister of Social Security [1969] 2 Q.B. 173.
Cooke J. at p. 184 said, inter alia:
“The observations of Lord Wright, of Denning L.J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this:
‘Is the person who has engaged himself to perform the services performing them as a person in business on his own account?’ If the answer to that question is ‘yes’, then the contract is a contract for services, if the answer is ‘no’ then the contract is one of service.”
In dealing with the issue of control, Cooke J., said that it could no longer be regarded as the sole determining factor. He said:
“… and that factors which maybe of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”
As well as drawing attention to those remarks of Cooke J. above, Keane J. also noted that the Supreme Court of the Irish Free State in Graham v Ministry for Industry and Commerce [1933] I.R. 156, had made it clear that the essential test was whether the person alleged to be a “servant” was in fact working for himself or another person.
In that regard Keane J. went on to say:
“The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference *287 that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”
In applying the criteria outlined in the Denny case, to the circumstances of the appellant’s case I am satisfied that the two cases can be distinguished. For one, the demonstrator in the Denny case made no financial contributions or otherwise of her own, whereas the appellant in the instant case, clearly did. He purchased and used his own truck. He bought a pallet-lifter at his own expense to improve his efficiency and he employed and paid his own helpers and substitutes from time to time. The appellant himself said that he paid his helper a set wage and that he would use a substitute when he took holiday breaks.
Accordingly, when the appellant did engage the assistance of others (and it seems he employed the helper on a regular basis), these persons would have been engaged as a matter of routine.
Furthermore, in the course of his evidence, the appellant was closely examined about his accounts. These accounts are clearly profit and loss accounts and the appellant accepted that he had kept these types of accounts going back to 1989. They show, inter alia, expenditure on wages and salaries, light and heat, printing, postage and stationary, telephone and fax, and different headings of depreciation and interest charges, etc, all headings more consistent with the normal running of a business. Indeed, the appellant himself said that he managed the business as best he could. It is probably the case that making his deliveries for the respondent and reloading his lorries, took up most of the day but the respondent maintained that he could have made a second delivery, and indeed Mr O’Connor (one of the appellants’ witnesses) said that he might be able to make a second delivery if the customers “were handy”.
Even if it were to be the case, that the extent to which the appellant could maximise his profits was relatively modest, this cannot affect the legal principles applicable. See Tierney v An Post [2000] 1 I.R. 536 at 547, per Keane J. Looking at the overall management of the appellant’s business, it seems to me, that there was flexibility for the appellant to reduce or increase his profit according as to how he managed his business, e.g. the lower he kept his expenses the greater would be his profit. When the appellant changed his lorry to one with a tail-lift (on the advice of the respondent), and when he purchased a pallet-lifter at his own expense and when he employed a helper or substitute, in effect these amounted to management decisions.
Another factor of importance in this case, is whether there was an obligation on the appellant to perform the work personally. The presence or absence of *288 such an obligation is a material consideration in determining whether the contract is one of service or for service. In that context clause 5 of the contract is quite clear. It provides for an agreement between the parties that the haulier should be free to engage the assistance of other persons for whom he is totally responsible, if he so desires.
The importance of a requirement to provide personal service as an instance of a contract of service was adopted by Blayney J., in O’Coindealbhain (Inspector of Taxes) v Mooney [1990] 1 I.R. 422 at 431:
“In my opinion, these features are inconsistent with the contract being one of service-they all point rather to its being one for services, in particular the absence of any requirements to perform the work personally and the obligation to provide and furnish the premises in which the work is to be performed. Both these features suggest that the respondent is an independent contractor. So even before the accepted tests are applied it seems to me that a conclusion can be reached on a consideration of the terms of the contract alone.”
Also at p. 432 of that judgment:
“Finally, there is the test from the definition of a contract of service, that one of the conditions to be satisfied is that the contracting party agrees to provide its own work and skill. In my opinion it is clear that the contract here does not satisfy that condition. There is no obligation on the respondent to carry out any of the work personally.”
I am satisfied in this case, that the appellant was free to sub-contract and engage the assistance of others, and this is what he in fact did over the period from his engagement under the first contract in 1989 until the most recent and relevant contract, that of June 2000. There was accordingly, no obligation on the appellant to carry out any of the work personally.
I have little doubt but that the intention of the parties is reflected in the written contract and that Mr Hogan was fully aware of what he was letting himself into in February 1989 and thereafter. I am satisfied that he entered into the first contract and subsequent working arrangements and further contracts freely, and as a matter of choice. The fact is, that the greater number of drivers at that time, i.e. 1989 decided not to enter into the new working arrangements. Mr Hogan was one of the five drivers who chose to do so. There is nothing to suggest in the evidence that the appellant ever questioned the terms of the written contracts or his working arrangements under these contracts, or that he ever took, or felt minded to take, legal advice in the matter. In fact it seems that the only negotiations which the appellant got involved in himself, were those *289 about rates which were freely entered into, between himself and his fellow drivers, and the respondent from time to time.
Finally, it cannot pass without some comment, that in the course of his evidence, the appellant claimed that Mr Wall had told him in 1989 that the contract was not worth the paper it was written on, or words to that effect. Apparently there was no suggestion along these lines made at the original hearing before the Employment Appeals Tribunal. Frankly, I think it would be very unlikely that a person such as Mr Wall who has been directly involved in intensive negotiations with the unions about an enhanced redundancy package for the drivers, who had personally involved himself in drawing up the new contract and who had gone to the trouble of arranging a seminar for the drivers to explain it, would then turn around and say that all of this wasn’t worth the paper it was written on.
Conclusion
I am satisfied, having considered the evidence, and the terms of the written contract, and the authorities opened by counsel, that the manner that the contract was actually worked was consistent with the terms of the written contract; that the appellant was a person in business in his own account without an obligation to carry out any of the work for the respondent personally, and that accordingly, he was, in the particular circumstances of this case, engaged under a contract for services and not of service and therefore the appellant is not entitled to the statutory relief claimed.
Notwithstanding that conclusion, however counsel for the appellant who ably argued and conducted the case for her client, submitted that in the event that the court was to hold that the appellant was employed under a contract for services, the court should find that the appellant was not afforded fair procedures in the process and decision which led to his contract not being renewed.
In advancing this proposition counsel drew attention to the decision in Tierney v An Post [2000] 1 I.R. 536. In that case one of the questions before the Supreme Court was whether a contract for services should be construed as containing an implied term that the respondent was obliged to conduct disciplinary procedures provided for in the contract in accordance with fair procedures. In that case the Supreme Court held that the appellant was employed under a contract for services and considered whether such a contract should be construed as containing an implied term that the respondent was obliged to conduct the disciplinary machinery provided for in accordance with fair procedures. In considering this issue, Keane J. referred to Re Haughey [1971] I.R 217, Glover v B.L.N Limited [1973] I.R 388 and Meskell v C.I.E [1973] I.R. 121, and in particular cited a passage from Glover v B.L.N from the judgment of Walsh J. in that case where he said: *290
“This court in Re Haughey held that Article 40.3 of the Constitution was a guarantee of fair procedure. It is not, in my opinion necessary to discuss the full effect of this Article in the realm of private law or indeed of public law. It is sufficient to say that a public policy and the dictates of constitutional justice requires that statutes, regulations or agreements setting up machinery for taking decisions which may effect rights or impose liabilities should be construed as providing for fair procedures. It is unnecessary to decide to what extent the contrary can be provided for by agreement between the parties.”
