EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NO.
Liam Mooney RP774/13
- appellant
Against
Health Service Executive T/A Mental Health
- respondent
under
REDUNDANCY PAYMENTS ACTS, 1967 TO 2007
I certify that the Tribunal
(Division of Tribunal)
Chairman: Mr. T. Ryan
Members: Mr W. Power
Mr S. O’Donnell
heard this appeal at Dublin on 12th August 2014
and 10th October 2014
Representation:
Appellant:
Mr. Peter Hughes, Psychiatric Nurses Association, Station House,
The Waterhouse, Sallins, Co. Kildare
Respondent: Ms. Niamh McGowan BL instructed by:
Ms Deborah Delahunt, Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2
The decision of the Tribunal was as follows:-
Background:
The appellant was employed as a Nurse in a psychiatric hospital in Dublin from the 3rd June 1977 until his retirement on the 17th February 2008.
(Note from respondent’s submission: “As a role of a psychiatric nurse can be physically demanding one, employees of the Respondent employed in this role have an option which is provided for under their contracts of employment to apply for early retirement upon attaining 55 years of age. The Complainant was entitled to accelerated pension benefits, whereby each year after 20 years’ service is counted as two years’ service.)
On his retirement the appellant received an annual pension of over €32,000.00 per year and a lump sum of over €89,000.00.
In August 2008 the appellant interviewed for and was successful in being placed 1st on the panel for the “bank”. The nursing “bank” initiative was put in place by the respondent in response to chronic nursing shortages in the country in and around 2000. Both retired nurses and permanent employees of the respondent who wanted more flexible working hours applied to work in the nursing “bank”.
In 2012 the Department of Health advised the respondent that, in line with Government policy, staff already in receipt of a public service pension and who had returned to the workplace following their retirement would no longer be a part of a direct service position.
By letter dated the 31st October 2012 the Director of Nursing (CB) of the respondent wrote to the appellant and stated:
“I have been placed on notice that the bank nursing pool comes under the terms of the rehiring of retired (respondent) employees and as such I have to give notice of the (respondent’s) intention to cease these contracts. I am therefore giving you ten weeks notice of our intention to cease this contract commencing on 5 November 2012 with the contract ceasing on 13 January 2013.”
By letter dated the 27th November 2012 the appellant wrote to the Director of Nursing (CB) of the respondent and stated:
“As you are aware, I am now in my fifth year as an employee on the (respondent’s) Nurses Bank. Would you please advise me as to the Redundancy Terms been offered.”
The appellant then made a claim to the Employment Appeals Tribunal for a redundancy payment.
The respondent contends the appellant was not an employee during his time working on the Nurses Bank and therefore it not entitled to a redundancy payment.
The appellant contends he was an employee and therefore entitled to a redundancy payment for his service while working on the Nurses Bank.
Respondent’s Position:
The Director of Nursing (CB) gave evidence. CB explained that the appellant, as other nurses working in the Bank, were not employees of the respondent company. When work was available the appellant would be contacted and offered hours of work. He could agree to work these hours or decline them. It was his decision. He was paid for annual leave.
On cross-examination he agreed that the appellant did have to follow company policy. If a nurse on the Bank wished to leave they did not have to give the respondent notice of their departure.
Appellant’s Position:
The appellant gave evidence. He explained that he had been paid for annual leave and was paid for any public holidays. He paid PRSI, tax and a pension levy from the wages he received from the respondent. He explained to the Tribunal that he had joined the Nursing Bank to increase his PRSI contributions in respect of his pension.
On cross-examination the appellant rejected the suggestion that the respondent was not obliged to offer him hours of work. He explained to the Tribunal that he took note of the hours of the work he carried out for the respondent and did not go over the €33,000 yearly threshold or he would lose the pension he received. He agreed he could have left working for the Bank without giving the respondent notice.
Determination:
The appellant commenced working as a ‘bank nurse’ on the 1st November 2008 and his engagement/employment was terminated on the 13th January 2013. The appellant has claimed redundancy and is only entitled to such payment if he is an employee. The Tribunal has therefore to determine whether the appellant is an employee or an independent contractor.
