FULL RECOMMENDATION
SECTION 28(1), ORGANISATION OF WORKING TIME ACT, 1997 PARTIES : DEPARTMENT OF AGRICULTURE, FOOD AND RURAL DEVELOPMENT (REPRESENTED BY THE CHIEF STATE SOLICITORS OFFICE,) - AND - THOMAS MAHER (REPRESENTED BY T.A. O'DONOGHUE & SON SOLICITORS) DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Pierce Worker Member: Mr O'Neill |
1. Appeal against Rights Commissioner's decision.
BACKGROUND:
2. The worker was employed by the Department on the 25th of November, 1981, as a veterinarian. The worker was employed for the purpose of carrying out official testing/blood sampling under the Bovine Tuberculosis and Brucellosis Schemes. The position is known as a Whole-Time Temporary Veterinary Inspector. This type of veterinary inspector is involved solely in the testing of animals under the eradication schemes, and they are paid on a fee per test basis. There are 20 whole-time Temporary Veterinary Inspectors employed to carry out the Tuberculosis testing and every effort is made to ensure that a sufficient volume of testing is available to them. A daily cancellation fee is paid if there is no work available.
The issue as to whether the worker is engaged on a contract of service as required for eligibility under the Organisation of Working Time Act, 1997, was referred to a Rights Commissioner on the 29th of August, 2001.
The Rights Commissioner found as follows:-
"With regard to redress, I consider that the worker should be entitled to the provisions of the legislation in terms of being able to avail of annual and public entitlements with effect from 1st January, 2002. He should receive compensation for the period 1st July, 2001, to 31st December, 2001, amounting to 9% of his pay for that period. If the parties accept the decision but cannot agree on the amount involved, I will re-convene a hearing at the request of either side, and if necessary will issue a decision on the amount to be paid. If the overall decision is appealed by either side to the Labour Court then it will be a matter for that Court to determine what, if any, amount is to be paid to the worker."
(The worker was named in the Rights Commissioner's decision).
The matter was referred to the Labour Court and a Labour Court hearing took place in Galway on the 27th of March, 2002.
COMPANY ARGUMENTS: 2. 1. The worker should have made an application pursuant to the Act before the 30th of March, 1998, or, pursuant to Section 5, the claimant potentially had the right to make an application up to the 30th of September, 1998.
2. A crucial issue in determining the workers entitlement to holiday is to establish whether he is working under a Contract of Service or under a Contract for Services.
3. The worker is not a civil servant.
4. The worker is not an employee pursuant to the 1998 Act.
5. The worker is operating as an independent contractor and the more animals he tests, the more he is paid.
6. The amount of control exercised by the employer over the worker is minimal.
7. The worker supplies a specialist skill, coupled with many years of experience. It is incorrect to suggest that he supplies labour only.
8. The worker cannot subcontract work.
9. The worker does have the opportunity to profit from sound management and the scheduling of his work , and in the performance of his tasks.
3. 1. The worker has no control over his work.
2. The worker cannot sub-contract any of the veterinary work to another veterinary surgeon.
3. The worker is subject to and liable for PAYE and PRSI in the same way as other employees of the Department and these payments are deducted at source.
4. The worker cannot register for Value Added Tax purposes.
5. The worker is prevented from doing any other work in a private capacity under the terms of his contract of employment.
6. If there is any industrial action in the Department the worker is effectively "locked out".
7. The Department determines the rate of pay without reference to the worker or any of his colleagues who are in similar employment with the Department.
8. The worker cannot charge for export certificates.
9. The Department of Social Welfare treat the worker as an employee.
DETERMINATION:
This is an appeal by the Department of Agriculture against a decision of a Rights Commissioner which concluded that the claimant was an employee under a contract of service for the purposes of the Organisation of Working Time Act, 1997, and, therefore, decided that he had entitlements to annual leave and public holidays under Section 19 and 21 of the Act. The Department is of the view that he is not employed under a contract of service but is an independent contractor employed under a contract for service and, therefore, has no entitlement under the Organisation of Working Time Act, 1997.
Section 2 of the Act defines an "employee"
means a person of any age, who has entered into or works under (or, where the employment ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee, employed by that employer; and for the purposes of this Act, a person holding office under, or in the service of, the State (including a Civil servant within the meaning of the Civil Service Regulation Act, 1956) shall be deemed to be an employee employed by the State or Government, as the case may be, and an officer or servant of a local authority for the purposes of the Local Government Act, 1941, or of a harbour authority, health board or vocational education committee shall be deemed to be an employee employed by the authority, board or committee, as the case may be;
The Facts:-
- The claimant has been employed for over 20 years.
- He applied for the position personally, using the application form supplied by the Department.