Keane J. said:
“That statement of law is not confined to contracts of service. It is in accordance with the general principles laid down by the same learned judge in Meskell v C.I.E that constitutional rights maybe protected or enforced in proceedings between private citizens and not merely in proceedings against the State.”
However, it should be noted that the facts which gave rise to the dispute in the Tierney case arose out of the termination of an existing contract, whereas in the instant case the appellant’s contract had run its full course and it was the failure by the respondent to renew that contract which was the real cause of the dispute in this case.
The appellant in this case has sought statutory relief. In my judgment, the issue of the absence of fair procedures either during the course of the contract, or subsequent to it are not matters within the jurisdiction of the Circuit Court. Notwithstanding that, at the very least, if it had been the case that the plaintiff’s contract had been terminated before its expiration, on the basis of the procedures which the respondent actually adopted in this case, then I think there would have been a serious question mark over the fairness of those procedures. The plaintiff was not told, that his performance and the performance of other drivers was being assessed under a points appraisal; nor was he given any advance indication or warning that such a system was in use, nor was he informed as to the criteria adopted for its use. If it was the case that his performance was not up to scratch he was not given any warning as to how his performance could be improved.
However, in view of my findings this is not an issue which this court can determine. The appellant’s appeal is dismissed.
Paul Dower v Radio Ireland Ltd v Trading as Today FM
14 September 2000
[2001] 12 E.L.R. 1
CARROLL J
The plaintiff is a radio presenter/disc jockey. He was first employed by the defendant under the terms of a contract dated 8 April 1997 expressed to be for three months commencing on 10 March 1997. In fact the start-up date of the station was around 17 March 1997.
The terms of that contract, headed ‘Agreement for Services’, recited:
A. Mr Dower is a self-employed freelance radio producer and programme presenter and has certain knowledge, skills and abilities which Radio Ireland wishes to avail of.
B. Mr Dower has agreed to provide services to Radio Ireland as a producer and presenter on the following terms and conditions.
Clause 1 provides:
Operative provisions
Radio Ireland hereby engages Mr Dower to provide to Radio Ireland as a producer and presenter of two weekly radio programmes to be broad *3 cast at 6.00 to 8.00 pm each Saturday and Sunday on the terms and subject to the conditions hereinafter contained.
Clause 2 provides:
Duration
This agreement shall commence on 10 March 1997 and shall continue for a fixed period of three months unless terminated earlier on notice by either party in accordance with Clause 9 hereof and provided always that this agreement may be terminated summarily if Mr Dower is in breach under the provisions of Clause 10 hereof.
Clause 3 provides:
Hours
Mr Dower will provide his service for such hours as are reasonably necessary enable him properly and diligently to carry out the services referred to in Clause 1 hereof.
Clause 6 provides:
Fee
Radio Ireland will pay to Mr Dower a fee of £80 per programme for his services under this agreement which will be charged by Mr Dower weekly in arrears such fee to be exclusive of value added tax (if applicable). The weekly fee will be paid on presentation of invoice by Mr Dower.
Clause 8 provides:
Breaks and sickness
Breaks from weekly schedule may be as agreed between Mr Dower and the programme controller. In the event of Mr Dower being unable to provide his services hereunder due to illness he will notify the programme controller immediately and in any event no later than two hours prior to commencement of his programme.
Clause 9 provides:
Notice of Termination
This agreement may be terminated by either party giving to the other not less than an one weeks prior notice in writing.
Clause 11(a) and (b) provides:
Status and tax liabilities
(a) The parties hereby declare that it is their intention that Mr Dower shall have the status of a self-employed person and shall not be entitled to any pension or other fringe benefits from Radio Ireland and it is agreed that Mr Dower hereby agrees to indemnify and hold harmless Radio Ireland against all demands for any income tax, PRSI, penalties or interest in respect of his services hereunder and against any costs incurred in dealing with such demands.
(b) For the avoidance of doubt, it is understood and agreed that Mr Dower will be free to undertake such other outside activities and offer his services to third parties to the extent that such activities and provision of services do not conflict with his obligations under this contract. Mr Dower agrees not to offer his services to any other national or local radio station without the prior written consent of Radio Ireland during the term of this agreement.
Clause 17 provides:
Law and arbitration
This agreement shall be governed by Irish law and all disputes which arise between the parties in connection with this agreement shall be submitted to arbitration, with arbitrators to be nominated by the parties or in default of agreement nominated by the President for the time being of the Incorporated Law Society of Ireland and such arbitration shall be governed by the Arbitration Acts 1954 to 1980 (as amended).
The plaintiff continued working for the defendant until, following a meeting on 14 June 2000, he was given three months written notice on 14 June 2000 terminating his working arrangement. He then issued a plenary summons on 12 July 2000 claiming he was still employed by the defendant and brought a motion for injunctive relief requiring the defendant to continue to pay his remuneration. The defendant brought an application to stay the proceedings under section 5 of the Arbitration Act 1980 so that the matter could be submitted to arbitration. It claimed that the provisions of Clause 17 applied to the contract between the plaintiff and the defendant.
The two matters came on for hearing on 26 July 2000 when the application to stay was taken first and heard on affidavit. Since there were disputed matters of fact in the affidavits the matter was adjourned for oral evidence to 5 September 2000.
There are two issues arising: *5
1. Whether the plaintiff was in June 2000 employed on a contract for services a contract of service, i.e. was he an independent contractor otherwise a freelance presenter or was he an employee as such of the defendant.
2. If he was employed as an independent contractor on a contract for services, whether the terms of the arbitration clause continued to apply after the expiration of the fixed term of three months.
The plaintiff claims that although he was initially employed as an independent contractor on a fixed month contract, the renewal of this contract from time to time showed he was an employee at the latest when the defendant agree to pay him £30,000 per year. He claims he was always subject to the control and direction of the defendant.
The cases in relation to the difference between contracts for services and contracts of service have been cited to me. The perspective in this case is somewhat different in that the plaintiff was clearly employed on a contract for services in 1997 and the question is whether the status of his working arrangement changed.
The facts are that he started doing two weekends, 6.00 to 8.00 pm on Saturday and Sundays at £40 per hour, a total of four hours. In June 1997 he was asked to do a lunchtime slot during the week plus four hours at weekends, a total of 14 hours for which he was paid £560 per week. This was later reduced to £480 per week when Saturday was dropped. In August 1997 he was asked to do 10.00 am to 1.30 pm weekly with two hours on Saturday and was paid £650 per week. In January 1997 he was offered a position as a swingjock (i.e. a person who slots into vacant slots or covers for sickness/holidays of other presenters) as well as a Saturday morning breakfast show, 6.00 am to 9.00 am and Sunday afternoon, 1.00 to 3.00 pm. For this he was paid £500 per week.
In September 1998 he said he was offered by Tom Hardy, assistant programme manager, a position as presenter of the breakfast show, 5.00 to 7.00 am, in addition to providing relief cover for Ian Dempsey on his breakfast show, 7.00 to 10.00 am. For this he was paid £30,000 per annum, invoiced at £577 per week from 2 October 1998 to the present time.
