Labour Court Database __________________________________________________________________________________ File Number: CD88795 Case Number: LCR12152 Section / Act: S20(1) Parties: HYDRAULIC SERVICES LIMITED - and - A CLAIMANT |
Alleged unfair dismissal.
Recommendation:
The Court, having considered the submissions made by the parties,
is satisfied that the Company acted within its contractual
obligations in this case and that the claimant was not unfairly
dismissed. The Court accordingly does not recommend concession of
the claim. The Court notes the Company's undertaking to furnish a
suitable reference to the claimant.
Division: Mr Fitzgerald Mr Shiel Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD88795 RECOMMENDATION NO. LCR12152
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 20(1)
PARTIES: HYDRAULIC SERVICES LIMITED
and
A CLAIMANT
SUBJECT:
1. Alleged unfair dismissal.
BACKGROUND:
2. The Company is engaged in the repair and sale of hydraulic
appliances and is agent in Ireland for a number of hydraulically
operated tools and lifts. The Company states that, up to June
1985, it employed salesmen pursuant to Contracts of Service and
that these were employees for all purposes, e.g. PAYE and PRSI
deductions were made; they had fixed hours of work and holiday
entitlements and were reimbursed for expenses incurred in the
course of business. In June, 1985 the Company states that its
sales staff were offered the options of redundancy or becoming
independent contractors. As such, they would be paid fixed
amounts related to productivity and basic salary would be
eliminated. The Company would not supply vehicles and would not
be responsible for expenses or holiday pay. The Agents would
themselves make available to the Revenue Commissioners details of
monies due by them.
In September, 1985 the claimant commenced work as a Sales Agent
and signed a contract with the Company. In an accompanying letter
the Contract was referred to as a "Contract of Employment". The
Company states this was a clerical error and that the Contract
was, in fact, a Contract for Services. The claimant was asked for
a P45. PAYE and PRSI were subsequently deducted from his
earnings.
3. In February, 1986 the claimant noticed that the PAYE and PRSI
columns on his payslip were blank and asked the wages clerk about
this. She referred him to the Chairman of the Company who said
that he was a self-employed sales agent, not an employee of the
Company. The claimant disagreed and a meeting with the Company's
accountant was arranged. The accountant said that PAYE and PRSI
had initially been deducted as a result of a clerical error and
that this should not have happened since he was not, in fact, an
employee of the Company. The claimant contacted the Revenue
Commissioners office in Mount Street, Dublin. He says he was
informed there that the Company was to continue deducting PAYE and
PRSI from his wages. He was subsequently made aware, by the
Company, that the Company was putting money into a tax account, in
his name. He informed the Revenue Commissioners of this. He says
that the Revenue Commissioners stated again that the Company was
to deduct PAYE and PRSI from his wages.
4. In the meantime, another agent who had worked for the Company
was processing an unfair dismissal case. The claimant contends
that this was not unrelated to his situation, as the Company did
not want him to be seen to be an employee because of the bearing
it might have on the other case. Just prior to this other case
being heard by the Employment Appeals Tribunal, the Chairman of
the Company met with the claimant in this case and on 16th May,
1986 issued the following letter to him:
"Further to our meeting of Friday last and our discussion of
this afternoon.
It will not be possible to continue operating with you as A
SALES AGENT as here to fore and for this reason we are
invoking clause two (2) of your Contract as Sales Agent. We
wish to advise you that as of today's date we are terminating
your agency and we are serving you with 90 days notice due to
expire on Friday 15th August, 1986."
5. However, the Chairman met with the claimant again shortly
afterward and an agreement was reached whereby the claimant could
continue to work for the Company if he bought a van from the
Company. The Company was to arrange the finance for the purchase.
The claimant borrowed #11,250 from a Finance Company for this
purpose. In June 1986 a new contract was drawn up between the
claimant and the Company and he started work with the van.
Subsequently, the van needed repairs which cost approximately
#500. The claimant sought reimbursement for this expense but was
informed that the Company was not liable. The invoice for the van
bore this out but the claimant states that he had not received a
copy of the invoice when he purchased the van. He only saw it
later, at the time of the repairs.
6. The claimant states that further problems arose because he was
not receiving commission on sales which he should have received.
Couriers were used by the Company to deliver goods in his area and
the Chairman's son also delivered goods in the area. In addition,
he states that money was deducted from him when potential
customers did not purchase goods after having had them on trial.
The claimant states that he got more and more deeply into debt,
due in part to the cost of the van (repayments, diesel and other
costs). The Chairman of the Company offered to buy back the van
for #7,200 - #1,800 less than the claimant had paid for it seven
months previously. An arrangement was reached whereby the
claimant leased the van from the Company. On 25th August, 1987
the claimant and the Company Chairman had a heated discussion.
The next day the Chairman sent the claimant the following letter:
"With regard to your decision to resign as agent for Hydraulic
Services Limited, we accept regretfully your decision and we
would like to wish you well, in whatever you do.
Should you require references or anything of that nature, we
would be delighted to help.
We hope that you will assist your successor during the week
you are working out your notice. Which we believe will expire
on Friday 18th September.
You did promise to give written confirmation of your decision
and to date we have not received same. We would be obliged if
you could do so, as soon as possible."
7. The claimant left the Company on 18th September, 1987. He
went to his local employment exchange and was told that he could
not be paid Unemployment Benefit as the Company had not paid PAYE
and PRSI on his behalf. He did receive Unemployment Assistance.
