FULL RECOMMENDATION
SECTION 83, EMPLOYMENT EQUALITY ACT, 1998 PARTIES : WESTERN PEOPLE NEWSPAPER (REPRESENTED BY RONAN DALY JERMYN SOLICITORS) - AND - A WORKER DIVISION : Chairman: Mr Duffy Employer Member: Mr Carberry Worker Member: Mr O'Neill |
1. Appeal under Section 83 of the Employment Equality Act, 1998 - DEC-E2003/045
BACKGROUND:
2. The complainant referred his case to the Labour Court on the 12th of November, 2003. The following is the Court's determination:
DETERMINATION:
This is a Preliminary Determination of the Court.
This matter came before the Court by way of an appeal by the worker/complainant against the decision of the Equality Tribunal pursuant to section 83 of the Employment Equality Act 1998 (the Act). The complainant had taken a claim against the Western People Newspaper (the respondent) for equal remuneration with four named comparators. The respondent contended that the complainant was not its employee and had no locus standi to maintain the proceedings. The Equality Officer held with the respondent on this point and held that he lacked jurisdiction to investigate the complaint. The Equality Officer did not make any decisions on the substance of the complainant’s case.
Having considered the issues arising in this case, the Court has concluded that the Equality Officer erred in holding that he lacked jurisdiction to hear and decide the complainant’s claim. Accordingly, it is the determination of the Court that the decision of the Equality Officer be set aside and substituted with a finding that the complainant was an employee of the respondent at all times material to his complaint.
Since the substance of the complainant’s claim has not been investigated at first instance, the Court has further determined to invite the parties to make submissions to it as to how it should proceed following this preliminary determination. In that regard, the Court wishes to point out that it can proceed to determine the question of whether or not the claim herein is well founded or it may refer the matter back to the Equality Tribunal pursuant to section 84(2) of the Act.
The reasons for the Courts determination are set out hereunder:
Facts.
The complainant suffers from a profound physical disability. He describes himself as a writer and a disability worker.
On or about September, 1997, the complainant proposed to the editor of the respondent newspaper that he would write a column on disability issues. The editor accepted that proposal and confirmed to the complainant that he would publish his column once per fortnight. It was further agreed that the complainant would be paid £15 (€19) in respect of each article published. The respondent suggested to the complainant that he should seek sponsorship for the column. He subsequently obtained sponsorship to the value of €41.30 per column.
The complainant did not write for any other newspaper or periodical and it appears that his work was confined to the column at issue.
In 2002, the complainant sought a pay rise. He asked for €30 per column. The editor of the newspaper responded that he was reviewing the content of the paper and that the complainant should not submit further copy. Eventually the complainant was told that his arrangement with the paper was terminated.
The Preliminary Issue.
The first issue to be considered by the Court in this case is whether the complainant was engaged on a contract of employment. If, as contended by the respondent, he was engaged as a freelance journalist on a contract for service, he lacks the necessary legal standing (locus standi) to pursue a claim under the Act.
Contract of Service / Contract for Service
The process of determining if a person works under a contract of employment or is self-employed must be approached in two stages. The first stage requires the Court to decide if the alleged employer is contractually obliged to provide the person claiming to be an employee with work which that person is then required to perform. This mutuality of obligations has often been referred to as the irreducible minimum requirement which must be present before a contract of employment can be held to exist.
Here a distinction must be drawn between an arrangement by which a journalist might prepare an article and offer it to a newspaper. If it is accepted and consideration agreed for its publication, a contract would come into being in respect of that article. However, there would be no continuing or ongoing obligation on the journalist to write articles for the newspaper nor would the newspaper be obliged to accept further copy. Conversely, where, as in the present case, the parties have reached agreement for the preparation and publication of copy on an ongoing basis there is mutuality of obligations.
The second stage in the process requires a determination as to whether the contract binding the parties is one of service or one for service. The fundamental test for determining this question was set down in the English decision ofMarket Investigations v Minister of Social Security [1969] 2 Q.B 173. Here it was held that the Court should consider if the person was performing the service as a person in business on his own account. If the answer to that question is yes, than the contract is one for service. If the answer is no then the contract is one of service.