Tom Hardy, who negotiated with the plaintiff, recalled the meeting and said it was essentially about a change in hours. There was no change in his contractual position. He said his recollection was that Tom Street, the CEO agreed the fee.
The plaintiff’s evidence was that since he was going to fill in for two months, he asked Tom Hardy for £650 per week which was the same as before and Mr Hardy said no and offered £30,000 per annum, equivalent to £577 per week. The plaintiff also said in evidence that if voiced up a radio commercial he got paid extra to do it.
It is my view that there was no agreement to pay a salary of £30,000 per *6 annum constituting employment but rather agreement to pay a fee calculated on £30,000 per annum.
The plaintiff is registered for VAT with the Revenue Commissioners as a sole trader. All his remuneration has been paid on foot of invoices for four weeks at a time with VAT at 21%. Following the agreement for £30,000 per annum he presented his invoices every four weeks showing four weeks at £577.
The plaintiff claimed he was entitled to 35 days holiday and sick pay. The only invoice submitted claiming holiday pay was submitted after the dispute between the parties arose. Mr O’Reilly, current CEO of the defendant since June 1999, said nobody in the organisation is entitled to 35 days holiday.
Mr O’Reilly said that the position of a radio presenter is by its nature precarious. It is very much personality and style driven. The defendant pays the presenters to bring in an audience and the rewards are large. A successful presenter who is freelance can maximise earnings by outside work. Mr O’Reilly said he put the life span average at about three to four years but there were exceptions such as Gay Byrne. Mr O’Reilly was with RTE 19 years and they have the same practice there. In his affidavit he stated the agreement with the plaintiff was terminated not because of any wrongdoing or default but because the station was unable to find a niche which suited the plaintiff’s skill and personality as a presenter. He also said that anyone taken on as an employee would have PRSI and PAYE deducted as well as being put on the pension plan. He said the plaintiff for the breakfast show from 5.00 to 7.00 am came in at 4.30 am and was gone after the show by 8.00 am. He had no desk and no telephone extension. He said the procedure for payment is to agree how much and divide it up and pay it. The normal course of business is done on a monthly basis. The plaintiff was paid a fixed rate of £30,000 per annum for four weekly invoices plus VAT over 52 weeks since October 1998.
I accept Mr O’Reilly’s evidence. There is nothing in those facts which would indicate any change in the employment status of the plaintiff.
The matters which the plaintiff points to as indicating that his status has changed to that of an employee under a contract of service were varied. I have already said the agreement to pay £30,000 per annum to be invoiced per week was not the salary of an employee but an agreed fee for a freelance presenter. The change in his hours and change in remuneration from time to time did not change his status. There was never a re-negotiation of the working relationship between the plaintiff and the defendant. There was one period of six to eight weeks around September 1997 when he helped Bryan Adams (Head of Music) on a Thursday for six to seven hours and gave a hand with schedules. The plaintiff agreed there was not an additional 20 to 25 hours per week as set out in his affidavit. There were also weekly playlist meetings lasting one to one and a half hours to decided what new songs would be added to the station list to which all presenters were invited.
*7
The six weeks’ period of extra work for which he did not get paid did not alter the status of his employment. Apart from that six-week period his duties over the few years as a radio presenter remained the same. It was a case of being offered different slots which he took. He was not told what to say or how to say it. He performed as a presenter.
The plaintiff also said that he spoke to Jeff Holland, one of the London based consultants, hired to revamp the station in September 1997 to ask about his position and Mr Holland said, ‘you are staff’. It cannot be seriously argued that that remark was sufficient to change his employment status, quite apart from the fact that the defendant says Mr Holland was only a consultant and would have had no authority to change the plaintiff’s employment status.
In a similar vein is the claim that when the plaintiff was called for jury duty in October 1998 the music programme manager wrote to the county registrar referring to him as an employee and asking that he be excused from duty ‘as a member of our on-air staff. This claim has no weight at all. Neither does the claim that he attends staff parties. As to attendances at staff meetings, Mr O’Reilly says that since he became CEO there have been no staff meetings.
I accept the plaintiff’s assurances that he does not work for his girlfriend’s PR company and that the assistance that he gives is minimal and he is not paid for it.
Taking into consideration the cases cited (Re Sunday Tribune [1984] IR 505; Denny v. Minister for Social Welfare [1998] 1 IR 34; [1998] ELR 36 and Tierney v. An Post [1999] ELR 293), I do not accept that any of the facts add up to a change in the plaintiff’s status as an independent contractor from the time he was first taken on by the defendant in March 1997.
The second issue is whether, if he continued as an independent contractor, Clause 17 continued to apply to the working arrangement between the plaintiff and the defendant as being a dispute in connection with the subject-matter of the agreement. It was submitted on behalf of the plaintiff that even if the plaintiff continued as an independent contractor, the contract did not continue but was renegotiated. It was submitted that there was no written arbitration agreement and therefore it fell outside the definition section of the Arbitration Act 1954.
However, there is a written arbitration clause in the contract of 8 April 1997 and the question is whether that clause as well as other clauses in the agreement continued to apply on a roll-over basis as each variation in schedules and remuneration occurred. In my view there is no valid reason why the parties did not continue to be bound by the same terms as set out in the original written contract including the arbitration clause. It seems to me perfectly reasonable that the parties would consider their relationship to continue on the same basis as before subject only to the changed schedules and remuneration.
Accordingly, I consider the contract between the parties to be a contract for *8 services which continued to be subject, on a roll-over basis, to implied conditions similar to those contained in the original contract, including the arbitration clause concerning disputes in connection with the subject-matter of the agreement. It is therefore appropriate to stay these proceedings so that the matter can be referred to arbitration.