- The position he was successful in obtaining was called a Wholetime Temporary Veterinary Inspector. The terms"Wholetime"and"Temporary"are terms normally associated with contracts of employment.
- He is required to carry out the work personally.
- He is prohibited from engaging in other work, whether on his own or another's behalf. To do so would result in "immediate termination".
- The Department assigns his work for him. Every effort is made by the Department to ensure that a sufficient volume of testing is available. Approximately 750 animals per week are expected to be tested.
- He is required to work the "normal testing week (i.e. 6-day week)". If he cannot fulfil this requirement he is liable to be removed from his position.
- He is paid a fee per animal tested; he does not negotiate a fee.
- The region he works in is determined by the Department; if he refuses to transfer to a new region his contract will be terminated with one week's notice.
- He is provided with access to the necessary computer facilities.
- The claimant's earnings since 1997 have been less than the salaries paid to Established Veterinary Inspectors with similar service.
- During thefoot and mouthcrisis, he was required to transfer to the Louth area for specialised work in relation to the crisis. During this period he was paid differently. He was paid a daily rate; the Department paid his travel and subsistence expenses.
- With the exception of callipers and 2 syringes the Department provides all other equipment necessary for the job.
- The Department of Social Welfare, having examined the facts, indicated in July, 1984, that it was satisfied that the claimant had been employed under a contract of service since the 9th of December, 1981, and was, therefore, insurable under the Social Welfare Acts for all benefits. Class A PRSI contributions and PAYE deductions are made from his fees.
- The claimant is not required to carry indemnity insurance.
Legal complexity surrounds the area of the distinction between a contract of service and a contract for service. A series of tests have evolved at common law to assist in this identification process. It is accepted that the distinction is a fine one and may be difficult to apply in borderline cases. Traditionally, the existence of a contract of employment was dependent in part on the amount of control exercised by the employer, but the Court accepts that this test is not an absolute one.
A self employed person is characterised by a number of features - typically he owns the assets; he is not paid a predetermined wage. Instead he runs the chance of profit, or the risk of loss according to his own efficiency in limiting his costs; he is often not obligated to work personally, but may delegate the carrying out of a job to a third party. A self-employed person may be identified using this test.
The leading Irish case is Henry Denny & Sons - v - Minister for Social Welfare (1998) ELR 36. The appellant was employed as a supermarket demonstrator under a yearly contract. Her contract described her as "self-employed". Denny's & Sons provided the equipment. If she could not do the job, only a person approved by Denny & Sons could do it for her. She had to wear the uniform provided. She was paid by the day. The question before the Court was whether the appellant was in insurable employment. The Company claimed that she was in business of her own account. However, the premises and equipment belonged to Denny & Sons, her profit did not depend on efficiency, therefore, even though there was a statement in her contract stating, "I am not an employee of Denny & Sons" the Supreme Court held that the assessment of employment status was based on objective terms, and found that the appellant was not self-employed, therefore, she was employed.
Many other tests exist, e.g. the integration test, the intent of the parties test, the long-term continuity test. For that reason the Employment Status Group was set up under the auspices of the Programme for Prosperity and Fairness. This group was set up because of the growing concern that there may be increasing numbers of individuals categorised as "self-employed" when the "indicators" may be that "employee" status would be more appropriate. The Group produced a "Code of Practice for Determining Employment or Self-Employment Status of Individuals"to eliminate misconceptions and provide clarity.
This code of Practice indicates that the overriding consideration or test will always be whether the person performing the work does so "as a person in business on their own account". Is the person a free agent with an economic independence of the person engaging the service?"
The Court has considered each of the criteria set out in the Code of Practice; firstly, it has examined this case in relation to the criteria on whether an individual is an employee, and secondly, the criteria on whether an individual is self-employed.
In relation to the latter criteria, the Court is satisfied that:
- The claimant does not own his own business -he is not running an enterprise, he works solely for the Department of Agriculture, Food and Rural Development.
- He is not exposed to financial risk -he receives a fee per headage basis; his average earnings from such fees do not vary substantially.
- He does not assume responsibility for investment and management in the enterprise -how he invests his own earnings is no different from that of an employee on a salary. There is no opportunity to invest in the "enterprise" as it would not seem to benefit him in any way.
- He does not have the opportunity to profit from sound management in the scheduling and performance of engagements and tasks -he is assigned tasks by the District Veterinary Office of the Department. The Department endeavour to ensure that he has a sufficient volume of animals for testing. To do otherwise would put his livelihood at risk, which would be counterproductive for the Department, who are satisfied with the current arrangement.