At the commencement of the hearing the Respondent's Representative submitted that the Tribunal did not have jurisdiction to hear the appeal because the appellant was not an employee as defined in the Unfair Dismissals Act 1977 but that he was an independent contractor. The Tribunal could not rule on this application without hearing all the evidence. This is clear from a number of High Court decisions referred to hereafter.
While in most cases it is obvious whether a person is an employee or self-employed, it can sometimes be difficult to assess whether an individual providing services to another person or business can properly be described as self-employed. The terms "employed" and "self-employed" are not clearly defined in law, but some guidance has been provided by the courts. It is necessary to look at what the worker actually does, the way the worker does it and the terms and conditions under which the worker is engaged. What the parties call their relationship is not conclusive; it is the reality of the relationship that matters. The Tribunal considered existing case law in this contentious area cognisant of the fact that it would be difficult to find a set of circumstances in a previously decided case that exactly mirrors "the particular circumstances" of the case in issue. Recourse is therefore made to cobbling ratio decidendi from a number of relevant cases to fit the circumstances of the case before the Tribunal.
The High Court decision in the case of The Minister for Agriculture and Food V Barry and Others 1998 ELR 36 (7th July 2008) (hereinafter referred to as "the Barry Case") contains a detailed analysis of the jurisprudence on the tests which should be considered in deciding whether a person is working under a Contract for Service [Independent Contractor] or a Contract of Service [Employee]. It is appropriate that we examine ‘the Barry case’ in detail as it is relevant to the case brought by the claimant. In ‘the Barry case’, the Court allowed the appeal by the Department of Agriculture and Food against the decision of the Employment Appeals Tribunal (EAT) which had found that five Temporary Veterinary Inspectors (hereafter "the TVI's) were employees and accordingly entitled to payments under the Redundancy Payments Acts 1967-2003 and Minimum Notice and Terms of Employment Acts 1973-2001 following the closure of the Galtee Meats Plant at Mitchelstown, Co.Cork (hereafter "Galtee"). Edwards J. found that the TVIs were engaged as independent contractors, in other words, under contracts for service rather than as employees under contracts of service. The Department had argued that the TVIs were private veterinary practitioners who were also in business on their own account, and that they could and did continue in private practice along with undertaking temporary work for the Department. Further, the TVI’s remuneration was paid on an hourly fee basis at rates fixed between the Department and their union, Veterinary Ireland. The TVI's paid PAYE and PRSI and each was issued with a P60 annually. The TVI's were not obliged to maintain their own professional indemnity insurance. The TVI's did not charge VAT, and were not paid VAT even though VAT was chargeable on TB testing.
Edwards J considered the following pertinent matters in reaching his decision:
Mutuality of Obligation
This 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. In the case before this Tribunal the respondent provided work for the claimant on a continuous basis for over four years – from November 2008 to January 2013.
"The so called Enterprise Test"
Edwards J analysed the relevant jurisprudence in relation to "the so called Enterprise test". This test examines whether or not a person is in business on his/her own account. This test originated in a UK decision of Market Investigations –v- Minister for Social Welfare and was adopted by the Supreme Court in this Jurisdiction in the case of Henry Denny and Sons Ireland Limited V The Minister for Social Welfare (hereinafter referred to as ‘the Denny case’) and the application of the ratio decidendi in that case and in the subsequent decisions Tierney –v- An Post (2000); Castleisland Cattle Breeding Society Ltd –v- The Minister for Social and Family Affairs (2004) and the Electricity Supply Board –v- The Minister for Social Community and Family Affairs & Others (2006). Edwards J noted that a very important "particular fact" common to these cases was the existence of a contractual document stating that the relationship between the parties was a contract for services. The fact that the parties agreed that the description of their relationship should be considered a contract for services should not be considered decisive or conclusive. Edwards J considered with great care the judgements in ‘the Denny case’ and referred to the statement of Keane J that when determining whether a particular employment relationship is to be considered a contract "for service" or "of service" [that] "each case must be considered in the light of its particular facts and of the general principles which the courts have developed" Edwards J quoted the following paragraph from Keane J in the 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 passage which arose from "misguided attempts to divine in the judgement the formulation of a ‘one size fits all’" approach to this difficult question. He went on to say that it was unhelpful to speak of a "control test", an "enterprise test" a "fundamental test" an "essential test", a "single composite test" as none of these "tests" can be relied on to deliver a definitive result. None of these tests were conclusive or exhaustive. Accordingly this Tribunal should not reduce its consideration to a few tests. It is clear from 'the Barry case' and from Denny that all possibilities must be investigated before coming to a conclusion. This is what the Tribunal must now do.
