In the modern gig economy, where individuals may often work for more than one employer and provide services on an irregular basis, it is often difficult to determine whether an individual is an employee or a self-employed contractor. In the absence of clear definitions, it has been left to the courts to provide guidance on this complex area.
Supreme Court
A recent Supreme Court judgment has provided some clarification on the criteria to be used when determining if someone is an employee or a contractor. This case concerned the employment status of pizza delivery drivers engaged by Domino's Pizza in Ireland. Overturning an earlier decision of the Court of Appeal, the Supreme Court ruled that the drivers who had been engaged as independent contractors are in fact employees of the business.
Criteria
In reaching this decision, the Supreme Court rejected the rationale of the Court of Appeal which had determined that "mutuality of obligation" was a fundamental pre-condition in deciding whether the worker was an employee or contractor. Instead, the Supreme Court favored the application of tests that had been set out in earlier cases, which require a consideration of a number of factors. In doing so the Supreme Court identified the following questions for consideration:
- Does the contract involve the exchange of wage or other remuneration for the work?
- If so, is the agreement one in which the worker is agreeing to provide their own services and not those of a third party to the employer?
- If so, does the employer exercise sufficient control over the worker to render the agreement one that is capable of being an employment agreement?
- If the requirements are met, the decision maker must then determine whether the terms of the contract between employer and worker interpreted in the light of the admissible factual matrix and having regard to the working arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contract having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer.
- Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the court to adjust or supplement any of the foregoing.
Comment
A careful factual and legal analysis of the relationship needs to be conducted to determine the true status of the engagement as it will have important implications for employment law and Revenue purposes.
If you have any questions regarding the status of an individual's engagement or would like assistance in this area then please do not hesitate to contact any member of our Employment Team.
The Revenue Commissioners v Karshan Midlands Limited t/a Domino's Pizza [2023] IESC 24
