FACTS
The claimant carried out work as a Regional Claims Manager under a Service Contract and Agreement for the provision of Insurance Investigation and Settlement Services for the respondent. A Clause of the claimant’s contract, which referred to the claimant as “the Contractor”, provided that he would not be prevented or restricted, by virtue of his relationship with the respondent, from providing services to any other clients, subject to no conflict of interest arising.
The claimant was a director and 100% shareholder of another company. Payments were made to that other company by the respondent for work carried out by the claimant. Up to 1 October 2009, all payments by the respondent were paid into the claimant’s personal bank account but after that date, the claimant had requested by e-mail dated 22 September 2009 that all payments should be made payable to the other company.
The claimant accepted that he had no guarantee of work from the respondent or control over the amount of work given to him by the respondent. He did not receive holiday pay or sick pay, he was not part of the pension scheme, he used his own car while carrying out his duties for the respondent and he looked after his own tax affairs, which he had submitted as a self-employed person since 2007. In addition, the claimant submitted that he could not delegate his work, he was provided with business cards and an e-mail address by the respondent and his voicemail was changed to state he was from the respondent company. It was noted that only when the claimant reviewed the case law as stated in the case of Henry Denny and Sons Ireland Limited v The Minister for Social Welfare [1998] 1 IR34 (the “Henry Denny Case”) did he consider himself to be an employee.
The claimant acknowledged that he regarded himself as self-employed but that this was not out of choice as the respondent refused to employ him as a PAYE worker. He gave evidence that while other employees received pay increases, he did not. The claimant gave further evidence that he was unemployed between January 2011 and July 2011 but that he has been employed as a PAYE worker since July 2011.
DETERMINATION AND LEGAL REVIEW
Counsel for the respondent made an application that the Tribunal did not have jurisdiction to hear the matter as the claimant was not an employee as defined in the Unfair Dismissals Act 1977 and in fact was an independent contractor. The Tribunal took the following factors into consideration in reaching its determination:
(i) the claimant considered himself an independent contractor since 2004;
(ii) the claimant was responsible for paying his own taxes and he confirmed that he made revenue returns as a self employed person since 2007;
(iii) the claimant’s e-mail of 22 September 2009 stated it was more tax efficient to trade as a limited liability company rather than as a sole trader and he requested that all payments after the 1 October 2009 should be made to the company of which he was 100% owner;
(iv) he was not paid when out sick;
(v) he was not paid for holidays;
(vi) he was not part of any pension scheme;
(vii) he was not paid wage increases when other employees were;
(viii) he could work for other clients so long as there was no conflict of interest;
(ix) he submitted invoices for his services;
(x) the claimant had to carry out the work himself and could not delegate his functions;
(xi) he was given business cards by the respondent; and
(xii) he was provided with an e-mail address by the respondent.
The Tribunal examined the case of The Minister for Agriculture and Food v. Barry and Others [2008] IEHC 216 (the “Barry Case”).
In the Barry Case, the High Court allowed an appeal by the Department of Agriculture and Food against a decision by the Tribunal which found that 5 Temporary Veterinary Inspectors (“TVIs”) were employees and therefore entitled to payment under the Redundancy Payments Acts 1967-2003 and Minimum Notice and Terms of Employment Acts 1973-2001 following the closure of the Galtee meat plant. The Department of Agriculture and Food argued that the TVIs were in business on their own account while undertaking temporary work for the Department and the TVIs were paid an hourly rate, fixed between the Department and the TVI’s union. The High Court agreed with the Department and found that the TVIs were independent contractors under contracts for services.
Mr Justice John Edwards considered various tests in the Barry Case, including the Mutuality of Obligation Test referred to by the EAT. Mutuality of Obligation exists where the employer is obliged to provide work for the employee and the employee is obliged to perform that work as in a normal employer/employee relationship. The High Court considered that although this was an appropriate test to use, it did not mean that an implied contract of mutual obligation existed and he agreed with the Department that they had no control over the level of work available to the TVIs as this was in the control of Galtee.
Mr. Justice Edwards stated that the EAT erred in trying to find as a preliminary point whether a single contract, either for services or of service, existed and he stated that the EAT should ask the following:
* Whether the relationship between each TVI and the Department was subject to just one contract or more than one contract?
* What was the scope of each contract?
* What was the nature of each contract?
He also stated that each individual contract should be analysed as to whether it was a contract for services or a contract of services and he considered the possibility of a course of dealing over a lengthy period of time becoming an enforceable umbrella contract, which he explained as a type of overarching contract.
Edwards J also examined “the so called Enterprise test”, i.e. is a person in business on their own account or not? Edwards J stated that the fact that the parties agreed that the description of their relationship should be considered a contract for services should not be decisive or conclusive. He considered the statement of Keane J in the Henry Denny Case that when determining whether a particular employment relationship is to be considered a contract “for services” or “of services”, “each case must be considered in the light of its particular facts and of the general principles which the courts have developed”.