The Barry case stipulated that in deciding whether a person is working under a Contract of Service or a Contract for Services a Court or Tribunal should have regard to the following:
(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.
The binding element of the Judgement of Keane J in the Denny case is that "each case must be considered in the light of its particular facts and of the general principles which the courts have developed". Therefore the test regarding whether "a person is in business on their own account" is reduced from being the fundamental test to one of the many factors that have to be taken into consideration in light of the particular facts of the case. Perhaps the main point to take from the case is that the various tests in this area should be considered as useful, rather than fundamental or single composite tests. Furthermore, 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 contracts exists, whether in fact one, or more contracts or an umbrella type of contract exists. The Tribunal must consider all the facts in the case before it and must not have a narrow focus.
The Tribunal found the Denny case particularly useful in considering its decision. It is worth setting out the facts of this case: A demonstrator had been engaged by the Appellants (in the Denny case) to demonstrate their food products in various supermarkets. She was employed under a series of temporary contracts which were renewed every year. Her contract clearly specified that she was not an employee rather she was an independent contractor. Some of these statements were:-
"You are deemed to be an independent contractor",
"It shall be your duty to pay and discharge such taxes and charges as may be payable out of such fees to the Revenue Commissioners or otherwise",
"It is agreed that the provisions of the Unfair Dismissals Act 1977 shall not apply etc",
"You will not be an employee of this company",
"You will be responsible for your own tax affairs"
However her duties were to be carried out in a very specific way; she would be given a minimum period of notice before each job; if she could not do the job another person approved by the employer could do it for her; she had to wear a uniform provided; she was paid by the days she worked, payment being made on receipt of an invoice which was only valid if signed by the store manager. She submitted an invoice and payment was made each fortnight without deduction of tax or PRSI.The demonstrator was deemed to be an employee notwithstanding statements in her contract to the contrary.
The Judge in the Denny case felt that statements, such as "you are deemed to be an Independent Contractor" etc, in the contract should be disregarded, on the basis that they represent the opinion of the contracting parties but were of minimal value in deciding the work status of the person engaged.
In 'the Denny case' the Supreme Court held that in order to decide whether a contract is one for service or of service each case should be considered on its own particular facts and in the light of the general principles which the courts have developed McAuliffe V Minister for Social Welfare 1995 ILRM 421 approved;
Whilst the degree of control exercised by a person may provide guidance in deciding whether a contract is one "for service" or "of service" it may not always be a satisfactory test to apply Cassidy V Minister for Social Welfare 1951 2 KB 343 and Queensland Stations Property Limited V Federal Commissioner of Taxation 1945 70 CLR 539 considered. The degree of control is not decisive. Market Investigations Limited V Minister for Social Security 1968 3 AER 732. In the case before the Tribunal the Respondent controlled where and when the appellant did his work.
The inference that a person is engaged in business on their own account is more readily drawn when they provide their own premises or equipment, where they employ others to assist them in their business and where the profit is dependent on the efficiency with which they conduct their business. The claimant did not provide a premises nor employ others to assist him-
The Tribunal then considered the facts of the case before it with commentary of previous case law and taking into account the facts and realities on the ground. In doing so the Tribunal found some factors more helpful than others. The Tribunal notes the observations of Dillon L.J in Nethermere (St Neots) that:
"the same question as an aid to appreciating the facts will not necessarily be crucial or fundamental in every case. It is for a court or Tribunal seized of the issue to identify those aids of greatest potential assistance to them in the circumstances of the particular case and to use those aids appropriately".
