Important Decision on Distinction Between Employee and Self-Employed Persons
A recent court of appeal decision highlighted the distinction to be made when deciding whether individuals are self employed or have the status of employees.
A number of years ago The Revenue Commissioners determined that workers who provide services for Domino Pizza delivery service were deemed to be employees. Dominos appealed this decision to the High Court, which upheld the determination by the Revenue Commissioners. In making this decision, the High Court referred to a previous case in which Judge Edwards referred to the requirement of ‘mutuality of obligation’ i.e. mutual obligations on part of the employer to provide work for the employee and on the employee to perform work for the employer. The High Court held that mutuality of obligation was present for the duration of the individual contracts.
The Court of Appeal went on to make a determination on this particular point. The Court of Appeal noted that it had been acknowledged between the parties that ‘mutuality of obligation’ is a sine qua non (i.e. an essential condition) of an employment relationship.
It quoted Edwards in the Barry case who said that ‘there must a mutual obligation on the employer to provide work for the employee and on the employee to perform work for the employer’.
In this case, the contract between Dominos and the service providers ie delivery men stated the following:
- That the work was undertaken ‘strictly as an independent contractor’
- The driver was to provide his/her own vehicle and was paid per delivery and the driver could subcontract the work by providing a substitute delivery person.
- Crucially, the company did not warrant that it would utilise the contractor services at all, and the company recognised the delivery person’s right to make himself available on days and at times of his choosing.
- The drivers sign a form for social welfare purposes to the effect that they were ‘independent contractors’.
The Court of Appeal held that the fact that the written agreement did not oblige the drivers to work mean that the ‘mutuality of obligations’ test was not satisfied.
The Court of Appeal found that the pizza delivery drivers were self-employed independent contractors.
In conclusion this is an important case in the analysis of the circumstances and the factors to be taken into account when assessing whether an employee should be deemed to be an employee or an independent contractor.
For further advices in relation to any employment related matter, please do not hesitate to contact Brendan Dillon or Conor Cleary on 01 2960666.