Karshan (Midlands) Trading as Dominos Pizza v Revenue Commissioners
[2019] IEHC 894 (20 December 2019)
JUDGMENT of Mr. Justice Tony O’Connor delivered on the 20th day of December, 2019Introduction1. This is an appeal by way of case stated for the opinion of the High Court pursuant to s.949AQ of the Taxes Consolidation Act 1997 (“TCA”). The appeal relates to adetermination of Tax Appeals Commissioner Gallagher (“the Commissioner”) dated 8thOctober, 2018, which decided that pizza delivery drivers engaged by the appellant (“thedrivers”) worked during the relevant tax years of assessment (2010 and 2011) undercontracts of services and are taxable pursuant to schedule E of the TCA (“thedetermination”). The appellant contends that the drivers operate under contracts forservices, are therefore self-employed, and taxable pursuant to schedule D of the TCA.Contracts and performance2. The determination noted facts admitted or proven which are included in the followingsummary:-(i) The written agreement between the appellant and each driver inter alia:-a. Identified each driver retained by the appellant as an “independentcontractor”;b. Stipulated that drivers were paid according to the number of deliveriessuccessfully undertaken;c. Provided for payments by the appellant to drivers for brand promotionthrough the wearing of branded clothing and or logos affixed temporarily tovehicles used by drivers. Clothing and logos were provided by the appellantto the drivers;d. Required drivers to use their own cars and motor insurance. (The provisionmade for drivers to rent cars was not operated);e. Offered drivers appropriate business use insurance on a third party basis at apre-determined rate;f. Did not warrant a minimum number of deliveries and drivers consequentlyassumed financial risks and rewards “in keeping with all self-employedindividuals”;g. Obliged drivers to provide invoices and maintain their own records;h. Required drivers to maintain the confidentiality of trade information andsecrets of the appellant;i. Allowed drivers to engage a substitute driver provided that substitute couldperform all contractual obligations of the driver to the appellant;Page 2 ⇓j. Did “not warrant or represent” that the appellant “will utilise” the services ofeach driver “at all” while drivers had the right to notify the appellant of daysand times on which they were available;k. Confirmed in the final clause of the contract that the driver undertook workfor the appellant “strictly as an independent contractor”.(ii) All drivers were required to sign a document to confirm that the appellant “has noresponsibility or liability whatsoever for deducting and/or paying PRSI or tax” onmonies which the appellant paid for their work.(iii) Drivers were required to pay a deposit for clothing provided by the appellant.(iv) Rosters were drawn by a store manager of the appellant after drivers had filled out“an availability sheet” approximately one week beforehand.(v) The substitute, whether chosen by the drivers or the appellant, was paid by theappellant.(vi) The branded uniform of cap, shirt, jacket and name tag together with the blacktrousers and black shoes were mandatory and subject to checks by managers ofthe appellant.(vii) Drivers had to use their own phones to contact customers if necessary.(viii) Drivers were obliged to provide the appellant with certificates of business useinsurance.(ix) The appellant ensured that drivers would only get two deliveries at a time and onedelivery if another driver was waiting.(x) Some drivers were required to fold boxes while waiting for deliveries to be ready.(xi) The appellant furnished prepaid invoices for signature by many drivers.(xii) Drivers clocked in and clocked out on the appellant’s computerised system usingdriver numbers resulting in the collating and maintenance of that information bythe appellant.(xiii) Drivers were given a cash float which was returned at the end of each shift.(xiv) A non-negotiable sum of €1.20 was paid to drivers per drop with an added 20c forinsurance and drivers were also paid €5.65 per hour in respect of brandpromotions.Core issues3. Counsel for the appellant ultimately contended that the Commissioner erred in law in herinterpretation and/or application of the following concepts:-(i) Mutuality of obligations;Page 3 ⇓(ii) Substitution;(iii) Integration;(iv) Terms of the contract, specifically that the Commissioner failed to give properweight to the actual terms of the contract.The Court therefore proceeds to analyse the submissions made under each of those headings.Jurisdiction of the High Court on an appeal by way of case statedGeneral4. Kenny J. in Mara (Inspector of Taxes) v. Hummingbird Ltd [1982] ILRM 421 at p. 426explained:-“A case stated consists in part of findings on questions of primary fact, e.g. withwhat intention did the taxpayers purchase the Baggot Street premises. Thesefindings on primary facts should not be set aside by the courts unless there was noevidence whatever to support them. The commissioner then goes on in the casestated to give his conclusions or inferences on these primary facts. These aremixed questions of fact and law and the court should approach these in a differentway. If they are based on interpretation of documents, the court should reversethem if they are incorrect for it is in as good a position to determine the meaning ofdocuments as is the commissioner. If the conclusions from the primary facts areones which no reasonable commissioner could draw, the court should set aside hisfindings on the ground that he must be assumed to have misdirected himself as tothe law or made a mistake in reasoning. Finally, if his conclusions show that he hasadopted a wrong view of the law, they should be set aside. If however they are notbased on a mistaken view of the law or a wrong interpretation of documents, theyshould not be set aside unless the inferences which he made from the primary factswere ones that no reasonable commissioner could draw.”5. Blayney J. in Ó Culachain v. McMullan Brothers Ltd [1995] 2 I.R. 217, cited by theSupreme Court in Mac Cárthaigh v. Cablelink Ltd [2003] 4 IR 510, further summarisedas follows at pp. 222-223:-“(1) Findings of primary fact by the judge should not be disturbed unless there is noevidence to support them.(2) Inferences from primary facts are mixed questions of fact and law.(3) If the judge’s conclusions show that he has adopted a wrong view of the law, theyshould be set aside.(4) If his conclusions are not based on a mistaken view of the law, they should not beset aside unless the inferences which he drew were ones which no reasonable judgecould draw.Page 4 ⇓(5) Some evidence will point to one conclusion, other evidence to the opposite: theseare essentially matters of degree and the judge’s conclusions should not bedisturbed (even if the court does not agree with them, for we are not retrying thecase) unless they are such that a reasonable judge could not have arrived at themor they are based on a mistaken view of the law.”6. Reference to “judge” in the above extract applies equally to the Tax AppealsCommissioner.Burden of proof7. Substantive issues of fact described in the case stated are not disputed although theinterpretation of the umbrella contract provision for substitution looms. The appellant, asthe relevant taxpayer, bears the burden of establishing that the drivers were engagedunder a contract for services. An appeal by way of case stated is different from aconsultative case stated where a more expansive approach can be taken. In this appealthe Court is restricted to identifying the law and applies a deference to the Commissionerwho has experience in determining facts with an eye to the applicable law. There wasindeed an intricate if not complex factual matrix with which the Commissioner grappled.8. The determination explained the law which the Commissioner applied. Counsel for theappellant through this case stated process sought to identify errors of law made by theCommissioner. Under the heading “mutuality of obligations” and “integration”, thesubmissions concerned the explanation and application of the law by the Commissioner.On the other hand, the appellant confined its challenge under the “substitution” and“terms of the written contract” to the application of the law by the Commissioner. Inother words, the appellant has the burden of specifying and establishing the errors of lawmade in the Commissioner’s statement of the law for the concepts known as “mutuality ofobligations” and “integration”. The appellant then has the onus to establish that theCommissioner misapplied the law specifically and in general, taking account of the fourabove mentioned concepts.Function of this court9. Between the extreme examples of “contract of service” and “contract for services”inevitably lies an intermediate range which may lead to different conclusions by thoseapplying the relevant legal principles. Therefore, special circumstances and an overviewof the factual position concern a forum of first instance rather than a court with ajurisdiction that is inherently deferential to the fact finder.10. The Commissioner heard evidence from nine witnesses including a number of drivers.The Commissioner has the necessary skill and experience to elicit and determine all factsthat are relevant. There is no de novo appeal hearing.Page 5 ⇓11. Mummery L.J. in Brent London Borough Council v. Fuller [2011] EWCA Civ 267,[2011] ICR 806, at para. 30, explained the function at an appeal tribunal which can equally applyto this Court:-“The reading of an employment tribunal decision must not, however, be so fussythat it produces pernickety critiques. Over-analysis of the reasoning process; beinghypercritical of the way in which the decision is written; focussing