That approach was adopted in this jurisdiction by the Supreme Court inHenry Denny & Sons v Minister for Social Welfare [1998] IR 34. Here Keane J (as he then was) quoted with approval the following passage from the judgement of Cook J inMarket Investigations:
- “The observations of Lord Wright, of Denning L. J and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: 'Is the person who has engaged himself to perform these services performing them as a person in business on his own account '. If the answer to that question is 'yes', then the contract is a contract for services. If the answer is 'no', then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task."
- 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.
The Supreme Court held that the contract was one for service. Keane J observed that it was not normal to find a clause in a contract of employment allowing an employee to hire assistance for the work which he or she is employed to perform. It was further held that whilst the applicant worked under the control of the respondent’s Regional Manager, and the running of a post office was part of the respondent’s business, an overriding consideration was the fact that he operated the post office from the same premises as his own business and that the post office was, in fact, part of the applicant's own business.
Application of these Principles to the Present Case.
In this two stage approach, the first stage of the process involves establishing whether a binding contract existed between the parties. That is a question of law. The second stage which involves the correct classification of the contract is a question of fact and degree (per Kerr LJ inNeithermer (St Neots) Ltd v Taverna and Gardiner [1984] ILRM 240). In reaching a conclusion of fact on the correct classification of the contract, regard should be had to the indicia identified inDenny. However, as is clear fromMarket Investigations v Minister of Social Security,this must not be seen as an exhaustive list nor are there strict rules as to the relative weight which the various considerations should carry in a particular case. It is a question of degree to be decided by the Court, having regard to the contract as a whole, and bearing in mind the ultimate question which must be answered, namely, whether the person is in business on his or her own account or if they are working for another.
The first question for consideration is whether a continual contractual relationship existed between the complainant and the respondent. This question can be resolved in favour of the complainant as the Solicitor for the respondent conceded in the course of the hearing that there was a continuing contract rather than a series of individual contracts starting and ending with each article submitted. Thus, the position of the complainant can be distinguished from that of the regular contributor held to be an independent contractor inPatrick Woodworth in the case of In re Sunday Tribune Ltd [1984] IR 507. Here Carroll J found that this Journalist was:
- “ [A] freelance contributor who secured commissions in advance. She was under no obligation to contribute on a regular basis. Presumably, if she did not negotiate a commissioned article, the company’s editor would get articles from some other source. Therefore I am satisfied that she was not employed under a contract of service but as an independent contractor in respect of the articles which she did provide.
In considering the second stage of the test (is the contract one of service) the following considerations are relevant.
Control
It is clear from the authorities that the degree of control exercised over the work is a relevant indicator of a contract of service. Traditionally the control test involved ascertaining the extent to which the employer could direct the operation and determine how it was to be done and when it was to be done. It has, however, diminished in significance over time. As was pointed out by Walsh J inRoche v Kelly [1969] IR 100,it is the right to control the work rather than the actual exercise of that right that matters.
In this case the respondent determined the content of the complainant’s column. He was expressly confined to writing on disability issues. They also determined the length of the column and the deadlines in which it must be submitted. Moreover, it is established in the newspaper industry that an editor can exercise full control over what is published. In order to give business efficacy to any contract with a columnist, the agreement would have to contain an implied term allowing the editor the right to determine the content of an article submitted for publication unless there was an express provision that such a right did not exist.
The respondent did not determine when the work was to be done in that the complainant could decide his own hours of work. In that respect he was in the same position as any other “home worker” who could determine their own hours of work provided certain deadlines were met. InNethermere (St Neots) v Taverna and Gardiner[1984] IRLR 240, the employment status of the respondents was at issue. They were garment workers who worked from home. They had no fixed hours for doing the work and could determine the volume of work which they wished to take in. They were paid according to the number of garments produced. It was held by the Court of Appeal that they were employed under a contract of service.