Edwards J went on to consider the following paragraph of Keane J in the Henry Denny case:
“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”.
Mr Justice Edwards criticised the misinterpretation of this statement which arose from “misguided attempts to divine in the judgment the formulation of a “one size fits all” approach” and he said that he considered that the appropriate test as to whether a person is engaged in business on his or her own account should consider, among other matters, the following factors:
* Whether he or she provides the necessary premises, or equipment or some other form of investment;
* Whether he or she employs others to assist in the business; and
* Whether the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.
Mr Justice Edwards went on to state that a Court of Tribunal should have regard to the following when deciding whether a contract for services or a contract of services exists:
(a) all possibilities should be investigated in determining the nature of the work relationship between the parties;
(b) the “so called enterprise test” is not determinative of the issue and that 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;
(c) compare the question of enterprise to questions of control and integration as such a comparison will assist a court or tribunal with valuable assistance in drawing the appropriate inferences from the primary facts and no one factor is subsumed by another;
(d) there is no exhaustive list and there might be other factors which might also assist.
He also acknowledged that some factors may prove more helpful than others.
It is interesting to note that when the Barry case was returned to the EAT for determination, the EAT reversed their original decision and held that the veterinary surgeons were engaged under a Contract for Services and therefore had no jurisdiction to hear the case, despite the fact that new evidence was introduced. The High Court judgment of Mr. Justice Edwards was interpreted by the EAT as an instruction to the EAT to change its original determination due to its many errors in law in reaching it’s determination. The veterinary surgeons appealed the EAT’s decision to the High Court [2011] IEHC 43 and the High Court held that nothing in the new evidence was of such crucial importance that having heard it, no reasonable tribunal would be entitled to conclude that the veterinary surgeons were employed other than under a contract for services. Hedigan J referred to the “heavy onus of proof” which the applicants bear in this regard.
The Edwards J decision has been the subject of some criticism and it will be interesting to see if the Supreme Court has the opportunity to clarify the position at any point.
The Tribunal noted in the present case that the test regarding whether “a person is in business on their own account” is therefore only one of the many factors that have to be taken into consideration in light of the particular facts of the case.
The Tribunal further held that the main point to take from the Barry Case is that the various tests in this area should be considered as useful, rather than fundamental or single composite tests. The Tribunal noted that each case should be examined on its own facts, giving particular attention as to whether or not a written contract containing a statement of the purported nature of the contract exists, or where no clear written contract exists, whether in fact one, or more contracts or an umbrella type of contract exists.
The Tribunal held that the Henry Denny case does not support the claimant quite as much as the claimant suggests and the Henry Denny case clearly states that “each case must be considered in the light of its particular facts and of the general principles which the courts have developed”. The Tribunal therefore must consider all the facts in each particular case and cannot have a narrow focus.
The Tribunal stated that Paragraphs (i) to (ix) above strongly suggest that the claimant is an Independent Contractor while (x) to (xiii) support the contention that the claimant was an employee. The Tribunal stated however that whether a worker is an employee or self employed depends on a large number of factors and that the issue is not determined by adding up the numbers of factors pointing towards employment and comparing that result with the number pointing towards self employment. It is the overall effect that matters and this is not necessarily the same as the sum total of all individual details. Not all details are of equal weight or importance and they may vary in importance from one situation to another. The Tribunal stated that the correct approach is to stand back and look at the picture as a whole once all the details have been established, to see if the overall effect is that of a person working in a self employed capacity or a person working as an employee in someone else’s business. If the evidence is evenly balanced, the intention of the parties may then decide the issue.
The Tribunal summarised that there is no single test but that each case must be considered in light of its own particular facts.
The Tribunal held that when looking at the picture as a whole, and taking into account the legal principles set out in the Barry Case and the other cases considered by the Tribunal, the Tribunal determined that the Claimant was working as an Independent Contractor under a Contract for Services.
The Tribunal held that it does not have jurisdiction to hear the claim under the Unfair Dismissals Acts, 1977 to 2007 or the Redundancy Payments Acts, 1967 to 2007.
CONCLUSION
It is clear from the above Determination that the Tribunal will consider each case on its own particular facts rather than relying on a single test to determine whether a claimant is an Employee under a Contract of Services or an Independent Contractor under a Contract for Services. Although different factors will be considered by the EAT, each factor may have different weight, depending on the facts of each case and it is the overall effect that matters.
The Employment Appeals Tribunal does not consider that there is one determinative test as to whether a person is an independent contractor or an employee, and all of the details of the situation will be examined to determine whether a person is working under a contract for services or a contract of services.
Full Case Decision:
http://www.eatribunal.ie/determinationAttachments/ac8b7586-5d48-4d40-aa15-6d940159558d.pdf
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