too much onparticular passages or turns of phrase to the neglect of the decision read in theround: these are all appellate weaknesses to avoid.”12. In summary, the burden of proof on the appellant is indeed onerous. The structure ofthis judgment is to explain impacting submissions made by the parties under a headingfor each of the concepts. Then the Court gives its reasons for its decision on specifics andgenerally.Mutuality of obligation13. The appellant submits that mutuality of obligation is the sine qua non of an employmentrelationship. There must be an obligation on the employer to give the employee work andthere must be an obligation on the employee to carry out the work for the employer. TheCommissioner held in this case that there was an overarching umbrella contractsupplemented by multiple individual contracts in respect of each assignment or roster ofwork. The requirement of mutuality was satisfied in the individual contracts.14. The principal case cited by the Commissioner was Weight Watchers (UK) Ltd v. Revenueand Customs Commissioners [2011] UKUT 433 (TCC), [2011] All ER (D) 229 (Nov)(“Weight Watchers”). It is worth summarising the facts to create context. “Leaders”were engaged by Weight Watchers which is known to promote meetings of those wishingto lose weight. Leaders were required to arrange and conduct those meetings. Theappellant (Weight Watchers) appealed determinations that the leaders were subject toPAYE and a contribution similar to PRSI.Appellant’s submissions15. According to the appellant the “so-called supplemental multiple individual contracts … areat the heart of the decision under appeal” in respect of each assignment or roster of work.The appellant emphasises that clause 14 of the contract recognises the freedom of adriver to work when he or she chooses. The Commissioner was incorrect in relying uponEnglish law and should have applied the law in Ireland as understood by the appellant.The appellant challenges the findings in the following paragraphs:-“82. In this appeal, the right of a driver to cancel a shift was qualified by therequirement to engage a substitute, to provide advanced notification to theappellant and to work out the remainder of the shifts in the series which had beenagreed.83. I agree with the reasoning of Briggs J. in Weightwatchers (UK) Ltd and I concludethat a contract which provides drivers with the right to cancel shifts at short noticePage 6 ⇓does not relieve a driver of work related obligations in the manner contended for bythe appellant.84. Thus I determine that the requirement of mutuality of obligation were satisfied inthe individual contracts entered into between the Appellant and the drivers, eachcontract representing an assignment of work (comprising one or more shifts), andthat these obligations were not invalidated by clauses 12 and/or 14 of the writtenagreement, and were not invalidated on any other basis.”16. By relying on English cases, the appellant submits that the Commissioner failed to followIrish case law (discussed below) which “posits a strict view of mutuality that goessignificantly beyond the work/wage exchange and requires an ongoing reciprocalcommitment to provide and perform work on the part of the employer and employeerespectively.”17. The appellant also focused on para. 49 of the determination:-“Thus in the within appeal, the umbrella contract required a driver … to initiate anagreement with the Appellant in relation to his availability for work …. Once theAppellant rostered a driver for one or more shifts of work, there was a contract inplace, in respect of which the parties retained mutual obligations.”to submit that the Commissioner was “legally incorrect” because the umbrella agreementdid not require a driver to initiate an agreement with the appellant.18. The appellant cites Ní Raifeartaigh J. in McKayed v. Forbidden City Limited [2016] IEHC 722(unreported, High Court, 16th November, 2016), where the contract in that casecommitted the employer to “endeavour to maintain sufficient work for” the worker. Therethe plaintiff claimed that he was an employee so that he could maintain a claim under theunfair dismissals legislation. The appellant submits that such a clause is stronger for aworker than exists in the contract before this Court. Ní Raifeartaigh J. found that therewas an absence of mutuality in McKayed and the appellant contends that a similar findingshould be made in this case. Thus, where the appellant specifically does not warrant orrepresent that the appellant will utilise the services of the driver, the mutuality ofobligations cannot be found to exist.19. The appellant argues that McKayed contained factual elements which pointed morestrongly towards employment than those in the current case and yet the court held thatthere was no mutuality of obligation.Revenue’s submissions20. The defendant (“Revenue”) submits that the contractual relationship between theappellant and the drivers as found by the Commissioner does indeed comprise a hybridcontract consisting of an overarching umbrella contract supplemented by individualcontracts in respect of each assignment or roster of work.Page 7 ⇓21. The hybrid contract description appears in the judgment of Briggs J. in Weight Watchers,and more particularly at para. 30:-“… The third, hybrid, class consists of an over-arching contract in relation to certainmatters, supplemented by discrete contracts for each period of work. In this hybridclass, it may be (and is, in the present case) sufficient if either the over-archingcontract or the discrete contracts are contracts of employment, provided that anycontract or contracts of employment thus identified sufficiently resolve the questionin dispute. Where, as here, the question is whether the PAYE regime and theapplicable [national insurance] regime apply to the work done by the leaders, it isclearly sufficient if there is identified either a single over-arching contract ofemployment or a series of discrete contracts of employment which, together, coverall periods during which the leader’s work is carried out.”22. Revenue notes clause 14 of the contract: “The Company … recognises the Contractor’sright to make himself available on only certain days and certain times of his choosing.”Revenue argues that this requires a driver to initiate an agreement with the appellant inrelation to his availability for work.23. Revenue refers to the material fact as found by the Commissioner that the practice, inrelation to rostering of shifts, was that the drivers filled out an “availability sheet”approximately one week prior to the drawing up of a roster. The roster was drawn by astore manager based on the availability sheets. Thus, the Commissioner found that oncethe appellant rostered a driver for one or more shifts, there was a contract containingmutual obligations.Minister for Agriculture v. Barry24. Both parties cite the judgment of Edwards J. in Minister for Agriculture v. Barry[2008] IEHC 216, [2009] I.R. 215 (“Barry”) in support of their positions concerning theapplicable law.25. The ongoing saga of the temporary veterinary inspectors (“vets”) who worked at a meatprocessing plant in Mitchelstown, Co. Cork, which closed in October 2004, is worthoutlining.26. The vets lodged claims with the then Employment Appeals Tribunal (“EAT”) on 21st April,2005, contending that they worked under a “contract of service” for the appellant Minister(“the Minister”) and that they were entitled to redundancy payments. The Minister hadgiven directions that the vets could have their names placed on a maximum of four panels(i.e. four meat plants) but could hold only one regular shift. The panels operated on thebasis of seniority, availability and suitability. Details of the functions, reporting structure,equipment and materials provided by the Minister, hours of work, payment of PAYE andPRSI, training and disciplinary proceedings, and annual leave entitlements were set out inparas. 16 to 41 of the judgment of Edwards J.Page 8 ⇓27. The EAT decided to hear a preliminary point about whether the vets were employed undera contract of service or a contract for services. Edwards J. found at para. 43 as follows:-“In each instance it was incumbent on the tribunal to ask three questions. The firstquestion was whether the relationship between each respondent and the appellantwas subject to one contract, or more than one contract. The second questioninvolved the scope of each contract. The third question involved the nature of eachcontract.