Integration test.
The extent to which a person works as part of a business and is an integral part of the business is a further consideration. This was the test applied by Carroll J inIn re Sunday Tribune.The respondent contends that since the complainant did not attend meeting or attend at the respondent’s offices he was not interrogated into the business. This could not be a decisive factor since home workers, who are generally regarded as employees would in many instances be in a similar position. Moreover, advances in communication technology would have lessened the need for working journalists to attend at their employer’s place of business, and the complainant’s impaired mobility must also have been a factor inhibiting his attendance at the respondent’s offices.
Furthermore, the core business of the respondent is the production of a newspaper. The publication of articles of interest to its readers is central to that business. The preparation and production of a regular column by the complainant could not be said to constitute an activity ancillary to the main business of the respondent. In that respect the position of the complainant is similar to that of the regular columnist held to be an employee inIn Re Sunday Tribune.
Entrepreneurial Test.
This test also looks at all the factors involved, but effectively it asks the question posed inMarket Investigationsand inDenny- is the person in business on his or her own account? Provision of equipment or assets, responsibility for investment and management, whether he or she hires a helper and most significantly whether the profit or loss made from the venture is dependant on the efficiency with which the person performs their work are all factors to be taken into account.
The respondent argues that by the application of this test the complainant is not an employee.
The main factors relied upon are:
•The complainant incurs expense in researching his articles and by prudently managing his affairs he can maximise his profit.
•The complainant can obtain assistance in the preparation of the articles
•The complainant is free to work for other newspapers.
This line of argument ignores the underlying object of the various elements of this test. Its purpose is to help in establishing if, on its true construction, the contract at issue is one made between two parties in business on their own account or between an enterprise and an individual selling his own skill in the service of that enterprise. In applying the test regard should be had to the reality of the situation envisaged by the contracting parties rather than to theoretical possibilities.
It is submitted by the respondent that, since the complainant incurred certain expenses (such as telephone calls, travel and internet costs) in researching his article he was in a position to maximise profits and minimise loss.
The position of the complainant in this respect is no different to any worker who works from home. In the more distant past outworkers in the clothing trade or the shoe industry would have incurred costs in heat light and electricity which could be reduced by efficient management of their work. They were nonetheless generally classified as employees ( seeNethermere (St Neots) v Taverna [1984] IRLR 240andAirfield Footware v Cope [1978] IRLR 396.
In a more modern context, many administrative or professional workers may work from home for a variety of reasons, including family responsibilities or where through disability they have difficulty in attending at their normal place of work. In such cases the worker may use their own PC, their own telephone system and electricity in the course of their employment. They may also update their internet or technology systems at their own expense. Such outlay could not be equated to the operating costs of a business and would have to be of marginal relevance in determining the appropriate employment classification of the worker concerned.
There is another point of relevance. Given that the remuneration paid to the complainant amounts to €19 per fortnight there could be no possible scope for maximising profit or minimising loss to a degree that could justify an inference that the complainant is a man in business on his own account. If such savings could be made they would be so small as to be disregarded as de minimus (so small that it would be ignored on the principal that the law does not concern itself with trifles).
Further, the test postulates the possibility of the “employee” being authorised to employ an assistant to help speed up the work and maximise profit. This is entirely different to the possibility of the complainant obtaining the gratuitous assistance of another party to assist him with some aspect of his research. Given the level of remuneration paid to the complainant it could not be seriously suggested that he could employ assistance.
It is finally argued that the complainant is free to work for other newspapers and that this is indicative of a contract for service. Two points arise here. The complainant is not a career freelance journalist trading his copy between newspapers and there is nothing to suggest that the contract between the parties was concluded in that context. Secondly, any employee can have a second or third job and this has no bearing on their employment status in any one of them. In that regard it is noteworthy that, as appears from the Judgment of Carroll J, the regular columnist held to be an employee inIn Re Sunday Tribune, also worked for London Weekend Television and for the New Statesman.
