The Court of Appeal overturned the decision of the Tax Appeal Commission (TAC) and the High Court and found that pizza delivery drivers are self-employed independent contractors. It had been determined in previous decisions that the pizza delivery drivers were employees.

What happened?

The contract between Karshan (Midlands) Limited Trading as Domino’s Pizza (Dominos) and the delivery drivers described the delivery drivers as independent contractors. Before they were rostered, the delivery drivers would submit their availability to the store managers. The Revenue Commissioner (Revenue) had stated that the delivery drivers should be treated as employees for PAYE purposes. Dominos contended that the delivery drivers were independent contractors and as such their tax affairs were their own responsibility. On appeal to the TAC, and again to the High Court, Revenue's decision was upheld. The High Court stated that the contract was supplemented by 'discrete individual contracts' and that mutuality of obligation existed in these 'discrete individual contracts' which arose each night the delivery driver was rostered.

What did the Court of Appeal decide?

The majority decision of the Court of Appeal stated that the test to be relied upon in determining whether an individual is an employee (and thus subject to PAYE and PRSI) or a contractor is the mutuality of obligation test, i.e. is there a mutual obligation on the employer to provide work for the employee and on the employee to perform work for the employer. Only once mutuality of obligation is made out should the Court look at other matters such as:

1. right of substitution,
2. level of integration in the business, and
3. the terms of the contract.

The Court of Appeal was critical of the over-reliance on UK case law such as Weight Watchers UK v Revenue & Customs [2011] UKUT 433.  The Court of Appeal determined that there was a right of substitution and a level of integration in the business, however, it was irrelevant given that there was no mutuality of obligation and as such the delivery drivers could only be classified as independent contractors. The Court of Appeal found that no mutuality of obligation existed between the parties and therefore the delivery drivers were independent contractors responsible for their own taxes. This case has been appealed to the Supreme Court.

Key takeaways

The rule still applies that the label the contracting parties place on a relationship will not be determinative of the worker's status. The courts will look behind the written terms at the actual working relationship between the parties to reach a determination on status. 3.10 The written contract should reflect the true relationship between the parties. Guidance is available in the Code of Practice on Determining Employment Status.

The full case can be read here: 
https://www.bailii.org/ie/cases/IEHC/2019/2019IEHC894.html