In the Barry case Edwards J 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 [see below], the following factors:
The Tribunal applied three of the tests, which Edwards J deemed appropriate, to the case before it as follows:
Whether the person provides the necessary premises, or equipment or some other form of investment.
In the case before the Tribunal the claimant did not provide premises, equipment or any investment.
Whether the person employs others to assist in the business.
The claimant did not employ 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.
This is debatable. The Appellant could only work the hours he was given by the respondent.
That it is not confined to these three tests is clear from Edwards J reference to "among other matters". The "other matters" which the Tribunal considered were:
The appellant paid his taxes through the PAYE system. While this does not conclusively make that person an employee the Tribunal is mindful of the fact that an independent contractor would not normally pay through the PAYE system. The Tribunal reminded itself that this is just one of the factors which must be taken into consideration in deciding the employment status of the claimant. The Tribunal notes that in the Denny casethe demonstrator paid her own tax yet this factor alone did not make her an independent contractor.
In the Barry case PAYE and PRSI was deducted by the Department from the TVI's pay. The Employer’s PRSI contribution of 10.75% was paid by the appellant in respect of each TVI, rendering each TVI insurable for all purposes of the PRSI Acts. Each TVI was issued annually with a P60, which named the appellant as the "Employer" and the TVI as the "Employee". The fact that the TVIs had tax/PRSI deducted did not persuade the High court to hold that the TVIs were employees. While the fact that an employee pays his/her own tax and PRSI is persuasive that he/she is an employee it is not the defining fact. Furthermore even Revenue does not accept the fact that because an individual has registered for self assessment or vat automatically makes that person self-employed. In the same way Revenue do not automatically accept that because a person is taxed under the PAYE system that the person is automatically an employee. This is clear from the 2010 document – Code of Practice for Determining Employment or Self-Employment Status of Individuals;
Substitution: Evidence was given that the appellant could not engage a substitute to do his work. This is again indicative of employment status.
No credible evidence was presented to the Tribunal that the appellant was in business on his own account. In O'Coindealbhain (Inspector of Taxes V Mooney) [1990] IR 422 the critical question was considered to be whether the person was performing the relevant services as a person in business in his/her own account. In the case before the Tribunal the appellant could not be deemed to be in business on his own account.
Whilst the degree of control exercised by a person may provide guidance in deciding whether a contract is one "for service" or "of service" it may not always be a satisfactory test to apply. This is clear from the cases referred to above Cassidy V Minister for Social Welfare 1951 2 KB 343 et al. The Tribunal considered the question of "control" and found that the respondent exercised control over the claimant – when the job was done and where it was to be done.
Holidays: evidence was given to the Tribunal that the appellant was paid annual leave. This is strongly indicative of employee status. An independent contractor is not paid annual leave.
Whether a worker is an employee or self employed depends on a large number of factors. The Tribunal wishes to stress that the issue is not determined by adding up the number of factors pointing towards employment and comparing that result with the number pointing towards self employment. It is the matter of the overall effect which is not necessarily the same as the sum total of all individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. When the detailed facts have been established the right approach is to stand back and look at the picture as a whole, 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 somebody else's business. If the evidence is evenly balanced, the intention of the parties may then decide the issue.
In summary there is no single test. Each case must be considered in the light of its own particular facts.
Standing back and looking at the working relationship as a whole, and mindful of the legal principles set out in the cases referred to above, the Tribunal determines that the working relationship between the Appellant and the Respondent was one of a Contract of Service and that the appellant was working as an employee for the respondent. The appellant could not be said to be in business on his own account.
The Tribunal finds a redundancy situation occurred. Accordingly, the Tribunal finds that the appellant is entitled to a lump sum payment under the Redundancy Payments Acts, 1967 to 2007 based on the following criteria:
Date of Birth:
Date of commencement of employment: 1 November 2008
Date of termination of employment: 13 January 2013
Gross weekly pay: €640.00
This award is made subject to the appellant having been in insurable employment under the Social Welfare Acts during the relevant period. It should be noted that payments from the Social Insurance Fund are limited to a maximum of €600.00 per week.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)