- He has no control over what he does, how it is done when and where it is done and whether it is done personally -his duties are assigned to him. The Department submit to the Court that he can exercise a significant degree of control in relation to the work which he is required to do - that he is in a position to choose the volume of work which he wishes to complete (within reason) and is, therefore, in a position to control the amount of money which he earns. The Department state that he is free to choose when and how to carry out his tests. The Court is of the view that the amount of control he may exercise is no more or less than a similar person working in a professional capacity in the same field. The only difference here is that he is economically dependent on the benefits earned by exercising good control over the number of cattle tested.
- He is not free to hire other people, on his terms, to do the work, which has been agreed to be undertaken -he is under a restrictive covenant. He is prohibited from engaging in other work, whether on his own or another's behalf. To do so would result in "immediate termination". Such a restrictive covenant is rarely found in a contract for service.
- He cannot provide the same service to more than one person or business at the same time.
- He does not provide the materials, equipment or machinery necessary for the job -other than some minor tools all materials are provided by the Department.
- He does not have a fixed place of business where materials, equipment, etc. can be stored.
- He cannot cost and agree a price for the job -he is informed of the fee that will be paid for the job, he does not negotiate with the Department on the level of the fee.
- He does not provide his own insurance cover,e.g. public liability cover, indemnity insurance, etc.
- He does not control the hours of work in fulfilling the job obligations -he is required to work the "normal testing week (i.e. 6-day week)" if he cannot fulfil this requirement he is liable to be removed from his position.
The Code of Practices states that generally an individual should satisfy the self-employed guidelines; otherwise he would normally be regarded as an employee.
Conclusion
The Court is satisfied that the claimant is working under a contract of employment. It is of the view that when first introduced in 1981, the Department of Agriculture Bovine Tuberculosis and Brucellosis Eradication Schemes was intended to be a temporary scheme and, therefore, persons were employed in a temporary capacity to augment the established veterinary inspectors employed by the Department. This eradication scheme has transpired to be an ongoing process.
The reality of the employment relationship between the claimant and the Department is that an employer / employee relationship exists. The claimant personally executes the work for a consideration, to decline such work would be uneconomical and he is prohibited from engaging any other person to do the work. The Department retains total and absolute control over all functions carried out in his professional capacity. He is subject to supervision and discipline by the Department. He has been determined by the Scope Section of the Department of Social Welfare and Family Affairs to be working under a contract of service and subject to Class A PRSI contributions. He is subject to PAYE deductions.
As the Supreme Court has held, even the existence of an express term in the contract does not of itself mean that a contract for service exists. The decision as to the status of the contract must be based on objective terms and considered in the light of all the facts.
In conclusion, the Court is of the view that when considered in the light of the various tests and Code of Practice, the claimant works under a contract of service for the Department.
Time Limit
The Department also claimed that his claim was out of time under Section 27(4) of the Act. The Rights Commissioner concluded that there were no "exceptional circumstances" to warrant granting an extension to the six months time limit under Section 27(5) which provides for an extension in such circumstances of a further 12 months. A similar issue was dealt with by the Labour Court in LCR No. DWT0141Royal Liver Assurance Limited v SIPTU.In that case, the Court noted that Section 19(1) of the Act entitles an employee to 4 weeks paid annual leave in respect of each leave year during which they work at least 1,365 hours and Section 20(1) provides that, subject to certain conditions, it is for the employer to determine the time at which annual leave is granted to an employee provided the leave is granted within the year to which it relates or, with the consent of the employee, within the 6 months thereafter. A leave year is defined by Section 2(1) as a year beginning on the 1st of April, and may with the consent of the employee be extended to the 30th of September of the following year.
Therefore, this Court inRoyal Liver Assuranceheld that an infringement of Section 19 of the Act could not have occurred until that time scale had expired without the paid leave having been granted, and the employee had six months from the 30th of September to bring a claim in respect of that leave year.
In the present case as the claim was made on the 28th of December, 2000, the Court is of the view that the appropriate period to take into consideration is the leave year from the 1st of April, 1999, to the 31st of March, 2000, and thence forward.
Determination
The decision of the Rights Commissioner is varied. The Court determines that the claimant is employed under a contract of service and, therefore, should be entitled to compensation in respect of 4 weeks annual leave not granted to him in the leave year commencing on the 1st of April, 1999, and 9 days public holidays which occurred in the same period.
In addition, in accordance with Section 27(3)(c) of the Act, having regard to all the circumstances of this case, the Court awards further compensation to the employee of €5000.
Signed on behalf of the Labour Court
Caroline Jenkinson
29th April, 2002______________________
HMCD/MBDeputy Chairman
NOTE
Enquiries concerning this Determination should be addressed to Helena McDermott, Court Secretary.