There is a further feature of this case which would not normally be found in situations where a person is in business on their own account. The complainant obtained sponsorship for his column in the form of guaranteed advertising associated with it to the value of €41 per article. The value of this advertising accrues to the respondent and did not benefit the complainant in any way. It would be unusual for a business person seeking to maximise profits from the venture in which they are engaged to obtain subvention of this type without seeking some financial benefit as part of the deal.
Other Issues.
Payment.
The complainant was paid on foot of an invoice without deduction of PAYE or PRSI. In theDennycase the Demonstrators were paid a fee in respect of each demonstration provided. As appears from the Judgement of the Supreme Court, each demonstrator submitted an invoice and payment was made each fortnight without deduction of tax or PRSI. They were nonetheless held to be employees.
Whilst the tax treatment of the complainant may be a factor to be taken into account, it is not decisive. In theSunday Tribunecase each of the three applicants was registered with the Revenue Commissioners under Schedule D (as self-employed) and were responsible for their own tax. Carroll J was of the view that in the circumstances of the case this was not a determining factor.
Working Hours.
The complainant was free to determine his own working hours. This again was not decisive. In The Nethermere (St Neots) case the following passage appears in the headnote of the decision:
- “The mere fact that the workers could fix their own hours of work, could take holidays and time off when they wished and could vary how many garments they were willing to take on any one day or even to take none on a particular day, were factors for the industrial tribunal to consider in deciding whether or not there was a contract of service but they did not as a matter of law negative the existence of such a contract”
It is well settled that the label which the parties attach to their contract is not determinative of its true classification. In Denny, the case the agreement signed by the demonstrators expressly provide that the demonstrator is:-
"deemed to be an independent contractor and nothing in this agreement should be construed as creating the relationship of master and servant or principal and agents."
The same clause goes on expressly to provide that:-
"It is further agreed that the provisions of theUnfair Dismissals Act, 1977, shall not apply to the contractual relationship between [the appellant] and the demonstrator."
Again the express provisions included a term that:-
"It shall be the duty of the demonstrator to pay and discharge such taxes and charges as may be payable out of such fees to the revenue commissioners or otherwise."
In dealing with the significance of this provision Murphy J stated as follows:
- ”On behalf of the appellant it was conceded that these provisions were not of decisive importance. In my view their value, if any, is marginal. These terms are included in the contract but they are not contractual terms in the sense of imposing obligations on one party in favour of the other. They purport to express a conclusion of law as to the consequences of the contract between the parties. Whether Ms Mahon was retained under a contract of service depends essentially on the totality of the contractual relationship express or implied between her and the appellant and not upon any statement as to the consequence of the bargain. Certainly the imposition of income tax and the manner of its collection falls to be determined in accordance with the appropriate legislation and the regulations made thereunder as they impinge upon the actual relationship between parties and not their statement as to how liability should arise or be discharged”.
Following the decision of the Supreme Court inHenry Denny & Sons v Minister for Social Welfare [1998] IR 34and inTierney v An Post [2000] 1 IR 536there is now a single composite test for determining if a person is engaged on a contract of service or a contract for service. That involves looking at the contract as whole and asking is the person in business on his or her own account. If the answer to that question is yes, the contract is one for service. If it is no, the contract is one of service. The question of control and integration should no longer be regarded as automats tests in themselves but as elements to be taken into account in applying the enterprise test.
Having regard to all of the factors in this case, there is little to support the proposition that the complainant was engaged in business on his own account. Rather, the preponderance of evidence suggests that he undertook a continuing arrangement to provide his own skill and labour in the service of the newspaper on a mutually convenient basis as to how and when he would work and that he did so in return for remuneration.
For all of the foregoing reasons, the Court is satisfied that the complainant was employed by the respondent under a contract of service and that he has locus standi to maintain the within proceedings
Signed on behalf of the Labour Court
Kevin Duffy
24th May, 2004______________________
CONChairman
NOTE
Enquiries concerning this Determination should be addressed to Ciaran O'Neill, Court Secretary.