[44] As I have stated, there were various possibilities. It was, of course, possiblethat each of the respondents, respectively, was employed under a single contractwhich, upon a thorough examination of the circumstances, might fall to beclassified as either a contract of service or a contract for services. However,another possibility was that on each occasion that the temporary veterinaryinspectors worked they entered a new contract, and these contracts, depending onthe circumstances, might fall to be classified as contract of service or contracts forservices. A third possibility is that on each occasion that the temporary veterinaryinspectors worked they entered a separate contract governing that particularengagement, which might be either a contract of service or a contract for service,but by virtue of a course of dealing over a lengthy period of time that course ofdealing became hardened or refined into an enforceable contract, a kind ofoverarching master or umbrella contract, if you like, to offer and acceptemployment, which master or umbrella contract might conceivably be either acontract of service or a contract for services or perhaps a different type of contractaltogether. This notion of an umbrella contract, though controversial, has featuredin several English cases involving particular classes of workers, such as outworkers,casual workers and piece workers: see, for example, Airfix Footwear Limited v.Cope [1978] I.C.R. 1210 and Nethermere (St. Neots) Limited v. Gardiner[1984] I.C.R. 612.”28. Under the heading mutuality of obligation Edwards J. at para. 47 stated:-“The requirement of mutuality of obligation is the requirement that there must bemutual obligations on the employer to provide work for the employee and on theemployee to perform work for the employer. If such mutuality is not present, theneither there is no contract at all or whatever contract there is must be a contract forservices or something else, but not a contract of service.”29. Edwards J. found that the vets “… were entitled to decline to work at the very least 16%of the shifts offered to them without that refusal having any consequences for theircontracts” (para. 49) and that there was no commitment to “… work on an ongoing basis”(para. 51) which led him to find that the determination by the EAT concerning themutuality of obligations was flawed. Edwards J. did not find that the vets workedpursuant to a contract for services but rather found that the EAT was in error whenconsidering each question about which they should have asked themselves.Page 9 ⇓30. Following the order for remittal made by Edwards J., the EAT felt that it had beeninstructed to change its original determination and found, in its second determinationdated 31st July, 2009, that the vets were engaged under a contract for services.31. The judgment delivered by the High Court, Barry v. Minister for Agriculture [2011] IEHC 43(unreported, High Court, Hedigan J., 9th February, 2011) led to the Supreme Courtoverturning the High Court in Barry v. Minister for Agriculture [2015] IESC 63(unreported, Supreme Court, 16th July, 2015). Charleton J., in the concluding paragraphof his concurring judgment, explained:- “The case of whether the vets were employed bythe respondent Minister or were, instead, self employed persons doing shifts at theMitchelstown meat plant is a matter of fact for the [EAT] on a rehearing of the matter.”(para. 17).32. The saga continues because the subsequent ruling of the EAT is now the subject of furtherHigh Court proceedings which were commenced by the issue of a special summons on28th April, 2017, with record number 2017/199 SP.33. The consideration of the claims made by the vets indicate some of the difficulties arisingin first instance applications of the law to facts established where there is a dispute aboutwhether workers have a contract of services or a contract for services. In truth, there isno comprehensive statutory or common law definition of a “contract for services” or“contract of service” even though those terms are regularly used. Those adjudicating atfirst instance, whether a commissioner or court, may be tempted to adopt a box-tickingexercise when considering if an appellant or claimant is an employee or not. In fact,classification needs a careful and flexible understanding of relationships.Substitution34. Clause 12 of the agreement provided:-“The Company accepts the Contractor’s right to engage a substitute delivery personshould the Contractor be unavailable at short notice. Such person must be capableof performing the Contractor’s contractual obligations in all respects.”35. The Commissioner found as a material fact that the substitution clause permitted driversto substitute another of the appellant’s drivers when they were unavailable and that thesubstitute driver would be paid by the appellant in respect of that shift of work.Appellant’s submissions36. The appellant submits that the Commissioner wrongly concluded “that the drivers werenot genuinely entitled to sub-contract the performance of their duties” apparently “basedon two factors: first, that any replacement drivers were paid directly by the appellant and,second, that such drivers had to be approved of by, and entered into a separate contractwith, the appellant.”37. The appellant contends that there was no requirement to arrange for the work to be doneby another person. There was indeed a right of substitution but there was no obligation,Page 10 ⇓according to the appellant. This Court is only concerned with the application of the lawwhich concerns “substitution” and is not concerned with the findings of fact made by theCommissioner.38. The various judgments relied upon by the appellant:-(i) Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1997] IESC 9,[1998] I.R. 34, (“Henry Denny”);(ii) Castleisland Cattle Breeding v. Minister for Social Welfare [2004] IESC 40, [2004] 4I.R. 150 (“Castleisland”);(iii) Tierney v. An Post [1999] IESC 66, [2000] 1 I.R. 531 (“Tierney”);(iv) ESB v. Minister for Social Community and Family Affairs & Ors [2006] IEHC 59,[2006] ITR 63,contemplate, according to the appellant, that the right (as opposed to the obligation) tosubstitute a worker for oneself is at most indicative of the employment relationship.39. The appellant contends that the distinction posited in Weight Watchers between twodistinctive forms of substitution is not recognised in Irish law. The appellant furthersubmits that the right of an employer to approve substitutes does not indicate anemployment relationship. The fact that the appellant exercised a significant measure ofcontrol over the drivers’ choice of delegates is insufficient to indicate the existence of anemployment relationship, according to the appellant.Revenue’s submissions40. Revenue submits that in reality, the drivers did not have freedom to substitute but couldnominate a replacement approved by and paid for directly by the appellant.41. Relying on Weight Watchers, Revenue contends that true substitution occurs when theperson (the driver in this appeal) is free to have the work performed by himself or bysome other person and that he (the driver) will be paid for the work. Critical, accordingto Revenue, is the provision for payment to the replacement driver by the appellant.42. Revenue distinguished the facts described in the judgment of the Supreme Court inCastleisland where statutory regulations were found to have required approval. Revenuealso distinguishes Tierney where the applicant there was entitled to employ others toassist in the post office business. In this appeal, the replacement of one driver foranother driver requires selection from a pool of drivers maintained by the appellant.Integration43. Integration is a concept which was described by Denning L.J. in Stevenson Jordan andHarrison Ltd v. MacDonald and Evans [1952] 1 TLR 101 at p. 111 as follows:-Page 11 ⇓“One feature which seems to run through the instances is that, under a contract ofservice, a man is employed as part of the business and his work is done as anintegral part of the business whereas under a contract for services, his work,although done for the business is not integrated into it but is only accessory to it.”(emphasis added.)Appellant’s submissions44. The appellant emphasises the integration test applied in Re Sunday Tribune Ltd[1984] IR 505 (“Sunday Tribune”) when submitting that the Commissioner implied that the soleissue to be determined is whether the kind of work done by the drivers (i.e. pizzadeliveries) is integral to the business of the appellant. The integration test, according tothe appellant “is entirely different from a test of integration which merely asks whetherthe work being performed was integral to the business” which “was erroneously applied”by the Commissioner. The appellant submits that the drivers must be regarded as “onlyaccessory” to the business of the appellant. If the broader integration test had beenapplied (i.e. did the drivers form part of the appellant’s organisation?) there should havebeen a finding of contracts for services between the drivers and the appellant because thedrivers, as opposed to their work, were not integral to the business of the appellant.Revenue’s submissions45. Revenue submits that the drivers play a vital role and are essential components of theappellant’s business. Revenue distinguishes the facts in Sunday Tribune on the basis thateach of the reporters there had different roles for the newspaper. In this appeal thedrivers are engaged under similar terms and conditions which fact supports theintegration of the drivers.Terms of the contract46. The Commissioner found the following facts:-(i) Contrary to clause 4 of the contract, vehicles were not available to rent;(ii) The appellant prepared invoices which the drivers signed;(iii) Some drivers were asked to assemble boxes when time permitted.47. The appellant argues that the Commissioner erred in law in failing to give proper weightto the actual terms and conditions of the contract. The appellant submits that theCommissioner erred in her statement at para. 155 of the determination: “[t]he law isunambiguous as regards the minimal weight to be attached to the description of thedrivers in the written contracts as ‘independent contractors’.” The appellant argues thatthe Commissioner effectively paid little or no attention to the wording used in the written(alleged) umbrella contract.48. Revenue refer to repeated judicial statements (Keane and Murphy JJ. In Henry Denny atpp. 51 and 53 respectively, and Geoghegan J. in Castleisland at p. 161) to the effect thatPage 12 ⇓the decisive factor is to look at how the contract is worked because wording is notdefinitive of the nature of the work.ConclusionsMutuality49. The description by the Commissioner about an obligation for drivers to initiate anagreement should be taken in context. The Court understands that the initiation of therelevant contract for each roster depended on a driver making himself available. TheCommissioner did not err in characterising the