The Department of Social Welfare (Scope Section) conducted an
investigation into his situation. The decision of the Deciding
Officer was that from 13th September, 1985 to 12th June, 1986 he
was insurable under the Social Welfare Acts for all benefits and
pensions at PRSI Class A and that from 13th June, 1986 to 18th
September, 1987, he was not insurable under the Social Welfare
Acts. The Company initially appealed this decision but
subsequently withdrew the appeal. The Revenue Commissioners also
investigated the situation and on 11th March, 1988, a Tax
Inspector wrote to the claimant stating "I am hereby confirming
that it is my contention that while you worked for Hydraulic
Services Limited you were an employee of that Company and
therefore subject to the regulations of PAYE and PRSI".
8. The claimant, considering he was in dispute with the Company,
referred the matter to a Rights Commissioner. The Company,
however, refused to be represented at such a hearing. On 29th
September, 1988, the claimant referred the matter to the Labour
Court. On 14th October, 1988, he confirmed that his referral was
under Section 20(1) of the Industrial Relations Act, 1969, and
that he agreed to be bound by the Court's recommendation. The
Court hearing took place on 17th November, 1988. The Company was
represented at the hearing by a Solicitor.
CLAIMANT'S ARGUMENTS:
9.1 The claimant considers that he has been unfairly treated by
the Company in relation to his status as an employee, the
purchase of the van and the costs which this gave rise to,
his commission earnings and the termination of his
employment.
9.2 The initial contract which the claimant signed was clearly
identified in an accompanying letter (copy supplied to the
Court) as a Contract of Employment. The claimant was asked
for a P45. When he commenced employment, PAYE and PRSI were
deducted. The claimant contends that he was, in all
respects, an employee of the Company. The Revenue
Commissioners and the Department of Social Welfare have
upheld this view.
9.3 Arising from the difficulties which he experienced on the
question of his status as an employee, the claimant purchased
the van from the Company. This involved considerable expense
to him, for the purchase, subsequent repairs and running
costs. The claimant went heavily into debt because of this.
He had believed that the Company was liable for repairs but
this turned out not to be the case. He had not seen the
invoice which stated this at the time of the purchase.
9.4 At the same time, the claimant's earnings were below what
they should have been. This was because commission was
deducted when certain potential customers did not purchase
and because the Chairman's son and couriers were delivering
goods in his area.
9.5 The claimant contends that his situation was influenced by
the case of alleged unfair dismissal being taken by another
Sales Agent.
9.6 The claimant contends that he was unfairly dismissed from his
employment with the Company.
COMPANY'S ARGUMENTS:
10.1 Up to June, 1985 the Company employed Salesmen pursuant to
Contracts of Service which placed these individuals under
the Company's direct control and authority. These Salesmen
were employees for all purposes. In June 1985, the Company
decided that it could no longer justify the overheads
associated with maintaining a sales force of employees and
embarked on a radical re-construction. It offered its Sales
Staff the option of either being made redundant or becoming
independent Contractors. As such, basic salary would be
replaced by fixed payments relating to productivity. In
addition, agents would not be supplied with Company vehicles
and the Company would not pay expenses, holiday pay or PAYE/
PRSI.
10.2 In September, 1985, the claimant was given a Contract for
Services with the Company. Due to a clerical error in an
accompanying letter, this Contract was referred to as a
Contract of Employment, although the Contract itself was
quite specifically a Contract for Services. Pursuant to the
letter, the Company's book-keeper deducted PAYE and PRSI
from the claimant. This error was discovered some months
afterwards.
10.3 The Company executed a completely new Agreement with the
claimant in June 1986. At this time the claimant was
registered for VAT and no deductions, pursuant to the
Contract, were made under PAYE or PRSI from the claimant's
commission earnings.
10.4 The claimant resigned from the Company in September, 1987.
His resignation was accepted and the Company and the
claimant parted. Since that time, the claimant has
maintained a campaign against the Company, for reasons
unknown. It is presumed that the claimant applied to the
Department of Social Welfare, for whatever payments to which
he was entitled. As far as the Company was concerned, the
claimant was not an employee. He was an independent
Contractor. However, the Department of Social Welfare
eventually held that the claimant was entitled to be
considered as having been in insurable employment under the
Social Welfare Acts from the 13th of September, 1985 to the
12th of June, 1986. It further confirmed that from the 13th
of June, 1986 to the 18th of September, 1987, the claimant
was not insurable under the Social Welfare Acts. The
Company initially appealed this Decision. It has now
withdrawn this appeal and is prepared to accept the decision
of the Department of Social Welfare.
10.5 The Company maintains that at all times the claimant was
aware of his status, i.e. that of an independent Contractor.
From the Company's point of view, due to their clerical
error, monies were deducted in the initial period and it
has, as far as the claimant is concerned, remedied this
error.
10.6 The Company contends that the claimant has no valid claim
against it.
10.7 The Company representative stated at the hearing that the
Company would furnish a suitable reference to the claimant.
RECOMMENDATION:
The Court, having considered the submissions made by the parties,
is satisfied that the Company acted within its contractual
obligations in this case and that the claimant was not unfairly
dismissed. The Court accordingly does not recommend concession of
the claim. The Court notes the Company's undertaking to furnish a
suitable reference to the claimant.
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Signed on behalf of the Labour Court
5th December, 1988 Nicholas Fitzgerald
AK/PG Deputy Chairman