umbrella and hybrid agreements.50. The Court is not persuaded that mutuality of obligations always requires an obligation toprovide work and to complete that work on an ongoing basis in the manner contended forby the appellant. “Ongoing” does not necessarily connote immediate continuation or adefined period of ongoing. There is no binding precedent to suggest that the ongoingbasis between the appellant and the drivers does not meet the criteria required. Theappellant bears the burden of establishing that the application of “ongoing” as found bythe Commissioner was an error of law. This case is concerned with whether theCommissioner misstated or misunderstood the law about the mutuality of obligations.The Commissioner, in relying upon Weight Watchers did not go against Irish law butrather recognised the necessity to adapt to modern means of engaging workers. Theappellant agreed to provide work when the appellant needed the driver, who notified theappellant about his or her availability. The Commissioner considered the facts andapplied her understanding of the law which the appellant has not established to havebeen incorrect. The appellant has not discharged its burden to establish that theCommissioner misunderstood or misapplied the law in Ireland concerning the concept ofmutuality.51. The reference in Barry to the need for an ongoing series of mutual obligations should beunderstood having regard to the claims in Barry which related to redundancy entitlementsthat depended on length of service. Revenue correctly submits that hybrid contracts ofemployment are relevant in tax or PRSI cases such as that now before the Court.Undoubtedly, umbrella and hybrid contracts require more ongoing commitments in unfairdismissal, redundancy and other labour rights cases due to the statutory triggers basedon defined periods of employment. The Commissioner took the facts into account whenapplying the law which is admittedly difficult to summarise for all circumstances.Mutuality of obligations can occur under an umbrella contract which is modified by theoperation of ongoing relationships that carry obligations for both sides of the contract ofemployment.52. The appellant sought to distinguish the findings in the judgments in Pimlico Plumbers Ltdv. Smith [2018] UKSC 29, [2018] 4 All ER 641 and Autoclenz Ltd v. Belcher [2011] UKSC41, [2011] 4 All ER 745 that there were agreed number of hours despite the writtenexpress terms to the contrary. Paragraphs 81 to 84 of the determination set out followingare logical and understandable:-Page 13 ⇓“81. While there are differences in Pimlico and in Autoclenz (i.e. the contract in Pimlicospecified a minimum number of hours to be worked while the contract in Autoclenzdid not actually reflect what was agreed between the parties) the reasoning inthese cases is of assistance insofar as it does not support the proposition that ifthere is such a clause (i.e. a clause which provides that the provider of work has noobligation to offer work and the putative recipient has no obligation to accept work)that mutuality of obligation is absent.82. In this appeal, the right of a driver to cancel a shift was qualified by therequirement to engage a substitute, to provide advance notification to the Appellantand to work out the remainder of the shifts in the series which had been agreed.83. I agree with the reasoning of Briggs J. in Weight Watchers (UK) Ltd. and I concludethat a contract which provides drivers with the right to cancel shifts at short noticedoes not relieve a driver of work related obligations in the manner contended for bythe Appellant.84. Thus I determine that the requirement of mutuality was satisfied in the individualcontracts entered into between the Appellant and the drivers, each contractrepresenting an assignment of work (comprising one or more shifts), and that theseobligations were not invalidated by clauses 12 and/or 14 of the written agreement,and were not invalidated on any other basis.”53. The written “umbrella” contract did indeed require a driver to initiate an agreement withthe appellant.54. I cannot criticise the Commissioner’s findings that:(i) A driver who wanted work had to put his name on the availability sheet;(ii) Once rostered by the appellant, there was a contract which retained mutualobligations.55. In the circumstances the right to cancel a shift at short notice imposed obligations toengage a substitute and to work out the remainder of the shifts in the series.56. This scenario is different from the engagement of a self-employed tradesman or solicitor.Drivers, unlike those service providers, work rosters and shifts. A self-employed plumbermay agree to service a boiler but the plumber has inherently tremendous latitude in thattask unlike the drivers who had ongoing obligations.57. This Court has not been satisfied by the appellant that the Commissioner erred in thedetermination under the heading mutuality of obligations.SubstitutionPage 14 ⇓58. The reliance by the appellant on the Supreme Court judgment in Castleislandconveniently overlooks the fact that the inclusion of terms requiring approval forsubstitutes occurred in that social welfare appeal due to the necessity to comply withstatutory regulations for artificial inseminators. The appellant imposed the terms aboutsubstitution.59. The Commissioner determined that “[t]he absence of an ability to genuinely subcontractis a factor which indicates that the drivers worked under contracts of service as opposedto contracts for services.” The Commissioner did not err in applying the fact that driversdid not hire assistants; rather one driver was replaced with another driver from theappellant’s pool of drivers. The substitute was paid by the appellant. A substitute wasnot a sub-contractor of the driver. Moreover, the driver and substitute left it to theappellant to prepare invoices for them respectively.60. This factor of substitution does not avail the appellant as is urged on its behalf. Theappellant has failed to satisfy this Court that the Commissioner erred in her application ofthe law in this regard.Integration61. Paragraphs 120 to 125 of the determination contain a detailed consideration anddescription of the appellant’s delivery service and elements of integration which point tosatisfying the integration test. The Commissioner cited Uber BV v. AslamUKEAT/0056/12/DA, [2018] IRLR 97 (“Uber”) concerning a minimum wage claim for Uberdrivers (which was upheld (2-1) in the Court of Appeal in Uber BV v. Aslam [2018] EWCACiv 2748, [2019] 3 All ER 498, on 19th December, 2018) in support of her conclusion thatthe pizza delivery service is fundamental to the business “and is not merely accessory toit.”62. The Commissioner did not hear either side about whether Uber (the Court of Appealjudgment was delivered after the date of her determination) could be distinguished. Theappellant submits that Uber relates to a category of “workers” which is an intermediatecategory between “independent contractors” and “employees” provided for under s.230(3)(b) of the UK Employment Rights Act 1996.63. Despite the indignation expressed on behalf of the appellant, the distinction between a“worker” and an “employee” in the UK legislation was not central to the reliance placed bythe Commissioner on Uber and the other UK judgements cited in the determination forthe integration and mutuality issues.64. This case stated is not a judicial review of the procedures adopted by the Commissioner.The Court repeats that the appellant bears the onus of satisfying this Court that theCommissioner erred in her application of the law in relation to integration.65. Having read paras. 120 to 125 of the determination with the objective of scrutinising thesubmission that the Commissioner focussed only on the nature of the delivery business asPage 15 ⇓opposed to the functions and obligations of the drivers, I conclude that the Commissionerdid have regard to the integration of the drivers into the business of the appellant. Thereasoning in the determination is not flawed; the Commissioner looked at many factors,including the requirement for drivers to:-(i) Wear uniforms and place logos on their cars;(ii) Reassure customers that they were dealing with personnel of the appellant;(iii) Maintain a coherent operation under the care of the appellant;(iv) Take telephone orders from the appellant and not the customers of the appellant.Written terms66. Written terms in an umbrella agreement, which can be used piecemeal or in ways whichwill suit the practicalities of those who engage and those who work, were interpreted bythe Commissioner at first instance with an eye on the reality of the relationships betweendrivers and the appellant. The words of Keane J. in Henry Denny (p. 53) about thewritten terms having “marginal” value echo in this regard. Moreover, Geoghegan J. inCastleisland at p. 150 referred to the necessity to “…look at how the contract is workedout in practice as mere wording cannot determine its nature”. In short, this Court seesno real merit in the submissions made on behalf of the appellant under this heading. TheCommissioner found the facts, summarised her understanding of the law and appliedsame without an error which has been established to the satisfaction of this Court.Point not pursued67. The Court appreciates the concession for the appellant that the decision of the SocialWelfare Appeals Office in August 2008 concerning a self-employed worker for a pizzaenterprise using the same trading name as that of the appellant has no effect orrelevance to the matters under consideration in this Court.Order68. Therefore, the Court will make an order to the effect that the Commissioner was correctin law and I will hear counsel about the precise terms of the order for each question.
Result: Tax Appeals Commissioner correct in interpretation and application of four concepts when determining that appellant’s drivers had contracts of service
Revenue Code of Practice
Determining Employment or Self-Employment Status of Individuals
Criteria on whether an individual is an employee.
While all of the following factors may not apply, an individual would normally be an employee if he or she:
- Is under the control of another person who directs as to how, when and where the work is to be carried out.
- Supplies labour only.
- Receives a fixed hourly/weekly/monthly wage.
- Cannot subcontract the work. If the work can be subcontracted and paid on by the person subcontracting the work, the employer/employee relationship may simply be transferred on.
- Does not supply materials for the job.
- Does not provide equipment other than the small tools of the trade. The provision of tools or equipment might not have a significant bearing on coming to a conclusion that employment status may be appropriate having regard to all the circumstances of a particular case.
- Is not exposed to personal financial risk in carrying out the work.
- Does not assume any responsibility for investment and management in the business.
- Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements.
- Works set hours or a given number of hours per week or month.
- Works for one person or for one business.
- Receives expense payments to cover subsistence and/or travel expenses.
- Is entitled to extra pay or time off for overtime.
Additional factors to be considered:
- An individual could have considerable freedom and independence in carrying out work and still remain an employee.
- An employee with specialist knowledge may not be directed as to how the work is carried out.
- An individual who is paid by commission, by share, or by piecework, or in some other atypical fashion may still be regarded as an employee.
- Some employees work for more than one employer at the same time. Some employees do not work on the employer’s premises.
There are special PRSI rules for the employment of family members.
Statements in contracts considered by the Supreme Court in the ‘Denny’ case, such as
- “You are deemed to be an independent contractor”,
- “It shall be your duty to pay and discharge such taxes and charges as may be payable out of such fees to the Revenue Commissioners or otherwise”,
- “It is agreed that the provisions of the Unfair Dismissals Act 1977 shall not apply etc”, “You will not be an employee of this company”,
- “It shall be your duty to pay and discharge such taxes and charges as may be payable out of such fees to the Revenue Commissioners or otherwise”, “It is agreed that the provisions of the Unfair Dismissals Act 1977 shall not apply etc”, “You will not be an employee of this company”,
- You will be responsible for your own tax affairs” are not contractual terms and have little or no contractual validity.
While they may express an opinion of the contracting parties, they are of minimal value in coming to a conclusion as to the work status of the person engaged.
Criteria on whether an individual is self-employed While all of the following factors may not apply to the job, an individual would normally be self-employed if he or she:
- Owns his or her own business.
- Is exposed to financial risk by having to bear the cost of making good faulty or substandard work carried out under the contract.
- Assumes responsibility for investment and management in the enterprise.
- Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks.
- Has control over what is done, how it is done, when and where it is done and whether he or she does it personally.
- Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken.
- Can provide the same services to more than one person or business at the same time.
- Provides the materials for the job.
- Provides equipment and machinery necessary for the job, other than the small tools of the trade or equipment which in an overall context would not be an indicator of a person in business on their own account.
- Has a fixed place of business where materials, equipment etc. can be stored.
- Costs and agrees a price for the job.
- Provides his or her own insurance cover e.g. public liability cover, etc.
- Controls the hours of work in fulfilling the job obligations.
Additional factors to be considered:
Generally an individual should satisfy the self-employed guidelines above, otherwise he or she will normally be an employee. The fact that an individual has registered for self-assessment or VAT under the principles of self-assessment does not automatically mean that he or she is self-employed.
An office holder, such as a company director, will be taxed under the PAYE system. However, the terms and conditions may have to be examined by the Scope Section of Department of Social Protection to decide on the appropriate PRSI Class.
It should be noted that a person who is a self-employed contractor in one job is not necessarily self-employed in the next job. It is also possible to be employed and self-employed at the same time in different jobs.
In the construction sector, for health and safety reasons, all individuals are under the direction of the site foreman/overseer. The self-employed individual controls the method to be employed in carrying out the work.
Consequences arising from the determination of an individual’s status. The status as an employee or self-employed person will affect:
- The way in which tax and PRSI is payable to the Collector-General.
- An employee will have tax and PRSI deducted from his or her income.
- A self-employed person is obliged to pay preliminary tax and file income tax returns whether or not he or she is asked for them.
- Entitlement to a number of social welfare benefits, such as unemployment and disability benefits.
An employee will be entitled to unemployment, disability and invalidity benefits, whereas a self-employed person will not have these entitlements.
Other rights and entitlements, for example, under Employment Legislation.
An employee will have rights in respect of working time, holidays, maternity / parental leave, protection from unfair dismissal etc A self-employed person will not have these rights and
protection.
Public liability in respect of the work done.
Deciding status – getting assistance
Where there are difficulties in deciding the appropriate status of an individual or groups of individuals, the following organisations can provide assistance.
Tax and PRSI
The Local Revenue Office or The Local Social Welfare Office.
Scope Section in the Department of Social Protection.
If there is still doubt as to whether a person is employed or self-employed th e Local Revenue Office or Scope Section of Department of Social assistance. Having established all of the relevant facts, a written decision as to status will be issued. A decision by one Department will generally be accepted by the other, provided all relevant facts were given at the time and the circumstances remain the same and it is accepted that the correct legal principles have been applied to the facts established. However, because of the varied nature of circumstances that arise and the different statutory provisions, such a consensus may not be possible in every case.